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CSR LIMITED ANNUAL REPORT 2018MANAGING DIRECTOR’SREVIEWOur strategy to capitalise on the strength in the residential construction market followinginvestment in our operations has delivered another strong result for CSR.Residential construction markets remainedstrong during the year.The successful execution of our strategy hasensured that we capitalised on this strong activity.While our earnings in Building Products have grownconsecutively over the last five years, we are alsoinvesting for the future.We are focused on two key areas – on our customers,by ensuring they are at the centre of everything wedo, and secondly, by transforming CSR into a digitalleader in the construction industry.We want to improve our customers’ experience witha seamless process to place orders, track deliveriesand interact with CSR. We are also investing ininnovations to develop construction industry solutionsthat are smarter, faster and easier to use. Mostimportantly, we want to make our customers’ liveseasier, more productive and profitable.We are also driving innovation in the constructionindustry by sourcing and developing constructionsystems from around the world and adapting themfor the Australian and New Zealand constructionmarkets. We are recognised as the leader andinnovator in building systems by the constructionindustry.SUSTAINABILITY“We are investing in future growth through ourdigital solutions and growing our position in lightweightbuilding and façade systems.”ROB SINDEL, MANAGING DIRECTOR6We have also continued to improve the sustainabilityof our operations this year. We have includedadditional reporting around our goals in threekey areas: the environment, our people and thecommunity.Environment – To date we have exceeded our 2020targets for waste and emissions with further workunderway to reduce water consumption and energy.Planning is underway for sustainability targets post2020 as we assess ways to mitigate the potentialimpacts of climate change and changes in energysupply and pricing.

CSR LIMITED ANNUAL REPORT 2018DELIVERING ON OUR STRATEGYWe are building on our strategy covering five key areas to grow our building products businesses over the medium term.CSR’S STRATEGYKEY BRANDSSTRATEGIC RATIONALELONG-TERM GROWTHStrengthenand invest Increased exposure to stabledetached market Operational flexibility Land releaseSmarter, faster,easier Greater share of multi-residentialmarket Speed of construction Doubled Rediwall capacity New market segment offering(aged care, townhouse andstudent accommodation)Changing the waywe live and work Growth and increasedshare in all market segments 75 million capacity expansion New product development Inclose façade systemsComfort andenergy efficiency Market expansion from glasswoolto polyester, solar, battery storageand ventilation Leading energy solutions providerto new build marketCustomer Maintain market leading position Invest in digital capability Investment in trade centres andretail capabilities Data analytics to provide customerpreferences and trendsPeople – Safety performance across most of our sites improvedthis year despite higher levels of production activity. While theoverall performance of the group improved, we have more workto do to ensure no one is injured at CSR. The focus for the yearahead is to ensure we continue to improve safety performancesupported by programs within four key themes: Leadership, RiskManagement, Systems Performance and Healthy Body and Mind.Community – Our community engagement covers a wide rangeof activities from engagement with local communities locatednear our sites to our extensive involvement with mentoring localstudents where our employees donated 628 hours during the year.In addition, CSR and its employees have donated over 3 millionto charities through the CSR Community Support Programsince 2003.FINANCIAL RESULTS BY BUSINESSTrading revenue from Building Products was 1.7 billion, up 6%,with higher volumes and improved pricing across most productsand segments.EBIT was up 6% to 214.1 million with earnings, reflecting thebenefit of improved factory performance, price increases and costmanagement. The result includes investment of approximately 10 million in a number of growth initiatives.Aluminium sales volumes of 212,801 tonnes were up 1% due tooperational improvements at the Tomago smelter. Trading revenueof 565.5 million was up 11% reflecting a 10% improvement inthe realised aluminium price.EBIT of 79.5 million was down 15% largely due to the powersupply contract which took effect from November 2017. Thisincreased total power-related costs by 34.3 million for the fivemonths of YEM18 that the new contract was in place.Property recorded EBIT of 47.8 million, up from 15.0 millionin the prior year. The result includes the sale of the 8-hectare siteat Rosehill, NSW and sales from Stage 4 and 5 of the 584-lotresidential development at Chirnside Park, Vic.OUTLOOKLooking at the outlook for the year ending 31 March 2019(YEM19), CSR confirmed:B uilding Products and Viridian – Recent building approvalsremain strong with detached housing at its highest level in twoyears. This supports the current level of activity for the yearahead. Viridian’s operational performance in Australia and NewZealand has improved in recent months with the business ontrack to improve earnings in the year ahead.Viridian’s trading revenue of 368.5 million was down3% following the sale of glass processing sites in Cairns,Darwin and Perth.C urrently 74% of net Aluminium exposure for YEM19 is hedgedat an average price of A 2,590 per tonne (excluding ingotpremiums) as of 30 April 2018. Earnings will be impacted by thefull year effect of higher power related costs.Viridian’s EBIT of 3.5 million in YEM18 was impacted by furtherlosses in its Commercial business. Operational performancehas improved in recent months following a simplification of theoperating structure at Ingleburn, NSW while demand grows forhigher margin insulated glass units (IGU) in the residential andcommercial markets.T wo Property transactions were announced in the first weekof YEM19 resulting in EBIT of approximately 37 million. Thisincluded the completion of Stage 5 at Chirnside Park, Vic andthe sale of the 10-hectare surplus industrial site at Horsley Park,NSW which is expected to be recorded in the second half ofthe year.ROB SINDEL, MANAGING DIRECTOR7

CSR LIMITED ANNUAL REPORT 2018BUILDING PRODUCTSAND VIRIDIANCSR’s Building Products business has continued its track record of growth in earningswhich improved for the fifth consecutive year.6%Building Products earningsup 6% with growth in pricingand volumesMARKET OVERVIEWTotal residential commencements on atwo quarter lag basis for the 12 months to31 March 2018 of 220,000 were down 6%compared to the previous 12 month period.Detached housing on the east coast remainedrelatively stable, down 1%, while Western Australiawas down 13%. The multi-residential markethas slowed, particularly in the high-rise segmentwhich was down 12%.The non-residential market increased stronglywith the value of work done up an estimated 9%following solid growth in approvals data over thelast three years. The alterations and additionsmarket is marginally down with some activity beingtransferred to the “knockdown rebuild” market. TheNew Zealand market remains reasonably strongacross all segments.Detached building approvals remain strong and whilelead indicators are pointing to a softening in activity inthe multi-residential market, the pipeline of projectsunderway is expected to underpin steady demand forCSR’s products in the year ahead.46%BUILDING PRODUCTSTrading revenue from Building Products was 1.7 billion, up 6%, with higher volumes andimproved pricing across most products andsegments.EBIT was up 6% to 214.1 million with earningsreflecting the benefit of improved factoryperformance, price increases and cost management.Approximately 10 million was invested in a numberof growth initiatives including CSR’s digital customerplatform and development of the Inclose offsitefaçade system. CSR Inclose is based in a newmanufacturing facility in Port Kembla, NSW and wasrecently awarded its first contract to supply a studentaccommodation project at the Australian NationalUniversity in Canberra.EBIT margin of 12.8% was down slightly from 12.9%as improved volume, pricing and product mix offset 9 million in higher energy costs.8CSR exposure to thedetached housing marketwhich has remained relativelystable over the last few yearsTOP: RANDWICKRACECOURSE FIT OUT WITHMARTINI ABSORB XXHDHANGING PANELS DELIVERINGMAXIMUM DESIGNFLEXIBILITY AND SUPERIORACOUSTIC PERFORMANCE.ABOVE: MONIER HORIZONFLAT TILES FEATURINGC-LOC COLOUR TECHNOLOGY.

CSR LIMITED ANNUAL REPORT 2018“I really enjoy workingwith our customersto help deliver greatbuilding projectswith Hebel fromdetached housesto high riseapartments.”JAKE BRIGHT, HEBELA WINNING COMBINATIONCSR brands showcased in the series ofThe BlockCSR has a long standing relationship with The Blockfeatured on the Channel 9 Network. The Block seescouples compete against each other to renovatea property and sell it at auction, the winnerdetermined by the highest price above reserveon auction day. CSR supplied over 20 products inthe 2017 series including logistics and technicalsupport from the teams at Gyprock, Bradford,Cemintel, Hebel, Monier, PGH and Viridian.“We are extremely luckyto have a long associationwith CSR at The Block.Our projects are literallywrapped in CSR productswhich create a greatthermal environment.”JULIAN BRENCHLEY,THE BLOCK ARCHITECTFor more information on The Block, please 211615161718BUILDING TRADING REVENUEYear ended 31 March ( million)1415161718BUILDING PRODUCTS EBITYear ended 31 March ( million)14110 117 117 11415161718Multi-residentialDetached housingBUILDING PRODUCTS HOUSING STARTSYear ended 31 March ( million)Source: ABS, two quarter lag9

CSR LIMITED ANNUAL REPORT 2018BUILDING PRODUCTS AND VIRIDIAN (CONTINUED)VIRIDIANTrading revenue of 368.5 million was down 3% followingthe sale of glass processing sites in Cairns, Darwin andPerth.77%Viridian’s Lightbridge doubleglazing insulates a homeup to 77% better thanordinary glassViridian’s EBIT of 3.5 million in YEM18 was impactedby further losses in its Commercial business. Higherthan anticipated volumes led to operational issues and asignificant increase in costs at the recently commissionedfactory in Ingleburn, NSW. Operational performancehas improved over the last few months following asimplification of the operating structure at Ingleburn whiledemand grows for higher margin insulated glass units(IGU) in the commercial market.3.58.13.1The balance of the Viridian businesses improvedperformance with increased pricing and product mix,offset by 4 million in higher energy costs. In Australia,demand for higher performing glass in the residentialmarket is also increasing following new BASIX energytargets in New South Wales which became effective inJuly 2017 while in Victoria, IGU sales accounted for over60% of revenue in YEM18.The New Zealand business is delivering improved earningsfollowing the consolidation of three plants in Auckland.7.01516171814VIRIDIAN GLASS USED TO CREATE LIGHT-FILLEDMEETING AND LEARNING SPACES USED IN THISLATROBE UNIVERSITY BUILDING IN MELBOURNE.-14.9VIRIDIAN EBITYear ended 31 March ( million)JEWEL PROJECT SHOWCASES HEBEL’S DIVERSITYINSIDE AND OUTHebel on both the interior and exteriorof the landmark Jewel residential projectat Wentworth Point in SydneyWith the Hebel High Rise Façade system, the creativepossibilities are endless.Taking this approach, Stanisic Architects ensured astunning finish to the landmark Jewel residential projectdeveloped by PAYCE and Sekisui House Australia,recently completed at Wentworth Point in Sydney.Hebel was used on both the exterior and interior ofthe mixed-use development, which comprises 256apartments across three buildings as well as retail,dining and other services.Jewel’s waterfront location at the northern tip of theWentworth Point peninsula demanded something specialin regard to its design, a demand that Stanisic Architectsanswered by choosing Hebel to develop a façade thatcould reflect the watery pattern of the harbour.Hebel was chosen because of its lightweight natureand also because it could be constructed on site, whichwould both improve the constructibility of the projectand reduce the cost. The Hebel PowerPanel system wasalso chosen for all the non-load bearing internal wallsincluding intertenancy and corridor walls.10

CSR LIMITED ANNUAL REPORT 2018“What stands out aboutthis project is its sheersize and complexityto fit thousands ofdifferent coloured glasspanels into what waslike working with ajigsaw puzzle.”CHRIS MURRAY,VIRIDIAN COMMERCIALINTENSIVE CAREViridian’s St. John of God Hospital, Berwick, MelbourneOverlooking Melbourne’s high volume PrincesFreeway, Berwick’s new 210-bed facility is wrappedin an array of Viridian EVantage SuperBlue doubleglazed units. The 120 million hospital representsthe kind of smart ideas where health care technologyand art come together into a single entity.Viridian’s new PixaGraphic digitised glass printingprocess provided the hospital’s signaturePomegranate motif to be repeated throughout,while SuperClear glass helps illuminate thecentral stairway.PIXAGRAPHIC GLASSPRINTING AT THE HOSPITALTHE FOLKHOUSEPGH’s contemporary extension to a character homeThe Folkhouse, described as a contemporaryextension to a character pre-war home, sits quietlyatop the crest of a hillside in Balmoral, Vic. With theexisting raised cottage, The Folkhouse has been filledin with a brick base, which certainly adds a bold andcontemporary texture to the home. The theme ofbrick stems from original post-war extensions thatwere of similar essence, offering a contrast resonantwith the lightweight first floor.The integration of brick into exterior paving helpsto link the house, swimming pool, and a uniquefireplace pillar together in this project. Notably,PGH’s bricks extend from the interior of the hometo its outdoor living area. Through this, internalfeature walls and seating are created, workingseamlessly, and offer a quintessential airyatmosphere.PGH COPPER GLOW BRICKSUSED IN THE EXTENSION11

CSR LIMITED ANNUAL REPORT 2018BUILDING PRODUCTS AND VIRIDIAN VIEWAFS is a leader in loadbearing permanentformwork walling solutionsto deliver faster, lower costconstruction.Bradford supplies a fullrange of thermal, acousticand fire insulation andenergy saving products forhomes and commercialbuildings.Cemintel providesengineered fibre cementsystems and internal liningproducts.Gyprock is Australia’sleading manufacturer ofgypsum based plasterboardproducts.RESULTSIncreased earningsreflecting increasedpenetration and demandfrom the multi-residentialmarket.Earnings increased followinghigher volumes andimproved pricing, despite asignificant step up in energycosts.Earnings were lowerfollowing increasedcompetition and pricingpressure.Increased earnings acrossall states with highervolumes and pricingreflecting the strongeast coast activity in theresidential constructionmarket.HIGHLIGHTSLaunch of the new Rediwallproduct range is underwayfollowing completion of themanufacturing facility atMinto, NSW.Bradford Energy Solutionsis also growing its allianceswith a number of majorbuilders to provide solarPV and battery storage asa standard inclusion in thenew home market.Continues to expand intonew markets with growthfrom new fibre cementfaçade systems andprefinished panels.Continues to improveits customer serviceexperience includingstore upgrades across its60 Gyprock Trade Centresincluding the opening offour new stores in YEM18.READY FOR THE GAMESCemintel used for the Commonwealth Games VillageCemintel designed a purpose made compressed sheet fibrecement product to supply over 60,000 square metres in the2018 Commonwealth Games Village in the Gold Coast.60,000m2of Cemintel supplied forthe Commonwealth GamesVillage in the Gold CoastThe redevelopment comprised over 1,200 permanent dwellingsthat provided accommodation and services for up to 7,000athletes and officials during the games. Incorporated in thedevelopment plan was over seven hectares of green andopen space. It is estimated that the construction of the villageinjected 550 million into the local economy and 1,500 jobsthroughout design and construction.“Cemintel worked closelywith developer Groconto deliver this landmarkproject for the 2018Commonwealth Games.The solution was speciallydesigned to meet specificsize and performancestandards for 60,000m2of façades across the18 buildings.”MATT MAHONEY, ACCOUNTMANAGER; AND CHARLI BYE,COLOUR AND DESIGNCO-ORDINATOR12

CSR LIMITED ANNUAL REPORT 2018Hebel is Australia’sonly manufacturer ofautoclaved, aeratedconcrete that is used inresidential, commercial andinfrastructure applications.Martini manufacturesenvironmentally sustainable,high-quality thermal andacoustic polyester fibreproducts for a variety ofindustries.Monier produces anextensive range of concreteand terracotta rooftiles inAustralia and New Zealand.PGH produces a range ofover 180 colours and sizesof bricks from 10 sitesacross the east coast ofAustralia.Viridian is Australia’s largestglass supplier and leadsthe industry for quality andinnovation.Continued its track recordof increasing earnings withmarket share growth in allmajor segments.Earnings increasedwith growth from thecommercial market inboth aesthetic decorativeproducts and functionalacoustic boards.Earnings were downfollowing softer marketdemand in Queensland andinvestment in innovationand product development.This was largely offset byimproved performance inVic and NSW.Earnings were higherfollowing strong activity onthe east coast, supportedby concerted efforts tomitigate increased energycosts.The balance of the Viridianbusinesses improvedperformance with increasedpricing and product mix,offset by 4 million in higherenergy costs.The 75 million expansionof capacity at Somersby,NSW is on track forcompletion in March 2019.Continuing to workwith Australia’s leadingarchitectural firms andengineering consultancieson many landmark projectssuch as the Barangarooand Darling Harbourdevelopments in Sydney.Investment in the Elementallightweight roofing rangeand Colour Lock technologycontinues.Investment in new productsand customer servicecontinues with the launchof the Corium brick claddingsolution and the opening ofa new PGH selection centrein Melton, Vic.Demand for higher performingglass is increasing followingnew BASIX energy targetsin New South Wales whichbecame effective in July 2017while in Victoria, IGU salesaccounted for over 60% ofrevenue in YEM18.SOARING TO NEW HEIGHTSGyprock supports Perth’s most iconicproject at Optus StadiumGyprock was pleased to be chosen by the wall andceiling contractor to supply the Optus Stadiumproject, partnering with Cubic to guide productspecification and providing technical support on

year. We are well advanced in the construction of our new 75 million Hebel factory in Somersby, NSW. Hebel is experiencing strong growth across residential and commercial construction and this new facility will provide additional volume to expand into new markets as Australia's only manufacturer of autoclaved aerated concrete.