CSR LIMITED | ANNUAL REPORT 2023
Building solutions
for a better future
CSR at a glance
Chair’s Message
Contents
2
4
6 Managing Director’s Review
8
Interior Systems
10 Masonry & Insulation
12 Construction Systems
14 Property
15 Aluminium
16 Sustainability at a glance
18 Empowering our people
20 Transition to net zero
21 Closing the loop
22 Leading through innovation
23 Building communities
24 Financial Overview
25
30 Board of Directors
32
46 Directors’ Report
49 Remuneration Report
69 Financial Report
109 Directors’ Declaration
110 Independent Auditor’s Report
114 Shareholder Information
Operating and Financial Review
Corporate Governance Statement and Risk
AGM Details
CSR’s Annual General Meeting
(AGM) will be held on 27 June 2023
at 10am (AEST). Details on
arrangements for the AGM are
included in the Notice of Meeting.
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.
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 and
solutions company and is the name behind
some of the market’s most trusted and
recognised brand names.
OUR BUSINESS
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.
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.
Masonry & Insulation
Masonry & Insulation brings together the key areas of
PGH Bricks and Monier Roofing for colours and design,
integrating with Bradford’s insulation and ventilation
systems for improved energy efficiency and home comfort.
STRONG FINANCIAL POSITION Year ended 31 March 2023 (YEM23)
$2.6bn
Revenue
13%
$330m1
Earnings Before Interest
and Tax (EBIT)
13%
$225m1
Net profit after tax
17%
18%
20.0c
36.5c
Final dividend (fully franked)
Full year dividends (fully franked)
46.9c1
Earnings per share
1 Before significant items
2
CSR LIMITED ANNUAL REPORT 2023 CONSTRUCTION MARKET DIVERSIFICATION
BUSINESS SEGMENT OVERVIEW
8%
9%
YEM23
Building
Products
Revenue
$1.8bn
10%
21%
52%
Detached
Non-residential
Medium density
High density
Alterations and
additions
2%
20%
YEM23
EBIT1
$330m
78%
Building Products
Property
Aluminium
1 Before significant items
Aluminium
Through its 70% shareholding in Gove Aluminium
Finance Limited, CSR holds an effective 25.2% interest
in the Tomago aluminium smelter in New South Wales.
Property
CSR generates additional earnings from its Property
business which focuses on maximising financial returns
from surplus former manufacturing sites and industrial land.
Construction Systems
Construction Systems develops engineered walling
and cladding systems across the three leading brands
of Hebel, AFS and Cemintel which bring speed of
construction with versatile design applications.
OPERATIONAL EXCELLENCE WITH A STRONG FOUNDATION
170+
Manufacturing and distribution sites
across Australia and New Zealand
2,785
CSR employees
50+
Property sites owned across Australia
18,000+
Customers across Australia and
New Zealand
$132m
Net cash
$2.2bn
Total assets
3
CHAIR’S MESSAGE
Chair’s
Message
Delivering a strong result while progressing CSR’s
strategy to diversify and strengthen the business.
JOHN GILLAM
CHAIR
EBIT BY BUSINESS1
$330m
13%
2%
20%
YEM23
EBIT1
$330m
78%
Building Products
Property
Aluminium
1 Before significant items
4
The performance and dedication of the
CSR team has delivered a very strong
result this year.
The team has ensured that we supported
our customers in what has been a
very busy and challenging period as
the construction market continues to
navigate a range of issues across supply
chain delays and labour shortages.
Strong operational performance across all
of CSR’s businesses has helped increase
CSR’s results for the third consecutive year
with net profit after tax (before significant
items) of $225 million up 17% when
compared to last year’s net profit of $193
million. CSR’s statutory net profit after tax
of $219 million was down from $271 million,
with the recognition of an $86 million
benefit from carry forward capital tax
losses included in the previous year.
The increase in net profit was driven
by a 20% increase in Building Products
earnings to a record $273 million
reflecting strong product availability for
customers with good volume growth in
Gyprock and Hebel as well as continued
focus on operational efficiency and cost
management.
The Property business increased
earnings to $72 million following
completion of six major transactions
during the year. This was the highest
result in Property over the last 15 years
and highlights the strength and depth of
CSR’s Property team to deliver complex
transactions with long lead times.
CSR has also contracted an additional
$102 million in Property earnings to
be delivered over the next two years.
Through our team’s capability, deep
knowledge of site management and
proactive management of our network,
we are well positioned to unlock
substantial value for many years to
come from our Property assets which
are currently valued on an “as is” basis
of $1.5 billion.
Earnings from Aluminium of $8 million
were down from $40 million as the
business managed a sharp increase
in raw material costs, including coke
and pitch which reached historic highs
during the year. While the market
remains challenging for aluminium in the
year ahead, higher hedged pricing is in
place to provide greater profitability in
future years.
CSR LIMITED ANNUAL REPORT 2023 Strong cash position supporting
investment in the business and
increasing shareholder returns
We ended the year with a very
healthy financial position, supporting
continued investment in core
operations to lift capacity, improve
productivity, enhance safety and
reduce emissions. This also supports
our appetite for growth via targeted
synergistic acquisitions.
CSR’s strong performance and
financial position also 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 20 cents per share
(fully franked). This will bring the full
year dividend to 36.5 cents per share
(fully franked), up 16% compared to
the previous year.
In June 2022, CSR announced an
on-market share buyback of up to
$100 million to increase shareholder
returns which is consistent with CSR's
recent history of proactive capital
management. This buyback remains
ongoing with $36 million in shares
purchased to date. Given our robust
balance sheet and strong operational
performance, CSR is able to invest in
growth while also increasing returns to
our shareholders via implementing an
on-market share buyback.
Sustainability a core foundation of
our strategy
Over the last three years, we have
developed many initiatives across
the business to deliver on our 2030
targets with detailed reporting
on our progress. This includes an
8% reduction in our emissions per
tonne of saleable product over
the last two years. While CSR is
making good progress on the 2030
targets, we are actively assessing
opportunities to extend these targets
to be more ambitious. This includes
the development of an overarching
Sustainability Framework aligned to
our strategy. This framework ensures
that all of our sustainability initiatives
are linked together across the full
breadth of environmental, social and
governance (ESG) topics.
Further work is underway to refine
our goals and commitments with
development of additional targets
and metrics across the five key
sustainability aspirations outlined
on page 16. Further details on our
approach to sustainability over the
past year are included in the 2022
CSR Sustainability Report which was
published in December 2022.
Board changes
In the last few months, we have
welcomed Christy Boyce and Adam
Tindall to the CSR board as non-
executive directors. They bring a
wide range of industry, financial and
strategic experience to CSR.
In November 2022, we said farewell
to non-executive director Christine
Holman after 6 years of service, while
non-executive director Matthew Quinn
will also be leaving the board at the
end of May following 10 years’ service
at CSR.
Both Christine and Matthew have
played crucial roles on our board
committees and we thank them for
their contribution to CSR.
Thank you to the CSR team
On behalf of the board, I want
to commend the over 2,700 CSR
employees across Australia and
New Zealand for their hard work and
dedication during the year. The teams
continue to deliver great progress
on our strategic initiatives whilst
ensuring strong underlying operational
and financial performance. We thank
them wholeheartedly for their great
effort. Finally, sincere thanks to our
customers and shareholders for your
ongoing support.
JOHN GILLAM
CHAIR
Capital management
increasing returns for
shareholders
CSR’s strong financial performance is
backed by our operational discipline,
cost control and investment in growth
which has provided the opportunity for
the company to deliver strong returns
to shareholders both through dividends
and capital management over the past
five years.
$175m
In total dividends to be paid for YEM23
16%
Increased total dividends in YEM23
CAPITAL MANAGEMENT (DIVIDENDS AND SHARE BUY BACKS) $ MILLION
$138
$131
$177
$153
$211
7
131
66
111
62
20
49
36
153
175
YEM19
YEM20
YEM21
YEM22
YEM23
Dividends
Special dividends
Share buy backs
5
MANAGING DIRECTOR'S REVIEW
Managing Director’s
Review
Providing a platform for growth and resilience to
deliver improved performance through the cycle.
Masonry & Insulation which includes
PGH Bricks, Bradford Insulation
and Monier Roofing also increased
earnings following increasing demand
for energy efficiency products and a
strong detached housing market which
was supported by CSR’s domestic
manufacturing capacity across our
15 sites in this business.
Construction Systems lifted earnings
following strong volume growth in both
Hebel and Cemintel as the business
increased its share of non-residential
markets. AFS also increased volumes
as it increased its reach across new
markets and segments. Hebel’s growth
reflects a compelling offer to our
customers with further work underway
to expand across more panel profiles
and finishes.
In what was a busy year, our teams
delivered a great result by ensuring
we optimised our factory operations
and distribution channels to deliver
for our customers, ensured pricing
discipline across the business
and continued to focus on cost
management.
In Building Products all of the
businesses increased revenue with
strong performances from Gyprock
and Bradford as well as Hebel which is
continuing to increase market share
with its faster build times and large
installer base. Strong cost control
helped deliver a 20% increase in EBIT
with the EBIT margin increasing to 15%.
Interior Systems which includes
CSR’s largest business in Gyprock
increased earnings reflecting volume
growth, good market execution and
the strength of its brand position. This
was supported by Gyprock’s continued
operational improvement and cost
discipline across its diversified market
position.
6
JULIE COATES
MANAGING DIRECTOR AND CEO
Progressing CSR’s strategy for
diversification and growth
The team has also progressed our
strategy to increase the diversification
of earnings and grow market share
in new segments. A key part of this
strategy is to increase our exposure
in the non-residential construction
sectors which will drive growth and
enhances our resilience. Our work in
building our capability in Customer
Solutions including major initiatives
such as Project Tracking which is
enabling our teams to identify more
projects with more CSR products
and systems.
Investing in our people and safety
Over the past year, we have continued
our work on addressing high potential
consequence risk in order to reduce
the risk of serious injuries to our
people.
While we have reduced our total
recordable injury frequency rate
(TRIFR) over the last three years to
9.9 (per million work hours), we have
more work to do in the year ahead.
CSR LIMITED ANNUAL REPORT 2023 This includes the continued rollout
of our “Never Walk Past” program to
build a mindset to never walk past
an unsafe act or condition.
CSR’s strategy is focused on providing
a platform for growth and resilience to
deliver improved performance through
the cycle.
CSR’s target is zero injuries and we
know this is possible as 80% of our
144 sites achieved this ambition in
the 12 months to 31 March 2023.
Outlook for the year ending
31 March 2024 (YEM24)
Building Products
CSR has made a strong start to the
year with the pipeline of detached
housing projects under construction
at historically high levels. CSR’s
focused execution into end markets
and pricing discipline to manage
inflationary cost pressures, continues
to support revenues. CSR is closely
monitoring the factors influencing
market dynamics and will manage the
business accordingly.
Activity in the apartment market
is improving as more projects have
commenced this year, while non-
residential activity remains strong,
supported by a large pipeline of
approvals.
The business is well diversified across
brands, market segments and the build
process with a product portfolio that is
adaptable to end market demand.
Incremental investments in
manufacturing performance, plant
consolidation, supply chain and
customer solutions have improved
manufacturing productivity, the
variability of the cost base and
responsiveness to customer demand.
Property
In Property, YEM24 will include
$44 million in contracted earnings
for the next tranche at Horsley Park,
NSW with an additional $58 million in
contracted earnings in YEM25. Work
continues on major projects at Darra,
QLD, Schofields, NSW and Badgerys
Creek, NSW.
Aluminium
While cost volatility and unpredictability
in energy and raw materials makes
forecasting challenging, at this early
stage in the year, the best estimate
for YEM24 is a loss in the range of
-$5 million to -$15 million (excluding
net RERT income, which was $13 million
in YEM23).
Aluminium is expected to return to
profit in YEM25 and increasing in
the following years due to higher
hedged pricing, based on current
cost assumptions.
CSR is well diversified across brands,
market segments and the build cycle
with its unique portfolio of trusted
brands and a long-standing history
in the market. We are continuing to
drive growth and the development
of the business and we look forward
to sharing more with you in the year
ahead.
Thank you to the CSR team for
their efforts this year
JULIE COATES
MANAGING DIRECTOR AND CEO
I would like to echo John’s comments
about the performance and effort of
the CSR team during the year.
As I meet with our teams across the
business, I am really impressed by the
focus and dedication of our people
to support our customers and our
strategy to improve productivity,
workplace safety, sustainability and
optimise our operations.
Building Solutions for a Better Future
CSR’s purpose is Building Solutions
for a Better Future as it captures
what we are doing across the
business with an eye on the future
with innovation and sustainability
for all stakeholders.
We are leveraging the strength of
CSR across key areas of Customer
Solutions and Supply Chain to
secure our position as a leading
local manufacturer and distributor
of the broadest range of products
and solutions.
This strategy is driving CSR
to continue to deliver strong
operational and financial
performance while strengthening
our resilience and performance
into the future.
Progressing strategy and delivering results
– Work to reorganise the business, build capability, focus on
supply chain and establish dedicated customers solutions is
supporting performance
– Unlocking value from Property assets and development capability
More responsive to demand
– Incremental investments in manufacturing assets and plant
consolidation has improved productivity, safety and sustainability
– Building an optimised network to improve customer service
Growth and resilience
– Quality of product, brand and distribution platform supporting
continued volume growth and improving performance through
the cycle
– Product portfolio adaptable to end market demand
Strong financial position
– Strong financial position supports investment and shareholder returns
– Track record of margin management
7
BUSINESS UNIT OVERVIEW | BUILDING PRODUCTS
Interior
Systems
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.
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 manufacturing sites
in Brisbane, Sydney, Melbourne
and Perth.
A key channel to market is the
56 Gyprock Trade Centres and
35 aligned distributors and retail
partners across Australia. Our
customers have a strong connection
to the Gyprock brand.
Gyprock continues to innovate and
enhance its product offering including
the 2023 launch of EC08™ Extreme.
Gyprock EC08 was the first Australian
made plasterboard to be manufactured
with high levels of recycled content
and certified by Good Environmental
Choice Australia (GECA). EC08
Extreme supports higher performance
requirements for commercial walls with
extreme impact resistance, fire and
acoustic ratings as well as mould and
moisture resistance.
Martini – Where science and sound
meet design. Martini manufactures
high performance acoustic products
that range from decorative through to
bulk insulation. Martini products are
made from thermally-bonded polyester
fibre with up to 80% recycled fibre
content from post-consumer PET
packaging.
Himmel in Australia and Potter in
New Zealand are leading interior
systems businesses supplying
ceiling tiles, grid systems, decorative
acoustics, and aluminium partitions
across social, infrastructure and
commercial projects. Both businesses
have extensive technical expertise
which we use to partner with architects
and designers to deliver solutions for
unique challenges and specifications.
Additionally, Himmel is the exclusive
distributor of Martini dECO,
manufactured by Martini, which
enhances a variety of commercial
spaces with its aesthetic and
acoustic properties.
8
CSR LIMITED ANNUAL REPORT 2023 PERFORMANCE OVERVIEW YEM23
YEM23
Building
Products
Revenue
$1.8b
40%
14%
Interior Systems
revenue by business
$738m
INTERIOR SYSTEMS REVENUE
$mINTERIOR SYSTEMS REVENUE
750
600
450
300
150
0
738
593
645
YEM21
YEM22
YEM23
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.
Rebuilt and ready for action
In August 2022, Sydney’s new state-of-the-art sporting venue, commercially
known as the Allianz Stadium, was completed. Concluding two years of working
through difficult and unprecedented conditions, the new Sydney Football
Stadium (SFS) was successfully delivered by John Holland, in partnership with
the New South Wales government.
Key to assisting this landmark development to be delivered on time and under
budget was Gyprock’s internal lining solutions, with a range of functional and
suitable products specified across multiple applications. Several key innovations
were included in the design including Gyprock’s Flexible to create curved walls
and ceilings as well as specialist ceiling boards to deliver acoustic performance
with design aesthetic. CSR brought its technical expertise to the project which
featured numerous CSR products and systems including Bradford, Cemintel,
Himmel and Martini.
Gyprock optimising performance and improving
sustainability
In October 2022, the Gyprock Wetherill Park, NSW site launched a project to
build new capability to convert raw gypsum into stucco, a key plasterboard
material input.
This $23 million investment will significantly reduce emissions through lower gas
and electricity usage, drive an increase in recycled board capacity and an 80%
reduction in paper waste to landfill through reuse in the process. This project
combines the current two step grinding and calcining processes into one energy
efficient process in line with latest technology, with commissioning targeted for
the second half of 2023.
9
BUSINESS UNIT OVERVIEW | BUILDING PRODUCTS
Masonry
& Insulation
Bringing together established brands with leading market position, backed
by our manufacturing expertise and technical and engineering teams.
Unique depth of product range
and systems
Extensive distribution and selection
centres
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 (NCC2022), we are providing
improvements in energy efficiency,
condensation control and in new
homes through our suite of systems
across insulation, construction fabrics
and ventilation. As the only approved
insulation partner of the National
Asthma Council Australia’s Sensitive
Choice® program, CSR brings a whole-
of-home approach providing not only
cost effective design and performance,
but also healthier home solutions.
CSR’s total home comfort resources
are an example of how CSR is
helping to educate its customers
and the broader market on building
sustainability.
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. Our large network of
PGH and Monier selection centres offer
many services such as colour schemes,
product selection and technical advice.
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
10-15% of its cement requirements.
Recent capital investments across
Masonry & Insulation are driving
efficiency and sustainability benefits
including a new water treatment plant
installed at the Bradford Brendale,
QLD site which will reduce water
consumption by 80% or 35 million litres
per year.
10
CSR LIMITED ANNUAL REPORT 2023 PERFORMANCE OVERVIEW YEM23
YEM23
Building
Products
Revenue
$1.8b
41%
9%
Masonry & Insulation
revenue by business
$753m
MASONRY & INSULATION REVENUE
$mMASONRY&INSULATION REVENUE
800
700
600
500
400
300
200
100
0
667
688
753
YEM21
YEM22
YEM23
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 is a proud sponsor
of The Block TV series
As suppliers to The Block for many
years, CSR helps to bring inspiration
about the latest styles and trends
with our quality building products
and expert assistance throughout
the season.
2022 brought a change of scenery
with the teams moving to the Macedon
Ranges, one hour north-west of
Melbourne. Five 10-acre properties
were made from old houses that were
sourced around Australia and trucked
in, along with newly built pavilions
and sheds.
With sustainability a big focus this
year, all five houses were built off the
grid with a seven-star energy rating,
with inclusions such as Bradford
insulation in the walls, roofs, floor and
ceiling and the sheds of these homes.
CSR delivering energy
efficient design
CSR is actively working to align to the
scope of changes contained in the
NCC2022 residential energy efficiency
provisions due for implementation in
October 2023.
CSR’s energy efficiency category
leadership under the Bradford
brand, and breadth of other building
products, positions it well to take a
leading position in developing new,
innovative, practical solutions to
the challenge of increasing energy
efficiency performance requirements.
Areas such as roof ventilation are an
easy and cost effective way to reduce
temperature build up and the impact
of moisture in the roof space as well as
reducing cooling energy costs.
Changes such as Monier’s new lighter
colour roof tile range can yield energy
savings over 25% compared to dark
colour tiles1.
1 Solar Absorptance Factsheet. ARTA.
11
BUSINESS UNIT OVERVIEW | BUILDING PRODUCTS
Construction
Systems
Construction Systems is targeting a number of new markets in structural
systems, façades and cladding with an unparalleled suite of products to deliver
versatile design applications, ease of installation and lower cost construction.
Cemintel stands for ‘Cement
Intelligence’ where Cemintel has
delivered innovative fibre cement
products to the market for external
and internal applications based on its
ongoing research, analysis of trends
and customer feedback. Its diversified
range includes products that are
suitable for façades and cladding,
internal linings, ceilings, compressed
flooring and decking products.
AFS is the leader in load-bearing
permanent formwork walling solutions
with both fibre cement and PVC
codemarked systems. For over two
decades, AFS has contributed to the
swift construction of apartments,
offices, warehouses and more.
Utilising cutting edge technologies,
AFS is constantly researching new
opportunities for innovation in hand-
erected load-bearing structural walls.
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. Following a $75 million
major expansion completed in 2019
at Somersby, Hebel has expanded
its application development and
innovation capability underpinning
its product pipeline to deliver
unique systems for the Australian
and New Zealand market. This
site is also leading in world class
technology driving the best practices
in automation and environmental
and waste management.
Cemintel has provided the Australian
market with an alternative fibre cement
range of traditional and prefinished
fibre cement products and systems for
over 25 years.
12
CSR LIMITED ANNUAL REPORT 2023 PERFORMANCE OVERVIEW YEM23
Bringing a natural and contemporary look to new schools
19%
YEM23
Building
Products
Revenue
$1.8b
As part of the NSW government’s $6.7 billion investment into education, Denham
Court Public School and Barramurra Public School in Sydney’s west and Estella
Public School in Wagga Wagga, NSW were designed by Hanson Yuncken and
Pedavoli Architects. The schools were designed to support the residential growth
in each area and to meet the increase of local enrolment demands.
22%
The investment is providing state-of-the-art facilities for 2,420 students.
Cemintel’s Barestone and Surround prefinished panels were used in the design of
the building to offer a natural, raw appearance that blends into the environment.
Other CSR products were included in the design including Gyprock’s premium
EC08 Complete was specified throughout – enabling it to meet the impact, noise
and fire requirements of each school project, with the entire project supported by
CSR’s technical team.
Construction Systems
revenue by business
$342m
CONSTRUCTION SYSTEMS REVENUE
CONSTRUCTION SYSTEMS REVENUE
$m
350
280
210
140
70
0
342
275
281
Estella Public School, Wagga Wagga NSW
YEM21
YEM22
YEM23
Macarthur Anglican School, Cobbity NSW
Barramurra Public School, Oran Park NSW
Showcasing CSR’s products and systems
CSR’s property project at Chirnside Park near Melbourne involved 581 lots which
included the construction of 140 townhouses which created a full showcase of
CSR’s suite of building products and systems. Hebel and Cemintel were featured
showing the contemporary façades with lightweight cladding combining ease of
application, speed of installation and non-combustibility properties. These homes
also featured a majority of CSR products including Gyprock, Bradford and PGH.
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
both fibre cement and PVC
permanent formwork systems.
Traditional and prefinished fibre
cement solutions for facades and
cladding, internal linings, ceilings
and soffits, flooring and decking.
13
BUSINESS UNIT OVERVIEW | PROPERTY
Property
Property has delivered $210 million in earnings in the
last five years bringing complex projects to the market.
Property delivering strong returns
CSR owns over 50 property sites 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
PERFORMANCE OVERVIEW YEM23
PROPERTY EBIT 2023
PROPERTY EBIT 2023
20%
20%
YEM23
EBIT
$330m1
Building Products 78%
Property 20%
Building Products 78%
Aluminium 2%
Property 20%
Aluminium 2%
1 Before significant items
Property EBIT
$72m
Property earnings over five years
$210m
Property sites owned
across Australia
50+
Development of major
projects
Horsley Park, NSW
– 52ha site of a former PGH Brick
factory redeveloped into an
industrial park. Rehabilitation of the
final stage of the project is expected
to continue over the next two years
– Completed and contracted proceeds
of $408 million
Badgerys Creek, NSW
– 196ha strategically located directly
adjacent to the Western Sydney
International Airport
– Accelerating site rehabilitation and
working with statutory authorities on
planning infrastructure delivery
Schofields, NSW
– 91ha site is proposed to be
rezoned residential, producing
circa 1,525 lots
– Advancing road design with
Transport NSW and commenced
early planning with Local Council
CSR LIMITED ANNUAL REPORT 2023 BUSINESS UNIT OVERVIEW | ALUMINIUM
Aluminium
Tomago Aluminium is Australia’s largest aluminium smelter
and has been operating 24 hours a day since 1983.
PROPERTY EBIT 2023
20%
Building Products 78%
Property 20%
Aluminium 2%
CSR was one of the founding partners
in the smelter in 1983 which today
employs approximately 1,000 people.
Tomago is managed independently with
joint venture partners Rio Tinto, GAF
and Hydro Aluminium.
Aluminium markets remains volatile
CSR is a joint venture participant
to the Tomago Aluminium Smelter –
Australia’s largest aluminium smelter.
Through its 70% shareholding in Gove
Aluminium Finance Limited (GAF),
CSR holds an effective 25.2% interest
in the Tomago Aluminium Smelter,
located near Newcastle, NSW.
Tomago produces around 583,000
tonnes of aluminium each year.
GAF aluminium hedge position
In order to reduce volatility and lock-in profitable returns, GAF has a significant
hedge book in place over the next few years.
As of 31 March 2023
YEM23
YEM24
YEM25
YEM26
YEM27
Average price A$ per tonne
(excludes premiums)
% of net aluminium
exposure hedged
A$3,061 A$3,089 A$3,198 A$3,448 A$3,912
N/A
84%
71%
68%
43%
PERFORMANCE OVERVIEW YEM23
ALUMINIUM EBIT 2023
ALUMINIUM EBIT 2023
2%
2%
YEM23
EBIT
$330m1
Building Products 78%
Property 20%
Building Products 78%
Aluminium 2%
Property 20%
Aluminium 2%
1 Before significant items
Aluminium EBIT
$8m
Aluminium earnings over five years
$167m
Aluminium produced by Tomago
each year
583k tonnes
Tomago securing its future
energy needs
Tomago has commenced planning its
move away from fossil fuel-derived
electricity to firmed renewables and
has commenced a formal Expression
of Interest (EOI) process. This market
process seeks key industry and
technology partners to collaborate
and potentially work together to
invest in, develop or procure traceable
renewable generation or energy
storage projects to repower the
smelter post-2028.
This work will result in significant
(~86%) carbon dioxide equivalent
(CO2e) emissions reduction and is also
expected to deliver reduced energy
costs in the long term. This forms part
of Tomago’s future energy strategy
which places the sustainability of the
smelter, from both an environmental
and economic perspective, as key
priority areas.
15
SUSTAINABILITY | CSR’S SUSTAINABILITY FOCUS AREAS
Empowering
our people
Thriving, inclusive and
high performing team
that is empowered to
make the change we need
115 sites
Safety performance improving:
zero recordable injuries at
115 sites (80%) of CSR sites
24/7
Wellbeing@CSR providing 24/7
support for employees and their
families
Supporting diversity and
inclusion: Launched revised
Family Care policies covering
domestic violence, parental leave
and extended compassionate
leave
Transition
to net zero
Decarbonising our
business to operate in
a low/no carbon world
30%
2030 GHG emissions reduction
target of 30% (per tonne of
saleable product)
8%
Reduction achieved in last
two years
Completed independent review
of emission target alignment
to 2030 targets and potential
pathway to transition to net zero
Sustainability
at a glance
Sustainability is a core foundation of our strategy
both in how we operate and how we will grow.
16
CSR LIMITED ANNUAL REPORT 2023 Closing the loop
Contributing to a circular
building industry
Leading through
innovation
Innovating to advance
sustainability at CSR and
across the building sector
Building
communities
Building long-term,
mutually beneficial
community relationships
30%
Water reduction target to 2030 –
7% achieved to date (per tonne of
saleable product)
75%
Waste reduction target to 2030 –
12% achieved to date (tonnes)
Adoption of additional targets to
2025 targeting all packaging 100%
reusable, recyclable or compostable
7star
CSR brings whole of home
thermal performance for
NCC2022 compliance
20K
CSR System Selector brings
20,000 system solutions together
in a digital tool
Ongoing development of CSR
systems delivering energy
efficient design and performance
76%
Tracking at 76% of 2030 target to
spend 5% of indirect procurement
with social enterprises including
disability and indigenous suppliers
600
600 tonnes per month of timber
saved from landfill through pallet
recovery program
Ongoing community support
through building product
donations, site level community
engagement with $72k donated to
charities through the community
support program
Our commitment to sustainability will ensure we make the world
a better place for our people, our communities and the planet.
In 2022, we launched a detailed review
of our sustainability ambition in order
to ensure that we have a deliberate and
structured plan of action going forward
which is responsive to the changing
environment and adapting to emerging
opportunities and expectations. This
work included external sustainability
experts leading discussions with
key internal CSR stakeholders, and
analysis of the external environment,
to better understand CSR’s material
sustainability impacts and further
opportunities to improve performance.
This work led to the development of an
overarching Sustainability Framework
aligned to our strategy. This framework
ensures that all of our sustainability
initiatives are linked together across
the full breadth of environmental, social
and governance (ESG) topics.
Further work is now underway to define
specific targets and actions to support
this framework and communication
of CSR’s sustainability ambitions.
This includes the refinement of goals,
commitments and development
of additional targets and metrics
across the five key pillars of CSR’s
Sustainability Framework.
Further details on CSR’s approach to
sustainability over the past year are
included in the 2022 CSR Sustainability
Report which was published in
December 2022.
CSR delivering energy efficient
design
CSR’s leadership in energy efficient
products and systems will play
an important role in how the built
environment reduces emissions,
improves energy productivity and
transitions to a greater use of
renewable energy.
In March 2023, CSR launched two major
innovations to drive better awareness
and performance of homes and
buildings with CSR System Selector
and Thermal Calculator.
CSR is also investing capital across
its network to improve sustainability
of its operations including major
projects including $23m at Gyprock
Wetherill Park, NSW and $13m Bradford
Brendale, QLD which includes a new
water treatment plant which will reduce
water use by 80%.
CSR has also installed solar PV systems
at 17 sites with a total capacity of
3,100kWs with work underway on a
$3m project at the Gyprock Wetherill
Park, NSW site to deliver an additional
2,000kWs of capacity.
17
SUSTAINABILITY | CSR’S SUSTAINABILITY FOCUS AREAS
Empowering
our people
Thriving, inclusive and high performing team
that is empowered to make the change we need.
Improving safety performance
in YEM23
Addressing high potential consequence
risk is CSR’s primary focus. In doing so,
we are able to reduce the risk of serious
injuries to our people.
At CSR, we measure potential risk using
a 5x5 Risk Matrix which classifies and
rates events based on the potential
severity combined with the potential
likelihood. When we commenced our
high potential consequence risk focus
two years ago, we reduced our risk
rating of injuries by 52%. This year,
we further reduced the risk rating of
injuries by 36%.
CSR also undertakes extensive
assurance of our risk rating
classification to ensure that incidents
are rated in accordance with our
procedures and adequately reflects
the severity of the events.
One of the ways we have managed to
improve our accuracy and transparency
is by implementing a compulsory
“reviewed risk rating” classification
whereby every incident at CSR is
reviewed by a safety professional to
ensure that risk rating classifications
are appropriate.
In YEM23 CSR improved its total
recordable injury frequency rate
(TRIFR) from 10.5 in March 2022 to
9.9 (per million work hours). While we
did achieve a reduction in YEM23, we
saw an increase in low to moderate
risk recordable injuries in the second
half of the year, particularly to newer
employees. A detailed review is
underway to implement corrective
actions in the year ahead. CSR’s
ultimate goal is to achieve zero injuries
and we know this is possible as 115
of our 144 sites, or 80% of our sites,
achieved this ambition in the 12 months
to 31 March 2023.
18
CSR LIMITED ANNUAL REPORT 2023 SAFETY PERFORMANCE OVERVIEW
Inspiring our people by creating
a safe and diverse place to work
and grow.
TOTAL RECORDABLE INJURY FREQUENCY RATE
As at 1 April 2022 – 31 March 2023
80% zero recordable injuries
SAFETY PERFORMANCE IN 2023
SAFETY PERFORMANCE IN 2023
10
6
19
13
115 sites
achieved zero
recordable injuries
in the 12 months to
31 March 2023
124
115
Sites with zero recordable injuries
Sites with one recordable injury
Sites with Zero recordable injuries
Sites with > than one recordable injury
Sites with one recordable injury
Sites with > than one recordable injury
TOTAL RECORDABLE INJURY FREQUENCY
TOTAL RECORDABLE INJURY FREQUENCY RATE
RATE (Per million work hours)
Per million work hours
14
12
10
8
6
4
2
0
13.3
10.5
9.9
YEM21
YEM22
YEM23
WOMEN IN LEADERSHIP AT CSR (%)
WOMEN IN LEADERSHIP AT CSR (%)
50
40
30
20
10
0
39
43
30
YEM23
Senior Management
Executive Leadership Team (includes CEO)
Board of Directors
21%
total women in the
CSR workforce at
31 March 2023
28%
new hires in the
12 months to
31 March 2023
were women
Never Walk Past – capturing the hearts
and minds of our people
In almost all incidents, there
are moments that occur before
someone is injured where if
someone intervened, rather than
walking past, the injury would not
have occurred.
During the year, CSR launched
a major initiative to develop
a simple, clear, and positive
framework to encourage all staff
to make a personal commitment
to engage and take action in the
‘moments that matter’.
This “Never Walk Past” program
has been designed to be Line
Leader-led with the support of
our Workplace Health, Safety and
Environment (WHSE) community.
Never walking past an unsafe
act or condition requires the
commitment of everyone to play
their part. This commitment
was highly visible to all sites by
installing a Never Walk Past board
which serves as a daily reminder
and reinforces the behavioural
change needed to see and feel the
long term impact.
The program was launched in
November 2022 and has been
rolled out to 500 leaders across
CSR. This will continue in the year
ahead including all CSR employees
at every level.
Improving diversity and inclusion at CSR
CSR is committed to increasing female representation at all levels of
management and across the organisation. As at 31 March 2023, the
percentage of women in the CSR workforce was 21%. During the year,
28% of new hires were women. Most pleasing was that 56% of hired
leaders in this period were women.
In partnership with University Technology Sydney (UTS), over the last
four years CSR has invested in the Women in Engineering Program which
supports the development of the next generation of young engineering
professionals. CSR also supports the Lucy Mentoring Program which
connects women studying engineering or information technology at UTS
with industry professionals for one-on-one mentoring over six months.
19
SUSTAINABILITY | CSR’S SUSTAINABILITY FOCUS AREAS
Transition
to net zero
Decarbonising our business to operate
in a low/no carbon world.
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.
We have developed a staged approach
to assess the risks and opportunities
and integrate them into our risk
assessment approach which covers the
key areas of Strategy, Governance, Risk
Management and Metrics and Targets.
CSR has now completed TCFD analysis
across its five largest businesses. We
are now moving to bring all this work
together across the CSR group, which
is being progressed during 2023. This
includes a review of how our portfolio
can specifically mitigate risks and
create greater opportunities and how
to fully integrate the findings into the
CSR business strategy.
CSR has a strong record in establishing
and tracking targets to measure its
sustainability performance. CSR set
four intensity targets in 2010 to 2020
with significant reductions achieved
across waste, energy, water and
emissions. New sustainability targets
to 2030 were launched in June 2020
covering a range of metrics to improve
performance and reduce environmental
impact. The team set challenging but
achievable targets which are aligned
to the UN Sustainable Development
Goals (SDGs).
All of our businesses have action
plans underway to achieve or exceed
their 2030 targets which are reviewed
monthly by the Sustainability Steering
Committee with progress reported to
the Board’s Safety & Sustainability
Committee.
20
Hebel Solar Project
reducing emissions
In May 2022, CSR completed the
installation of 1,900 solar panels on
its Hebel factory at Somersby, NSW.
This system covers a panel area of
approximately 4,000 m2, producing
over 1 million kWh of electricity which
equates to the reduction of carbon
emissions by 880 tonnes per year.
CSR now has a total of 17 sites with
solar PV providing a total capacity
of 3,100kWs.
A further $3 million project is currently
under construction at the Gyprock
Wetherill Park, NSW site which will
deliver an additional 2,000kW of
capacity to CSR’s renewable energy
network.
Manufacturing with
greater efficiency to
reduce energy use.
CSR PERFORMANCE
As at 30 June 2022
Energy
2.52GJ/tonne of saleable product
Energy reduction target
from 2020 baseline (%)
2021
2022
2030 Target
-3%
-7%
-20%
Emissions
205.5kg/tonne of saleable
product
Emissions reduction target
from 2020 baseline (%)
2021
2022
2030 Target
-3%
-8%
-30%
CSR LIMITED ANNUAL REPORT 2023
SUSTAINABILITY | CSR’S SUSTAINABILITY FOCUS AREAS
Closing
the loop
Contributing to a circular building industry.
Energy
2.52GJ/tonne of saleable product
Emissions reduction target
from 2020 baseline (%)
CSR is focused on two key areas in
closing the loop: reducing waste in
our business and in our supply chain
and protecting our resources.
Since 2009, CSR has reduced the
amount of solid waste to landfill
by over 50% per tonne of saleable
product. This is a significant reduction
created through numerous operational
efficiency projects and investments
in new technology. CSR has an
ambitious target to reduce solid waste
to landfill by 75% by 2030. Significant
work is underway to increase the
number of projects to help achieve
this target over the next few years.
CSR has also adopted the 2025
targets from the Australian Packaging
Covenant Organisation which
include: all packaging is either 100%
reusable, recyclable or compostable,
50% average recycled content in
packaging used, and plan to phase out
problematic/unnecessary plastic.
CSR has also progressed a major timber
pallet and packaging recycling program.
Launched in 2021, this program is
saving approximately 600 tonnes per
month of timber from entering landfill
and reduces overall timber usage in
the business.
CSR also recognises the importance of
using water efficiently. Our stormwater
and groundwater management,
together with the treatment and
disposal of water used at our
manufacturing facilities is central to
our on-site water reduction initiatives.
During YEM24, CSR is targeting a
number of investments to upgrade
water recycling and to reduce or
eliminate future water use. Water
management is also a key criteria for all
new investments by the company. CSR
continued to implement water saving
measures across its manufacturing
sites to reduce potable water usage.
Bradford Brendale water
treatment plant
Final commissioning is underway at
Bradford’s site at Brendale, QLD to
build a water treatment plant which
treats recycled water from an adjacent
plant next to the site.
This water treatment process converts
recycled water into treated water
that can be utilised in Bradford’s
production process. This equates to
a reduction in potable water required
at the site by 80% or a saving of
35 million litres of water each year.
CSR has an ambitious
target to reduce solid
waste to landfill and use
water more efficiently.
CSR PERFORMANCE
As at 30 June 2022
Water
381.4ltr/tonne of saleable product
Water reduction target
from 2020 baseline (%)
2021
2022
2030 Target
0
-7%
-30%
Waste
12,127tonnes
Waste reduction target
from 2020 baseline (%)
2021
2022
2030 Target
-1%
-12%
-75%
21
SUSTAINABILITY | CSR’S SUSTAINABILITY FOCUS AREAS
Leading through
innovation
Innovating to advance sustainability
at CSR and across the building sector.
7star
CSR brings whole of home thermal
performance for NCC2022 compliance
20K
CSR System Selector brings
20,000 system solutions together
in a digital tool
Ongoing development of CSR systems
delivering energy efficient design and
performance
Innovation in our products, systems
and processes
A key pillar of CSR’s strategy is
based on customer centricity which
involves working with our customers
to better meet their needs. We have
the opportunity to better integrate the
direct support provided by our teams
with digital tools and services that make
it easier for our customers to access
CSR’s expertise in how our systems
work together from walls and floors to
roofing and cladding. These systems
are backed by CSR’s comprehensive
testing and research capabilities.
Growth in the social and commercial
market is creating the opportunity
to evolve how we build to create
an environment that enhances the
performance of these buildings across
a range of factors such as air quality,
ventilation, natural lighting, thermal
comfort and acoustic performance.
In 2023, CSR launched System
Selector which provides over 20,000
compliant system solutions to support
building design with downloadable
documents, specification packages
and system comparisons.
A key point of difference for System
Selector is that it allows a designer
to specify the greatest share of the
building, using the range of applications
CSR has to offer, with the confidence
and trust of knowing CSR systems are
compliant with current building codes
and standards.
As part of CSR’s ongoing commitment
to the development and compliance of
our product solutions, some of CSR’s
testing and research laboratories
are also accredited with the National
Association of Testing Authorities
(NATA). CSR reached a significant
milestone in 2022 with Bradford
reaching 50 continuous years of
NATA accreditation.
Digital tools to assess
thermal performance
In 2023, CSR also launched the
Thermal Calculator which is a
simple-to-use calculator designed
on customer insight that allows
architects and contractors to
generate thermal performance
calculations for wall, roof and floor
systems for a range of building
classes. The system calculates
the thermal values that can meet
the requirements of the National
Construction Code (NCC2022) for a
specific building type, climate zone
and construction type.
It also provides flexibility to
experiment with different system
configurations with calculations that
will be compliant with the relevant
Australian Standards. Innovations
like System Selector and Thermal
Calculator are part of CSR’s digital
journey to lead the market in technical
expertise and digital tools for the
construction industry.
22
CSR LIMITED ANNUAL REPORT 2023 SUSTAINABILITY | CSR’S SUSTAINABILITY FOCUS AREAS
Building
communities
Building long-term, mutually beneficial
community relationships.
Supporting our communities
In 2023, CSR continued support for
projects including the construction of
Habitat for Humanity’s newest Australian
house. Habitat for Humanity is one of
the world’s largest not for profit housing
providers for low-income families.
The 9-bedroom house in Western
Sydney will be used for Emergency
accommodation for women and children
escaping domestic violence.
CSR, through Interior Systems, has
donated product to create a comfortable
and safe environment for women and
children in the most vulnerable of
conditions. The build will finish in mid-
2023 and house up to 80 women and
children annually.
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
– Student Mentor Program: CSR
commenced working with the
Australian Business and Community
Network (ABCN) in 2011 to provide
mentoring and coaching programs
for schools in high need areas
– 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 20 years
Supply chain sustainability
As part of its commitment to building
supply chain sustainability, CSR
developed a target to 2030 to have 5%
of our indirect procurement spend to be
spent with social enterprises (including
disability enterprises and indigenous
owned businesses) to align with this goal.
In the year to 30 June 2022, social spend
is up 10% with CSR now tracking at
76% of its social spend target. CSR has
also started tracking Diversity Equity
Inclusion credentials with $39 million
spent with over 90 suppliers with
diversity equity credentials in the year
to 30 June 2022.
CSR uses over 5,500 suppliers across
a range of procurement categories. We
have developed our overall procurement
capabilities across CSR while addressing
supply chain sustainability risks
including modern slavery with CSR’s
Modern Slavery statement lodged in
September 2022.
$71,500
donated to charity by CSR and its employees
in the 12 months to 31 March 2023
Clean-up Business Day 2023
As part of CSR’s commitment as a
signatory to the Australian Packaging
Covenant (APC), various CSR sites
across Australia participate in Business
Clean-Up Day each year. The clean up in
March 2023 was the tenth year CSR has
participated with volunteers cleaning our
sites and surrounding communities and
is a great way to promote a clean and
healthy work environment.
23
FIVE YEAR PERFORMANCE SUMMARY 1
Year ended 31 March ($ million) unless stated
Operating results
Trading revenue
Earnings before interest and tax (EBIT)
Building Products
Property
Aluminium
Segment total
FINANCIAL OVERVIEW
Financial Overview
Net profit after tax (before significant items) of $225 million, up 17% which reflects strong operational
performance and continued cost management
2023
2022
2021
2020
2019
2,613.3
2,311.6
2,122.4
2,212.5
2,322.8
Corporate and restructuring and provisions2
(23.4)
(23.4)
(24.0)
CSR EBIT
329.7
291.4
237.9
273.4
228.2
184.3
71.7
46.9
54.2
8.0
39.7
23.4
353.1
314.8
261.9
170.5
(1.5)
59.6
228.6
(11.8)
216.8
206.5
38.8
36.6
281.9
(16.9)
265.0
Statutory net profit after tax (after discontinued
operations)
218.5
270.6
146.1
125.3
78.0
Net profit after tax (before significant items)
225.0
192.6
160.4
134.8
181.7
Financial position
Total equity
Total assets
Net cash
Key data per share
1,176.6
949.4
1,157.8
2,231.1
2,447.0
2,176.8
131.6
177.7
250.8
1,125.5
2,404.5
94.8
1,231.1
1,991.1
50.0
Earnings before significant items (cents)
46.9
39.7
33.1
Earnings after significant items and discontinued
operations (cents)
Dividend ordinary (cents)
Dividend special (cents)
45.5
55.8
30.1
36.5
–
31.5
–
23.0
13.5
Payout ratio on ordinary dividends (%)
77.8
79.4
69.5
Key measures
EBIT margin (EBIT/trading revenue) (%)
12.6
12.6
11.2
Return on funds employed (ROFE) (%)3
28.9
27.3
21.1
Employees (number of people employed)
2,785
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
1 From continuing operations for 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.
24 CSR LIMITED ANNUAL REPORT 2023
OPERATING AND FINANCIAL REVIEW
Operating and Financial
Review
Group EBIT before significant items of $329.7 million, up 13% with improved earnings from Building Products and Property
Trading revenue of $2.6 billion for the year ended 31 March 2023 (YEM23), up 13% on the prior year.
Earnings before interest and tax (EBIT before significant items) of $329.7 million, up 13% included the following results:
Building Products - EBIT of $273.4 million, up 20%, reflecting good end market execution and disciplined price and cost management.
Return on funds employed increased to 31% from 27%.
Property - EBIT of $71.7 million, up from $46.9 million. Major transactions during the year included the sale of the site at Warner, QLD and
the next tranche at Horsley Park, NSW.
Aluminium - EBIT of $8.0 million, down from $39.7 million, with higher aluminium pricing offset by increased raw material costs including
coke and pitch which reached historic highs during the year.
Statutory net profit after tax of $218.5 million, down from $270.6 million. YEM23 includes a significant item relating to the recognition of $7.8
million in relation to carry forward tax losses (2022: $86.3 million).
Earnings per share (before significant items) of 46.9 cents, up 18%.
Dividends - Final dividend of 20.0 cents per share (fully franked) declared up from the previous final dividend of 18.0 cents per share (fully franked).
Full year dividend of 36.5 cents per share (fully franked) at the top end of CSR’s policy of 60-80% of net profit after tax before significant items.
A$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
2023
2,613.3
2022
2,311.6
273.4
71.7
8.0
(23.4)
329.7
(14.7)
(90.3)
0.3
225.0
(6.5)
218.5
228.2
46.9
39.7
(23.4)
291.4
(9.5)
(81.2)
(8.1)
192.6
78.0
270.6
change
13%
20%
53%
(80%)
–
13%
17%
(19%)
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 2023 (YEM23). All comparisons are to the year ended 31 March 2022
(YEM22) unless otherwise stated.
Net profit after tax (before significant items) of $225.0 million for the year ended 31 March 2023, up 17% following an increase in earnings from
Building Products and Property.
Statutory net profit after tax of $218.5 million includes significant items expense after tax of $6.5 million.
Tax expense of $90.3 million (before significant items) was up from $81.2 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 $113.8 million was down from $215.3 million, with increased working capital reflecting the higher trading
revenue.
Capital expenditure (excluding Property and acquisitions) was $84.5 million during the year. Of this total, $54.5 million was for stay-in-business
projects and $30.0 million was development related capital expenditure. Capital expenditure (excluding Property and acquisitions) was up from
$40.0 million in YEM22 which was impacted by COVID related delays. Property invested $47.4 million during the year as part of rehabilitation of
key sites.
Net cash of $131.6 million decreased from the net cash position of $177.7 million as of 31 March 2022 following payment of dividends and the
share buy back during the year. In addition, the operating cash flow reflected an increased level of working capital, reflecting higher revenue.
Product liability – As at 31 March 2023, the asbestos provision fell to $193.4 million from $213.3 million as at 31 March 2022. This provision
included a prudential margin of $36.6 million. CSR paid asbestos related claims of $25.3 million (including legal costs) compared to $22.9
million in the prior year.
25
OPERATING AND FINANCIAL REVIEW
BUILDING PRODUCTS PERFORMANCE
Construction market activity by segment
Australia Residential (12 months – 000s)
Detached1
Medium density1
High density1
Total Residential Commencements
Non-residential (A$B)2
Alterations and additions (A$B)2
NZ consents (12 months - 000s)3
2023
2022
change
124.9
35.4
34.3
194.6
50.2
10.9
50.7
149.5
36.4
43.2
229.1
48.6
11.5
47.3
(16%)
(3%)
(21%)
(15%)
3%
(5%)
7%
1 Source ABS data – (original basis two quarter lag – 12 months to September).
2 Source ABS, BIS Oxford Economic forecast (value of work done – 12 months to March).
3 Source Statistics New Zealand – (residential consents two quarter lag – 12 months to September).
The majority of CSR’s Building Products are utilised towards the end of the construction process which historically results in product sales
occurring on average two quarters after the start of a residential housing commencement. However, detached house build times remain
elevated given the continuation of strong demand and capacity levels within the building construction sector. As a result, CSR’s activity for
YEM23 is more closely aligned to detached residential completions (up 4% for detached housing for the year to December 2022).
Australian residential housing commencements on a two quarter lag basis of 124,900 were down 16% compared to the prior year. The medium
and high density market also declined during the period, down 3% and 21% respectively. Given long lead times and construction capacity
constraints, CSR has seen improved activity in the apartments sector.
The non-residential market was up 3% with 6% growth in the commercial sector offset by a modestly weaker social sector. The alterations and
additions market declined by 5% following a period of very strong activity. Trade retail was up 5% (in the year to February 2023) as it continues a
strong growth trend. The New Zealand market remained strong as the sector emerged from COVID lockdowns. Like Australia, realisation of
demand has been impacted by significant capacity constraints.
Earnings increased by 20% reflecting good end market execution
A$m unless stated1
Revenue
EBIT
Funds employed2
EBIT/revenue
Return on funds employed3
2023
1,833.0
273.4
938.2
14.9%
30.9%
2022
1,614.1
228.2
830.0
14.1%
27.3%
change
14%
20%
13%
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 $1,833.0 million, up 14%. All of the Building Products businesses increased revenue with good
execution into end markets and strong performances from Gyprock and Bradford as well as Hebel, which is continuing to increase market share
with its faster build times and large installer base.
Building Products earnings of $273.4 million were up 20% reflecting good end market execution, disciplined price and cost management.
EBIT margin of 14.9% was up from 14.1%. Return on funds employed of 31%, increased from 27%.
26 CSR LIMITED ANNUAL REPORT 2023
OPERATING AND FINANCIAL REVIEW
Building Products Business Performance
INTERIOR SYSTEMS
MASONRY & INSULATION
CONSTRUCTION SYSTEMS
40%
41%
19%
YEM23 Performance
YEM23 revenue of $738m, 14% above
YEM23 Performance
YEM23 revenue $753m, 9% above the
YEM23 Performance
YEM23 revenue $342m, 22% above the
the previous year
previous year
previous year
Represents 40% of total Building Products
Represents 41% of total Building Products
Represents 19% of total Building Products
revenue
revenue
revenue
Continued revenue and volume growth in
Gyprock reflecting strength of brand
position and good market execution
Margin improvement reflecting pricing
discipline to manage inflationary cost
pressures
EBIT growth reflects increased volumes,
continued operational improvement and
cost discipline across diversified market
position
Growth in Commercial Interiors EBIT
reflects pick up in commercial activity and
increased market share in decorative
acoustic systems
Strong revenue and earnings growth in
Bradford, capturing strong demand
environment as a domestic manufacturer
Solid performance in PGH and Monier, in
constrained trade labour market
Strong margin performance through
pricing discipline and cost management
– Bradford SKU rationalisation unlocking
capacity in higher margin products
Focus on pricing discipline and market
price execution as cost inflation was
driven by higher energy, raw material and
labour costs
Strong volume and revenue performance
reflects growth in Hebel and Cemintel
– Growing market share with faster build
times and large installer base
– Increasing share of non-detached
housing markets
Margin increase driven by volume growth
and cost discipline
Higher EBIT reflects market share gains
and improved factory performance
AFS volumes improved with increased
reach across different markets and
segments
YEM24 Priorities
Incremental manufacturing investment of
$23m at Gyprock Wetherill Park to
improve productivity and lower energy
consumption
– Targeted completion in second half of
YEM24
YEM24 Priorities
Bradford – capturing opportunities from
growing market, improving capacity and
increasing category participation across
end markets
– Growth in energy efficiency categories
following NCC2022 adoption
– Increased stucco capacity will improve
– 10% capacity expansion completed at
product quality and support new
product innovation
Continued planned investment in Gyprock
network across Australia
Consolidating leadership of Gyprock
through ongoing range optimisation and
improved customer experience
– EC08 Extreme launched in February
2023 targeting social/commercial
market
– Gyprock Trade Network’s ongoing
improvement of in-store experience
driving strong connection to customers
Leveraging market leadership in Gyprock
to support Interior Systems growth for
large commercial projects
Bradford Brendale with water
treatment project to reduce
consumption by 80% per annum
– Leveraging Project Tracking to grow
position in non-residential market
PGH – better positioned through the cycle,
focus on optimising profitability
– Enhanced flexibility and financial
position to manage changes in activity
across network (post Bricks JV and
consolidation of Horsley Park and
Darra sites)
– Oxley investment completed to improve
productivity and efficiency
YEM24 Priorities
Hebel strategy to diversify sector and
customer base gaining traction across all
markets
– Capacity to double volumes over
medium term to support demand
– Environmental and build time
attributes support adoption
– Leveraging supply chain capability from
local manufacturing base
– Further investment to enhance
capacity and capability across panel
profiles and surface finishes
Cemintel building share across all
markets, increased adoption amongst
architects, key contractors and developers
– Optimising Cemintel operational
capability and expand capacity
AFS to continue to capture opportunity in
multi-residential markets
27
OPERATING AND FINANCIAL REVIEW
Building Products Outlook
CSR has made a strong start to the year with the pipeline of detached housing projects under construction at historically high levels. CSR’s focused
execution into end markets and pricing discipline to manage inflationary cost pressures, continues to support revenues. CSR is closely monitoring the
factors influencing market dynamics and will manage the business accordingly.
Activity in the apartment market is improving as more projects have commenced this year, while non-residential activity remains strong, supported by a
large pipeline of approvals.
The business is well diversified across brands, market segments and the build process with a product portfolio that is adaptable to end market
demand.
Incremental investments in manufacturing performance, plant consolidation, supply chain and customer solutions have improved manufacturing
productivity, the variability of the cost base and responsiveness to customer demand. CSR’s strategy is focused on providing a platform for growth and
resilience to deliver improved performance through the cycle.
PROPERTY
Good progress on key development projects
A$m unless stated1
EBIT
Funds employed2
Return on funds employed3
2023
71.7
153.1
44.9%
2022
46.9
166.1
30.7%
change
53%
(8%)
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 $71.7 million compared to
$46.9 million in the previous year. The result includes the completion of several transactions during the year including Stage 2.2b at Horsley
Park, NSW, and the sale of the site at Warner, QLD.
Development of major projects
Horsley Park, NSW
52-hectare site of a former PGH Brick factory redeveloped into an industrial park. Rehabilitation of the final stage of the project is expected to
continue over the next two years.
Completed and contracted proceeds of $408 million.
Badgerys Creek, NSW
196-hectare site strategically located directly adjacent to the Western Sydney International Airport.
Accelerating site rehabilitation and working with statutory authorities on planning infrastructure delivery.
Schofields, NSW
91-hectare site is proposed to be rezoned residential, producing circa 1,525 lots.
Advancing road design with Transport NSW and commenced early planning with Local Council.
Property Outlook
In Property, YEM24 will include $44 million in contracted earnings for the next tranche at Horsley Park, NSW with an additional $58 million in
contracted earnings in YEM25. Work continues on major projects at Darra, QLD, Schofields, NSW and Badgerys Creek, NSW.
28 CSR LIMITED ANNUAL REPORT 2023
OPERATING AND FINANCIAL REVIEW
ALUMINIUM
EBIT higher with increased A$ aluminium price
A$m unless stated1
Sales (tonnes)
A$ realised price2
Revenue
EBIT
Funds employed3
EBIT/revenue
Return on funds employed4
2023
212,649
3,670
780.3
8.0
163.3
1.0%
5.6%
2022
211,374
3,300
697.5
39.7
121.3
5.7%
30.9%
change
1%
11%
12%
(80%)
35%
1 Before significant items.
2 Realised price in A$ per tonne (including hedging, premiums, value added product and spot sales).
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$3,670 was up 11% following an increase in the A$
aluminium price.
Gove Aluminium Finance (GAF – 70% CSR) sales volumes of 212,649 tonnes were up 1% from the previous year. Trading revenue of $780.3
million was up 12% due to higher aluminium prices.
The Australian dollar averaged 69 US cents compared to 74 US cents in the prior year, while the average MJP ingot premium for the year was
US$121 per tonne, compared to US$179 per tonne in the prior year (Platts Metals Week – Main Japanese Port ingot premium).
EBIT of $8.0 million was down from $39.7 million with higher aluminium pricing offset by increased raw material costs including coke and pitch,
which reached historic highs during the year.
GAF Aluminium Hedge Book position extended to YEM27
Given Tomago’s high energy cost (which is not correlated to LME aluminium prices), CSR’s approach is to take advantage of profitable pricing by
hedging when possible. A significant hedge book is in place through to March 2027.
As of 31 March 2023
Average price A$ per tonne (excludes premiums)
% of net aluminium exposure hedged
YEM23
A$3,061
n/a
YEM24
A$3,089
84%
YEM25
A$3,198
71%
YEM26
A$3,448
68%
YEM27
A$3,912
43%
Aluminium Outlook
While cost volatility and unpredictability in energy and raw materials makes forecasting challenging, at this early stage in the year, the best
estimate for YEM24 is a loss in the range of -$5 million to -$15 million (excluding net RERT1 income, which was $13 million in YEM23).
Aluminium is expected to return to profit in YEM25 and increasing in the following years due to higher hedged pricing, based on current cost
assumptions.
1 Reliability and Energy Reserve Trader payment for power disruption to support national energy market stability.
29
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 June 2018,
non-executive director since December
2017
Other current 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 (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
Executive Director and Managing
Director since September 2019
Other current 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:
None
CHRISTINA (CHRISTY) BOYCE
BEcon, MBA (Kellogg), GAICD
Non-executive director since
March 2023
Other current CSR responsibilities: Member of the Remuneration & Human Resources
Committee.
Experience and expertise: Christy was formerly a Director (Senior Partner) of Port Jackson
Partners and a Partner at McKinsey & Co, working in the firm’s Sydney, New York and Chicago
offices. Christy has over 25 years of strategy advisory experience in both Australia and the
United States. She has led strategic transformation programs with a range of multinational and
Australian-based corporates, working with senior leadership to redefine their business models,
strengthen their value propositions and rejuvenate their sales and marketing.
Other directorships/offices held:
•
•
•
Chair of SCEGGS Darlinghurst Trust (Non-executive director since 2018 and Chair April
2023 to current)
Non-Executive Director of Vera Living (2022 to current)
Previously a non-executive director of Monash IVF Group (2014 to 2020)
30 CSR LIMITED ANNUAL REPORT 2023
BOARD OF DIRECTORS
NIGEL GARRARD
BEcon, CA, MAICD
Non-executive director since
December 2020
Other current CSR responsibilities: Chair of the Safety & Sustainability Committee and
member of the Risk & Audit 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 Detmold Group advisory board (2020 to current)
MATTHEW QUINN
BSc (HONS), ACA, ARCS
Non-executive director since
August 2013
Other CSR current 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 2013. Matthew has an extensive background in commercial, retail, industrial and residential
property investment, development and environmental land rehabilitation.
ADAM TINDALL
BEng (Hons), Cert App Fin, FAICD
Non-executive director since
January 2023
PENNY WINN
BCom, MBA, GAICD
Non-executive director since
November 2015
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)
Other CSR current responsibilities: Member of the Risk & Audit Committee and the
Remuneration & Human Resources Committee.
Experience and expertise: Adam was formerly chief executive officer AMP Capital from 2015 to
2020 leading a global team overseeing funds across a range of investment asset classes.
Adam's prior roles at AMP capital included Director and Chief Investment Officer for Property,
managing a $19 billion portfolio of real estate and development investments. Prior to 2009,
Adam held senior leadership roles at Macquarie Capital and Lendlease. Adam has 35 years of
industry experience in investment management, real estate and infrastructure.
Other directorships/offices held:
•
•
Non-executive director of Stockland Corporation Limited (2021 to current)
Non-executive director of Bennelong Funds Management Ltd and Bennelong Funds
Management Group Pty Ltd (2021 to current)
Other CSR current 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)
Non-executive director of Z Energy Limited, a wholly owned NZ subsidiary of Ampol Limited
(2022 to current)
Board member of the ANU Foundation (2020 to current)
Board member of the Amphora Group PLC (2021 to current)
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)
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 10 May 2023
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 2022 through to 31
March 2023, 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. A new constitution of the company
was approved by shareholders at the 2022 annual general meeting.
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 and
is committed to bringing together the best possible combination of
individuals so it can serve shareholders and customers now and into
the future.
The company aims to have a board which, as a whole, has the range
of skills, knowledge, background and experience to govern CSR, made
up of individuals of high integrity, with sound commercial judgement,
inquiring minds and the ability to work cohesively with other directors.
When considering director candidates, CSR seeks a combination of
former chief executives and individuals experienced in manufacturing,
finance, the law and, ideally, the industries in which CSR participates
as well as the areas in which it hopes to grow. CSR undertakes
background checks on prospective candidates, covering the
candidate’s character, experience, education, criminal record and
bankruptcy history.
During YEM23 the board underwent a renewal process with the
appointment of Christina (Christy) Boyce (15 March 2023) and Adam
Tindall (16 January 2023) and the retirement of Christine Holman (16
November 2022).
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 2023
CORPORATE GOVERNANCE STATEMENT AND RISK
Directors’ independence
The board believe that director independence contributes to good governance and delivers superior outcomes for all our stakeholders by
encouraging the constructive challenging of management. 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.
At all times throughout YEM23, 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 current material business or other
relationships that could compromise his or her autonomy as a director.
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. Christina Boyce, prior to her appointment to the board, had been engaged periodically by CSR as a consultant
providing strategic transformation advice. This consultancy engagement ceased prior to Christina’s appointment as a non-executive director. In
accordance with the director’s independence criteria set out in the board charter and the factors set out in Box 2.3 of the ASX CGC Principles,
the board assessed the consultancy services previously provided by Christina to not be material and accordingly considers that Christina is an
independent director. The board is satisfied that the advice previously provided by Christina does not interfere with the independent exercise of
her judgement as a non-executive director of the company.
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)
Christina Boyce
Nigel Garrard
Matthew Quinn
Adam Tindall
Penny Winn
Date appointed
December 2017
September 2019
March 2023
December 2020
August 2013
January 2023
November 2015
Date last re-elected
2021 Annual Meeting
2020 Annual Meeting
Not previously elected
2021 Annual Meeting
2022 Annual Meeting
Not previously elected
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. The
company secretary acts as secretary to the board and all the board
committees. 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 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 and involves a site tour.
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 six non-executive directors and one
executive director. Information about directors, including their skills,
experience, expertise and their period in office is set out on pages 30
to 31 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 YEM23, the following changes to the composition of the board took
place:
Christine Holman retired from the board on 16 November 2022;
Adam Tindall was appointed to the board on 16 January 2023;
and
Christina Boyce was appointed to the board on 15 March 2023.
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, capabilities and experience of
its members, as well as their independence, under review and
acknowledges that these areas continually evolve. 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.
34 CSR LIMITED ANNUAL REPORT 2023
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 demonstrated
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 and
Transformation
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 anticipate and 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, with optimal digital enablement and information security.
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, the oversight of key processes,
and the application of technology, including data analytics, to substantially enhance
operations.
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
Expertise and experience in managing and driving environmental management and
social responsibility initiatives, including community concerns, carbon emissions
reduction, climate change risks and the governance of these impacts, as well as human
rights and responsible sourcing to create long-term sustainable value.
Digitisation and
innovation
Proven success creating efficient and effective business processes, products and ideas,
leading to new growth platforms and competitive advantage including, experience
leveraging digital platforms to unlock long-term growth opportunities and improve
customer experience.
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 and retain talent, oversee
people management, monitor culture and improve diversity and inclusion.
Marketing and
Customers
Senior executive experience in consumer and customer marketing and customer service
delivery.
Directors with skill/experience
6
7
6
7
6
7
4
6
5
5
6
6
5
35
The specific responsibilities allocated to each committee are set out
below and on the following page.
Risk & Audit Committee
The Risk & Audit 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 members of the Risk & Audit Committee during the reporting
period were:
Table 3: Risk & Audit Committee membership
Name
Membership status
Penny Winn (chair)
Member and chair for the entire period
Nigel Garrard
Member for the entire period
Adam Tindall
Member from 16 January 2023
Christine Holman
Member until 16 November 2022
John Gillam
Member 5 December 2022 to
15 January 2023
Each of these directors is deemed to be independent and their
qualifications and experience are set out on pages 30 and 31 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 the
managing director, chief financial officer and relevant senior
managers (also by invitation). The internal audit firm partner also
attends all Risk & Audit Committee meetings by invitation.
The Risk & Audit Committee Charter sets out the committee’s specific
responsibilities, and include:
reviewing the scope of the annual audit plans of the external
auditor and internal auditor and oversight of the work performed
by the auditors throughout the year;
considering and recommending to the board significant accounting
policies and material estimates and judgements in financial
reports;
reviewing and monitoring internal controls and risk management
across the group, including the risk management framework and
risk appetite statements;
reviewing and recommending to the board the adoption of the
company’s full-year and half-year financial statements; and
reviewing the performance and effectiveness of the internal and
external auditors.
The committee is a direct link for providing the views of internal and
external auditors to the board, when necessary, independently of
management influence. Time is allocated for detailed questioning of
the material presented and for separate sessions with each of the
external auditor, internal auditor, executive general manager risk 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 is
identified the relevant director, or the board, may determine that they
should not receive documents related to or take part in discussions or
decisions in respect of that 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 YEM23, an externally facilitated review of the board and each of its
committees was undertaken. This review included feedback from all
directors and senior management who interact frequently with the
board and its committees. Outside of scheduled reviews, the
directors and executive management continue to provide regular
feedback to the chair in relation to the processes and operation of the
board and its committees.
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 2023
CORPORATE GOVERNANCE STATEMENT AND RISK
Board Committees (continued)
Remuneration & Human Resources Committee
The Remuneration & Human Resources Committee considers
independent advice on policies and practices to attract, motivate,
reward and retain strong performers.
The members of the Remuneration & Human Resources Committee
during the reporting period were:
Table 4: Remuneration & Human Resources Committee membership
Name
Membership status
Matthew Quinn (chair)
Member and chair for the entire period
John Gillam
Penny Winn
Member for the entire period
Member for the entire period
Adam Tindall
Member from 15 February 2023
Christy Boyce
Member from 15 March 2023
Nigel Garrard
Member until 5 December 2022
Each of these directors is deemed to be independent and their
qualifications and experience are set out on pages 30 and 31 of the
annual report, available on CSR’s website on the Annual Reports
page.
The managing director and other members of management attend
meetings of the Remuneration & Human Resources Committee by
invitation.
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.
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 oversees and reports
to the board on the management of the company’s WHS&E
responsibilities and on the company’s sustainability objectives and
commitments.
The members of the Safety & Sustainability Committee during the
reporting period were:
Table 5: Safety & Sustainability Committee membership
Name
Membership status
Nigel Garrard (chair) Member and chair from 5 December 2022
John Gillam
Member for the entire period, and chair
17 November 2022 to 4 December 2022
Matthew Quinn
Member for the entire period
Adam Tindall
Christine Holman
Member 16 January 2023 to
15 February 2023
Member and chair until
16 November 2022
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;
monitoring the adequacy and effectiveness of CSR’s sustainability
framework and mechanisms to track progress to sustainability
objectives and targets; and
monitoring potential liabilities, changes in legislation, community
expectations, research findings and technological changes.
The committee conducted each meeting during YEM23 at a CSR site,
with meetings including a presentation from local management and a
site tour.
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 YEM23
Details of director attendance at board and board committee
meetings held during the year are provided on page 47 of the
Directors’ Report.
37
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. CSR is committed to conducting
business honestly, with integrity, and in accordance with our
standards of expected behaviour. The code sets out 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, also referred to as
behaviours, 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 concerns they may
have regarding conduct in a number of ways, including via a
confidential telephone service. The company's Incident Reporting
Policy provides that an employee will not be subject to retaliation by
CSR for reporting in good faith a possible violation of the code of
business conduct and ethics. The board is advised of all material
breaches of the code and incidents reported under the policy via the
Risk & Audit Committee.
To ensure that CSR employees and stakeholders are made (and kept)
aware of incident reporting methods and policies, a Speak Up @ CSR
program has been developed and is accessible to all employees and
external stakeholders on CSR’s website.
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 YEM23, 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
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 YEM23, steering committees continued to operate 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 candidates’ character, experience, education, criminal
record and bankruptcy history.
Senior executives’ responsibilities and terms of employment, including
termination entitlements, are set out in a formal executive service
agreement. A summary of the main elements and terms of the
managing director’s and chief financial officer’s service agreements
are set out in the remuneration report.
Induction of senior executives
New executives undertake a structured induction program when they
join the company. This includes comprehensive briefings and
information on the company’s businesses, and its policies and
procedures. Additionally, the program includes site visits and
meetings with people in key internal and external roles in order to
build the relationships necessary to meet the requirements of their
roles.
As discussed further below, and in the remuneration report, key
performance indicators are agreed with each executive to ensure
goals and performance measures are fully and accurately understood
and disclosed.
Performance evaluation of senior executives
CSR’s performance management framework requires that a balanced
scorecard of annual key performance indicators (including financial
and non-financial measures) is set for each senior executive. Every
half year, each senior executive discusses their performance with
their manager.
At the end of the year, as part of a formal review process, each senior
executive’s performance is reviewed against the performance
indicators. Also, each individual’s performance and behaviour are
internally and externally benchmarked and assessed. CSR conducted
evaluations of its senior executives in accordance with this process in
October 2022, as well as in March 2023.
Senior leaders are accountable for driving change to deliver on CSR’s
purpose and strategy, with CSR’s reward strategy kept under review 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.
38 CSR LIMITED ANNUAL REPORT 2023
CORPORATE GOVERNANCE STATEMENT AND RISK
Culture
CSR workplace profile
Throughout YEM23, CSR has continued to promote and develop the
culture and behaviors required to align with our purpose – Building
Solutions for a Better Future. CSR acknowledges that culture plays a
key role in driving company performance. There has been regular
engagement with employees during YEM23 to obtain insights and
feedback relating to culture and engagement, with continued progress
against key metrics.
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
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 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
provide better solutions for our customers.
As part of this commitment, initiatives are underway to increase the
number of women at all levels of the organisation, particularly in
operations and line management positions. This will be achieved
through ongoing improvement of our recruitment, retention and
development frameworks to attract and promote diverse talent.
We have maintained regular reporting on attraction, selection and
retention of female employees by tracking metrics on:
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 YEM23, the percentage of women in the CSR workforce
was 21%, up 1% on YEM22. During YEM23, 28% of new hires were
women, an increase of 1% from YEM22.
Key changes to CSR’s workforce profile during YEM23 include:
Senior management - The total number of women in senior
management roles, CEO-2, has increased from the prior
year. This group is an important source of succession for
business leadership positions;
Executives – In December 2022, the number of executives
increased by one, with the appointment of the Executive
General Manager of Safety, Sustainability and Risk to the
executive leadership team; and
Board of Directors - In March 2023, the number of directors
increased from six to seven as a temporary measure to
facilitate board transition.
In YEM23, the proportion of CSR’s workforce currently represented by
women in leadership roles is set out below:
Figure 2: Women in leadership
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.
During YEM23 CSR continued to participate in the Champions of
Change Coalition for best practice to improve gender diversity and
inclusion. A number of ‘Listen and Learn’ sessions were held across
the business during the year to seek input from women across CSR on
the gender diversity and inclusion initiatives to be set for YEM24.
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 YEM23 and the initiatives for YEM24, as approved by the
Remuneration & Human Resources Committee, are set out below:
Table 6: Diversity measurable objectives
Measurable objective
YEM23 achievements
Overview of YEM24 initiatives
Leadership
and culture
Policy and Governance
Recruitment
and retention
REMUNERATION
Launched a Belonging @ CSR framework to celebrate and
Strengthen and simplify our behaviors
acknowledge diversity across gender, ethnicity, culture, and
religion
Promoted diversity and inclusion through recognition and
celebration of International Women’s Day. A cross section of
leaders participated in a panel on the topic of ‘Creating
Equity’
Launched a targeted leader-specific culture and engagement
survey to better understand and support the leaders driving
culture change in our business
Implemented a quarterly culture and engagement survey
action check point at an executive leadership/business unit
level
Launched a new Learning Management System, Elev8, as our
single point of learning for our teams
Continued to provide access to on-the-job training and
upskilling through strategic projects
Provided a $1,000 share grant to our team to drive a sense of
ownership in all levels of the business
Continued membership and participation in the Champions of
Change Coalition
$100 gift cards issued to all members of the CSR team as a
thank-you for their continued support in delivering for our
customers
Extended and relaunched our team benefits offering and
made it more accessible and meaningful for our front-line
team
Launched revised Family Care Policies covering domestic
violence, parental leave and extended compassionate leave to
offer more support for the CSR team during these moments
that matter
Reviewed and addressed gender pay parity for females across
all salaried roles
Extended our wellbeing offering through the launch of a
mobile app with access to health and wellbeing resources,
EAP support and team member rewards
Engaged with all labour hire agencies servicing our business
to set expectations relating to diversity and inclusion
Updates made to the Supplier Code of Conduct that sets
expectations relating to diversity and inclusion
and further embed through the
organisation
Continue to measure culture and
engagement ensuring that all line
managers have an action plan to
address areas of focus
Monitor culture and engagement results
based on gender participation and
engagement, taking action as required
Recruit and promote leaders who role
model inclusiveness and build diversity
Continued monitoring of gender pay
parity and action to address where
required
Further review of CSR policies to ensure
they are inclusive and adapt to meet any
future legislative changes
Engaged a strategic sourcing partner to further leverage
opportunities around inclusive hiring practices
Continued to appoint female talent to strategic on the job
development opportunities
Improved recruitment and selection processes to make
operations roles more accessible for females e.g., on the job
training made available to close skill gaps
Built future female talent pipelines with tertiary institutions for
women in engineering and technology roles
Identify opportunities in operational
environments to ensure that amenities,
team culture and behaviours are
welcoming for diverse new hires
Roll out sexual harassment training for
senior leaders and create a whole of
organisation plan
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 64 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 49 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 YEM23
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 2023
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.
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.
There are several layers that assist the board in ensuring the
appropriate focus is placed on the risk management framework:
Risk management accountability
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;
Remuneration & Human Resources Committee – reviews and
reports to the board on the company’s organisational capability to
deliver on the strategy and create value for shareholders;
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
addressing the risks and opportunities of climate change and the
company’s involvement in the communities in which it operates;
Executive leadership team – manages and reports to the board on
business and financial risks and overall compliance; and
Steering Committees – established across a number of key areas,
including sustainability, customer solutions, transformation and
logistics to provide ongoing governance and monitoring.
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. CSR is committed to improving risk management to protect and
enhance shareholder value, with a comprehensive review of CSR’s
risk management processes undertaken in YEM23. The risk
management framework requires current and emerging risks across
the businesses to be identified, evaluated, monitored and controlled.
Risks are classified as either strategic/commercial, operational,
financial or compliance/conduct risks. The framework also includes
evaluation of mitigation strategies.
CSR’s Risk Appetite Statements, approved by the board, are core to
the Risk Management Policy and defines (within practical boundaries)
the amount of risk the organisation is willing to accept in pursuing its
strategic objectives. By expressly articulating and documenting its
Risk Appetite Statements, CSR aims to ensure that:
risks can be measured, managed and monitored;
risk appetites can be consistently articulated and understood by all
relevant stakeholders; and
day-to-day operations are undertaken in alignment with CSR’s
tolerance for risk.
The board, through the Risk & Audit Committee, receives
recommendations in relation to the risk profile of CSR, breaches of
the policy framework and external developments which may impact on
the effectiveness of the risk management framework. It also approves
significant changes to the risk management framework, risk appetite
statements and related policies.
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 2022.
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 YEM23
was operating effectively; and
the systems relating to financial reporting were operating
effectively in all material respects.
In YEM23 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, enabling management to verify that the report is
balanced and materially accurate and provides stakeholders with
appropriate information. 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
Economic, environmental and social sustainability risks
CSR’s risk management framework is intended to provide the basis for a systematic approach to the identification and management of risks.
Following a comprehensive review during YEM23, the matters below reflect CSR’s material economic, environmental and social sustainability risks.
Table 7: Material economic, environmental and social sustainability risks
Key areas of materiality Risks
Monitor and manage risk
Aluminium, currency
and debt markets
Issues associated with CSR’s activities in
aluminium.
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.
Climate change
An inability to accurately understand and
For 2030, CSR has set 10-year sustainability targets which
effectively respond to climate change may
result in reduced revenues, increased costs
or business supply disruption.
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, minimising
water use and waste, social procurement, closed loop
packaging and preserving biodiversity.
Initiatives have been developed to deliver on the 2030 targets
with detailed reporting and monitoring reviewed regularly by
management and the Safety & Sustainability Committee.
Development of an overarching Sustainability Framework,
aligned to the Company’s strategy, ensuring all sustainability
actions and targets are linked across all ESG topics.
Transition risk assessment scenarios have been completed for
CSR’s five largest businesses. This analysis focused on
transition risks, complementing earlier work undertaken on
the physical risks impacting sites and supply chain risks, with
this work to be brought together across the CSR group.
Sustainability Steering Committee formed to provide focused
oversight, with external advisors engaged as necessary to
provide specialist sustainability advice.
Energy and Security of
supply
Financial and Capital
management
Information and Cyber
security
Legacy Product and
site obligations
CSR’s manufacturing operations use
Where possible, CSR enters into long-term contracts to provide
significant amounts of energy including
electricity and gas.
Incorrectly anticipating or managing energy
fluctuations will have a negative impact on
earnings and shareholder value.
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.
An inability to effectively and efficiently
Well established financial planning processes set out key
manage financial performance and capital.
requirements relating to operational and capital investments.
Bi-weekly review of trading, credit and key financial exposures.
Monthly Finance Committee meeting, covering Treasury and
related exposures.
Periodic review of secured debt facilities to ensure appropriate
size and tenure.
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.
External threats to CSR network availability,
performance and data security risks as a
result of 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.
System redundancy implemented where appropriate.
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.
Rehabilitation risk following site closures
when surplus to requirements.
CSR meets all valid asbestos claims 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.
Dedicated resources allocated to manage ongoing obligations,
including biodiversity management, site rehabilitation and
remediation as sites become surplus to requirements.
42 CSR LIMITED ANNUAL REPORT 2023
CORPORATE GOVERNANCE STATEMENT AND RISK
Economic, environmental and social sustainability risks (continued)
Table 7: Material economic, environmental and social sustainability risks (continued)
Key areas of materiality
Risks
Monitor and manage risk
Market structure and
volatility
Organisational
capability
Approximately 70% of CSR’s total revenue
is generated from products and services
supplied into the construction sector of
Australia and New Zealand and 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.
That CSR does not develop, maintain or
have access to the people required to
delivery on strategy.
Product quality
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.
Defective or non-compliant raw materials,
products or systems may result in
significant reputation damage, financial
loss, regulatory impacts and/or injury,
harm or illness.
CSR operates a number of factories
across Australia and New Zealand and
employs over 2,500 employees.
CSR‘s activities can impact the
community and environment in which it
operates.
Failure to comply with a legal or
governance requirement, or a breach of
CSR’s social licence to operate.
Reputation
Reviews of market activity are factored into CSR’s regular
reporting, including weekly Executive meetings, monthly
reporting, quarterly forecasting and annual budget and
planning cycles, which in turn drive capacity and capital
planning.
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 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.
Established organisation design and workforce planning
processes, including monthly resourcing reviews.
Flexible recruitment team resourcing to meet demand.
Comprehensive centrally managed development planning and
talent review processes.
Training resources and plans to meet skill requirements,
aligned to the strategy.
Enhanced employee communications program.
Periodic review of remuneration and benefits to remain
competitive.
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 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’s code of business conduct and ethics sets out the
behaviours expected of all employees, suppliers and other
contractors. Compliance with the code is measured annually.
There is a dedicated, external confidential hotline available to
employees and other stakeholders for reporting misconduct.
Operations product compliance project group established with
oversight from the Customer Solutions Steering Committee.
Central technical team established to maintain product
governance.
CSR has set targets out to 2030, to increase the quantity of
products purchased from social enterprises (including
indigenous and disability owned businesses).
Strategy and execution
Inability to identify and execute on
opportunities to pursue strategic and
transformation objectives.
Dedicated Steering Committees formed, comprising the
Executive Leadership Team and subject matter experts to
regularly monitor progress.
Workplace health
and safety (WHSE)
Risk of serious harm to an employee,
The Safety & Sustainability Committee regularly reviews
contractor, customer or to the
environment.
initiatives targeting improved safety performance across CSR.
An established WHSE risk management framework to support
CSR has a stated long-term belief that all
CSR’s WHSE commitments,
injuries, occupational illnesses and
environmental incidents can be
prevented.
Dedicated and experienced CSR WHSE personnel embedded
within each business unit.
Regular auditing to test effectiveness of key controls.
Note: Material Risks are listed alphabetically.
43
CORPORATE GOVERNANCE STATEMENT AND RISK
Role of the external auditor
ENGAGEMENT WITH STAKEHOLDERS
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.
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:
The external auditor attends the company’s annual general meeting
so shareholders are given the opportunity to ask questions relevant
to:
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.
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 internal audit service provider supports management efforts 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 identified key risks. The Risk
& Audit Committee approves the internal audit plan which is reviewed
throughout the year to ensure it remains appropriate. Internal audit
activity and outcomes are reported to the Risk & Audit Committee at
each meeting.
44 CSR LIMITED ANNUAL REPORT 2023
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 embrace the benefits of electronic
communication and 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.
An email alert system is available from the CSR website enabling
shareholders and stakeholders to be advised when announcements
are released to the ASX.
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 to all suppliers, including all
organisations and sub-contractors providing goods and services to
CSR, based in Australia, New Zealand and overseas.
During YEM23, 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
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 2023. The information appearing on
pages 46 to 68 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 2023 is set out on the inside front cover to page 29 and
pages 69 to 109 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 2023.
Events after balance sheet date
Dividends
On 10 May 2023 the board resolved to pay a final dividend of 20.0
cents per share, fully franked at the 30% corporate tax rate. The final
dividend for the financial year ended 31 March 2023 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 18.0 cents per ordinary share (100%
franked at the 30% corporate tax rate), with respect to the financial
year ended 31 March 2022, was paid on 1 July 2022; and
an interim ordinary dividend of 16.5 cents per ordinary share
(100% franked at the 30% corporate tax rate) was paid on 9
December 2022 (as set out in note 19 to the financial statements
on page 90).
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 10 of CSR’s constitution, CSR indemnifies every person
who is or has been a director or 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 10 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 10 of CSR’s
constitution or any agreement.
During the year, CSR paid premiums in respect of insurance contracts
for the year ended 31 March 2023 and, since the end of the year,
CSR has paid, or will agree to pay, premiums in respect of such
contracts for the year ended 31 March 2024. 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’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 any political events (2022: $nil) and as such
disclosure to the Australian Electoral Commission was not required.
46 CSR LIMITED ANNUAL REPORT 2023
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 2023, an officer of the CSR group. No auditor who
played a significant role in the CSR group audit for the year ended 31
March 2023 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 48.
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 108. 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 49 to 68 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 16 November 2022 Ms Christine Holman retired from the board.
On 16 January 2023 Mr Adam Tindall was appointed to the board,
and on 15 March 2023 Ms Christina Boyce was appointed to the
board. There were no other changes to the board in the year ended 31
March 2023.
The names of directors who held office at 10 May 2023, 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 30 and 31 and forms part of the directors’ report.
The qualifications and experience of the company secretary at 10 May
2023 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 2018. In 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 2023, 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 67 and 68. 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 2023
CSR Board
Risk & Audit
Committee
Safety & Sustainability
Committee
Remuneration &
Human Resources Committee
John Gillam
Christina Boyce3
Nigel Garrard
Christine Holman4
Matthew Quinn
Adam Tindall5
Penny Winn
Julie Coates
Held1
9
1
9
6
9
2
9
9
Attended2
9
1
9
6
9
2
9
9
Held1
-
-
4
3
-
1
4
-
Attended2
3*
1*
4
3
2*
1
4
4*
Held1
4
-
1
2
4
-
-
-
Attended2
4
-
1
2
4
1*
2*
4*
Held1
4
1
3
-
4
1
4
-
Attended2
4
1
4*
3*
4
1
4
4*
1 Number of meetings held while a member.
2 Number of meetings attended. Board committee meetings are open to all directors to attend. Where a director attended a meeting of a committee of which they were not
an appointed member, or are no longer an appointed member, this is indicated with an asterisk.
3 Director appointed 15 March 2023.
4 Director retired 16 November 2022.
5 Director appointed 16 January 2023.
John Gillam
Chair of the board
10 May 2023
Julie Coates
Managing Director and CEO
10 May 2023
47
AUDITOR’S INDEPENDENCE DECLARATION
The Directors
CSR Limited
Triniti 3
39 Delhi Road
North Ryde NSW 2113
10 May 2023
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 2023, 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.
48 CSR LIMITED ANNUAL REPORT 2023
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 2023 (YEM23).
The CSR board plays an active role in the implementation of the remuneration framework to ensure our senior executives and employees are
rewarded in a way that is fair, reasonable and motivates them to deliver strong performance. The key principle of our remuneration strategy is
alignment of executive reward 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.
YEM23 performance
CSR has performed well over the last year and continued to progress with strategic initiatives 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 record EBIT and the Property segment
delivered their highest earnings over the last 15 years. Ordinary dividends of 36.5 cents per share declared to shareholders for YEM23 are the
highest since the divestment of the Sugar business in 2011.
Employee Share Grant
CSR share ownership is a great way for our employees to share in the success of our collective efforts in delivering for our shareholders and
customers, and further strengthen our purpose of building solutions for a better future. We were pleased to offer all eligible employees across the
business the chance to participate in our 2022 Employee Share Grant. Eligible employees received a grant of $1,000 worth of CSR shares
purchased on their behalf, resulting in 98% of employees owning CSR shares.
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 YEM23 EBIT exceeded the financial target, which accounts for 60% of total STI outcomes.
The board also reviewed significant items and, to ensure alignment between the actual earnings and the targets set, reduced the EBIT for the
purpose of STI outcomes to incorporate the transformation implementation costs. There were no other adjustments required for the financial
component of STI.
The STI payout reflects performance between target and stretch and the management team and employees have been appropriately rewarded for
their efforts and results.
In summary
YEM23 was a very good year for CSR, both in terms of financial performance and continued progress with strategic initiatives. 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
49
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 2023 (YEM23) and the remuneration framework. The
report also details proposed changes for the financial year ended 31 March 2024 (YEM24).
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 YEM23 are detailed in the table below. KMP are as defined by the Accounting Standard AASB 124 Related Party Disclosures (AASB
124).
The Managing Director and CEO and the Chief Financial Officer and Executive General Manager, Property and Aluminium are the only two senior
executives who qualify as executive KMP consistent with prior years.
Table 1: Key management personnel
Name
Position
Term as KMP
Non-executive Directors (NEDs)
John Gillam
Christina Boyce
Nigel Garrard
Christine Holman
Matthew Quinn
Adam Tindall
Penny Winn
Executive KMP
Julie Coates
David Fallu
Director and Chair of the board
Director
Director
Director
Director
Director
Director
Full year
From 15 March 2023
Full year
To 16 November 2022
Full year
From 16 January 2023
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
Amy Bentley
Paul Dalton
Catherine Flynn
Heath Hopwood
Chris Karakatsanis
Andrew Mackenzie
Gary May
Andrew Rottinger
Cameron Webb
Mark White
Position
Executive General Manager, Logistics
Executive General Manager, Interior Systems
Executive General Manager, Human Resources
Executive General Manager, Masonry & Insulation
Executive General Manager, Safety, Sustainability & Risk
General Manager, Property
Executive General Manager, Customer Solutions
Executive General Manager, Construction Systems
Term as senior executive
Full year
Full year
Full year
Full year
From 2 December 2022
Full year
Full year
Full year
Executive General Manager, Transformation, Technology & Digital Full year
General Manager, Aluminium
Full year
50 CSR LIMITED ANNUAL REPORT 2023
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 YEM23. The board believes presenting information in this way provides shareholders with clarity
and transparency of executive KMP remuneration, 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
YEM23 expressed
as the full value,
inclusive
of the 40% STI
deferral into CSR
shares.
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 2023.
Leave
accruals
Not
included
Statutory
remuneration
disclosures
As above
STI award for
YEM23, exclusive
of STI deferral, plus
amortisation of STI
deferrals into CSR
shares 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 YEM23 relates to YEM21 to
YEM23 LTI grants.
Included
Other benefits
Includes YEM23
Employee Share Grant,
and YEM22 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
$
Fixed
remuneration
2023
Julie Coates
David Fallu
Total
2022
Julie Coates
David Fallu
Total
Short-term
Incentive1
942,151
430,207
1,372,358
1,175,875
738,750
1,914,625
1,150,000
1,094,800
715,000
662,400
1,865,000
1,757,200
Long-term
incentive2
Other
benefits3
1,366,823
592,009
1,958,832
–
142,062
142,062
–
3,074
3,074
–
1,000
1,000
Total
3,484,849
1,764,040
5,248,889
2,244,800
1,520,462
3,765,262
1
2
Short-term incentive represents the full value of the STI, inclusive of 40% deferral into CSR shares.
Long-term incentives remuneration includes the vesting of the YEM20 TSR LTI, the vesting of the LTI issued to Ms Coates at employment commencement in 2019 and the
vesting of the LTI issued to Mr Fallu in 2019 for the divestment of the Viridian business. The long-term inventive amount is based on the number of shares valued using the
five-day VWAP prior to issue of the shares.
3 Other benefits include the Employee Share Grant for YEM23 and other expenditure, all of which related directly to company business. YEM22 includes USOP.
Table 5: Commentary on actual remuneration received by executive KMP
Area
Explanation
Fixed
remuneration
Ms Coates’ fixed remuneration was increased from 1 July 2022 from $1,150,000 to $1,184,500 per annum, through
CSR’s annual remuneration review.
Mr Fallu’s fixed remuneration was increased from 1 July 2022 from $720,000 to $745,000 per annum, through CSR’s
annual remuneration review.
51
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 a 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 progressing on CSR’s strategy.
Strong execution across end markets, combined with cost management and pricing disciplines, has delivered the
financial results for the year. The CSR strategy, which focuses on developing market leading customer solutions, industry
best practice supply chain and digitisation of systems and processes, is well-progressed and delivering benefits. The STI
award represents 80% of Ms Coates’ maximum STI opportunity for YEM23.
The board assessed Mr Fallu’s performance against the objectives set and determined that Mr Fallu would be awarded a
STI at between target and stretch. The STI outcome recognises Mr Fallu’s role in the implementation of strategic
initiatives and leadership of the Property and Aluminium businesses, with Property delivering the highest earnings for the
past 15 years. While Mr Fallu provided notice of resignation from his position as Chief Financial Officer and Executive
General Manager, Property and Aluminium in March 2023, the STI awarded acknowledges that Mr Fallu was employed
for the full year and delivered on the personal and financial performance objectives that were set at the beginning of the
financial year. Mr Fallu is currently serving a six-month notice period to September 2023. The STI award represents 58%
of Mr Fallu’s maximum STI opportunity for YEM23.
Further detail on the STI outcomes is included in sections 4 and 7.
Long-term
incentives
(LTI)
Long-term incentives represent the partial vesting of the YEM20 LTI for Ms Coates and Mr Fallu. In addition, Ms Coates
satisfied the three-year performance condition associated with the performance rights issued on employment
commencement and these shares were awarded during YEM23. Mr Fallu also satisfied the three-year employment
condition associated with the one-off performance bonus for the Viridian business divestment and these shares were
awarded during YEM23. Both of these LTI grants were disclosed in previous remuneration reports.
Further detail is included in sections 4, 8 and 12.
Other benefits
Other benefits include the YEM23 Employee Share Grant and other expenditure (all of which related directly to company
business) and YEM22 Universal Share Ownership Plan (USOP).
Senior executive actual remuneration
The year-on-year change in total actual remuneration for senior executives is summarised in the table below and is prepared on the basis
outlined in table 3. The analysis excludes the executive KMP.
The disclosure of senior executives has expanded by one role in YEM23 with the addition of the Executive General Manager, Safety,
Sustainability & Risk, from December 2022.
The increase in total senior executive remuneration in YEM23 is due to the higher LTI outcome, partly offset by lower STI outcome. Further
explanation on STI outcomes is set out in section 4.
Actual fixed remuneration has increased reflecting the addition of one senior executive as well as the senior executive team being in place for
the full year. The LTI outcomes in YEM23 were higher due to increased vesting outcomes in YEM23.
Table 6: Senior executive remuneration
Year ended 31
March
$
Number of
Senior
Executives
Actual fixed
remuneration
received
Short-term
Incentive1
Long-term
Incentive2
2023
2022
10
9
4,739,412
2,696,955
1,114,552
4,389,472
3,645,468
308,574
Other
Benefits3
9,989
4,998
Total
8,560,908
8,348,512
1
2
Short-term incentive represents the full value of the STI, inclusive of 40% deferral into CSR shares.
Long-term incentives include a one-off incentive for a senior property executive that was approved by the CSR board in June 2019 and vested during YEM23. The incentive
was linked to the successful delivery of specific property outcomes including sale transactions.
3 Other benefits include the Employee Share Grant for YEM23 and USOP for YEM22.
52 CSR LIMITED ANNUAL REPORT 2023
REMUNERATION REPORT | REMUNERATION AND PERFORMANCE OUTCOMES
4
Performance outcomes
Summary of performance outcomes for YEM23
A summary of the YEM23 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: YEM23 STI CSR group financial targets and assessment of performance outcomes
Area
Explanation
YEM23 financial
targets for STI
purposes
Assessment of
performance
against targets
STI awarded
as a % of EBIT
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 YEM23 were set by the board in March 2022, 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.
The CSR group, Building Products and Property business segments YEM23 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 $330 million represented an increase of $38 million or 13% compared to YEM22.
An assessment of significant items was completed by the board and, to ensure consistency against the targets set, the
EBIT used for assessing CSR group and Building Products STI financial performance was reduced by the
transformation costs of $15 million which are treated as ‘significant items’. Details of this assessment are set out in
table 9.
The CSR group EBIT for STI assessment purposes of $315 million was slightly above the financial target set. As a
result, the CSR group financial component of STI was awarded at between target and stretch.
The CSR group financial performance for YEM23 reflected:
‒ Building Products record earnings, with strong operational performance and continued pricing and cost
disciplines to manage inflationary cost pressures.
‒ Continued progress and benefits realised from 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.
‒ Property earnings a 15-year high, with the delivery of all targeted property sales, combined with the sale of two
additional sites.
‒ Lower Aluminium earnings with the business impacted by volatility in global commodity costs.
The board only exercised discretion in relation to a small number of eligible Aluminium employees who were awarded
their non-financial STI based on delivery of personal objectives set at the beginning of the financial year. Under the STI
plan rules this would have been halved. This acknowledges that the factors impacting the Aluminium segment
performance for YEM23 were due to factors outside of management’s control and that significant work has been
undertaken by the management team to mitigate the risk of further earnings shortfalls through pro-active hedging of
revenue. No discretion was exercised for the financial component for Aluminium employees.
The total STI awarded amounts to a payout ratio of 5.4% of YEM23 EBIT for STI assessment purposes (YEM22: 7.3%
of YEM22 EBIT).
The reduction in the STI as a % of EBIT reflects the YEM23 group financial STI outcome which was awarded at
between target and stretch compared to the YEM22 group financial STI outcome which was awarded at stretch.
Table 8: YEM23 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 YEM23, 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, cost disciplines and
managing the economic environment including
inflationary pressures and disrupted/congested
supply chains. In addition, the business was
tasked with the continued implementation of the
strategy and the realisation of benefits during
YEM23.
Between
target and
stretch
Building Products revenue for YEM23 was above
the target set, with growth across all business
units.
Building Products EBIT of $273 million was up $45
million or 20% on YEM22. EBIT margin of 15%
represented an increase compared to 14%
delivered in YEM22.
The earnings growth was driven through a
combination of factors including realisation of
strategy benefits, strong operational performance
and continued pricing and cost disciplines.
As noted above and detailed in table 9, Building
Products EBIT for STI purposes was lowered by
$15 million for transformation costs recorded in
‘significant items’ to $258 million.
Overall, Building Products earnings for STI
purposes exceeded the financial target set and the
financial STI component was awarded at between
target and stretch.
Financial STI outcomes
Stretch
Between target
and stretch
At target
Between threshold
and target
Below threshold
53
REMUNERATION REPORT | REMUNERATION AND PERFORMANCE OUTCOMES
4
Performance outcomes (continued)
i) Short-term incentive outcomes (continued)
Table 8: YEM23 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 YEM23, which included:
o
the sale of Horsley Park stage 2.2b which
required completion of rehabilitation
works;
o
the sale of the Warner site; and
o completion of the final stages of
Chirnside Park residential project.
The earnings target for YEM23 was set above
YEM22.
Aluminium
In the context of volatile Aluminium prices and
higher production costs, the Aluminium
business was set a target which would see
earnings decrease compared to YEM22.
The financial target reflected the hedging held
at the time and forecast production costs.
Stretch
Below
threshold
The Property business generated earnings of $72 million,
the highest earnings recorded in the past 15 years.
In addition to completing all of the targeted transactions
during YEM23, the sale of the Narangba and Bathurst
properties were finalised.
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 YEM23 Property business earnings significantly
exceeded the financial targets set and the financial STI
component was awarded at stretch.
The earnings of the Aluminium segment have been
negatively impacted by higher production costs due to
volatility in global commodity costs.
Given the significant production cost escalations,
Aluminium earnings of $8 million were below threshold and
the financial component of the STI was not awarded for the
Aluminium business segment.
Notwithstanding the significant cost increases experienced
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. As a result, the board has
exercised discretion and awarded the applicable 40% non-
financial STI component to a small number of eligible
Aluminium employees based on delivery of personal
objectives set at the beginning of the financial year.
Financial STI outcomes
Stretch
Between target
and stretch
At target
Between threshold
and target
Below threshold
Consideration of significant items recorded in YEM23
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.
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 YEM23 is contained in note 3 to the financial statements on page 78.
Table 9: Assessment of significant items for remuneration purposes
Amount
(pre-tax)
$’million
Remuneration
outcomes
adjusted
(15)
Yes
Item
Transformation
system
implementation
costs
Recognition of
tax losses
8
No
Product liability
provision
(5)
No
54 CSR LIMITED ANNUAL REPORT 2023
Rationale for treatment for remuneration purposes
These costs relate to the transformation implementation costs that involve
Software-as-a-Service and are required to be expensed due to a change in
international accounting interpretation during 2022.
As these costs were contemplated in the earnings targets set for YEM23, the costs
incurred during the year should also be included in the earnings used to assess STI
remuneration outcomes. As a result, Building Products and CSR group EBIT used to
assess the STI outcome has been lowered by this cost.
While the YEM21 LTI grant vests at stretch performance regardless of the
treatment of these costs, they were still considered by the CSR board for the
purposes of assessing the LTI outcome. As the costs were not contemplated in the
YEM21 LTI target set, YEM23 earnings per share (EPS) was not adjusted for
assessing the LTI outcome of this grant.
A higher EPS will be used to set the LTI targets for the YEM24 PRP grant, as the
EPS will not be downgraded by the transformation system implementation costs.
This benefit relates to legacy carried forward tax losses which are now expected to
be utilised and the tax benefits were not contemplated when the YEM23 financial
targets were set.
The board has consistently treated these amounts as significant items with no
adjustment to STI.
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.
REMUNERATION REPORT | REMUNERATION AND PERFORMANCE OUTCOMES
4
Performance outcomes (continued)
i) Short-term incentive outcomes (continued)
STI non-financial measures
CSR group, Building Products and Property met their business segment 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). The board has not exercised any discretion, with the
exception of Aluminium where the non-financial component was awarded to a small number of eligible employees, as outlined in Table 8.
ii) 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: YEM23 long-term incentive outcomes
LTI measure
Explanation
Overall
The YEM20 LTI performance hurdles were partially met resulting in 50% of the YEM20 PRP grant vesting in March
2022.
The value of LTI that vested in YEM23 increased compared to YEM22 due to a higher number of rights vesting.
Further detail is contained in section 8.
TSR
EPS
Total shareholder return (TSR) target: 50% vested out of 50% potential.
Earnings per share (EPS) target: nil% vested out of 50% potential.
iii) Overall financial performance and variable remuneration
The following table summarises the 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
YEM23
YEM22
YEM21
YEM20
YEM19
329.7
(16.9)
46.9
28.9
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
4.75
6.15
5.78
3.17
3.32
1.4
1.8
1.8
0.57
1.4
2.7
3.6
2.6
–7
2.0
5.4%8
7.3%
7.5%
2.6%
6.3%
2.0
0.1
0.1
0.7
2.0
1.1
0.3
0.4
0.7
2.1
1 EBIT and EPS are calculated before significant items.
2 TSR for 12 months to 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 24.
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 YEM23 represents 112% of the target STI opportunity. Calculation for YEM23 based on EBIT used for STI assessment purposes. Further detail on the
STI awarded is outlined in table 7 and 8 and Remuneration Governance in section 5.
55
REMUNERATION REPORT | REMUNERATION GOVERNANCE
Remuneration Governance
5 Remuneration governance
CSR’s remuneration governance framework is set out below. While the board retains ultimate responsibility, CSR’s remuneration 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 on the
CSR website. The charter was reviewed and updated during the year.
Figure 1: CSR’s remuneration governance framework
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.
CSR Board
Management and Board Remuneration Policy
Human Resources, Talent Management and Culture
Remuneration & Human Resources Committee
Monitors, recommends and reports to the board on:
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.
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 & 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 Orient
Capital 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.
56 CSR LIMITED ANNUAL REPORT 2023
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 or above 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. Under
the STI deferral plan, 40% of any STI
earned by executive KMP and senior
executives is converted to CSR shares.
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.
Refer to section 7 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.
Half of the deferred shares are
restricted for one year and the
remaining half are restricted 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: YEM23 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
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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
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 compared with roles
of a similar size, responsibility and complexity. For executive KMP, analysis is completed against a custom peer group
that falls within 50% to 200% of CSR’s market capitalisation, revenue and EBIT and a group of industry peers.
At risk remuneration (through STI and LTI) provides the opportunity to earn reward that reaches the top quartile of the
market for superior performance.
Performance
driven and
aligned with
shareholder
interests
Fixed remuneration is designed to attract and retain executives based on their experience and capability to deliver the
CSR strategy. The ‘at risk’ components of remuneration (both STI and LTI) are driven by challenging targets, focussed on
both external and internal measures of financial and non-financial performance and are aligned with shareholder
returns. Under the STI deferral plan, 40% of any STI earned by executive KMP and senior executives is converted into
CSR shares which are restricted.
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 and enabled through the LTI plan, STI deferral plan for executive KMP and
senior executives, the YEM23 Employee Share Grant, 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
CFO and EGM Property
and Aluminium
58 CSR LIMITED ANNUAL REPORT 2023
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 aligned to CSR’s performance objectives
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.
Equity deferral
Under the STI deferral plan, 40% of any STI earned by executive KMP and senior executives is converted to CSR
shares. The number of shares is determined using the five-day VWAP up to and including 31 March of the STI
performance year. Half of the shares are 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.
Minimum
financial
performance
requirements
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 for stretch performance is 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.
Significant
items
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.
Performance
measures
The performance measures for the STI were updated from 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 segment 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 for YEM23. 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.
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 where the maximum STI payable is 143% of target STI
opportunity, equivalent to 100% of fixed annual remuneration.
59
REMUNERATION REPORT | COMPONENTS OF REMUNERATION
7
(i)
At risk remuneration – short-term incentive (continued)
Table 13: Details of the short-term incentive plan (continued)
Non-financial
objectives
Assessment of
performance
against measures
Board discretion
Individual objectives are set at the start of each financial year in CSR’s performance management system
ACHiEVE@CSR. 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 and performance does not meet minimum requirements, the non-financial STI will be
forfeited and the financial STI component may be reduced or forfeited.
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 performance ratings are reviewed and
calibrated by the business unit Executive General Manager. The Managing Director and CEO approves STI allocations
based on the overall performance outcomes. The Remuneration & Human Resources Committee recommends to the
board executive KMP and senior executive STIs and the overall STI pool in aggregate.
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;
poor individual performance;
inadequate WHSE leadership or WHSE performance improvement;
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 Code of Business 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.
60 CSR LIMITED ANNUAL REPORT 2023
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;
retain, motivate and attract executive talent to deliver and sustain business performance and increase shareholder returns; and
enable executives to build their interests in CSR equity.
(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 YEM20 to YEM23 are
set out below.
Table 14: Features of the long-term incentive plan
Participation
KMP, 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 performance 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).
Dividends
There is no entitlement to dividends on performance rights during the performance period.
At vesting
For all PRP grants, rights are eligible for one CSR Limited share per one performance right on vesting.
Holding lock
A 12-month holding lock on shares awarded under the LTI applies 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
Treatment on
cessation of
employment
Shares transferred to participants on the vesting of performance rights are subject to the CSR Share Trading Policy.
Unvested awards: Generally, if a participant ceases to be employed prior to the performance conditions being met, any
unvested shares will be forfeited. 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 not subject to accelerated transfer 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 not subject to accelerated transfer 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 2023, 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).
61
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
YEM23
YEM22
YEM21
YEM20
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
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.
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-calendar-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.
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%
62 CSR LIMITED ANNUAL REPORT 2023
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, with the YEM23 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 YEM20 to YEM23 PRP grants
EPS performance hurdle
Target
Stretch
Target
Stretch
Target
Stretch
Target
Stretch
YEM23
YEM22
YEM21
YEM20
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
131.4
144.5
109.6
120.5
85.4
93.9
119.5
131.4
43.8
48.2
36.5
40.2
28.5
31.3
39.8
43.8
Proportion of Tranche B to vest
0%
50%
Straight-line vesting between 50% and 100%
100%
(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
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
Expiry date
(if hurdle
not met)
1 April 2022
21 July 2020
(YEM21)
Tranche A (TSR) $1.06
Tranche B (EPS) $3.08
21 July 2020 to
31 March 2023
1 April 2020 to
31 March 2023
1 April 2023
Performance status
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%.
Subsequent to 31 March 2023:
Tranche A (TSR)2: Relative TSR was 65%.
Performance condition was met, resulting in
80% vesting of the allocation grant.
Tranche B (EPS): Actual average EPS of 39.5
cents compared to a stretch target of 31.3
cents. Compound growth performance
condition was met at stretch and all rights
vested.
Total award was 90%.
21 July 2021
(YEM22)
Tranche A (TSR) $2.32
Tranche B (EPS) $4.67
21 July 2021 to
31 March 2024
1 April 2021 to
31 March 2024
29 July 2022
(YEM23)
Tranche A (TSR) $1.45
Tranche B (EPS) $3.87
29 July 2022 to
31 March 2025
1 April 2022 to
31 March 2025
1 April 2024
Performance testing not commenced.
1 April 2025
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, Orient Capital, to calculate CSR’s performance against the relative TSR
hurdles.
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REMUNERATION REPORT | COMPONENTS OF REMUNERATION
8
(v)
At risk remuneration – long-term incentive (continued)
Long-term incentive framework changes
No changes are proposed to the LTI framework for YEM24.
(vi) Other equity incentive plans
During YEM23, the Employee Share Grant was offered to all eligible employees in lieu of the Universal Share Ownership Plan (USOP). The
Employee Share Acquisition Plan (ESAP) was also offered to all eligible employees during YEM23.
Table 21: Other equity incentive plans
Employee Share Grant
Universal Share Ownership Plan (USOP)
Employee Share Acquisition Plan (ESAP)
Participation
All executives and employees (except
directors), as at 1 April in the year the
shares are granted.
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
The board may elect to grant eligible
employees CSR shares. The maximum
value of the Employee Share Grant is
$1,000 (being the limit of the tax
exemption) for each eligible participant.
The board can approve 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.
The plans are designed to encourage share ownership for employees and therefore do not have any performance conditions
attached.
Participants are entitled to dividends and other distributions and have full voting rights.
Absence of a
performance
condition
Dividends
and voting
rights
64 CSR LIMITED ANNUAL REPORT 2023
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 $1,184,500 inclusive of superannuation contributions effective from 1 July 2022. 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 potential 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 resigned from his position of Chief Financial Officer and Executive General Manager, Property and Aluminium in March 2023 and will
serve his contractual notice period of six months, up to September 2023. The STI awarded acknowledges that Mr Fallu was employed for the full
year and delivered on the personal and financial performance objectives that were set at the beginning of the performance year. The board
determined that it is appropriate for Mr Fallu to remain eligible for a STI in YEM23. 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 $745,000 inclusive of superannuation contributions effective from 1 July 2022. 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 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 100% 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).
65
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 rights and
shares under holding lock2
Immediate termination for cause No STI payable and clawback provisions may
Rights and shares are forfeited.
Resignation
apply (including deferred STI).
STI is forfeited unless board determines
otherwise.
Notice by company, retirement,
redundancy, death or permanent
disability
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 and shares are forfeited unless board determines
otherwise. While an employee is serving a notice period,
no new LTI grants are issued.
Board discretion to allow awards to vest or remain
subject to performance hurdles after termination on a
pro-rata basis.
Shares remain subject to relevant holding lock unless
the Board determines otherwise.
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.
Shares remain subject to relevant holding lock unless
the Board determines otherwise.
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 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 a decrease in total remuneration expensed for accounting purposes for executive KMP in YEM23 compared
with YEM22.
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
2023
2022
1,151,014
1,126,900
24,861
23,100
30,006
55,880
–
–
978,382
1,023,347
940,851
867,712
3,125,114
3,096,939
Chief Financial Officer and Executive General Manager, Property and Aluminium – David Fallu
2023
2022
713,889
691,900
486,892
624,507
24,861
23,100
74,219
42,766
3,074
1,000
23,897
304,010
1,326,832
1,687,283
31%
33%
37%
37%
30%
28%
2%
18%
1 Other benefits include the Employee Share Grant for YEM23 and other expenditure, all of which related directly to company business. YEM22 includes USOP.
2 STI expense for YEM23 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 2022
37,814
23,976
Granted1
71,015
42,967
Vested1
(73,321)
(45,459)
Lapsed
Balance
31 March 2023
–
–
35,508
21,484
1 The value of deferred shares provided at grant date was $6.17 per share based on the VWAP of five-days up to and including to 31 March 2022. These shares related to
the YEM22 STI and were granted in June 2022. Half vested on 31 March 2023 and the remaining balance will vest on 31 March 2024 consistent with the STI deferral plan.
Deferred STI in relation to the YEM23 STI award was issued subsequent to 31 March 2023 and will be disclosed in the YEM24 Remuneration
Report.
66 CSR LIMITED ANNUAL REPORT 2023
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 2022
1,188,919
412,825
Granted1
Vested2
Lapsed
268,920
(280,865)
(180,121)
120,814
(118,648)
(57,904)
Balance
31 March 2023
996,853
357,087
1 The accounting value of Ms Coates and Mr Fallu’s rights granted were $715,327 and $321,365 respectively.
2 The following rights vested to ordinary shares during the year ended 31 March 2023:
Ms Coates: YEM20 Tranche A rights vested of 180,120, Tranche B rights of 180,121 lapsed. A total of 180,120 shares were issued on 26 May 2022, and the value of each
of these shares was $4.99, representing a total value to Ms Coates of $898,731. In addition, Ms Coates satisfied the three-year performance condition associated with
PRPs issued on employment commencement. A total of 100,745 shares were issued on 21 November 2022, and the value of each of these shares was $4.65,
representing a total value to Ms Coates of $468,092.
Mr Fallu: YEM20 Tranche A rights vested of 57,904, Tranche B rights of 57,904 lapsed. A total of 57,904 shares were issued on 26 May 2022, and the value of each of
these shares was $4.99, representing a total value to Mr Fallu of $288,919. In addition, Mr Fallu satisfied the three-year employment condition associated with the one-off
performance bonus for the Viridian business divestment. A total of 60,744 shares were issued on 26 May 2022, and the value of each of these shares was $4.99,
representing a total value to Mr Fallu of $303,090.
13 Shareholdings
Minimum shareholding requirements
All non-executive directors and executive key management personnel are expected to acquire a beneficial interest in CSR shares equivalent in
value to one year's fixed remuneration, and senior executives are expected to acquire a beneficial interest in CSR shares equivalent in value to
six months total fixed remuneration. Fixed remuneration is calculated as being inclusive of superannuation. The minimum shareholding
requirements are required to be met by non-executive directors within four years of appointment and by KMP and senior executives within a
reasonable time frame and are to be valued at the greater of either the cost at the time of purchase, or the current value.
Table 28: Executive KMP shareholdings
Julie Coates
David Fallu
Balance
1 April 2022
77,786
161,342
Number of CSR shares1
Acquired2
360,596
162,878
Sold or
transferred
–
(50,000)
Other
–
–
Balance
31 March 2023
438,382
274,220
1 CSR shares in which the executive KMP has a beneficial interest, including shares held by the CSR share plan trustee for vested shares from the PRP and shares held in
respect of the STI deferral plan, by the ESAP trustee or via their related parties. It also includes spouse shareholdings.
2 Represents shares allocated upon vesting of rights under the PRP and shares acquired under the STI deferral plan as detailed earlier in this report. Ms Coates acquired
shares include 1,038 shares acquired under ESAP, 71,015 shares acquired under the STI deferral plan, 180,120 shares issued on vesting of PRPs, 100,745 shares issued
on vesting of three-year performance condition associated with PRPs issued on employment following service conditions being met and 7,678 shares acquired under the
Dividend Reinvestment Plan. Mr Fallu’s acquired shares include 57,904 shares issued on vesting of PRPs, 60,744 shares issued on vesting of three-year employment
condition associated with the one-off performance bonus for the Viridian business divestment, 42,967 shares acquired under the STI deferral plan, 1,038 shares acquired
under ESAP and 225 shares acquired under the Employee Share Grant.
14 Other transactions with KMP
The CSR group offers staff discounts on certain products which are also made available to KMP.
A director, Ms Boyce, is also a director of CVF Investments Pty Limited (CVF Investments). Prior to becoming a director of CSR Limited, CVF
Investments was engaged as a consultant providing strategic transformation advice. The consulting fees paid to CVF Investments during the year
ended 31 March 2023 of $434,002 were based on normal commercial terms and conditions and recognised as an expense in the CSR group
income statement.
There were no other transactions, including loans between CSR and KMP (including their related parties), during YEM22 and YEM23.
67
REMUNERATION REPORT | NON-EXECUTIVE DIRECTORS
Non-executive directors
15 Arrangements
Non-executive directors (NED) 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 arrangements
Role
Annual fee for YEM23 (including superannuation guarantee)
Chair base fee (including all committee memberships)
Other NED base fees
Committee Chair (Risk & Audit Committee, Remuneration & Human
Resources Committee or Safety & Sustainability Committee)
Committee memberships
$417,300
$154,500
$29,000
$12,400 per committee
Following benchmarking undertaken in YEM23, the board determined that effective 1 April 2023 a 3.75% fee increase be applied to all NED fees
(rounded to the nearest hundred dollars).
No retirement allowances are payable to NEDs. NEDs do not participate in the company’s STI or LTI plans, USOP or Employee Share Grant, or
receive any variable remuneration but may forgo fees for CSR shares under the ESAP. 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)
Christina Boyce (from 15 March 2023)
Nigel Garrard
Christine Holman (to 16 November 2022)
Michael Ihlein (to 25 June 2021)
Matthew Quinn
Adam Tindall (from 16 January 2023)
Penny Winn
Total non-executive directors
Directors’ fees
Termination
benefits
Superannuation
Total
YEM23
YEM22
YEM23
YEM22
YEM23
YEM22
YEM23
YEM22
YEM23
YEM22
YEM23
YEM22
YEM23
YEM22
YEM23
YEM22
YEM23
YEM22
392,439
380,069
7,114
–
167,341
157,695
111,004
172,255
–
45,166
177,486
172,255
34,419
–
177,486
170,982
1,067,289
1,098,422
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24,861
23,100
747
–
17,367
15,571
11,433
17,009
–
–
18,414
17,009
3,614
–
18,414
16,889
94,850
89,578
417,300
403,169
7,861
–
184,708
173,266
122,437
189,264
–
45,166
195,900
189,264
38,033
–
195,900
187,871
1,162,139
1,188,000
Table 31: Non-executive directors’ shareholdings
John Gillam (chair of the board)
Christina Boyce
Nigel Garrard
Christine Holman
Matthew Quinn
Adam Tindall
Penny Winn
Balance
1 April 2022
253,510
–
60,000
86,529
81,169
–
51,248
Number of CSR shares1
Acquired
Other2
Balance
31 March 2023
–
–
15,000
6,722
7,389
20,000
–
–
–
–
(93,251)
–
–
–
253,510
–
75,000
–
88,558
20,000
51,248
1
2
CSR shares in which the director has a beneficial interest, including shares held under the ESAP trust or via related parties.
Following Ms Holman’s retirement from the board on 16 November 2022, she is no longer a KMP. The ‘other’ change represents a shareholding balance that no longer
requires disclosure and does not represent a disposal of shares whilst a KMP.
68 CSR LIMITED ANNUAL REPORT 2023
FINANCIAL REPORT
Financial Report
Consolidated financial report
Statement of financial performance
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial report
Directors’ declaration
Independent auditor’s report
Shareholder information
Notes to the financial report
1
Basis of preparation
Financial performance overview
Segment information
2
Significant items
3
Earnings per share
4
Revenue
5
Expenses
6
Net finance costs
7
Income tax (expense) benefit
8
Business combinations
9
70
71
72
73
74
75
109
110
114
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
75
75
76
76
78
79
79
80
80
81
82
83
83
83
84
86
87
88
89
90
90
90
90
91
92
97
97
97
100
100
101
102
103
103
107
107
107
108
108
108
69
FINANCIAL REPORT
Statement of financial performance
$million
Trading revenue – sale of goods
Cost of sales
Gross profit
Other income
Warehouse and distribution costs
Selling, administration and other operating costs
Share of net profit of joint venture entities
Impairment expense
Other expenses
Profit before finance costs and income tax
Interest income
Finance costs
Profit before income tax
Income tax (expense) benefit
Profit after tax
Profit after tax attributable to:
Non-controlling interests
Shareholders of CSR Limited
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
6
7
7
8
24
4
4
2023
2022
2,613.3
(1,855.2)
758.1
89.6
(263.1)
(274.2)
19.3
–
(15.1)
314.6
2.5
(22.5)
294.6
(76.4)
218.2
(0.3)
218.5
218.2
45.5
45.3
2,311.6
(1,610.2)
701.4
64.5
(216.5)
(266.6)
15.6
(7.0)
(6.9)
284.5
0.5
(15.0)
270.0
8.7
278.7
8.1
270.6
278.7
55.8
55.5
The above statement of financial performance should be read in conjunction with the accompanying notes.
70 CSR LIMITED ANNUAL REPORT 2023
FINANCIAL REPORT
Statement of comprehensive income
$million
Profit after tax
Other comprehensive income (expense), net of tax
Items that may be reclassified to profit or loss
Hedge profit (loss) recognised in equity
Hedge loss 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 (loss) gain on superannuation defined benefit plans
Income tax benefit relating to these items
Other comprehensive income (expense) – net of tax
Total comprehensive income (expense)
Total comprehensive income (expense) attributable to:
Non-controlling interests
Shareholders of CSR Limited
Total comprehensive income (expense)
Note
2023
218.2
2022
278.7
21
21
20
13
28
226.4
80.3
0.8
(92.0)
(1.9)
0.7
214.3
432.5
67.1
365.4
432.5
(571.2)
135.0
(0.1)
130.8
0.1
–
(305.4)
(26.7)
(93.0)
66.3
(26.7)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
71
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
The above statement of financial position should be read in conjunction with the accompanying notes.
72 CSR LIMITED ANNUAL REPORT 2023
Note
2023
2022
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
131.6
285.9
425.2
36.0
29.2
16.8
13.4
938.1
12.3
109.4
45.0
20.9
692.2
128.8
59.9
9.3
206.7
8.5
1,293.0
2,231.1
293.5
32.5
69.7
14.5
134.3
544.5
131.1
165.0
213.2
0.7
510.0
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
1,054.5
1,176.6
1,497.6
949.4
930.3
(147.9)
384.7
1,167.1
9.5
1,176.6
966.7
(293.7)
334.0
1,007.0
(57.6)
949.4
FINANCIAL REPORT
Statement of changes in equity
$million
Balance at 1 April 2022
Profit for the year
Other comprehensive income (expense)
– net of tax
Dividends paid
On-market share buy-back
Acquisition of shares by CSR employee
share trust
Share-based payments – net of tax
Balance at 31 March 2023
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 – net of tax
Balance at 31 March 2022
Note
19
18
20
20
19
20
20
Issued
capital
966.7
–
–
Reserves
(293.7)
–
148.1
Retained
profits
334.0
218.5
(1.2)
–
–
(5.0)
(166.6)
–
–
CSR
Limited
interest
1,007.0
218.5
146.9
(166.6)
(36.4)
(5.0)
Non-
controlling
interests
(57.6)
(0.3)
67.4
–
–
–
Total
equity
949.4
218.2
214.3
(166.6)
(36.4)
(5.0)
2.7
(147.9)
–
384.7
2.7
1,167.1
–
9.5
2.7
1,176.6
(89.6)
–
(204.4)
245.3
270.6
0.1
1,122.4
270.6
(204.3)
35.4
8.1
(101.1)
–
(6.0)
(182.0)
–
(182.0)
(6.0)
–
–
1,157.8
278.7
(305.4)
(182.0)
(6.0)
–
966.7
6.3
(293.7)
–
334.0
6.3
1,007.0
–
(57.6)
6.3
949.4
–
(36.4)
–
–
930.3
966.7
–
–
–
–
The above statement of changes in equity should be read in conjunction with the accompanying notes.
73
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
Receipts (payments) for financial assets
Loans and receivables repaid (advanced)
Net cash inflow (outflow) from investing activities
Cash flows from financing activities
On-market share buy-back
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 (loss) 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 inflow from operating activities
Note
2023
2022
26
12
9
18
19
20
14
2
24
6
12
20
5
2,840.5
(2,694.9)
15.0
2.2
(49.0)
2,546.9
(2,261.9)
10.9
0.9
(81.5)
113.8
215.3
140.3
(47.4)
(84.5)
–
74.3
7.5
90.2
(36.4)
(166.6)
(5.0)
(32.7)
(9.5)
(250.2)
(46.2)
177.7
0.1
131.6
218.5
(0.3)
84.9
–
(4.3)
4.3
9.5
(75.6)
(47.8)
(51.1)
(20.9)
(19.9)
(3.3)
26.7
(6.9)
113.8
100.1
(59.7)
(40.0)
(2.0)
(54.4)
(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
1 During the year ended 31 March 2023 of the $166.6 million in dividends paid to CSR Limited shareholders, $10.7 million was used to purchase CSR shares on-market to
2
satisfy obligations under the Dividend Reinvestment Plan (DRP), and the remaining $155.9 million was paid in cash.
In accordance with AASB 16 Leases, interest and other finance costs paid for the year ended 31 March 2023 includes finance costs relating to leases of $6.8 million
(2022: $7.0 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.
74 CSR LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL REPORT | BASIS OF PREPARATION
Notes to the financial report
1 Basis of preparation
This section sets out the basis upon which the CSR group’s financial
statements are prepared as a whole. Significant and other accounting
policies that summarise the measurement basis used and are relevant
to an understanding of the financial statements are provided throughout
the notes to the financial statements. All other accounting policies are
outlined in note 34.
Statement of Compliance: CSR Limited is a limited company incorporated
in Australia whose shares are publicly traded on the Australian Securities
Exchange.
This general purpose financial report is prepared in accordance with the
Corporations Act 2001 and applicable Accounting Standards and
Interpretations, and complies with other requirements of the law. CSR
Limited is a ‘for profit’ entity. The financial report includes the
consolidated financial statements of CSR Limited and its controlled
entities (CSR group).
Accounting Standards
include Australian Accounting Standards.
Compliance with Australian Accounting Standards ensures that the
financial statements and notes of the company and the CSR group
comply with International Financial Reporting Standards.
Basis of preparation: The financial report is based on historical cost,
except for certain financial assets and liabilities which are at fair value.
In preparing this financial report, the CSR group is required to make
estimates and assumptions about carrying values of assets and
liabilities. These estimates and assumptions are based on historical
experience and various other factors that are believed to be reasonable
under the circumstances. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing
basis. The accounting policies adopted are consistent with those of the
previous year, unless otherwise stated.
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 the
Australian Securities and Investments Commission (ASIC) Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated
24 March 2016.
Currency: Unless otherwise shown in the financial statements, amounts
are in Australian dollars, which is the CSR group’s functional currency.
New or revised accounting standards: The CSR group has adopted all
amendments to Australian Accounting Standards which became
applicable for the CSR group from 1 April 2022.
New standards not yet applicable: refer Note 27 for further detail on
AASB 17 Insurance Contracts.
Other 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.
75
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 2023, the CSR group's trading revenue from external
customers in Australia amounted to $2,542.3 million (2022:
$2,242.1 million), with $71.0 million (2022: $69.5 million) of trading
revenue related to other geographical areas.
The CSR group's non-current assets excluding investments accounted
for using the equity method, deferred tax assets and other financial
assets in Australia amounted to $1,005.9 million at 31 March 2023
(2022: $999.9 million), with $14.5 million (2022: $10.5 million)
related to other geographical areas.
76 CSR LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
2
Segment information (continued)
$million
Trading revenue1
EBITDA before
significant items2
Depreciation and
amortisation
Business segment
2023
2022
2023
2022
Building Products
Property
Aluminium
Corporate3
Restructuring and provisions4
1,833.0
1,614.1
–
780.3
–
–
–
697.5
–
–
344.7
71.7
19.6
(19.5)
(1.9)
302.4
46.9
51.5
(19.2)
(1.7)
2023
(71.3)
–
(11.6)
(2.0)
–
2022
(74.2)
–
(11.8)
(2.5)
–
Earnings before
interest, tax and
significant items
2023
2022
273.4
71.7
8.0
(21.5)
(1.9)
228.2
46.9
39.7
(21.7)
(1.7)
Total CSR group
2,613.3
2,311.6
414.6
379.9
(84.9)
(88.5)
329.7
291.4
Reconciliation of earnings before interest, tax and significant items to profit after tax
$million
Earnings before interest, tax and significant items
Net finance costs
Income tax expense
Profit after tax before significant items (before non-controlling interests)
Non-controlling interests
Note
7
24
2023
329.7
(14.7)
(90.3)
224.7
0.3
2022
291.4
(9.5)
(81.2)
200.7
(8.1)
Profit after tax before significant items attributable to shareholders of CSR Limited
225.0
192.6
Significant items after tax attributable to shareholders of CSR Limited
3
(6.5)
78.0
Profit after tax attributable to shareholders of CSR Limited
218.5
270.6
Business segment
As at 31 March 2023
As at 31 March 2022
As at 31 March 2023
As at 31 March 2022
Funds employed ($million)5
Return on funds employed (%)6
Building Products
Property
Aluminium
Corporate
Total CSR group
938.2
153.1
163.3
(41.3)
830.0
166.1
121.3
(47.3)
1,213.3
1,070.1
30.9%
44.9%
5.6%
–
28.9%
27.3%
30.7%
30.9%
–
27.3%
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 2023 is calculated as net assets of $1,176.6
million (2022: $949.4 million), excluding the following assets: cash of $131.6 million (2022: $177.7 million), net tax assets of $209.0 million (2022: $328.6 million) and
net superannuation assets of $6.5 million (2022: $8.3 million). In addition, the following liabilities have been excluded from funds employed: asbestos product liability
provision of $193.4 million (2022: $213.3 million), net financial liabilities of $190.1 million (2022: $422.1 million) and interest payable of $0.3 million (2022: $0.1 million
interest receivable).
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.
77
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
3
Significant items
$million (expense) income
Transformation system implementation projects
Significant items before finance costs and income tax
Discount unwind and hedging relating to product liability provision
Recognition of 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
Note
6, (i)
7
(ii)
Net profit after tax before significant items attributable to shareholders of CSR Limited
Earnings per share attributable to shareholders of CSR Limited before significant items1
Basic (cents per share)
Diluted (cents per share)
1 The basis of calculation is consistent with the earnings per share disclosure in the statement of financial performance. Refer to note 4.
2023
(15.1)
(15.1)
(5.3)
7.8
6.1
(6.5)
–
(6.5)
218.5
6.5
225.0
2022
(6.9)
(6.9)
(5.0)
86.3
3.6
78.0
–
78.0
270.6
(78.0)
192.6
46.9
46.6
39.7
39.5
Note
Description
Further explanation
(i)
Transformation
system
implementation
projects
During the year ended 31 March 2023, the Building Products segment incurred implementation costs of
$15.1 million (2022: $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 interpretation. These costs, relating to two
projects, have been disclosed as significant due to their size and relevance in understanding the current
year trading performance.
(ii)
Recognition of tax
losses
During the year ended 31 March 2023, the CSR group recognised a deferred tax asset of $7.8 million
(2022: $86.3 million) in relation to carry forward capital and revenue tax losses. Refer Note 8 for further
detail.
Recognition and measurement
Significant items are those which by their size and nature or incidence are relevant in explaining the financial performance of the CSR group,
and as such are disclosed separately.
78 CSR LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
4
Earnings per share
Weighted average number of ordinary shares used in the calculation of basic EPS (million)1
Weighted average number of ordinary shares used in the calculation of diluted EPS (million)2
Profit after tax attributable to shareholders of CSR Limited ($million)
Basic EPS (cents per share)
Diluted EPS (cents per share)
2023
479.8
482.4
218.5
45.5
45.3
2022
484.7
487.4
270.6
55.8
55.5
1 Calculated by reducing the total weighted average number of shares on issue of 481.0 million (2022: 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 1,173,192 (2022: 666,479).
2 Calculated by increasing the weighted average number of shares used in calculating basic EPS by outstanding performance rights of 2,584,517 (2022: 2,700,156).
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
Net Aluminium Reliability and Emergency Reserve Trader (RERT) compensation
Other
Note
2
2023
2022
2,613.3
2,311.6
75.6
12.7
1.3
60.3
–
4.2
Recognition and measurement
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.
79
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
6
Expenses
$million
Expenses
Significant items1
Employee benefits expense
Depreciation
Amortisation
Note
2023
2022
3
12,14
12
15.1
478.8
82.6
2.3
6.9
444.1
85.1
3.4
1
Significant items are included within 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 loss (gain)
Finance costs
Interest income
Net finance costs
Finance costs included in significant items
Net finance costs before significant items
Recognition and measurement
Note
2023
2022
14
15
3
2.7
6.8
5.3
0.8
6.9
22.5
(2.5)
20.0
(5.3)
14.7
3.1
7.0
5.0
0.8
(0.9)
15.0
(0.5)
14.5
(5.0)
9.5
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.
80 CSR LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
8
Income tax (expense) benefit
Reconciliation of income tax (expense) benefit charged to the statement of financial performance:
$million
Profit before income tax
Income tax expense calculated at 30%
Decrease (increase) in income tax expense due to:
Recognition of carried forward capital tax losses
Recognition of carried forward tax losses
Share of net profit of joint venture entities
Taxable profit on property disposals
Income tax under provided in prior years
Other items
Total income tax (expense) benefit
Comprising of:
Current tax expense
Deferred tax (expense) credit relating to movements in deferred tax balances
Total income tax (expense) benefit
Note
3
3
13
2023
294.6
(88.4)
5.0
2.8
5.5
(0.4)
(0.7)
(0.2)
(76.4)
(43.3)
(33.1)
(76.4)
2022
270.0
(81.0)
86.3
–
4.4
(0.6)
(0.3)
(0.1)
8.7
(40.2)
48.9
8.7
Recognition and measurement
Current and deferred tax is recognised as an expense in the statement of financial performance except when it relates to items credited or
debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting of
a business acquisition, in which case it is taken into account in the determination of goodwill.
Tax transparency report
The CSR group has prepared a voluntary tax transparency report which is available to view online or to download from the CSR website
(www.csr.com.au). The report sets out relevant tax information for CSR Limited and its controlled entities for the year ended 31 March 2023.
Disclosure of company tax information
Under tax legislation the Australian Taxation Office will publish in 2023 the following data for the CSR Limited tax consolidated group and
Gove Aluminium Finance Limited in relation to the 2022 tax year:
Entity
CSR Limited (ABN: 90 000 001 276)
Gove Aluminium Finance Limited (ABN: 45 001 860 073)
Total revenue1
($million)
Taxable income
($million)
Tax payable
($million)
1,774.0
708.3
164.2
34.3
42.0
9.5
1 For financial reporting and taxation purposes, items may have been classified between revenue and expenses differently. Therefore, total revenue may not reconcile to
note 2 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 2022 was $42.0 million because CSR was entitled to utilise franking credits on dividends received and R&D tax
offsets to reduce its tax payable.
81
NOTES TO THE FINANCIAL REPORT | FINANCIAL PERFORMANCE OVERVIEW
8
Income tax (expense) benefit (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 2023, the CSR group has recognised a deferred tax asset of $7.8 million in relation to carry forward tax
losses.
The net amount of tax losses, capital losses and rebates carried forward at the end of the year for which no deferred tax asset has been
recognised is set out below:
Value of tax losses, capital losses and rebates
carried forward (net)
CSR group
2023
($million)
99.0
2022
($million)
107.8
The gross value of unused tax losses for which no deferred tax asset has been recognised are $27.1 million (2022: $36.9 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 $304.8 million (2022: $325.0 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 2023, the Building Products segment invested in an entity for cash consideration of $1.3 million.
ii) Prior 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.
82 CSR LIMITED ANNUAL REPORT 2023
ii)
Inventories
2022
$million
2023
2022
Current
Raw materials and stores
Work in progress
Finished goods
Total current inventories
168.6
26.1
230.5
425.2
138.7
25.2
210.2
374.1
1 Write-down of inventories recognised as an expense within cost of sales for the
year ended 31 March 2023 totalled $15.0 million (2022: $14.1 million).
iii) Current payables
$million
Trade payables
Other payables
Total current payables
2023
255.3
38.2
293.5
2022
281.9
32.5
314.4
NOTES TO THE FINANCIAL REPORT | BALANCE SHEET ITEMS
Balance sheet items
10 Working capital
i)
Current receivables
$million
Trade receivables
Allowance for doubtful debts
2023
269.4
(15.3)
216.0
(10.2)
Net trade receivables
254.1
205.8
Property receivable
Other receivables
Total current receivables
6.3
25.5
–
22.6
285.9
228.4
Ageing
Within terms - impaired
Past due 0-60 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
1.3
–
7.1
6.9
(10.2)
1.1
(6.2)
(15.3)
–
1.0
7.6
2.6
(8.2)
0.4
(2.4)
(10.2)
2023
2022
36.0
36.0
36.8
72.6
53.0
53.0
39.1
74.8
Total non-current property holdings
109.4
113.9
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.
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.
83
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
2023
2022
2023
2022
2023
2022
401.0
398.8
1,426.2
1,354.4
1,827.2
1,753.2
Accumulated depreciation and impairment
(120.4)
(113.1)
(1,014.6)
(974.0)
(1,135.0)
(1,087.1)
Net carrying amount
Net carrying amount at 1 April
Capital expenditure
Disposed
Depreciation
Impairments1
Exchange differences
Acquisitions - business combinations
Transferred to intangible assets
280.6
285.7
1.2
(1.1)
(7.8)
–
–
–
–
285.7
288.0
7.6
(2.7)
(8.3)
(0.5)
–
–
–
411.6
380.4
81.8
(2.1)
(46.5)
–
0.1
–
–
6
9
Transferred from/(to) property plant and equipment and
property holdings
2.6
1.6
(2.1)
380.4
405.7
32.4
(0.4)
(49.0)
(6.5)
–
0.2
(0.2)
(1.8)
692.2
666.1
83.0
(3.2)
(54.3)
–
0.1
–
–
0.5
666.1
693.7
40.0
(3.1)
(57.3)
(7.0)
–
0.2
(0.2)
(0.2)
Balance at 31 March
280.6
285.7
411.6
380.4
692.2
666.1
1 The impairment expense in YEM22 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
Goodwill
Software
Other
Total other intangible
assets
Note
2023
2022
2023
2022
2023
2022
2023
2022
90.1
88.6
29.8
30.3
119.9
118.9
(87.4)
(85.6)
(23.2)
(23.2)
(110.6)
(108.8)
2.7
3.0
1.5
3.0
5.6
–
6.6
7.1
–
(1.8)
(2.8)
(0.5)
–
–
–
–
–
0.2
3.0
7.1
8.0
–
(0.6)
–
(0.3)
9.3
10.1
1.5
(2.3)
–
–
10.1
13.6
–
(3.4)
–
(0.1)
6.6
7.1
9.3
10.1
$million
Cost
Accumulated amortisation and
impairment
Net carrying amount
Net carrying amount at 1 April
Capital expenditure
Amortisation
Acquisitions - business combinations
Transferred from/(to) property plant
and equipment and property holdings
59.9
–
59.9
59.9
–
–
–
–
59.9
–
59.9
58.3
–
–
1.6
–
6
9
Balance at 31 March
59.9
59.9
2.7
84 CSR LIMITED ANNUAL REPORT 2023
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: 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 (2022: $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. Goodwill is allocated to the lowest level within the
group at which the goodwill is monitored for internal management purposes, and cannot be larger than an operating segment. Following
the reorganisation of the Building Products segment, the AFS goodwill has been reallocated to the Constructions Systems operating
segment given performance of the goodwill is monitored at this level. Immediately prior to the reallocation, an assessment of the carrying
value of the AFS CGU (including the goodwill) was performed and confirmed that the recoverable amount exceeded the carrying amount.
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 amounts 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 (2022: $59.9 million and $1.6 million respectively). The recoverable amounts of the cash generating units that include
goodwill are determined using discounted cash flow projections.
Key assumptions used in the impairment assessments:
Cash flow forecasts: The cash flows are modelled over a five-year period with a terminal value used from year six onwards. The first five
years represent financial plans forecast by management, based on the CSR group's view of the most recent outlook on building activity
levels and the current climate-related regulations and committed sustainability initiatives in place, with the terminal year representing
long-term average activity levels. These estimates are informed by a review of a sample of external forecasts available as at the date of
these financial statements. In addition, cash flows for the Aluminium cash generating unit reflect the most recent forecasts for key
assumptions such as the US$ 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 9.6% for all CGUs other than Aluminium which
uses 11.6% (2022: 9.0% for all CGUs other than Aluminium which was 10.5%).
Terminal value: The terminal value annual growth rate assumed is 2.5% (2022: 2.0%).
85
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 net deferred income tax assets
2023
168.5
2.4
35.8
206.7
2022
288.3
0.6
43.9
332.8
Opening
balance
Credited
(charged) to
profit or loss
Credited
(charged) to
equity
Other
(including
transfers)
Closing
balance
$million
2023
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
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
Recognition and measurement
(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
–
150.7
(4.6)
8.5
(9.6)
(6.0)
(1.4)
3.1
–
(3.3)
(8.7)
(4.8)
1.8
(8.1)
–
–
–
–
–
–
(92.0)
–
–
(1.0)
–
–
(33.1)
(93.0)
(2.8)
8.3
(9.8)
(5.3)
2.8
0.5
–
2.1
8.7
1.8
(1.3)
43.9
48.9
–
–
–
–
–
–
130.8
–
–
2.3
–
–
–
(9.3)
9.1
–
–
0.2
–
–
–
–
–
–
–
–
(8.0)
8.0
–
–
0.1
–
–
–
–
–
–
(16.5)
(38.6)
49.1
58.0
28.4
26.0
57.6
7.8
–
(3.3)
2.4
35.8
206.7
(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
133.1
0.1
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.
86 CSR LIMITED ANNUAL REPORT 2023
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 reflects 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’
2023
2022
115.3
7.8
5.7
128.8
32.5
131.1
163.6
112.4
8.3
5.3
126.0
30.0
135.5
165.5
2023
2022
22.8
2.6
2.9
28.3
6.8
15.6
2023
32.7
6.8
39.5
6
7
7
22.2
2.9
2.7
27.8
7.0
13.2
2022
31.9
7.0
38.9
2022
36.7
62.5
44.3
56.2
The table below analyses the undiscounted cash flows for the CSR group’s lease liabilities, into relevant maturity groupings based on the
remaining lease term at the reporting date:
$million
1 year or less
1 to 3 years
3 to 5 years
Over 5 years
2023
38.8
63.4
39.6
49.7
Total undiscounted cash flows
191.5
199.7
87
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
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
Recognised/
remeasured
Settled/
transferred
Discount
unwind
62.8
–
25.3
–
3.0
6.2
97.3
–
(25.3)
0.3
0.6
(0.1)
–
(24.5)
(68.7)
–
(25.3)
0.5
(4.6)
(3.7)
(101.8)
0.4
–
(0.6)
(0.4)
–
(0.7)
(1.3)
–
–
–
–
–
–
–
–
5.4
–
–
0.7
0.1
6.2
2023
88.7
1.4
24.0
1.4
6.3
12.5
134.3
5.3
169.4
2.4
10.4
16.0
9.7
213.2
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 and Western Australia 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.
88 CSR LIMITED ANNUAL REPORT 2023
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 2023, CSR had resolved
approximately 5,500 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;
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 2023 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
268.0
246.9
231.0
213.3
193.4
500
400
300
200
100
0
2019
2020
Base case provision A$m
2021
2022
2023
Prudential margin A$m
$million
Year ended 31 March
2023
156.8
36.6
23.3%
193.4
2022
174.8
38.5
22.0%
213.3
89
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 3.40% and US liability
Base case estimate
Prudential margin
Prudential margin %
2.20%); and
the discount rate applied to future payments (Australian liability
4.50% and US liability 4.20%).
Total product liability provision
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 $330.0 million (31 March 2022: $420.0 million) committed standby facilities with external financial institutions.
These facilities have fixed maturity dates as follows: $25.0 million in 2024, $55.0 million in 2025, $130.0 million in 2026 and $120.0 million in
2027. As at 31 March 2023, $330.0 million of the standby facilities were undrawn (2022: $420.0 million undrawn).
18
Issued capital
On issue 31 March 2022
On-market share buy-back – net of transaction costs
On issue 31 March 2023
Ordinary shares
fully paid1
Issued capital
$million
485,382,776
(7,999,189)
477,383,587
966.7
(36.4)
930.3
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 2023 and 31 March 2022 under employee share plans as shares in respect of the
plans were acquired on market. During the years ended 31 March 2023 and 31 March 2022, 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 2023 are $2.30 (2022: $1.93). Net tangible assets per share is calculated
as net assets attributable to CSR Limited shareholders of $1,167.1 million (2022: $1,007.0 million) less intangible assets of $69.2 million
(2022: $70.0 million) divided by the number of issued ordinary shares of 477.4 million (2022: 485.4 million).
During the year ended 31 March 2023, the company announced that as part of its ongoing capital management strategy, it would undertake an
on-market share buy back of up to $100 million. The share buy-back commenced in July 2022 and remains ongoing.
19 Dividends and franking credits
i) Dividends
Dividend type
2021 Final ordinary
2021 Final special
2022 Interim ordinary
2022 Final ordinary
2023 Interim ordinary
2023 Final ordinary1
Cents per
share
Franking
14.5
9.5
13.5
18.0
16.5
20.0
100%
100%
100%
100%
100%
100%
Total
amount
$million
70.4
46.1
Date
paid/payable
2 July 2021
2 July 2021
65.5 10 December 2021
87.4
1 July 2022
79.2 9 December 2022
3 July 2023
95.5
Graph 1: Dividends declared relating to each financial year
– cents per share
1 The final dividend for the financial year ended 31 March 2023 has not been recognised in this financial report because it was resolved to be paid after 31 March 2023. The
amounts disclosed as recognised in 2023 are the final dividend in respect of the financial year ended 31 March 2022 and the interim dividend in respect of the financial
year ended 31 March 2023.
ii) Franking credits
$million
Franking account balance on an accruals basis1
2023
22.8
2022
43.4
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.
90 CSR LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENT
20 Reserves
$million
Balance at 1 April 2022
Hedge profit 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
Income tax related to share-based payments
Acquisition of shares by CSR employee share trust
Balance at 31 March 2023
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
Income tax related to share-based payments
Acquisition of shares by CSR employee share trust
Balance at 31 March 2022
Nature and purpose of reserves
Hedge
reserve
(236.8)
164.8
45.7
–
(63.2)
–
–
–
(89.5)
(32.5)
(384.6)
92.8
–
87.5
–
–
–
(236.8)
Foreign
currency
translation
reserve
Employee
share
reserve
Share
based
payment
trust
reserve
Non-
controlling
interests
reserve
(31.4)
–
–
–
–
–
–
(5.0)
(68.8)
–
–
–
–
–
–
–
Total
(293.7)
164.8
45.7
0.8
(63.2)
4.3
(1.6)
(5.0)
(36.4)
(68.8)
(147.9)
(25.4)
–
–
–
–
–
–
(6.0)
(68.8)
–
–
(89.6)
(384.6)
92.8
–
–
–
–
–
(0.1)
87.5
4.0
2.3
(6.0)
48.7
–
–
–
–
4.3
(1.6)
–
51.4
42.4
–
–
–
–
4.0
2.3
–
48.7
(31.4)
(68.8)
(293.7)
(5.4)
–
–
0.8
–
–
–
–
(4.6)
(5.3)
–
–
(0.1)
–
–
–
–
(5.4)
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 61 to 64 of the
remuneration report for further detail). When the Trust purchases the company’s equity instruments, the consideration paid is recorded in
the share-based payments trust reserve.
Number of shares
Opening balance
Acquisition of shares by the Trust (average price of $4.48 (2022: $5.81) per share)
Issue of shares under executive incentive plans
Closing balance
2023
2022
750,812
1,116,734
(1,081,106)
102,181
1,031,614
(382,983)
786,440
750,812
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.
91
NOTES TO THE FINANCIAL REPORT | CAPITAL STRUCTURE AND RISK MANAGEMENTCIAL 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 2023
and 31 March 2022.
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 or
A2 for durations of more than 3 months or A– or A3 from rating
agencies Standard & Poor’s and Moody’s respectively for shorter
terms, 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
2023
Current payables
Commodity financial
instruments
Foreign currency financial
instruments
294.4
41.3
–
92.2
– 294.4
39.0 172.5
28.7
46.2
4.2
79.1
Total
364.4
138.4
43.2 546.0
2022
Current payables
Commodity financial
instruments
Foreign currency financial
instruments
314.4
248.9
–
284.8
– 314.4
61.4 595.1
2.5
6.5
1.9
10.9
Total
565.8
291.3
63.3 920.4
92 CSR LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL 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
2023
Commodity swaps – aluminium
Commodity swaps – alumina/aluminium
Commodity swaps – oil
Commodity swaps & futures – electricity
Forward exchange rate contracts (US dollars – sell)6
2022
Commodity swaps – aluminium
Commodity swaps – alumina/aluminium
Commodity swaps – oil
Commodity swaps & futures – electricity
Forward exchange rate contracts (US dollars – sell)6
2,409.8
–5
99.7
63.4
0.7
2,239.7
–5
83.7
57.1
0.7
378.7
173.3
12.6
9.1
354.9
344.1
113.2
13.8
10.1
307.4
765.2
367.2
5.8
6.7
299.7
196.3
–
–
1,443.6
736.8
18.4
15.8
669.1
237.0
1,261.0
669.1
207.7
10.0
11.9
538.6
296.2
87.2
–
0.2
1,309.4
408.1
23.8
22.2
235.0
1,081.0
14.6
3.8
3.5
15.3
4.2
0.2
37.4
11.4
22.4
53.5
(122.6)
(36.3)
(0.7)
(0.3)
(74.5)
(143.7)
65.2
2.1
3.0
113.6
(603.9)
(185.5)
(9.9)
–
(0.1)
(8.7)
57.7
3.5
4.4
100.4
143.7
(65.2)
(2.1)
(3.0)
(138.9)
185.5
(57.7)
(3.5)
(4.4)
(122.7)
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 $123.2 million net of commodity contract losses (2022: $542.4 million net losses) were deferred in 2023 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 2023 is one year or less: $15.2 million loss (2022: $229.5 million loss); one to three years: $77.2 million loss (2022: $256.5 million loss); three to five years: $30.8 million loss (2022: $56.4 million loss). The
fair value of $122.7 million (2022: $542.5 million) includes $0.5 million of gains (2022: $0.1 million of losses) recognised in profit or loss.
4 $70.3 million of net foreign exchange contract losses (2022: $44.8 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 2023 is one year or less: $27.4 million loss (2022: $36.0 million gain); one to three years: $41.9 million loss (2022: $5.2 million gain) and three to five years $1.0 million loss (2022: $3.6 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 2023 is an asset value of $2.3 million (2022: $0.6 million) and liability value of $0.1 million (2022: $1.7 million).
9
3
93
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
$131.6 million (2022: net cash balance of $177.7
million).
The maturity profile for the net cash balance of
$131.6 million is less than 1 year. The average
interest rate on debt for the year was 0% (2022: 0%)
and the average interest rate on cash balances for
the year was 1.83% (2022: 0.15%).
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 2023 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 $0.7 million
higher/lower (2022: $0.9 million higher/lower).
This is mainly due to higher/lower interest income on net cash
balances.
The CSR group uses a variety of foreign exchange risk management
instruments, including spot, forward and swap currency contracts and
currency options, to hedge foreign currency denominated receipts
resulting from revenue and payments for raw materials and capital
equipment denominated in foreign currencies.
The CSR group’s policy is to hedge its net US dollar aluminium
exposure to reduce the volatility of aluminium earnings, when
acceptable Australian dollar outcomes can be achieved.
Forecast US dollar receipts are based on highly probable forecast
monthly sales receipts of aluminium which ensures that the underlying
foreign currency exchange risk is identical to the hedged risk
component (i.e. the US dollar price). Hedging is undertaken at
declining levels for up to four years.
Sensitivity of fair values to changes in exchange rate is disclosed in
the market risk table on page 93.
The table below provides details on the nature and risk management in relation to commodity price risk. Sensitivity of fair values to changes in
commodity prices is disclosed in the market risk table on page 93.
Commodity Nature of commodity price risk
Commodity price risk management
Aluminium
The CSR group has exposure to aluminium
commodity prices which arises from sales contracts
that commit the CSR group to supply aluminium in
future years. Prices for product supplied under these
contracts are a function of the US dollar market
price at the time of delivery.
Alumina
The CSR group has exposure to alumina commodity
prices through the consumption of alumina at the
US$ 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, and also purchases directly
through supply contracts.
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 prices in gas
contracts where oil linked to reduce the volatility of its energy costs.
Eligible hedging instruments are commodity forward contracts and
options and commodity futures contracts and options.
94 CSR LIMITED ANNUAL REPORT 2023
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
Level
Current1
Non-current
Total
Current1
Non-current
Total
2023
2022
Financial assets at fair value
Commodity swaps – aluminium
Commodity swaps – alumina/aluminium
Commodity swaps – oil
Commodity swaps – electricity
Commodity futures – electricity
Forward exchange rate contracts
Payments in advance2
Futures margin3
Other
Total
Financial liabilities at fair value
Commodity swaps – aluminium
Commodity swaps – alumina/aluminium
Commodity swaps – oil
Commodity swaps – electricity
Commodity futures – electricity
Forward exchange rate contracts
Futures margin3
Other
Total
2
2
2
2
1
2
2
1
2
2
2
2
2
1
2
1
2
8.3
3.2
3.5
4.1
7.3
2.2
–
0.6
–
6.3
0.6
–
–
3.9
4.3
–
0.3
5.5
14.6
3.8
3.5
4.1
11.2
6.5
–
0.9
5.5
29.2
20.9
50.1
–
–
7.4
5.3
5.0
37.6
42.8
–
0.2
98.3
0.2
37.4
4.0
3.1
9.0
16.5
40.3
–
4.3
0.2
37.4
11.4
8.4
14.0
54.1
83.1
–
4.5
114.8
213.1
38.4
2.5
0.3
–
0.2
28.1
–
0.2
69.7
84.2
33.8
0.4
–
0.1
46.5
–
–
122.6
36.3
0.7
–
0.3
74.6
–
0.2
237.5
9.9
366.4
–
–
0.1
–
2.5
1.5
–
–
–
–
7.9
5.1
–
603.9
9.9
–
0.1
–
10.4
6.6
–
165.0
234.7
251.5
379.4
630.9
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 hedging under futures account agreements.
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 2023 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.
95
9
6
C
S
R
L
I
M
I
T
E
D
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
3
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 2023 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
2023
Aluminium commodity swaps
402,350 tonnes
14.6
(122.6)
Alumina/aluminium commodity
swaps3
1,330,000 tonnes
3.8
(36.1)
Oil commodity swaps
184,000 barrels
Electricity commodity swaps
250,296 MWh
Forward currency contracts (sales)
Forward currency contracts
(purchases)
1,260.5
47.1
3.5
14.8
4.2
2.3
(0.7)
(0.3)
(74.5)
(0.6)
Environmental certificates
84,000 certificates
–
(0.3)
2022
495.8
(59.9)
(8.6)
(7.9)
(115.1)
2.9
(0.5)
Aluminium commodity swaps
439,350 tonnes
0.2
(603.9)
(475.3)
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)
40.4
14.7
31.0
0.4
(46.6)
(0.8)
Environmental certificates
96,500 certificates
0.2
–
0.2
(497.6)
63.4
8.6
7.0
115.1
(2.9)
0.5
477.3
(43.1)
(14.7)
(31.0)
0.2
46.6
0.8
(0.2)
(107.9)
(32.3)
2.8
14.5
(70.3)
1.7
(0.3)
410.7
(98.1)
1.3
16.5
(107.2)
3.7
(0.5)
(603.7)
(621.8)
27.5
11.4
22.4
–
44.8
(1.1)
0.2
10.3
18.1
32.8
0.5
(10.7)
(0.6)
0.2
85.1
Trading revenue
38.3
Cost of sales
(9.9)
(24.4)
Cost of sales
Cost of sales
(7.9)
Trading revenue
(0.9)
Cost of sales
–
Cost of sales
146.5
30.1
(3.4)
(1.8)
(0.1)
Trading revenue
Cost of sales
Cost of sales
Cost of sales
Cost of sales
(36.0)
Trading revenue
(0.3)
Cost of sales
–
Cost of sales
1
2
The net hedge gain recognised in other comprehensive income totalling $226.4 million (2022: $571.2 million net loss) less non-controlling interests of $61.6 million (2022: $186.6 million) reconciles to the hedge
gain transferred to equity in note 20.
The net loss reclassified from other comprehensive income to profit or loss before tax totalling $80.3 million (2022: $135.0 million net loss) less non-controlling interests of $34.6 million (2022: $42.2 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.
96 CSR LIMITED ANNUAL REPORT 2021
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 | GROUP STRUCTURE
Group structure
22 Subsidiaries
Entity
2023
2022
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
2023
2022
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 2023
and 31 March 2022 of the closed group.
97
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
23 Deed of cross guarantee (continued)
i) Consolidated statement of financial performance
$million
Trading revenue – sale of goods
Cost of sales
Gross margin
Other income
Warehouse and distribution costs
Selling, administration and other operating costs
Share of net profit of joint venture entities
Impairment expense
Other expenses
Profit before finance costs and income tax
Interest income
Finance costs
Profit before income tax
Income tax (expense) benefit
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 benefit (expense) relating to these items
Items that will not be reclassified to profit or loss
Actuarial (loss) gain on superannuation defined benefit plans
Income tax benefit relating to these items
Other comprehensive (expense) income, net of tax
Total comprehensive income
iii) Summary of movements in consolidated retained profits
$million
Opening retained profits
Profit for the year
Actuarial (loss) gain on superannuation defined benefit plans (net of tax)
Dividends provided for or paid
Closing retained profits
98 CSR LIMITED ANNUAL REPORT 2023
2023
2022
1,762.0
(1,072.7)
1,544.7
(934.2)
689.3
75.6
(209.5)
(253.1)
18.2
–
(16.0)
304.5
1.8
(13.0)
293.3
(79.0)
214.3
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
2023
214.3
2022
248.4
21.0
(35.1)
0.8
4.2
(1.9)
0.7
(10.3)
204.0
2023
341.4
214.3
(1.2)
(166.6)
387.9
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
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
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
2023
2022
125.2
277.0
259.6
36.0
17.4
16.8
12.4
744.4
9.9
109.4
36.0
107.5
594.1
109.4
59.9
8.5
131.7
8.5
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
1,174.9
1,214.5
1,919.3
1,994.0
178.0
32.5
1.1
23.0
116.4
351.0
118.6
0.2
203.2
0.7
322.7
673.7
218.5
30.0
3.1
18.9
120.7
391.2
125.5
5.2
222.8
2.1
355.6
746.8
1,245.6
1,247.2
930.3
(72.6)
387.9
966.7
(60.9)
341.4
1,245.6
1,247.2
99
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
(Loss) profit after tax for the year
Other comprehensive income (expense) for the year
Total comprehensive income (expense) for the year
Statement of cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash held
Transactions with non-controlling interests
(Loss) profit allocated to non-controlling interests
Dividends paid to non-controlling interests
Recognition and measurement
Gove Aluminium Finance
Limited
2023
2022
186.2
198.1
178.4
175.7
780.3
(1.1)
224.6
223.5
(15.5)
65.0
(40.5)
9.0
(0.3)
–
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
–
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% (2022: 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% (2022: 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.
100 CSR LIMITED ANNUAL REPORT 2023
NOTES TO THE FINANCIAL REPORT | GROUP STRUCTURE
26 Equity accounting information
Carrying amount ($million)
Entity1
Building products
Rondo Building Services Pty Ltd2
Gypsum Resources Trust Australia2
New Zealand Brick Distributors3
Other2
Total investment
2023
Equity
accounted
investment
Long-term
loan
Net
investment
Long-term
loan
2022
Equity
accounted
investment
Net
investment
–
12.0
–
–
12.0
23.9
–
9.0
0.1
33.0
23.9
12.0
9.0
0.1
45.0
–
12.0
–
–
12.0
20.0
–
7.8
0.3
28.1
20.0
12.0
7.8
0.3
40.1
1 The CSR group’s interest in these entities is 50% (2022: 50%).
2 Entities incorporated in Australia.
3 Entity is a limited partnership in New Zealand.
Recognition and measurement
Investments in joint venture and associate entities have been accounted for under the equity method in the CSR group financial statements.
CSR’s share of net profit/loss of joint venture entities is recorded in the statement of financial performance.
Purchases and sales of goods and services to joint venture entities are on normal terms and conditions.
i) Net investment in joint ventures
$million
Opening net investment
Share of net profit before income tax
Share of income tax
Dividends and distributions received
Foreign currency translation and other
Closing net investment
ii) Summarised financial information of joint venture entities
$million
Statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Statement of financial performance
Revenue
Share of net profit after tax
Rondo Building Services Pty Ltd
Other
iii) Balances and transactions with joint venture entities
$million
Current payables to CSR
Non-current loans payable to CSR
Current payables to joint venture entities
Purchases of goods and services
Sales of goods and services
2023
40.1
27.5
(8.2)
(15.0)
0.6
45.0
2022
35.4
22.2
(6.6)
(10.9)
–
40.1
2023
2022
135.2
52.6
79.8
42.6
122.9
59.2
79.4
46.6
350.2
344.8
18.4
0.9
14.7
0.9
Note
2023
2022
32
1.7
3.2
7.3
57.1
4.8
0.5
10.6
9.8
48.1
3.9
101
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
2023
2022
733.6
1,828.5
(1,289.0)
(210.9)
737.3
1,850.2
(1,203.7)
(238.1)
1,062.2
1,145.7
930.3
9.0
122.9
966.7
11.3
167.7
1,062.2
1,145.7
123.1
121.9
134.5
134.6
1 As at 31 March 2023 CSR Limited is in a net current liability position of $555.4 million (2022: $466.4 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 $6.3 million
respectively (2022: $24.0 million and $7.9 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 $169.4 million and $16.0 million respectively (2022: $189.3 million and $15.4 million respectively). See notes 15 and 16
for further details.
2
AASB 17 Insurance Contracts (AASB 17) will be first applicable to the CSR group for the year commencing 1 April 2023 and must be applied
retrospectively. AASB 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts. The
parent entity, CSR Limited, will be impacted by the application of AASB 17 as the parent entity is a licensed self-insurer in New South Wales,
Queensland, Victoria and Western Australia for workers compensation insurance. The CSR group is currently determining the final impact on the
parent entity disclosures.
ii) CSR Limited transactions with controlled entities
During the financial years ended 31 March 2023 and 2022, 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
2023
2022
28
93.8
3.3
97.1
120.1
2.2
122.3
1 Financial guarantees disclosed above relate to bank guarantees provided to third parties to guarantee CSR Limited’s performance of its liabilities of $51.0 million (2022:
$77.3 million) and guarantees provided to third parties outside of the CSR group of $42.8 million (2022: $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 2023 (2022: $nil).
102 CSR LIMITED ANNUAL REPORT 2023
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 2023 for the CSR group were $37.0 million (2022: $32.0 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 2023 contributions
totalled $33.9 million (2022: $29.5 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 retained 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 2022. The funding requirements were
reviewed as at 30 June 2022. 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 102%. Therefore, as at 31 March 2023, CSR Limited was required to provide bank guarantees of $3.3
million to the trustee of the fund to satisfy the balance of its commitments (2022: $2.2 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 2022
$nil from 1 April 2022
57.6
29.4
(53.2)
(26.6)
4.4
2.8
0.2
0.2
Pilkington (Australia)
Superannuation Scheme DBD $nil from 1 April 2022 15.2 (15.9) (0.7) –
1 Actuarial liabilities are determined to be past service liabilities based on membership accrued up to 31 March 2023.
103
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 (loss) gain incurred during the financial year and recognised in the statement of comprehensive income
2023
2022
5.3
2.8
27.8
53.3
7.2
11.7
3.6
2.5
27.4
53.0
6.1
13.5
2023
2022
0.6
3.5
(3.8)
0.3
(1.9)
0.7
3.0
(3.2)
0.5
0.1
Cumulative actuarial losses recognised in the statement of comprehensive income
(52.4)
(50.5)
1 Disclosed in selling, administration and other operating costs.
Impact of plans on the statement of financial position
$million
Net asset of superannuation defined benefit plans
Fair value of assets
Present value of liabilities
Net asset
Included in the statement of financial position
Other non-current assets (note 32)
Other non-current liabilities
Net asset
Movements in the fair value of the defined benefit plan assets
Assets at the beginning of the financial year
Interest income
Return on assets (in excess of interest income)
Contributions from the employer
Contributions from participants
Benefits paid
Assets at the end of the financial year
Movements in the present value of the defined benefit plan liabilities
Liabilities at the beginning of the financial year
Current service cost
Finance cost
Contributions from participants
Actuarial gain
Benefits paid
Liabilities at the end of the financial year
104 CSR LIMITED ANNUAL REPORT 2023
2023
2022
102.2
(95.7)
111.7
(103.4)
6.5
8.3
7.2
(0.7)
6.5
111.7
3.8
(6.0)
0.4
–
(7.7)
10.4
(2.1)
8.3
123.5
3.2
0.1
0.3
0.1
(15.5)
102.2
111.7
103.4
0.6
3.5
–
(4.1)
(7.7)
115.1
0.7
3.0
0.1
–
(15.5)
95.7
103.4
NOTES TO THE FINANCIAL REPORT | OTHER
28 Employee benefits (continued)
i)
Superannuation commitments (continued)
Net asset (liability) of superannuation defined benefit plans
160
140
120
100
80
60
40
20
0
134.3
126.1
129.9
121.4
123.5
115.1
111.7
103.4
102.2
95.7
8.2
(8.5)
8.4
8.3
6.5
2019
2020
2021
2022
2023
Present value of fund liabilities ($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 2023, 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
2023
3,406,248
949,888
(724,335)
(511,214)
2022
3,143,063
835,606
(186,398)
(386,023)
3,120,587
3,406,248
There were no vested and exercisable shares at 31 March 2023 (2022: 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 2023 is set out below:
Grant date
19 July 2019
21 July 2020
21 July 2021
29 July 2022
Total
Expiry date
1 April 2022
1 April 2023
1 April 2024
1 April 2025
Performance rights
2023
–
1,335,093
835,606
949,888
2022
1,235,549
1,335,093
835,606
–
3,120,587
3,406,248
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
29 July 2022
Relative TSR with a
positive absolute TSR
requirement
Monte-Carlo simulation
1 April 2022
29 July 2022
EPS growth
Binominal tree
1 April 2022
31 March 2025 31 March 2025
2.7 years
$4.55
31%
6.1%
2.59%
$3.87
2.7 years
$4.55
31%
6.1%
2.59%
$1.45
Further details on the LTI plan and the terms of the grants during the year are detailed in the remuneration report on pages 61 to 64.
105
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
2023
350,446
$6.17
2022
272,319
$5.84
Employee Share Grant: to encourage employee share ownership, from time to time, the CSR board may elect to grant eligible employees CSR
shares. The maximum value of the Employee Share Grant is $1,000 per eligible participant. The shares can only be sold three years after the
date of grant, unless the participant’s employment ceases before then. During YEM23, the Employee Share Grant was offered to all eligible
employees in lieu of the Universal Share Ownership Plan (USOP).
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
Employee share grant1
USOP1
ESAP
2023
670,038
–
135,053
2022
–
348,406
78,185
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 $4.44 (2022: $5.46).
For further details on the USOP and the ESAP, refer to page 64 of the remuneration report.
Expenses arising from share-based payment transactions
$
Long-term incentive plan (PRP)
Deferred shares
Other plans
Total expense
2023
2022
2,549,474
1,764,474
2,341,390
2,520,154
1,509,875
951,555
6,655,338
4,981,584
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.
106 CSR LIMITED ANNUAL REPORT 2023
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.
These transactions included strategic transformation advice provided by a company related to a director, on normal commercial terms and
conditions, prior to the directors’ appointment to the CSR board. For detailed disclosures refer to the remuneration report on page 67.
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 2023 (2022: 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
2023
4,649,337
964,748
5,614,085
2022
4,800,500
1,171,722
5,972,222
Details of remuneration and the CSR Limited equity holdings of directors and other key management personnel are shown in the remuneration
report on pages 49 to 68.
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 2023 (2022: 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 2023 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 2023, 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
2023
2022
44.7
4.2
48.9
27.9
1.9
29.8
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.
107
NOTES TO THE FINANCIAL REPORT | OTHER
32 Other non-current assets
$million
Loans to joint venture entities1
Other 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
2023
3.2
9.1
12.3
1.3
7.2
8.5
2022
10.6
12.1
22.7
1.3
10.4
11.7
2023
2022
686,000
48,591
657,000
29,500
734,591
686,500
Cash and cash equivalents: net cash is defined as cash at bank and on hand and cash equivalents, net of bank overdrafts. Cash equivalents
include highly liquid investments which are readily convertible to cash, and loans which are not subject to a term facility. Cash and cash
equivalents held at 31 March 2023 included $131.6 million of cash at bank and on hand (2022: $177.7 million) and $nil short-term deposits
(2022: $nil).
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.
108 CSR LIMITED ANNUAL REPORT 2023
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 2023; 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
10 May 2023
Julie Coates
Managing Director and CEO
10 May 2023
109
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 2023, 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 2023 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 CSR, 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
$193.4 million as at 31 March 2023. 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 where
the past activities gave 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:
evaluating management’s process, including testing design and
implementation of controls in respect of the determination of the product
liability provision;
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;
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
110 CSR LIMITED ANNUAL REPORT 2023
INDEPENDENT AUDITOR’S REPORT
Key audit matter
How the scope of our audit responded to the key audit matter
Product Liability Provision (continued)
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.
Asset valuation
(Refer to Note 12 Property, plant and equipment and
intangible assets and Note 14 Leases)
At 31 March 2023 the Group’s consolidated
statement of financial position includes goodwill
amounting to $59.9 million, other intangible assets
amounting to $9.3 million, property, plant and
equipment amounting to $692.2 million and right-of-
use lease assets amounting to $128.8 million,
comprised of several cash generating units (CGUs).
Given that management has changed how they
monitor the business, this has resulted in the goodwill
being monitored at an operating segment level.
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.
In conjunction with valuation specialists, our procedures included, but not limited
to:
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;
obtaining and reading the position papers prepared by management to
support the models for the CGUs;
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, the level at
which goodwill is monitored and consistency with the segment reporting;
- evaluating management’s impairment trigger analysis based on a number
of factors including annual financial performance and external market
conditions; and
- confirming that each CGU containing goodwill had been included in
management’s impairment testing;
evaluating the analysis performed by management and the conclusions
drawn in relation to the AFS and Roofing CGUs by:
- assessing the appropriateness of the impairment model methodology, key
inputs and assumptions used in the models 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
models;
- agreeing relevant data in the cash flow models to the latest Board
approved forecasts;
- assessing the historical accuracy of forecasting of the CGUs;
- assessing the property valuation report as prepared by management’s
independent expert; and
assessing the appropriateness of the relevant disclosures in the Notes to the
financial statements.
111
INDEPENDENT AUDITOR’S REPORT
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 2023, 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 CSR 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.
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.
112 CSR LIMITED ANNUAL REPORT 2023
INDEPENDENT AUDITOR’S REPORT
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 49 to 68 of the CSR Limited annual
report for the year ended 31 March 2023.
In our opinion, the Remuneration Report of CSR Limited for the year ended 31 March 2023, complies with section 300A of the Corporations Act
2001.
Responsibilities
The directors of CSR 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, 10 May 2023
113
SHAREHOLDER INFORMATION
Shareholder information
20 LARGEST HOLDERS OF ORDINARY SHARES
As at 1 May 2023
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
Buttonwood Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
Prudential Nominees Pty Ltd
Citicorp Nominees Pty Limited
Navigator Australia Ltd
Filetron Pty Ltd
BNP Paribas Noms Pty Ltd
Mr Allan Ernest Ormes
HSBC Custody Nominees (Australia) Limited
CSR Share Plan Pty Limited
BNP Paribas Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
Netwealth Investments Limited
HSBC Custody Nominees (Australia) Limited
V M Nominees Pty Ltd
Top 20 holders of issued capital
Remaining holders balance
SUBSTANTIAL SHAREHOLDERS OF CSR LIMITED
Units
% of units
137,139,035
65,831,386
53,850,672
23,309,310
9,420,539
5,500,000
2,784,336
2,500,000
1,678,786
1,583,432
1,274,836
1,247,052
1,066,667
1,024,282
786,440
708,398
629,440
567,094
558,135
550,000
312,009,840
165,373,747
28.73
13.79
11.28
4.88
1.97
1.15
0.58
0.52
0.35
0.33
0.27
0.26
0.22
0.21
0.16
0.15
0.13
0.12
0.12
0.12
65.34
34.66
Australian Retirement Trust Pty Ltd advised that as at 22 March 2023, it and its associates had an interest in 24,066,209 shares, which
represented 5.037% of CSR’s issued capital at that time.
Blackrock Group and its subsidiaries advised that as at 22 February 2023, it and its associates had an interest in 24,120,3098 shares, which
represented 5.04% of CSR’s issued capital at that time.
Mitsubishi UFJ Financial Group Inc advised that as at 30 January 2023, it and its associates had an interest in 30,658,725 shares, which
represented 6.42% of CSR’s issued capital at that time.
State Street Corporation and its subsidiaries advised that as at 30 January 2023, it and its associates had an interest in 35,606,186 shares,
which represented 7.45% of CSR’s issued capital at that time.
First Sentier Investors Holdings Pty Limited advised that as at 30 January 2023, it and its associates had an interest in 30,661,364 shares,
which represented 6.42% of CSR’s issued capital at that time.
The Vanguard Group and its subsidiaries advised that as at 5 January 2022, it and its associates had an interest in 24,280,701 shares, which
represented 5.002% of CSR’s issued capital at that time.
114 CSR LIMITED ANNUAL REPORT 2023
SHAREHOLDER INFORMATION
SHAREHOLDINGS BY GEOGRAPHIC LOCATION
Location
Australia
New Zealand
Hong Kong
United Kingdom
United States of America
Other
Total
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
Units
473,976,421
2,082,471
431,982
346,304
158,737
387,672
477,383,587
Holders
23,762
19,681
4,190
2,815
86
50,534
Units %
99.29%
0.44%
0.09%
0.07%
0.03%
0.08%
100%
Holders
48,995
1,009
28
214
93
195
Holders %
96.95
2.00
0.06
0.42
0.18
0.39
50,534
100.00
Units
% of issued capital
11,500,627
46,900,079
30,474,620
61,555,915
326,952,346
477,383,587
Minimum $500.00 parcel at $5.3900 per unit
93
Minimum parcel size
Holders
1,458
RECENT CSR DIVIDENDS
Date paid
December 2017
July 2018
December 2018
July 2019
December 2019
December 2019
December 2020
December 2020
July 2021
July 2021
December 2021
July 2022
December 2022
Type of dividend
Dividend per share
Franking
Interim
Final
Interim
Final
Interim ordinary
Interim special
Interim ordinary
Interim special
Final ordinary
Final special
Interim ordinary
Final ordinary
Interim ordinary
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
18.0 cents
16.5 cents
50%
75%
100%
50%
50%
50%
100%
100%
100%
100%
100%
100%
100%
2.41
9.82
6.38
12.89
68.50
100.00
Units
44,438
Franked amount
per share at 30%
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
18.0 cents
16.5 cents
115
Investor Relations
For general investor queries please contact us at:
Email investorrelations@csr.com.au
Further information
The CSR Annual Report, Corporate Governance Statement and
Sustainability Report are available to view online or downloaded on
our website at www.csr.com.au
For further information about CSR and its operations, or to sign up
for ASX announcements please visit our website at
www.csr.com.au
SHAREHOLDER INFORMATION
Registered Office
CSR Limited
ABN 90 000 001 276
Triniti 3, Level 5, 39 Delhi Road
North Ryde NSW 2113 Australia
Mailing Address
Locked Bag 1345
North Ryde BC NSW 1670 Australia
Telephone
International
(02) 9235 8000
+61 2 9235 8000
www.csr.com.au
Share Registry
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
1800 676 061
+61 3 9415 4033
+61 3 9473 2500
www.investorcentre.com/contact
116 CSR LIMITED ANNUAL REPORT 2023