**SECURITIES AND EXCHANGE COMMISSION**

 

**FORM 20-F**

**(Mark One)**

 

| **o  ANNUAL REPORT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT  OF 1934**     |
|---------------------------------------------------------------------------------------------------|
|                                                                                              |   |
| **OR**                                                                                            |
|                                                                                              |   |   |
| **ý  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT  OF 1934** |
|                                                                                              |   |
| **For the fiscal year ended March 31, 2003**                                                      |
|                                                                                              |   |   |
| **OR**                                                                                            |
|                                                                                              |   |   |
| **o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**  |
|                                                                                              |   |

** **

**For the transition period from                        to                         **

 

**Commission file number: 0-24678**

 

**CSR LIMITED**

**ABN 90 000 001 276**

(Exactname of Registrant as specified in its charter)

 

**New South Wales, Australia**

(Jurisdiction of incorporation or organization)

 

**Level 1, 9 Help Street, Chatswood, New South Wales2067, Australia**

(Address of principal executive offices)

 

Securities registered or to be registered pursuant to Section 12(b) ofthe Act:

**None**

 

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Securities registered or to be registered pursuant to Section 12(g) ofthe Act:

**Ordinary Shares.**

**American Depositary Shares**

**evidenced by American Depositary Receipts, eachrepresenting**

**four Ordinary Shares.**

 

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Securities for which there is a reporting obligation pursuant toSection 15(d) of the Act:

**None**

 

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Indicatethe number of outstanding shares of each of the issuer’s classes of capital orcommon stock as of the close of the period covered by the annual report.

 

| **Ordinary shares, fully paid** |   | **944,668,106** |
|---------------------------------|--------|-----------------|

 

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Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

| **Yes** | ý |   | **No** | o |
|---------|--------|--------|--------|---|

 

Indicateby check mark which financial statement item the registrant has elected tofollow

 

| **Item 17** | o |   | **Item 18** | ý |
|-------------|---|--------|-------------|--------|

 

 

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| **CONTENTS**               |
|----------------------------|
|                       |   | **Page** |
| Rinker  demerger from CSR  | 4 |
| Certain  Definitions       | 6 |
| Forward-Looking Statements | 8 |
|                       |   |
| PART I                     |
|                       |   |   |
| Item 1.                    | Identity of Directors, Senior  Management and Advisors | 9 |
| Item 2.                    | Offer Statistics and Expected  Timetable | 9 |
| Item 3.                    | Key Information | 10 |
|                       | Currency of  Presentation and Exchange Rates | 10 |
|                       | A. | Selected  Financial Data | 12 |
|                       | B. | Capitalization and  Indebtedness | 14 |
|                       | C. | Reasons for  the Offer and Use of Proceeds | 14 |
|                       | D. | Risk Factors | 15 |
| Item 4.                    | Information on the CSR group | 21 |
|                       | A. | History and  development of the company | 21 |
|                       | B. | Business  Overview | 22 |
|                       | C. | Organizational  Structure | 38 |
|                       | D. | Description of  Property, Plant and Equipment | 38 |
| Item 5.                    | Operating and Financial Review and  Prospects | 40 |
|                       | Significant  Events in fiscal year 2003 | 40 |
|                       | US GAAP | 40 |
|                       | Critical accounting  policies | 40 |
|                       | New  Accounting Standards | 43 |
|                       | A. | Management  discussion and analysis of financial results | 46 |
|                       | B. | Liquidity and Capital  Resources | 65 |
|                       | C. | Research  and Development, Patents and Licenses | 68 |
|                       | D. | Trend Information | 68 |
|                       | E. | Off-Balance  Sheet Financial Arrangements | 69 |
|                       | F. | Contractual  Obligations and Commercial Commitments | 69 |
|                       | G. | Major  restructuring and rationalization charges and related asset impairment | 70 |
|                       | H. | Details of  defined benefits pension plans | 71 |
| Item 6.                    | Directors, Senior Management, and  Employees | 74 |
|                       | A. | Details of  directors and senior management | 74 |
|                       | B. | Compensation  of Directors and Senior Management | 76 |
|                       | C. | Board Practices | 81 |
|                       | D. | Employees | 83 |
|                       | E. | Share Ownership | 84 |
| Item 7.                    | Major Shareholders and Related Party  Transactions | 85 |
|                       | A. | Major  Shareholders | 85 |
|                       | B. | Related Party Transactions | 85 |
|                       | C. | Interests of Experts  and Counsel | 88 |
| Item 8.                    | Financial Information | 89 |
|                       | A. | Consolidated  statements and other financial information | 89 |
|                       | B. | Significant Changes | 95 |
| Item 9.                    | The Offer and Listing | 96 |
|                       | Nature  of Trading Market | 96 |
| Item 10.                   | Additional Information | 97 |
|                       | A. | Share Capital | 97 |
|                       | B. | Constitution | 97 |
|                       | C. | Material  Contracts | 99 |
|                       | D. | Exchange  Controls and Other Limitations Affecting Security Holders | 101 |
|                       | E. | Taxation | 102 |
|                       | F. | Dividends and Paying Agents | 106 |
|                            |  |  |  |  |

 

2

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|      | G.                                                                            | Statement  by Experts   | 106    |
|-----------|-------------------------------------------------------------------------------|-------------------------|--------|
|      | H.                                                                            | Documents  on Display   | 106    |
|      | I.                                                                            | Subsidiary  Information | 106    |
| Item  11. | Quantitative  and Qualitative Disclosures about Market Risk                   | 107                     |
| Item  12. | Description  of Securities Other Than Equity Securities                       | 109                     |
|      |                                                                          |                    |   |
| PART II   |
|      |                                                                          |                    |   |
| Item 13.  | Defaults, Dividend  Arrearages and Delinquencies                              | 109                     |
| Item 14.  | Material Modifications  to the Rights of Security Holders and Use of Proceeds | 109                     |
|      |                                                                          |                    |   |
| PART III  |
|      |                                                                          |                    | 109    |
| Item 15.  | Controls and Procedures                                                       | 109                     |
| Item  16. | Not  applicable                                                               |                    |
|      |                                                                          |                    |   |
| PART IV   |
|      |                                                                          |                    |   |
| Item 17.  | Financial statements                                                          | 109                     |
| Item 18.  | Financial statements                                                          | 109                     |
| Item 19.  | Exhibits                                                                      | 109                     |
|      | Signature                                                                     | 110                     |

 

3

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## **Rinker demerger from CSR**

 

OnMarch 28, 2003, the Federal Court of Australia approved the demerger of RinkerGroup Limited (“Rinker”) from CSR Limited (“CSR”), after shareholders voted infavour of the demerger on March 25, 2003. Rinker was admitted to the official list of the Australian StockExchange (“ASX”) and its shares were quoted on the stock market conducted bythe ASX, effective March 31, 2003 (on a deferred settlement basis). In accordancewith the terms of the demerger, Rinker issued 944.7 million shares on April 11,2003 to CSR shareholders.

 

*Thedemerger process*

 

On November 19, 2002, CSR announced a proposalto demerge Rinker from its building products, sugar and aluminium businesses.As a result of the demerger, CSR continues to hold its interest in its buildingproducts, sugar and aluminium businesses and Rinker holds Rinker MaterialsCorporation (“Rinker Materials”) and Readymix Holdings Pty Limited(“Readymix”), both of which were previously held within the CSR group.

 

Theeffect of the demerger was to split shares in CSR into separate investments intwo Australian companies, both listed on the ASX:

 

•                    Rinker – a focused, heavybuilding materials group, comprising Rinker Materials in the United States andReadymix in Australia and China; and

 

•                    CSR – a diversified companywith a portfolio of businesses comprising CSR Building Products (with operationsin Australia, Asia and New Zealand), Aluminium and CSR Sugar.

 

Thedemerger has been effected through an Australian court-approved scheme ofarrangement and associated capital reduction and dividend distribution.

 

Thedemerger occurred in two simultaneous stages. First, CSR reduced its sharecapital by A$0.84 per share and declared a notional cash dividend of A$0.69 pershare. Second, under a scheme of arrangement effected by an order of theFederal Court of Australia and binding on all CSR shareholders and CSR, CSRshareholders agreed to purchase all the shares in Rinker utilizing asconsideration their capital reduction and dividend entitlement from CSR. CSRshareholders received one Rinker ordinary share for each CSR share they held onthe record date of April 4, 2003 (other than certain CSR shareholders, whoseregistered addresses were in places where the issuance of Rinker shares is notpermitted or was impractical, who instead received the proceeds of sale ofthose Rinker shares).

 

Forthe demerger to proceed, approval was required from a majority in number of CSRshareholders present and voting, and holding at least 75 percent of the totalnumber of CSR shares voted, at the shareholder’s meeting held to consider thedemerger. The shareholders’ meeting was held on March 25, 2003 and 95.3 percentof shareholders who voted, representing 99.5 percent of shares voted, voted infavour of the demerger. The implementation of the demerger was also subject tothe approval of the Federal Court of Australia considering the scheme ofarrangement, which was approved on March 28, 2003. The approval of the ASX wasalso required in order to admit Rinker to the official list of the ASX andRinker shares commenced trading on March 31, 2003 (on a deferred settlement basis).

 

*Impact on the results of the CSR group in fiscal year2003*

 

Asa consequence of the demerger of Rinker on March 28, 2003, CSR Limited recordeda gain (after tax) of A$1,492.7 million, which is included in CSR group’s netprofit for fiscal year 2003 in the financial statements included elsewhere inthis annual report. Key components of this gain include:

 

 

4

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|                                                                                                             |   | **A$  millions** |   |
|------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
| Fair value of Rinker group disposal(1)                                                                           |   | 4,573.0          |   |
| Less:                                                                                                            |   |             |   |
| Book value of consolidated net assets of Rinker  group, excluding outside equity interests (A$16.9 million) |   | (3,023.8         | )      |
| Demerger transaction costs                                                                                       |   | (74.2            | )      |
| Profit from ordinary activities before finance and  income tax impact                                            |   | 1,475.0          |   |
| Income tax benefits                                                                                              |   | 17.7             |   |
| Net profit impact                                                                                                |   | 1,492.7          |   |

 

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(1)          The fair value of A$4,573.0 million was determinedby taking the average Rinker share price for the period March 31, 2003 to April14, 2003 of A$4.84 multiplied by the number of Rinker shares on issueimmediately after the demerger.

 

 

5

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## **Certain Definitions**

 

The fiscal year for CSR ends on March 31.  As used throughout this annual report, unless otherwise stated orthe context otherwise requires, the fiscal year ended March 31, 2003 isreferred to as fiscal year 2003  or yearended March 31, and other fiscal years are referred to in a correspondingmanner.  All other references to yearsrelate to calendar years.

 

References to tonnes herein are to metric tonnes, each of which equalsapproximately 2,205 pounds or 1.102 short tons.  Measures of distance referred to herein are stated in kilometers,each of which equals approximately 0.62 miles. Measures of area referred to herein are stated in square kilometers orhectares; one square kilometer equals 0.3861 square miles and one hectareequals 2.47 acres.  Measures of volumereferred to herein are stated in litres, each of which equals approximately0.26 United States gallons.

 

Estimates with respect to market size information represent thejudgment of the CSR group, based on records and experience of CSR groupentities as well as information available from industry and governmentpublications and other sources.

 

Any discrepancies between totals and sums of components in tables containedin this annual report are due to rounding.

 

“9.55am hedge settlement rate” means the 9:55 a.m. hedge settlement rate at the endof each month in the period presented, as displayed on the Reuters financialnews service.

 

“ADSs” means “American Depositary Shares”, each American DepositaryShare representing four Ordinary Shares.

 

“ADRs” means “American Depositary Receipts” which may evidence anynumber of ADSs.

 

“associate” or “associated company” means in relation to CSR, an entityother than a consolidated entity, where CSR has the capacity to influencesignificantly the financial and operating policies of the entity.

 

“ASX” means the Australian Stock Exchange.

 

“Australian GAAP” means accounting principles generally accepted inAustralia.

 

“consolidated entity” means an entity which CSR must consolidate underAustralian GAAP.

 

“CSR” means CSR Limited, ABN 90 000 001 276, an Australian company.

 

“CSR group” means CSR and its consolidated entities.

 

“fiscal year” means a fiscal year of CSR  ended March 31.

 

“finance” means borrowing costs net of interest income.

 

6

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“financial statements” means: (i) the audited consolidated statement offinancial position of the CSR group as at March 31, 2003 and 2002; and (ii) theaudited consolidated statements of financial performance, changes inshareholders’ equity and cash flows of the CSR group for each of the one-yearperiods ended March 31 for the years 2003, 2002, and 2001, together withaccompanying notes included herein at pages F-1 to F-60.

 

“GST” means Australian goods and services tax.

 

“Kiewit” means Rinker Materials Western (formerly known as KiewitMaterials Company, a company incorporated in Delaware and acquired by RinkerMaterials in September 2002).

 

“net profit” means the consolidated net profit attributable to membersof CSR Limited.

 

“NY#11 raw sugar price” means NewYork Board of Trade Sugar 11, raw sugar price.

 

“option” means an option granted by CSR pursuant to the CSR ExecutiveShare Option Plan.

 

“ordinary shares” means fully paid ordinary shares in the issuedcapital of CSR.

 

“profit margin” means profit from ordinary activities before financeand income tax divided by trading revenue.

 

“Readymix” means Readymix Holdings Pty Limited, ABN 87 099 732297, an Australian company, and its consolidated entities.

 

“Rinker” means Rinker Group Limited, ABN 53 003 433 118, anAustralian company.

 

“Rinker group” means Rinker and its consolidated entities.

 

“Rinker Materials” means Rinker Materials Corporation, a companyincorporated in Georgia, and its consolidated entities.

 

“segment profit” means segment profit from ordinary activities beforecorporate costs, unallocated items, finance, demerger related items and incometax, as shown in Note 1 to the financial statements.

 

“segment profit margin” means segment profit divided by tradingrevenue.

 

“shares” means ordinary shares and partly paid shares.

 

“significant items” are those items which by their size, nature orincidence are relevant in explaining the financial performance of the CSRgroup, and as such are disclosed separately under Australian GAAP.

 

“total revenue” means trading revenue plus other revenue from ordinaryactivities plus dividend income from others plus interest income.

 

“trading revenue” means revenue received from customers (net ofdiscounts, returns and allowances), including fees for services as agent, rentsand royalties.

 

“US GAAP” means accounting principles generally accepted in the UnitedStates of America.

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7

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## **Forward-Looking Statements**

 

This annual report contains a number of forward-looking statements andcertain ongoing litigation or expected impact on the CSR group’s financialcondition of such litigation.  Suchstatements can be identified by the use of forward-looking words such as “may”,“should”, “expect”, “anticipate”, “estimate”, “scheduled” or “continue” or thenegative thereof or comparable terminology. CSR can give no assurances that theexpected impact on financial condition, anticipated trading results or returnsof entities in the CSR group will not differ materially from the statementscontained in this annual report.

 

Such forward-looking statements are not guarantees of future results orperformance and involve known and unknown risks, uncertainties and otherfactors, many of which are beyond the control of CSR, which may cause actualresults of CSR group entities, or industry results to differ materially fromthose expressed or implied in the statements contained in this annualreport.  Such factors include, amongother things, the following:

 

•                    generaleconomic and business conditions in Australia, New Zealand, Japan, Asia andother global economic influences;

•                    trends andbusiness conditions in the Australian building and construction industries;

•                    trends andbusiness conditions in the Australian and global aluminium, and sugarindustries;

•                    competitionfrom other suppliers in the industries in which the CSR group operates;

•                    the potentialloss of major customers or suppliers;

•                    costs andavailability of raw materials;

•                    changes in theCSR group entities’ strategies and plans regarding acquisitions, dispositionsand business development;

•                    risksassociated with ongoing litigation in the United States and Australia fromclaimants alleging personal injuries due to exposure to asbestos; and

•                    compliancewith, and potential changes to, governmental regulations related to theenvironment, employee safety and welfare and other matters related to theentities of the CSR group.

 

The foregoing list of factors is notexhaustive.  When relying onforward-looking statements to make decisions with respect to investing in CSRshares, you should carefully consider the foregoing factors and other uncertaintiesand potential events. CSR does not undertake to update any forward lookingstatement, whether written or oral, that may be made from time to time by CSRor on CSR’s behalf.

 

For a discussion of certain of these factors, see “Item 3. KeyInformation”, “Item 4. Information on the CSR group”, “Item 5. Operating andFinancial Review and Prospects”, “Item 8. Financial Information” and “Item 11. Quantitative and QualitativeDisclosures about Market Risk”.

 

8

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# **Part I**

## ** **

## **Item 1**.    Identity of Directors,Senior Management and Advisors

 

Not applicable.

 

## **Item 2**.    Offer Statistics andExpected Timetable

 

Not applicable.

 

9

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## **Item 3.**    Key Information

# ** **

### **Currency of Presentation and Exchange Rates**

 

The CSR group publishes its financial statements in Australiandollars.  In this annual report, unlessotherwise specified herein or the context requires, references to “US$” or “USdollars” are to United States dollars and references to “$” or “A$” are toAustralian dollars. CertainCSR subsidiaries outside of Australia maintain financial records in foreign currencies, primarily US dollars.

 

For the purposes of thefinancial statements presentation, CSR group transactions that occur in foreigncurrencies are translated into Australian dollars at the 9:55 a.m. hedgesettlement rate at the end of each month in the period presented and balancesare translated into Australian dollars at the 9:55 a.m. hedge settlement rateat period end, consistent with the requirements of Australian GAAP and US GAAP.

 

Unless otherwise stated, thefollowing average rates, expressed in US$ per A$1.00, have been used totranslate the statement of financial performance and statement of cash flows ofCSR’s United States-based subsidiaries:

 
| Year ended March  31, 2003 |   | 0.5654 |   |
|----------------------------|--------|--------|--------|
| Year ended March  31, 2002 |   | 0.5112 |   |
| Year ended March  31, 2001 |   | 0.5524 |   |

 

Unless otherwise stated the following year end rates, expressed in US$per A$1.00, have been used to translate the statement of financial position ofCSR’s United States-based subsidiaries:

 
| As at March 31,  2003 |   | 0.6006 |   |
|-----------------------|--------|--------|--------|
| As at March 31,  2002 |   | 0.5285 |   |

 

For the convenience of the reader, this annual report containstranslations of certain Australian dollar amounts back into US dollars at the rateof US$0.6045 = A$1.00 which is the noon buying rate in New York City for cabletransfers in Australian dollars as certified for customs purposes by theFederal Reserve Bank of New York (the “Noon Buying Rate”) on March 31, 2003.  This is a “convenience” translation only andshould not be taken as an indication of the underlying US$ translation rate(for example, the purchase price of the Kiewit acquisition, which occurred inSeptember 2002, was converted to Australian dollars at the exchange rate prevailingat the end of September 2002. The resulting acquisition cost was thentranslated back at the “convenience“ rate of US$0.6045 = A$1.00).

 

The following table sets forth, for each of the CSR group’s fiscalyears indicated and for the most recent months, the high, low, average andperiod-end Noon Buying Rates for Australian dollars expressed in United Statesdollars per A$1.00.

 
| **Year ended March 31**       |   | **At Period  End** |   | **Average  Rate(1)** |   | **High** |   | **Low** |   |
|-------------------------------|--------|--------------------|--------|----------------------|--------|----------|--------|---------|--------|
|                          |   |               |   |                 |   |     |   |    |   |
| 1999                          |   | 0.6340             |   | 0.6177               |   | 0.6613   |   | 0.5550  |   |
| 2000                          |   | 0.6062             |   | 0.6446               |   | 0.6713   |   | 0.6017  |   |
| 2001                          |   | 0.4881             |   | 0.5471               |   | 0.6005   |   | 0.4881  |   |
| 2002                          |   | 0.5333             |   | 0.5124               |   | 0.5362   |   | 0.4828  |   |
| 2003                          |   | 0.6045             |   | 0.5649               |   | 0.6161   |   | 0.5270  |   |
| **Month of**                  |   |               |   |                 |   |     |   |    |   |
| December 2002                 |   | 0.5625             |   | 0.5624               |   | 0.5660   |   | 0.5589  |   |
| January 2003                  |   | 0.5860             |   | 0.5829               |   | 0.5922   |   | 0.5629  |   |
| February 2003                 |   | 0.6075             |   | 0.5955               |   | 0.6075   |   | 0.5843  |   |
| March 2003                    |   | 0.6045             |   | 0.6015               |   | 0.6161   |   | 0.5905  |   |
| April 2003                    |   | 0.6262             |   | 0.6100               |   | 0.6262   |   | 0.5970  |   |
| May  2003                |   | 0.6513             |   | 0.6468               |   | 0.6585   |   | 0.6298  |   |
| June (through June  23, 2003) |   | 0.6643             |   | 0.6646               |   | 0.6729   |   | 0.6564  |   |

### ** **

 

10

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(1)   Theaverage of the Noon Buying Rates on the last day of each month during the yearor the average for each day of the stated month, as applicable.

 

On June 23, 2003, the NoonBuying Rate was A$1.00 = US$0.6643

 

The Australian dollar is convertible into United States dollars atfreely floating rates and there are currently no restrictions on the flow ofAustralian currency between Australia and the United States.

 

11

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### **A.  SelectedFinancial Data**

 

The following table presents selected consolidated financialinformation of the CSR group.  Thistable should be read in conjunction with “Item 5. Operating and FinancialReview and Prospects” and the financial statements that are included elsewherein this annual report.

 

The statement of financial position (formerly balance sheet) data as ofMarch 31, 2003 and 2002 and statement of financial performance (formerly profitand loss statement) data for fiscal years ended March 31, 2003, 2002 and 2001set forth below have been derived from, and are qualified in their entirety byreference to, the financial statements. The statement of financial position data as of March 31, 2001, 2000 and1999 and statement of financial performance data for the years ended March 31,2000 and 1999 set forth below have been derived from the audited financialstatements of the CSR group, which are not included herein.

 

Thefinancial statements, prepared in accordance with accounting principlesgenerally accepted in Australia (“Australian GAAP”), differ in certain materialrespects from accounting principles generally accepted in the United States(“US GAAP”). See Note 39 to the financial statements for a description of theprincipal differences between Australian GAAP and US GAAP as they relate to theCSR group and a reconciliation of net profit and shareholders’ equity for theyears and as at the dates therein indicated.

 
|                                                                |   |                                                            |   | **2003(1)** |   | **2003** |   | **2002** |   | **2001** |   | **2000** |   | **1999** |   |
|---------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|-------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|
| ** s**                                                         |   | **(Dollars in Millions, Except Per Share Data and  Employees)** |   |
|                                                                |   |                                                            |   | **US$**     |   | **A$**   |   | **A$**   |   | **A$**   |   | **A$**   |   | **A$**   |   |
| **Statement of Financial  Performance Data**                        |   |                                                            |   |        |   |     |   |     |   |     |   |     |   |     |   |
| Trading revenue                                                     |   |                                                            |   | 4,403       |   | 7,283    |   | 6,985    |   | 6,424    |   | 6,419    |   | 6,507    |   |
| Operating profit                                                    |   |                                                            |   | 560         |   | 927      |   | 899      |   | 879      |   | 867      |   | 706      |   |
| Profit from ordinary activities before finance and  income tax      |   |                                                            |   | 1,480       |   | 2,449    |   | 926      |   | 980      |   | 804      |   | 693      |   |
| Borrowing costs net of interest income (“finance”)        |   |                                                            |   | (64         | )      | (105     | )      | (107     | )      | (132     | )      | (82      | )      | (126     | )      |
| Income tax expense relating to ordinary activities                  |   |                                                            |   | (161        | )      | (266     | )      | (244     | )      | (179     | )      | (214     | )      | (191     | )      |
| Net profit attributable to outside equity interests                 |   |                                                            |   | (14         | )      | (24      | )      | (22      | )      | (35      | )      | (37      | )      | (25      | )      |
| Net profit attributable to members of CSR                           |   |                                                            | (2)    | 1,241       |   | 2,054    |   | 553      |   | 634      |   | 472      |   | 351      |   |
|                                                                |   |                                                            |   |        |   |     |   |     |   |     |   |     |   |     |   |
| **Statement of Financial Position  Data**                           |   |                                                            |   |        |   |     |   |     |   |     |   |     |   |     |   |
| Total assets                                                        |   |                                                            |   | 1,654       |   | 2,736    |   | 7,950    |   | 8,462    |   | 6,883    |   | 7,250    |   |
| Total liabilities                                                   |   |                                                            |   | 959         |   | 1,587    |   | 3,846    |   | 4,381    |   | 3,064    |   | 3,637    |   |
| Contributed equity                                                  |   |                                                            |   | 556         |   | 920      |   | 2,139    |   | 2,322    |   | 2,647    |   | 2,641    |   |
| Net assets                                                          |   |                                                            |   | 695         |   | 1,149    |   | 4,104    |   | 4,081    |   | 3,819    |   | 3,613    |   |
|                                                                |   |                                                            |   |        |   |     |   |     |   |     |   |     |   |     |   |
| **Per Share Data**                                                  |   |                                                            |   |        |   |     |   |     |   |     |   |     |   |     |   |
| Weighted average number of ordinary shares (basic)  - in millions   |   |                                                            | (3)    | 937.7       |   | 937.7    |   | 944.8    |   | 1,003.3  |   | 1,036.4  |   | 1,034.5  |   |
| Weighted average number of ordinary shares  (diluted) - in millions |   |                                                            |   | 939.8       |   | 939.8    |   | 955.6    |   | 1,018.8  |   | 1,051.9  |   | 1,042.0  |   |
| Basic earnings per share                                            |   |                                                            | (4)    | 1.32        |   | 2.19     |   | 0.59     |   | 0.63     |   | 0.45     |   | 0.34     |   |
| Diluted earnings per share                                          |   |                                                            | (4)    | 1.32        |   | 2.19     |   | 0.58     |   | 0.62     |   | 0.45     |   | 0.34     |   |
| Dividends provided for or paid per share                            |   |                                                            |   | 0.07        |   | 0.11     |   | 0.24     |   | 0.23     |   | 0.23     |   | 0.23     |   |
|                                                                |   |                                                            |   |        |   |     |   |     |   |     |   |     |   |     |   |
| **Other**                                                           |   |                                                            |   |        |   |     |   |     |   |     |   |     |   |     |   |
| Total revenue                                                       |   |                                                            | (5)    | 7,295       |   | 12,068   |   | 7,195    |   | 7,038    |   | 7,301    |   | 6,759    |   |
| Net profit from  continuing operations                              |   |                                                            | (6)    | 108         |   | 179      |   | 224      |   | 409      |   | 183      |   | 134      |   |
| Basic earnings per  share from continuing operations                |   |                                                            | (6)    | 0.12        |   | 0.19     |   | 0.24     |   | 0.41     |   | 0.18     |   | 0.13     |   |
| Diluted earnings  per share from continuing operations              |   |                                                            | (6)    | 0.12        |   | 0.19     |   | 0.23     |   | 0.40     |   | 0.17     |   | 0.13     |   |
| Capital expenditure (on accruals basis)                             |   |                                                            |   | 813         |   | 1,345    |   | 584      |   | 1,660    |   | 538      |   | 606      |   |
| Depreciation and amortization                                       |   |                                                            |   | 285         |   | 472      |   | 453      |   | 415      |   | 364      |   | 371      |   |
| Employees at fiscal year end                                        |   |                                                            |   | 4,546       |   | 4,546    |   | 16,057   |   | 16,134   |   | 17,104   |   | 17,802   |   |

 

 

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|                                                   |   |                                             |   | **2003(1)** |       | **2003** |       | **2002** |       | **2001** |       | **2000** |       | **1999** |       |
|--------------------------------------------------------|--------|--------------------------------------------------|--------|-------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| **Amounts in accordance with US  GAAP**                |   | **(Dollars in Millions, Except Per Share Data)** |   |
|                                                   |   |                                             |   | **US$**     |       | **A$**   |       | **A$**   |       | **A$**   |       | **A$**   |       | **A$**   |       |
| **Statement of Financial  Performance Data**           |   |                                             |   |        |       |     |       |     |       |     |       |     |       |     |       |
| Trading revenue                                        |   |                                             |   | 4,403       |       | 7,283    |       | 6,985    |       | 6,424    |       | 6,419    |       | 6,507    |       |
| Operating profit                                       |   |                                             |   | 620         |       | 1025     |       | 869      |       | 893      |       | 871      |       | 698      |       |
| Net profit from  continuing operations                 |   |                                             | (6)    | 9           |       | 15       |       | 202      |       | 464      |       | 139      |       | 94       |       |
| Net profit attributable to members of CSR              |   |                                             |   | 252         |       | 417      |       | 530      |       | 673      |       | 441      |       | 313      |       |
|                                                   |   |                                             |   |        |       |     |       |     |       |     |       |     |       |     |       |
| **Statement of Financial Position  Data**              |   |                                             |   |        | ** ** |     | ** ** |     | ** ** |     | ** ** |     | ** ** |     | ** ** |
| Total assets                                           |   |                                             |   | 1,583       |       | 2,619    |       | 7,759    |       | 8,152    |       | 6,524    |       | 6,837    |       |
| Contributed equity                                     |   |                                             |   | 567         |       | 938      |       | 2,127    |       | 2,296    |       | 2,615    |       | 2,606    |       |
| Net assets                                             |   |                                             |   | 629         |       | 1,040    |       | 3,955    |       | 3,941    |       | 3,680    |       | 3,429    |       |
|                                                   |   |                                             |   |        |       |     |       |     |       |     |       |     |       |     |       |
| **Per Share Data**                                     |   |                                             |   |        |       |     |       |     |       |     |       |     |       |     |       |
| Basic earnings per  share from continuing operations   |   |                                             | (6)    | 0.01        |       | 0.02     |       | 0.21     |       | 0.46     |       | 0.13     |       | 0.09     |       |
| Basic earnings per share                               |   |                                             | (4)    | 0.27        |       | 0.45     |       | 0.56     |       | 0.67     |       | 0.43     |       | 0.30     |       |
| Diluted earnings per share from continuing  operations |   |                                             | (6)    | 0.01        |       | 0.01     |       | 0.21     |       | 0.46     |       | 0.13     |       | 0.09     |       |
| Diluted earnings per share                             |   |                                             | (4)    | 0.26        |       | 0.44     |       | 0.56     |       | 0.67     |       | 0.43     |       | 0.30     |       |
| Dividend declared per share                            |   |                                             |   | 0.15        |       | 0.24     |       | 0.23     |       | 0.23     |       | 0.23     |       | 0.22     |       |
|                                                        |        |                                                  |        |             |            |          |            |          |            |          |            |          |            |          |            |  |

 

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(1)          For convenience of the reader, the selectedfinancial data have been translated at the Noon Buying Rate on March 31, 2003of US$0.6045 = A$1.00.This is not necessarily the same rate at which underlying transactions aretranslated from US$to A$, as discussed above under “Currency of Presentationand Exchange Rate”.

 

(2)          As a consequence of the demerger of Rinker on March28, 2003, CSR recorded a gain of A$1,492.7 million, which is included in theAustralian GAAP financial measure net profit attributable to members of CSR.CSR management believes that the comparison of CSR’s financial performance infiscal year 2003 to prior periods is enhanced by also comparing net profitattributable to members of CSR excluding the gain of A$1,492.7 millionresulting from the demerger as follows:

 
|                                                                         |   | **2003**                  |   | **2003** |   | **2002** |   | **2001** |   | **2000** |   | **1999** |   |
|------------------------------------------------------------------------------|--------|---------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|
|                                                                         |   | **(Dollars in Millions)** |   |
|                                                                         |   | **US$**                   |   | **A$**   |   | **A$**   |   | **A$**   |   | **A$**   |   | **A$**   |   |
| Net profit attributable to members of CSR                                    |   | 1,241                     |   | 2,054    |   | 553      |   | 634      |   | 472      |   | 351      |   |
| Net profit arising as a result of the demerger                               |   | 902                       |   | 1,493    |   | —   |   | —   |   | —   |   | —   |   |
| Net profit attributable to the members excluding  the effect of the demerger |   | 339                       |   | 561      |   | 553      |   | 634      |   | 472      |   | 351      |   |
| Earnings per share excluding the effect of the  demerger                     |   | 0.36                      |   | 0.60     |   | 0.59     |   | 0.63     |   | 0.45     |   | 0.34     |   |

 

Keycomponents of the gain resulting from the demerger include:

 
|                                                                                                        |   | **A$  millions** |   |
|-------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
| Fair value of Rinker group disposal (a)                                                                     |   | 4,573.0          |   |
| Less:                                                                                                       |   |             |   |
| Book value of consolidated net assets of Rinker  group, excluding outside equity interests (A$16.9 million) |   | (3,023.8         | )      |
| Demerger transaction costs                                                                                  |   | (74.2            | )      |
| Profit from ordinary activities before finance and  income tax impact                                       |   | 1,475.0          |   |
| Income tax benefits                                                                                         |   | 17.7             |   |
| Net profit impact                                                                                           |   | 1,492.7          |   |

 

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(a) The fair value of A$4,573.0 million was determined by taking theaverage Rinker share price for the period March 31, 2003 to April 14, 2003 ofA$4.84 multiplied by the number of Rinker shares on issue immediately after thedemerger.

 

“Earnings per share excluding the effect of the demerger” is calculatedusing “net profit excluding the effect of the demerger”, explained in thisfootnote, divided by the weighted average number of ordinary shares issued andoutstanding during the fiscal year as described in footnote (3)  below.

 

(3)          Weighted average number of ordinary shares (basic)is calculated based on the average number of shares on issue on each day of thefinancial year. Weighted average number of ordinary shares (diluted) iscalculated based on the average number of shares on issue on each day of thefinancial year after deducting the number of shares that could be purchased (ataverage share price for the year) from the proceeds, if all outstanding stockoptions were exercised and converted into ordinary shares.

 

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(4)          Based on theweighted average number of ordinary shares issued and outstanding during thefiscal year.

 

(5)          As disclosed in “Certain Definitions”, total revenueunder Australian GAAP is computed as trading revenue plus other revenues fromordinary activities plus dividend income plus interest income.

 

(6)          “Net profit fromcontinuing operations “ represents the net profit attributable to the membersof CSR under Australian GAAP and US GAAP, excluding the net profit impact as aresult of the demerger as described in footnote (2) above, and after deductingnet profit attributable to the businesses which CSR transferred to Rinker as aresult of the demerger and Timber businesses sold by CSR in prior years.

 

“Basis earnings pershare from continuing operations” is calculated using “net profit fromcontinuing operations”, explained in this footnote, divided by the weightedaverage number of ordinary shares (basic).

 

“Dilutedearnings per share from continuing operations” is calculated using “net profitfrom continuing operations”, explained in this footnote, divided by theweighted average number of ordinary shares (diluted).

 

Detailsof differences between Australian GAAP and US GAAP are included in note 39 tothe financial statements included elsewhere in this annual report.

 

### **B.            Capitalization and Indebtedness**

 

Not applicable

 

### **C.            Reasons for the Offer and Use ofProceeds**

Not applicable.

 

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### **D.  Risk Factors**

 

CSRgroup entities are subject to various risks resulting from changing economic,political, social, industry, business and financial conditions, particularly inAustralia and the global markets where CSR group entities sell their products.  Certain of these risks are describedbelow.  CSR group entities could also besubject to other risks that management has not anticipated.

 

**CSR group is exposed to Australian non-civil buildingand construction activity levels and the CSR group’s revenues and profits infuture periods may fluctuate with the cycle.**

 

Thefinancial performance of CSR Building Products, which accounted for 4.9% of CSRgroup’s profit from ordinary activities before finance and income tax (and 38%of segment profit of continuing businesses, as described in the table ofsegment results on page 22) in the year ended March 31, 2003, is influenced byactivity levels within the Australian non-civil building and constructionindustry. In particular, CSR Building Products has a high exposure to theAustralian new residential building segment. Activity levels tend to follow acyclical trend and are heavily influenced by economic, demographic and otherfactors. Reduced activity levels may decrease sales volumes and place downwardpressure on pricing and profit.

 

**CSR group is exposed to fluctuations in aluminiumprices and the CSR group’s revenues and profit in future periods may fluctuatewith the price fluctuations.**

 

Thefinancial performance of CSR’s aluminium business, which accounted for 5.2% ofCSR group’s  profit from ordinaryactivities before finance and income tax (and 40% of segment profit ofcontinuing businesses, as described in the table of segment results on page 22)in the year ended March 31, 2003, is exposed to fluctuations in aluminiumprices, as sales are priced on the basis of the world aluminium price plus asmaller negotiated premium for each product sold. Aluminium prices areinfluenced by a series of factors including global production levels, worldeconomic growth and by shifts in construction and industrial activity.Historically, aluminium prices have been volatile, with prices per tonnevarying between a low of US$1,163 and a high of US$1,739 in the five yearsended March 31, 2003.  Global pricemovements, after hedging by CSR group, may impact Aluminium’s revenues andprofits.  Details of hedging ofaluminium prices by CSR are set out in “Item 11 – Quantitative and QualitativeDisclosures about Market Risks”.

 

**CSR Sugar is exposed to fluctuations in raw sugar pricesand the CSR Sugar’s revenues and profits in future periods may fluctuate withthe price fluctuations.**

 

Thefinancial performance of CSR Sugar, which accounted for 2.9% of CSR group’sprofit from ordinary activities before finance and income tax (and 22% ofsegment profit of continuing businesses, as described in the table of segmentresults on page 22) in the year ended March 31, 2003, is exposed tofluctuations in the NY#11 raw sugar price. NY#11 sugar prices are highlysensitive to changes in supply which are influenced by, among other things,climatic uncertainties, the production decisions of major exporters such asBrazil and changes in foreign government agricultural and trade policies.Global price movements may impact CSR Sugar’s revenues and profits. Details ofthe historical sugar price movement are included in “Item 5A – Managementdiscussion and analysis of financial results”.

 

**CSR Sugar is exposed to variations in the size of theQueensland sugarcane crop. CSR Sugar’s revenues and profits in future periodsmay fluctuate with the size of the crop.**

 

Thefinancial performance of CSR’s sugar milling operations which accounted for1.5% of CSR group’s profit from ordinary activities before finance and incometax (and 12% of segment profit of continuing businesses, as described in thetable of segment results on page 22) for the year ended March 31, 2003 areexposed to variations in the size of the Queensland sugarcane crop. The size ofthe sugarcane crop is affected by uncertainties such as weather conditions,crop disease and pests. The size of the sugar crop

 

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mayinfluence CSR Sugar’s revenues and profits. Details of the sugar cane cropappear in “Item 5A – Management discussion and analysis of financial results”.

 

**CSR group could be adversely impacted by changes inthe structure and competitive dynamics of industries in which it operates,which could impact CSR group’s revenues and profits in future periods.**

 

Thereis a risk that the businesses that continue to be conducted by CSR groupfollowing the demerger may be adversely impacted by material changes to thestructure or competitive dynamics of the industries in which they operate.

 

*Building products industry*

 

Theentry of new participants into the Australian building products industry orproduct group expansion by existing industry participants could increasecompetition levels within CSR Building Products’ market segments. This couldhave a material adverse impact on pricing and margins. Buckeridge Group CompanyPty limited (“BGC”), for example, has been expanding from its home base inWestern Australia to the east coast market. Recently BGC announced that itwould enter the Australian plasterboard market, and is currently commissioninga plasterboard plant in Western Australia. It has also announced that it isconsidering constructing a brick plant in Western Australia. While CSR BuildingProducts does not currently compete in the Western Australian brick market, itcould be adversely impacted by displaced Western Australian brick volumesentering the Australian east coast market. CSR Building Products’ sales volumescould also be adversely impacted by any product substitution away from itsexisting product lines.

 

*Aluminium industry*

 

Oneof the relatively recent developments in the world aluminium industry has beenChina’s shift from a net importer of aluminium to a net exporter as newcapacity has been introduced. The impact of this shift on CSR’s aluminiumbusiness is difficult to assess as the volume and timing of new capacity isbeing accompanied by closures of capacity in China and other producercountries, and growth in demand for aluminium, particularly in China. There isa risk that these developments may have a long term adverse impact on aluminiumprices and Aluminium’s revenues and profits.

 

Currently,almost all aluminium is produced in potlines using consumable carbon anodes.However, there are a number of producers seeking to develop inert anodes orother technologies to reduce the cost of aluminium production. Accordingly,there is also a risk that the development of a lower-cost smelting technologyby a competitor could alter the cost dynamics of the industry to the detrimentof Aluminium’s revenues and profits.

 

*Sugar industry*

 

Thereis currently a surplus of sugar refining capacity in Australia. This could leadto more intense competition and lower returns within the domestic refined sugarmarket affecting CSR Sugar’s revenues and profits. In addition, there is a riskof losing sugarcane supply due to failures in future industry restructuring andcontinued sugar price declines causing a fall in the number of sugarcanegrowers affecting crop size and cane prices, adversely impacting CSR Sugar’srevenues and profits.

 

**CSR group could be affected by movements in interestrates.  If interest rates rise,borrowing costs may be higher and higher interest rates may adversely affectbuilding activity levels.**

 

CSRgroup’s external net debt at March 31, 2003 was A$225.9 million. Accordingly,movements in interest rates may impact CSR group’s debt servicing obligationsand profits. An increase in interest rates may also reduce building andconstruction activity levels in both the residential and commercial segments ofthe market. This could have an adverse impact on the financial performance ofCSR group, through its

 

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CSRBuilding Products business. Details of interest rate risk are included in “Item11 – Quantitative and Qualitative Disclosures on Market Risks”.

 

**CSR group will be exposed to the effects of fluctuations inexchange rates.  If the A$ continues tostrengthens relative to key international currencies, reported revenues andprofits may fall.**

 

CSR’sfinancial performance is influenced by fluctuations in exchange rates,primarily through its exposure to international sugar and aluminium prices.

 

Themajority of the raw sugar produced by CSR Sugar is sold on the global market byQueensland Sugar Limited (“QSL”). As a majority of QSL sales are in US$, CSRSugar is exposed to volatility in exchange rates between A$ and US$. CSR Sugarwill also be indirectly exposed to fluctuations in the Brazilian currency. AsBrazil is the world’s largest sugar exporter, changes in its sugar production andexport volumes may have a material impact on world sugar prices. A depreciationin the Brazilian currency relative to the US$ would increase the NY#11 sugarprice in Brazilian currency terms. This may result in increased volumes ofBrazilian sugar exports on world markets and downward pressure on prices,adversely affecting CSR’s revenues and profits.

 

Salesby CSR’s aluminium business are priced in US$. Subject to any hedging, anappreciation of the A$ relative to the US$ will decrease A$ denominated revenueand earnings. As noted under the caption “Item 3. Key Information – Currency ofPresentation and Exchange Rates”, the CSR group publishes its financialstatements in Australian dollars. Since March 31, 2003, the Australian dollarhas continued to strengthen relative to the US $. Details of currency riskexposures are included in “Item 11 – Quantitative and Qualitative Disclosureson Market Risks”.

 

**CSR is a defendant in asbestos litigation. If actualfuture liabilities exceed the current provisions future profits may benegatively impacted.**

 

CSR’sfinancial statements include a provision for the present value of anticipatedcompensation payments and legal costs arising from asbestos related personalinjury claims in Australia and the United States. The provision is discountedunder Australian Accounting Standard AASB 1044, “Provisions, ContingentLiabilities and Contingent Assets (“AASB 1044”) at a pre-tax rate that reflectsthe time value of money and the risks specific to the liability. CSR currentlydiscounts its asbestos provision at the notional long-term government bondrates. In addition the cost to CSR in A$ of United States liabilities will varywith fluctuations in the exchange rate between the A$ and US$. CSR cannotdetermine with certainty the amount of its ultimate liability with respect toasbestos claims, nor their effect on net profit or loss in future reportingperiods. CSR’s asbestos provision is reviewed and, if necessary, adjusted ateach accounting period. It is possible that, in the future, CSR’s anticipatedliabilities may change and that exchange rates or interest rates may fluctuatein a way that requires CSR to increase its asbestos provisions, thus adverselyimpacting CSR’s profit. Details of CSR’s liability to asbestos related claimsare included in “Item 8 – Financial Information – Legal Proceedings” and Note38 to the financial statements included elsewhere in this annual report.

 

**CSR group’s operations may be disrupted by failures inits facilities which could impact on future revenues and profits.**

 

Themanufacturing facilities of CSR group businesses could be disrupted for reasonsbeyond their control. These disruptions may include extremes of weather, fire,natural catastrophes, supplies of materials or services, system failures,workforce actions or environmental issues. Any significant manufacturingdisruptions could adversely affect the ability of CSR group businesses to makeand sell products, which could impact on the CSR group’s future revenues andprofits. CSR’s aluminium investment, in particular, is dependent on thecontinuing operation of one smelter. CSR Aluminium segment profit represented40% of the segment profit of CSR group’s continuing businesses in fiscal year2003, as described in the table of segment results on page 22. The smelter hassignificant fixed costs that will continue to be payable even if the smelter isnot operating. Disruption in the operation of the smelter could result inreduced revenues, increased costs and therefore reduced profits.

 

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**CSR group may be required to provide further funds tocover the defined benefit program of its superannuation funds, which may havean impact on future profits.**

 

CSRgroup’s two existing superannuation funds provide both defined benefits andaccumulated benefits. There is a risk that, in the future, changes in the valueof either funds’ assets, changes in actuarial determinations of the funds’liabilities or changes to government legislation could require CSR to increasethe current level of its contributions to either fund, reducing CSR group’sprofits. CSR group has only a limited ability to terminate or reduce itsobligations to contribute to the Harwood Superannuation Fund (formerly CSRAustralian Superannuation Fund). Detailsof defined benefit plans are included in “Item 5: - Details of defined benefitspension plans”.

 

**CSR group’s operations could be adversely impacted byurban encroachment which could disrupt operation and have a negative impact onfuture revenues and profit.**

 

CSRgroup has a number of operating sites that are located close to urban centres.Further urban encroachment on these sites and concerns over noise, dust andtraffic could result in certain of the businesses, particularly those of CSRBuilding Products, being curtailed or stopped. This could adversely impact CSRgroup’s revenues and cost of operations and therefore profits.

 

**The CSR group’s businesses are subject toenvironmental risks and changes in environmental regulations which could havean adverse impact on future financial performance.**

 

TheCSR group’s operations are subject to extensive environmental laws andregulations. Failure to comply with environmental regulations such as noisepollution and Environmental Protection Authority (“EPA”) requirements couldresult in increasing costs or fines for CSR.

 

Environmentalliabilities, if incurred, could have an adverse impact on the CSR group’sfinancial performance and condition. Stricter environmental laws andregulations, or stricter interpretation and enforcement of existing laws orregulations, may impose new liabilities on the CSR group or result in the needfor additional investments in pollution control equipment, either of whichcould result in a decline in CSR group’s profitability.

 

TheAustralian Government may levy additional carbon taxes which, among otherthings, could increase the cost of electricity produced using fossil fuels.Electricity is a major cost for the Tomago aluminium smelter joint venture(“Tomago”). If such additional taxes were imposed in Australia, they couldsubstantially increase the production costs of the smelter and reduce itscompetitiveness compared to smelters in countries with lower carbon taxes orsmelters not powered by fossil fuels.

 

Scientificresearch has indicated that levels of plant nutrients and sediment haveincreased in rivers draining into coastal waters between the Great Barrier Reefand the North Queensland mainland, as a result of land use changes. The GreatBarrier Reef Marine Park Authority is developing a comprehensive strategy todeal with pollutants from land based water run off (as well as from ships).There is a risk that land use constraints required by the government to ensuregood environmental management may limit the size of the sugarcane cropultimately available for CSR Sugar’s raw sugar mills, reducing revenues orincreasing costs.

 

**Occupational health and safety risks may have animpact on CSR group’s future productivity and financial performance.**

 

CSRgroup entities’ operations are subject to operating risks associated withbuilding materials plants, aluminium smelters, sugar mills and ethanoldistilleries, including the related storage and transportation of rawmaterials, products and wastes. These hazards include storage tank leaks andruptures, explosions, discharges or releases of hazardous substances, manualhandling, exposure to dust and the operation of mobile equipment andmanufacturing machinery.

 

 

18

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Suchoperating risks can cause personal injury and property damage, and may resultin the imposition of civil and criminal penalties. The occurrence of any ofthese events may have an adverse effect on the productivity and profitabilityof a particular manufacturing facility and the operating results of CSR groupentities.

 

Crystallinesilica dust and its control have been identified as an occupational healthissue in CSR Building Products’ operations in Australia. CSR Building Productsuses raw materials containing silica in factories, which manufacture rooftiles, bricks and pavers, fibre cement, aerated lightweight concrete, andinsulation. CSR Building Products may face future costs of engineering andcompliance to meet new standards relating to crystalline silica since the riskis now perceived to be higher than previously thought by regulatory agencies inAustralia.

 

**Labour disputes between CSR group entities and itsunions could disrupt CSR group’s operations, which could have an adverse impacton CSR group’s future financial performance.**

 

CSRgroup’s production and maintenance employees are eligible for membership intrade unions. These employees are generally covered by collective bargainingagreements and awards, which periodically come up for renegotiation andrenewal. Disputes with trade unions could lead to industrial action that coulddisrupt CSR group’s operations, raise costs and reduce CSR group’s revenues andprofits. Any such disruptions to the operation of CSR group entities mayadversely affect CSR group’s financial performance and condition.

 

**If Rinker fails to pay CSR group entities under theindemnification agreement entered into between Rinker and CSR in connectionwith the demerger, CSR may be liable to make payments to third parties thatcould have an adverse impact on CSR group’s profits.**

 

Rinkerhas granted CSR, its subsidiaries, directors, officers and employees and thedirectors, officers and employees of its subsidiaries an indemnity againstliability (to the extent it is not covered by CSR’s insurance) arising from anyclaim made against any of them arising from any actions or omissions, includingnegligence and other alleged torts, breach of contract or law or any other actcommitted, omitted or done by Rinker or any of the businesses being conductedby members of the Rinker group after the demerger (or businesses that wouldhave been conducted by any member of the Rinker group after the demerger exceptthat those businesses have been closed before the demerger), regardless of whenthe liability or loss to which the claim relates arises. If Rinker fails to payCSR group entities under this indemnification agreement, CSR may be liable tomake payments to third parties that could have an adverse impact on CSR group’sprofits.

 

Further,CSR has agreed to indemnify Rinker, its subsidiaries, directors, officers andemployees and the directors, officers and employees of its subsidiaries againstliability incurred by them arising from any claim made against them arisingfrom a failure of the demerger booklet, Rinker’s listing memorandum to the ASXor marketing or other material distributed or published in connection with thedemerger (including any associated refinancing) to comply with any applicablelegal requirement where the failure is caused by, or arises out of, informationabout the businesses which are to be conducted by any member of the CSR groupafter the demerger(or businesses that would have been conducted by any memberof the CSR group after the demerger except that those businesses have beenclosed before the demerger).

 

**General risks associated with investing in shares mayimpact the value of CSR’s ordinary shares**

 

Asa result of the demerger, CSR is smaller than it was previously and has reducedearnings diversification. As a result, the cyclical nature of its productmarkets may result in CSR having more volatile earnings than before thedemerger.

 

Therelatively smaller size of CSR may also mean that litigation against it willhave a more significant effect on the CSR group’s financial position and shareprice than it would on the financial position and share price of CSR before thedemerger.

 

 

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Also, CSR has a significantly different business profile following thedemerger so that the trading history of CSR shares is not directly relevant tofuture trading of CSR shares. The price of CSR shares will be subject to manyinfluences that may affect the broad trend in the stock market or the shareprices of individual companies. There can be no assurance that an activetrading or liquid market will continue for CSR shares. The price at which CSRshares trade on ASX may be affected by a number of factors unrelated to CSR’sfinancial and operating performance and over which CSR has no control. Factorssuch as currency exchange rates, product prices, the level of industrialproduction, changes in government fiscal, monetary and regulatory policy,investor attitudes, stock market fluctuations in Australia and other stockmarkets around the world, changes in interest rates and inflation, andvariations in general market or economic conditions could all have an adverseeffect on the price of CSR shares.

 

 

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## **Item 4**.    Information on the CSRgroup

 

*The discussion below contains certain forward-lookingstatements.  See “Forward-LookingStatements” on page 8.*

 

Estimates with respect to market sizeinformation represent the judgment of the management of CSR, based on recordsand experience of CSR and its subsidiaries, or CSR group, as well asinformation available from industry and government publications and othersources.

 

### **A.            History and development of the company**

 

CSR was incorporated in New South Wales, Australia in 1887 as theColonial Sugar Refining Company and operates under the Corporations Act2001.  The company name was changed toCSR in 1973.  As at March 31, 2003,following the demerger, CSR was the 65th largest listed Australian company onthe ASX, as measured by its share market capitalization of A$1,512million.  CSR’s headquarters are atLevel 1, 9 Help Street, Chatswood, New South Wales, 2067 Australia.  The telephone number is (61-2) 9235-8000.

 

CSR is a diversified company with a portfolio of businesses comprisingCSR Building Products (with operations in Australia, Asia and New Zealand),Aluminium and CSR Sugar.

 

On November 19, 2002, CSRannounced a proposal to demerge Rinker, from its building products, sugar andaluminium businesses. On March 28, 2003, the Federal Court of Australia approvedthe demerger. On March 31, 2003, Rinker shares commenced trading on the ASX (ona deferred settlement basis). In accordance with the terms of the demerger,Rinker issued 944.7 million shares on April 11, 2003. For additionalinformation on the demerger of Rinker from CSR, see the discussion under thecaption “Rinker demerger from CSR” elsewhere in this annual report.

 

For fiscal year 2003, the CSR group had trading revenue of A$7,283million and net profit attributable to members of CSR of A$2,054 million.  Included in CSR group’s net profit is a gainof A$1,493 million related to transactions associated with the demerger and anet profit of $561 million related to ordinary trading activities.  As at March 31, 2003, following thedemerger, CSR group entities employed 4,546 people worldwide at some 57production sites and manufacturing facilities, and other trading anddistribution locations, in Australia and Asia, including China, Malaysia,Singapore and Indonesia.  In fiscal year2003, 58 percent of trading revenue was derived from sales by Rinker Materialsin North America, 40 percent from Australia and 2 percent from Pacific Rimcountries.  CSR had approximately109,823 shareholders on record at March 31, 2003.

 

During the last five years, CSR group entities have built shareholdervalue with three primary strategies:

 

•                    Performance Improvement -Profit margin, which is profit from ordinary activities before finance andincome tax divided by trading revenue, increased from 11 percent in fiscal year1999 to 34 percent in fiscal year 2003. Excluding the gain of A$1,475 millionfrom demerger related transactions, profit margin was 13 percent in fiscal year2003.  Operational improvements haveincreased efficiency and reduced costs by more than an estimated A$500 millionin five years.

 

•                    Rationalization and IndustryRestructuring - CSR group entities have sold under-performing or non-strategicbusinesses during the last four years. Disposals include the Timber Products business, CSR’s interest in GoveAluminium Limited bauxite mining and alumina production, and the AWP contractmining business.

 

•                    Growth - Capital expenditureby Rinker Materials in the United States has totalled over A$3.2 billion overthe last three years.  Rinker Materialsacquired businesses and new assets valued at about A$1.2 billion in fiscal year2003 following A$0.4 billion in fiscal year 2002 and A$1.5 billion in fiscalyear 2001, and has continued to acquire “bolt-on” businesses and build new orupgraded plants and equipment in the construction materials businesses.

 

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Majoracquisitions in the last three fiscal years include the following acquisitionsby Rinker Materials:

•                    American Limestone Company(A$352.8 million – June 2000);

•                    Wilson Concrete Company(A$120.4 million – June 2000);

•                    Florida Crushed StoneCompany (A$597.8 million – July 2000); and

•                    Kiewit Materials Company(A$996.9 million – September 2002).

 

More detailed information regarding thestrategic acquisitions, divestitures and capital expenditure by the CSR groupentities is provided below in the discussion of each segment and below under“Acquisitions and Divestitures”.

 

### **B.  Business Overview**

 

Forthe year ended March 31, 2003, the CSR group was organized into four divisions:Readymix (Australia and Asia), Building Products Division (Australia, NewZealand and Asia), Sugar Division and Aluminium Division, plus Rinker Materialsin North America. A description of these divisions and Rinker Materials isincluded below. The CSR group continuing businesses are those businesses thatare a part of the CSR group following the demerger. The Rinker group businessesare those businesses that are a part of the Rinker group following thedemerger. For additional financial information regarding segments andgeographical areas, see Note 1 to the financial statements.

 

**Segment Operating Results**

 
|                                                               |   | **CSR Group  Business Segment Revenues And Segment Profit(1)  A$ Millions  Year Ended March 31,** |       |
|--------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|------------|
|                                                               |   | **2003**                                                                                          |       | **2002** |   | **2001** |   |
|                                                               |   | **Trading****Revenue**                                                                            |       | **Segment(1)****Profit** |   | **Trading****Revenue** |   | **Segment(1)****Profit** |   | **Trading****Revenue** |   | **Segment(1)****Profit** |   |
| **CSR Group continuing businesses**                                |   |                                                                                              |       |   |   |   |   |   |   |   |   |   |   |
| Building Products                                                  |   | 896                                                                                               |       | 120 |   | 806 |   | 109 |   | 860 |   | 86 |   |
| Aluminium(2)                                                       |   | 447                                                                                               |       | 126 |   | 443 |   | 110 |   | 520 |   | 447 |   |
| Sugar                                                              |   | 708                                                                                               |       | 71 |   | 694 |   | 74 |   | 529 |   | 16 |   |
| **Total CSR continuing businesses**                                |   | **2,051**                                                                                         | ** ** | **317** | ** ** | **1,943** | ** ** | **293** | ** ** | **1,909** | ** ** | **549** | ** ** |
|                                                               |   |                                                                                              |       |   |   |   |   |   |   |   |   |   |   |
| **Rinker group businesses**                                        |   |                                                                                              |       |   |   |   |   |   |   |   |   |   |   |
| Rinker Materials Corporation                                       |   | 4,218                                                                                             |       | 592 |   | 4,116 |   | 598 |   | 3,590 |   | 496 |   |
| Readymix                                                           |   | 1,014                                                                                             |       | 120 |   | 926 |   | 57 |   | 923 |   | 6 |   |
| **Total Rinker group (excluding  corporate overhead allocations)** |   | **5,232**                                                                                         | ** ** | **712** | ** ** | **5,042** | ** ** | **655** | ** ** | **4,513** | ** ** | **502** | ** ** |
|                                                               |   |                                                                                              | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| Other unallocated items(3)                                         |   | —                                                                                            |       | (55 | ) | — |   | (22 | ) | 2 |   | (71 | ) |
|                                                               |   |                                                                                              |       |   |   |   |   |   |   |   |   |   |   |
| **Demerger impact(4)**                                             |   | **—**                                                                                        | ** ** | **1,475** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** |
| **Total CSR group**                                                |   | **7,283**                                                                                         | ** ** | **2,449** | ** ** | **6,985** | ** ** | **926** | ** ** | **6,424** | ** ** | **980** | ** ** |

 

----

(1)          The sum of segment profitfor each segment, other unallocated items (see footnote (3)) and demergerimpact (see footnote (4)) agrees to “Profit from ordinary activities beforefinance and income tax” for the CSR group (as shown on the face of thestatement of financial performance included in the financial statementspresented elsewhere in this annual report).

(2)          Segment profit in fiscalyear 2001 includes A$235.4 million on the sale of CSR group’s interest in GoveAluminium Limited.

(3)          Other unallocated itemsincludes corporate costs and items not specifically attributed to businesssegments.

(4)          Total CSR group includesboth the CSR group businesses post demerger and the Rinker group businesses.Segment profit for purposes of the business segment analysis does not includethe pre tax gain of A$1,475 million in fiscal year 2003 relating to thedemerger, which is attributable to the demerger of Rinker group entities anddoes not relate to the trading activity of any individual segment.

 

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#### **TradingRevenue by Geographic Areas**

 
|               |   | **Year Ended March 31,** |   |
|--------------------|--------|--------------------------|--------|
|               |   | **2003**                 |   | **2002** |   | **2001** |   |
|               |   | **A$ million**           |   | **Area %** |   | **A$ million** |   | **Area %** |   | **A$ million** |   | **Area %** |   |
| Australia domestic |   | 1,944                    |   | 27 | % | 1,762 |   | 25 | % | 1,780 |   | 28 | % |
| Australia export   |   | 954                      |   | 13 | % | 957 |   | 14 | % | 922 |   | 14 | % |
| North America      |   | 4,217                    |   | 58 | % | 4,116 |   | 59 | % | 3,590 |   | 56 | % |
| New Zealand        |   | 42                       |   | — |   | 31 |   | — |   | 30 |   | — |   |
| Asia               |   | 126                      |   | 2 | % | 119 |   | 2 | % | 102 |   | 2 | % |
| Total              |   | 7,283                    |   | 100 | % | 6,985 |   | 100 | % | 6,424 |   | 100 | % |

 

**Strategy**

 

CSR’smanagement team is strongly focused on building value for shareholders from thethree continuing CSR group businesses. Management believes that to be successful it should maintain acontinuing focus on the basics for its manufacturing businesses:

 

•                    **Creating asafe and satisfying work environment for CSR employees.**

Safetyperformance has improved significantly over the past 12 months.  The total recordable injury frequency rate(the number of lost time, medical treatment and restricted work injuries permillion work hours) improved by 25% in CSR Building Products and 28% in CSRSugar compared to the prior year.

 

•                    **Meeting itscustomers’ needs.**

CSRgroup’s success depends upon its ability to meet customers’ needs.  CSR group companies continue to focus ondeveloping better ways to serve their customers in a competitive andprofessional way to ensure that they are the supplier of choice.

 

•                    **Continuallyimproving efficiency and productivity.**

EachCSR group business has a strong ongoing commitment to productivity improvement,with established structured improvement programs.  Good success has been achieved in recent years.  In fiscal year 2003 the operationalimprovement program delivered an estimated A$87 million in savings, andmanagement have identified scope for further progress.  Systems are established to ensureperformance improvement is closely monitored.

 

•                    **Pursuinglow risk growth opportunities.**

CSRgroup is seeking low risk growth opportunities in each of its three businessareas.  For example, CSR (through GoveAluminium Finance Limited (“GAF”), in which CSR has a 70 percent interest) hasthe opportunity to participate in a 15 percent production expansion of theTomago smelter that is currently under way. The cost of GAF’s participation is around A$75 million and a decision isrequired by November 2003.

 

CSRis also exploring a further investment in electricity co-generation at one ofits sugar mills in North Queensland. The electricity, generated from renewable waste sugarcane fibre, is soldinto the electricity grid at commercially acceptable prices.

 

InBuilding Products, CSR is exploring a number of opportunities to extend itsproduct range to meet customer needs better. In addition, CSR continues to look for opportunities for restructuringand rationalisation in the building products markets, provided that these arevalue enhancing for shareholders.

 

 

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Following the demerger, CSR’s organisational structure and products areas follows:

 

** **

**CSR Building Products**

*** ***

*Overview*

 

CSRBuilding Products, manufactures and supplies building products and services tothe building and construction industry, principally in Australia. It is aleading supplier in the Australian building materials industry.

 

Thebusiness has 44 manufacturing plants (including both wholly owned and thoseoperating through joint ventures) with operations in Australia (35), NewZealand (3), Malaysia (2), China (2), Thailand (1) and Singapore (1). Inaddition, it operates four Asian trading businesses and manages three ships.

 

CSRBuilding Products has a decentralised structure whereby business units areoperated as separate and distinct enterprises.

 

***CSR Gyprock***

 

*Overview*

 

CSR Gyprock is a leading manufacturer and distributor of gypsum basedplasterboard (wallboard) and related products in Australia. Its product rangeincludes plasterboard sheets, fire-resistant and moisture-resistant liningsystems, acoustic systems, ceiling systems, sculptured wall panels and a widerange of related accessories. These products are used in walls and ceilings inboth residential and commercial building.

 

CSR Gyprock also holds a 50 percent interest in Rondo Building ServicesPty Ltd, which manufactures metal suspended ceiling and wall partitionproducts. These products are primarily used for fixing plasterboard and aremanufactured in its Sydney plant. The remaining 50 percent interest is held byBoral Limited (“Boral”).

 

*Sales and distribution*

 

CSR Gyprock’s share of the Australian plasterboardmarket is estimated to be more than 30 percent. Boral and Lafarge SA are CSRGyprock’s principal competitors and maintain significant market presences. Inaddition, the Buckeridge Group Company Pty Ltd (“BGC”) has announced itsintention to enter the

 

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nationalmarket and is commissioning a plasterboard plant in Western Australia. Importshave been largely unsuccessful in penetrating the plasterboard market and havea small market share.

 

CSR Gyprock has the largest distribution network inthe market and utilises the GyprockTM brand name, which has a highlevel of industry recognition. It maintains major distribution hubs in eachAustralian capital city and a national network of 47 company owned tradecentres and 40 closely aligned, but independently owned trade centres. About 70percent of CSR Gyprock’s sales volumes were managed through these trade centresfor the year ended March 31, 2003.

 

*Facilities and reserves*

 

Plasterboard is manufactured at four plants locatedin New South Wales, Victoria, Queensland and Western Australia. The first stageof manufacturing produces plaster by heating and grinding gypsum. Plaster isthen mixed with water, foam and other additives to form a slurry which is fed,to a predetermined thickness, between two layers of heavy paper liner. Once theplaster hardens into a solid board, it is cut to length and dried. Specialisedboards, for example for improved fire resistance or water resistance, usedifferent additives in the mix.

 

All CSR’s gypsum (other than Western Australia) issourced from Gypsum Resources Australia Pty Ltd (“GRA”), which operates aGypsum mine at Lake MacDonnell, South Australia. GRA is a joint venture, 50percent owned by the CSR group and 50 percent by Boral. The gypsum mine has anestimated 225 million tonnes of reserves which, at current usage levels,equates to an estimated mine life of 160 years. CSR Shipping manages thetransportation of gypsum to CSR Gyprock manufacturing plants.

 

#### ***CSR Fibre Cement***

 

*Overview*

 

CSR Fibre Cement entered the fibre cement market in1996 and is currently Australia’s second largest producer by volume of fibrecement products. Its product range includes eaves lining, external cladding,wet area wall linings, flooring and high impact partitions and facades. Theseproducts are specifically designed to meet the requirements of the Australianmarket for a wide range of residential and commercial wall constructionapplications.

 

*Sales and distribution*

 

CSR Fibre Cement operates nationally, targeting theQueensland, New South Wales and Victorian fibre cement markets. Its share ofthe Australian market is estimated to be more than 15 percent. James Hardie NVis the largest Australian producer, with BGC also marketing nationally.

 

CSR Fibre Cement utilises CSR Gyprock’s nationalnetwork of trade centres. Other distribution channels include direct sales tocustomers, retail chains and other trade outlets.

 

*Facilities*

 

CSR Fibre Cement operates from a single factorywhich was commissioned in 1996 and is located in Sydney. The manufacturingprocess starts with grinding sand and mixing it with cement, cellulose fibreand other additives to form a wet slurry which is deposited on a rotating drumuntil the required thickness is reached. The wet sheet is laid flat, thentransferred to an autoclave oven for curing before trimming and sanding.

 

The CSR Fibre Cement manufacturing plant is locatedadjacent to the CSR Gyprock manufacturing plant in Sydney, enabling thebusinesses to share the benefits of common management, distribution andadministration.

 

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#### ***CSR PGH***

 

*Overview*

 

CSR PGH is a leading Australian and New Zealandmanufacturer of clay bricks and clay pavers, which it markets in Queensland,New South Wales, Victoria, South Australia and New Zealand. Its brick productsare used in internal and external walling systems in the construction andrenovation of residential housing and commercial projects. Pavers are used in awide selection of external paving and flooring applications.

 

CSR is also the sole Australian manufacturer ofaerated lightweight concrete (“ALC”) blocks and panels, which it manufacturesat its Somersby plant near Sydney. ALC blocks and panels are principally usedas internal and external walls and flooring in buildings.

 

*Sales and distribution*

 

CSR PGH’s share of the Queensland, New South Walesand South Australian clay brick markets is estimated to be more than 30percent. Based on industry information, CSR estimates that clay bricks accountfor 80 percent of the external cladding market for new housing and multi-unitdwellings. Clay bricks compete for market share with other materials such asfibre cement, timber, masonry and steel. CSR PGH’s principal competitors inclay bricks include Boral, Brickworks Ltd and Bristile Ltd (“Bristile”). About85 percent of CSR’s bricks are distributed directly to builders with theremaining 15 percent distributed through resellers. Direct sales arefacilitated through a network of 19 brick and paver selection centres.

 

CSR PGH’s share of the Queensland, New South Walesand South Australian clay paver markets is estimated to be more than 30percent. CSR PGH faces competition from a number of clay and concrete paverproducers and other concrete products. Paver sales are distributed aboutequally between direct sales and sales to resellers. Pavers are also exportedto north Asia.

 

CSR PGH markets a well recognized suite of brand namesincluding PGHTM and ZacubaTM brands in Australia and theMonierTM brand in New Zealand.

 

*Facilities and reserves*

 

CSR PGH operates manufacturing plants in New SouthWales (5), Queensland (3), South Australia (1), and New Zealand (1). Themanufacturing process entails clay and shale being mixed to produce specificbrick properties and colour. Clay is then formed into a wide range of extruded,pressed and moulded bricks and pavers before being dried and fired in kilns.Clay and shale is mined from on-site and off-site clay reserves. While reservelife varies from quarry to quarry, at current extraction rates reserves areestimated to be in excess of 20 years.

 

#### ***CSR Monier Wunderlich***

 

*Overview*

 

CSR Monier Wunderlich is the leading terracotta andconcrete roof tile supplier by market share in Australia and New Zealand.Terracotta tiles are positioned at the medium to high value end of the roofingmarket and are produced in three main styles: Marseille, Swiss and Tuscan.Concrete tiles are positioned at the low to medium end of the roofing marketand are produced in a series of styles and colours.

 

*Sales and distribution*

 

CSR Monier Wunderlich competes in the Australianresidential pitched roofing market. By volume, this market is about evenlydivided between roof tiles and steel. Within the roof tile segment in fiscalyear 2003, concrete is estimated to account for about 80 percent of volumes andterracotta 20 percent. CSR

 

 

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Monier Wunderlich’s share ofthe Australian roofing market in fiscal year 2003 estimated to be  in excess of 20 percent. Its majorcompetitors include Boral and Bristile in tiles and BHP Steel Limited whomanufacture and distribute steel roofing products.

 

In fiscal year 2003, about 70 percent of CSR MonierWunderlich’s sales volume is sold on a ‘supply and fix’ basis whereby acomplete roof is sold to builders, with the labour sub-contracted. The businessbrand names have a high level of industry and retail recognition – WunderlichTMin terracotta tiles and MonierTM in concrete tiles. MonierWunderlich utilises CSR PGH’s network of 19 selection centres as points of saleas well as its own dedicated selection centres in Victoria (1) and WesternAustralia (1).

 

*Facilities and reserves*

 

Wunderlich terracotta tiles are manufactured atplants in New South Wales and Victoria. The manufacturing process entails themixing of clays to obtain desired properties and colour. The clay mix is thenextruded in a continuous stream, cut into set lengths and pressed into varioustile shapes. The soft tiles are then partially dried, treated with long lastingcoloured glazes and fired in kilns. Clay is sourced from two company controlledquarrying reserves. At current extraction rates, reserves are expected to be inexcess of 10 years.

 

Monier concrete tiles are manufactured in plants inNew South Wales (2), New Zealand (2), Victoria (1), Queensland (1) and WesternAustralia (1). A new concrete tile plant at the same site as the terracottaplant in NSW was commissioned during fiscal year 2003. The manufacturingprocess involves feeding a concrete mix of sand, cement and water into mouldsto create the basic tile shape. The wet tiles then pass through a colourcoating process, before being cured and packed.

 

#### ***Insulation***

 

*Overview*

 

CSR’s insulation business has two divisions: CSRBradford Insulation and CSR Asia Insulation.

 

CSR Bradford Insulation is Australia’s solemanufacturer of rockwool insulation, one of the leading manufacturers ofglasswool insulation products and also manufactures reflective foil. CSR AsiaInsulation operates five manufacturing plants in Asia, strategically located tosupply local and regional markets.

 

CSR’s insulation products are used for a wide rangeof thermal and acoustic insulation applications. The primary purpose ofinsulation is to reduce energy consumption with benefits arising from loweroperating and fuel costs, reducing the need for new or expanded power stationsand improving the overall environment. Other direct benefits include stabilityin temperature control, noise reduction and improved working conditions.

 

*Sales and distribution*

 

CSR Bradford Insulation’s share of the Australianrockwool and glasswool insulation market is estimated to be more than 30percent. Its BradfordTM brand is well recognized at both an industryand retail level. CSR Bradford Insulation’s two major glasswool competitors inAustralia and New Zealand are Tasman Building Products Pty Ltd and InsulationSolutions Pty Ltd. CSR Bradford Insulation also competes against otherinsulation products in the form of cellulose, polyester and wool. CSR BradfordInsulation’s principal Australian customers include home builders,distributors, retail outlets, insulation contractors and appliancemanufacturers.

 

CSR Asia Insulation’s products are sold mainly forapplication in commercial and industrial projects. To facilitate sales anddistribution across a range of markets in Asia, CSR Building Products hastrading businesses in Singapore, Manila, Shanghai and Hong Kong.

 

27

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*Facilities*

 

CSR Bradford Insulation operates three manufacturingplants in Australia:  a glasswoolinsulation plant in Sydney and rockwool and reflective foil plants inMelbourne. Glasswool production involves feeding recycled glass and a smallpercentage of glass making raw materials into a furnace to produce moltenglass, which is processed into a stream of fine glass fibres. These fibres aretransferred to an oven where they are compressed to the required thickness anddensity and cured, before being cut to size. Rockwool production involvesfeeding a mixture of basalt, slag and coke into a furnace. The resultantmaterial is converted into fine mineral fibres before being compressed,transferred to a curing oven and cut to size. Reflective foil consists of twooutside layers of aluminium foil. The production process for reflective foilinvolves adhering a layer of aluminium to a paper sheet and inserting afibreglass woven yarn between the second layer of aluminium and the reverseside of the paper to provide a strengthened reflective barrier.

 

CSR Asia Insulation operates five manufacturingplants in Asia, three of which are through joint ventures with local partners.The partners bring local knowledge and assist in sourcing contracts for thebusiness, while CSR retains management control. Its Asian operations include a70 percent interest in a rockwool plant in Kuala Lumpur, Malaysia, a 100percent interest in a rockwool plant in Rayong Province, Thailand, a 70 percentinterest in a rockwool plant in Dongguan, Guangdong Province, China and a 79.6percent interest in a glasswool plant in Zhuhai, Guangdong Province, China. InSingapore, CSR Building Products manufactures and distributes air conditioningducting and fittings.

 

***Enviroguard and Envirogreen***

 

CSR holds a 50 percent interest in the EnviroguardPty Ltd (“Enviroguard”) joint venture, which has a wholly owned subsidiary,Envirogreen Pty Ltd (“Envirogreen”). The remaining interest in the Enviroguardjoint venture is held by Brambles Industries Limited, an Australian companywith extensive waste management operations. Enviroguard operatesnon-putrescible landfills at Erskine Park in Sydney and Murarrie in Brisbane.Envirogreen produces plant protection, plant nutrition and growing mediaproducts for the home garden and horticultural markets located on the easternseaboard of Australia.

 

***CSR Shipping***

 

CSR Shipping operates and manages three ships (oneof which it owns) and arranges movement of cargo. Two of the ships, togetherwith chartered ships when required, carry gypsum from GRA’s South Australianoperations to the eastern Australian states and raw sugar and calcite fromQueensland to southern Australian states on return voyages. The third ship carriescement for Australian Cement Holdings (“ACH”), which is currently a 50/50 jointventure between Rinker and Hanson plc. For the year ended March 31, 2003, CSR Shipping managed about 3.9million tonnes of cargo.

 

***Aerated Lightweight Concrete,Malaysia***

 

CSR holds a 70 percent interest in CSR BuildingMaterials (M) Sdn Bhd, a Malaysia-based manufacturer of ALC products. CSRBuilding Materials (M) Sdn Bhd operates from a single plant and predominantlytargets the Malaysian and Singaporean markets.

 

## **Aluminium**

*** ***

*Overview*

 

CSRholds an effective 25.235 percent interest in the Tomago aluminium smelterjoint venture (“Tomago”), which is located near Newcastle, New South Wales.Tomago is Australia’s second largest smelter, with an annual productioncapacity of 460,000 tonnes of aluminium. The smelter has a competitive positionon the world industry cost curve. This is attributable to its competitivesource of electricity, close proximity to alumina supplies, high operatingefficiency and access to the potline technology of Pechiney, one of the world’slargest aluminium producers.

 

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CSR’sinterest is held via its 70 percent interest in Gove Aluminium Finance Limited(“GAF”) which holds a 36.05 percent interest in Tomago. The remaining 30percent interest in GAF is held by AMP Life Limited (“AMP”), a subsidiary ofAMP Limited, an Australian based financial services company. Each GAFshareholder has pre-emptive rights over the shares held by the other.

 

Theother equity participants in Tomago are:

 

•                    Pechiney Pacific Pty Limited(36.05%) and Cathjoh Holdings Pty Limited (15.5%), both subsidiaries ofPechiney of France; and

 

•                    Hydro Aluminium AustraliaLimited (6.2%) and Hydro Aluminium Tomago, Inc. (6.2%), both subsidiaries ofNorsk Hydro ASA of Norway.

 

TheTomago joint venture agreement prevents a participant selling its interest inthe joint venture without first offering the interest to the otherparticipants. If CSR wishes to exit its aluminium investment or GAF wishes tosell its interest, the other Tomago participants have the right to buy GAF’sinterest at its market price or at a 15 percent discount in the case of anoffer from a party which is not a joint venture participant. Similarpre-emptive rights apply if other participants wish to sell their interest inthe joint venture.

 

Tomagois managed by Tomago Aluminium Company Pty Limited (“TAC”), a special purposecompany owned 50 percent by GAF and 50 percent by Pechiney Pacific. The jointventure operates under a tolling arrangement whereby each participant suppliesits own alumina, pays its share of the smelter’s operating and capital costsand receives and sells its share of the smelter’s aluminium production. GAF isentitled to 36.05 percent of the aluminium produced at Tomago, which, at thesmelter’s current capacity, is about 165,000 tonnes a year.

*** ***

*Sales*

 

GAFaims to maximise sales of value added products, principally billet and slab,which sell at a premium to the standard aluminium ingot product. During theeight years ended March 31, 2003, these products have accounted for about 25percent of total sales.

 

GAF’scustomer base comprises a small number of long standing end users and tradingcompanies, the majority of which are located in Japan. About two-thirds ofsales are made under long term sales arrangements, which typically extend fortwo to three years and contain roll over provisions allowing for arrangementsto be extended beyond the initial term. GAF maintains close relationships withits customers on both marketing and product related matters.

 

*Facilities*

 

TheTomago smelter covers an area of 110 hectares and includes three potlines, eachcontaining 280 electrolytic cells known as pots. Pots are large rectangularcells, lined with carbon blocks and insulating bricks. Aluminium is producedwithin pots by dissolving alumina in a molten bath of sodium aluminium fluorideand passing an electric current through the bath. The process results inalumina being separated into its constituent elements, aluminium and oxygen.Molten aluminium formed in the pots is siphoned off, taken to holding furnaces,alloyed as required, analysed and then cast into either ingot, billet or slab.

 

Foreach tonne of aluminium produced, Tomago consumes approximately two tonnes of aluminaand half a tonne of carbon products in the form of petroleum coke and coal tarpitch.

 

GAFhas a long term contract for alumina supply with Gove Aluminium Limited, asubsidiary of Alcan Inc. Freight contracts and vessel scheduling are organisedand managed by CSR Shipping under arm’s length, fee-for-service arrangementswith the Tomago participants. TAC imports petroleum coke, while coal tar pitchis purchased domestically. Tomago obtains its electric power from MacquarieGeneration under a long term contract.

 

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Thesmelter utilises Pechiney’s AP18 pot technology. Pechiney has agreed to providetechnology to Tomago as and when needed and is reimbursed for its costs. Tomagoalso pays Pechiney an annual fee based on the value of aluminium produced eachyear. The current expansion project involves upgrading to Pechiney AP22technology, an enhancement over AP18 technology.

 

InApril 2002, Tomago announced the approval of a project to increase annual productionby 70,000 tonnes to 530,000 tonnes by 2006 at an estimated cost of A$210million. GAF has the option to participate in the expansion in proportion toits current interest in Tomago. It must decide whether or not it willparticipate by November 2003. If GAF participates, it will be required tocontribute its share of the project cost, which is currently expected to beabout A$75.7 million.* *IfGAF decides not to proceed, the other Tomago participants will be entitled toincrease their participation in the expansion in proportion to their ownershipin the smelter. In addition to this expansion, Tomago is also assessing thepotential for a fourth potline.

 

**CSR Sugar**

 

CSRSugar is the largest raw sugar producer in Australia. It comprises three majorbusinesses: sugar milling, sugar refining and the production of ethanol.

 

CSRSugar also has a 42.5 percent interest in C. Czarnikow Limited (“Czarnikow”),the world’s largest sugar broker by volume. For financial reporting purposes,CSR Sugar has two segments: sugar milling and sugar other (comprising refining,ethanol, CSR Sugar head office and sugar broking).

 

#### ***Milling***

 

*Overview*

 

CSRSugar is the largest producer of raw sugar in the Australian sugar industrywith an annual raw sugar milling capacity in excess of 2.4 million tonnes. Itsmills processed 14.1 million tonnes of sugarcane and produced 2.1 milliontonnes of raw sugar, or about 39 percent of Queensland’s total production incalendar year 2002.

 

CSRSugar’s milling business also produces valuable by-products such as molasses,which is primarily used for ethanol production and stockfeed. In addition, CSRSugar’s mills have electricity generation capacity and generate their own steamand electricity by burning sugarcane residual fibre. CSR Sugar’s mills sellexcess electricity into the Queensland electricity grid.

 

*Sales*

 

Followingthe milling process, all of CSR Sugar’s raw sugar is compulsorily acquired bythe Queensland Government and marketed by QSL. Other revenue is derived fromthe sale of molasses and the generation of electricity.

 

Othersignificant Australian sugar milling operators are Bundaberg Sugar Ltd andMackay Sugar Co-operative Association Ltd (“Mackay Sugar”), each producingabout 16 percent of raw sugar production in Australia in calendar year 2002.

 

*Facilities*

 

CSRSugar has seven mills in three districts in north eastern Queensland. Fourmills are located in the Burdekin River region south of Townsville, two in theHerbert River region north of Townsville and one at Plane Creek near Mackay.Since 1992, CSR Sugar has increased sugarcane milling capacity from about 10million tonnes a year to over 16.5 million tonnes, being able to produce inexcess of 2.4 million tonnes of raw sugar a year.

 

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Thesugar milling process is highly automated. Sugarcane is transported to CSRSugar’s mills by an extensive sugarcane railway system. The mills shred andcrush the sugarcane to extract juice, which is processed into concentratedliquor. Raw sugar is produced by growing crystals in the concentrated liquorand then separating the crystals from the residual syrup after furtherprocessing.

 

#### ***Refining***

 

*Overview*

 

CSRSugar’s refining operations in Australia are conducted through the SugarAustralia unincorporated joint venture (“Sugar Australia”). Sugar Australia wasformed in 1998 to help rationalise the Australian sugar industry at a time ofover capacity and following the removal of tariffs in 1997. CSR Sugar holds a50 percent interest in the joint venture, with Man Group plc and Mackay Sugar,each holding a 25 percent interest. Each of the joint venture participantseffectively supplies its proportionate share of raw sugar, pays its share ofoperating expenses and receives its share of production. Sugar Australia actsas agent for the joint venture participants in promoting, marketing, sellingand distributing production.

 

CSRSugar’s refining activities in New Zealand are conducted through the NewZealand Sugar Company (“NZSC”). The CSR group owned 100 percent of NZSC until1998 when CSR sold a 25 percent interest to Man Group plc and a 25 percentinterest to Mackay Sugar.

 

SugarAustralia is Australia’s largest sugar refiner. NZSC is the only sugar refinerin New Zealand. In addition, Sugar Australia and NZSC export refined sugarmainly to Asia and the Pacific Islands. Refined sugar exports were in excess of80,000 tonnes for the year ended March 31, 2003.

 

*Sales*

 

TheSugar Australia participants source raw sugar on a commercial basis and seek arefining margin over the NY#11 in negotiations with industrial, retail andexport customers.

 

Withinthe retail sector, Sugar Australia markets the CSRTM brand inaddition to supplying products, which are marketed under retail house brands.Sales to the industrial sector are primarily to food and beveragemanufacturers. Sugar Australia also exports sugar in various forms, includingbulk cargo sized parcels using a specially designed ship.

 

NZSCalso sells refined sugar to both the industrial and retail sector, with NZSC’sCHELSEATM retail brand commanding a leading market share in NewZealand. NZSC also exports refined sugar and sugar containing blends to Japanand Pacific Islands. In New Zealand it faces competition from importers ofrefined sugar.

 

*Facilities*

 

Therefining process involves the removal of impurities and colour from raw sugarand further refining sugar crystals into food grade products such as whitesugar, brown sugar, caster sugar, and syrups which can be delivered tocustomers in a range of bulk or packaged forms.

 

Theoperations of the Sugar Australia joint venture include refineries inYarraville, Victoria and Mackay, Queensland, depots in most Australian capitalcities and the specialised bulk refined sugar ship MV Pioneer, one of onlythree of its type in the world. The Mackay refinery has an annual capacity of350,000–400,000 tonnes and the potential for expansion at relatively low cost,while the Yarraville refinery has an annual capacity of about 250,000–300,000tonnes.

 

NZSC’sChelsea refinery in Auckland is the only sugar refinery in New Zealand. Therefinery has a capacity of 200,000–250,000 tonnes a year. While all raw sugaris currently sourced from QSL, NZSC is free to source its raw sugar from anysource. The Chelsea refinery is located on Auckland harbour.

 

31

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#### ***CSR Ethanol***

 

*Overview*

 

CSREthanol is a major producer of ethanol in Australia. Ethanol is used inpharmaceuticals, food and beverage, cosmetics and toiletries, printing,aerosols and paint. CSR Ethanol produces fertiliser as a by-product of theethanol production process and also operates a small agency business(chemicals, solvents and food ingredients).

 

*Sales*

 

CSREthanol has two principal markets: bulk exports mainly to Japan for use inalcoholic spirits and domestic sales to various industrial manufacturers. TheManildra Group is CSR’s primary competitor in the Australian market. CSREthanol also produces a range of fertiliser products, which are solddomestically to sugarcane farmers.

 

*Facilities*

 

CSRproduces ethanol from molasses using a process of fermentation anddistillation. CSR Ethanol operates two distilleries in Australia, at Sarina,Queensland, and Yarraville, Victoria.

 

TheSarina distillery has a production capacity of 55-60 million litres of ethanola year. Ethanol produced at the distillery is shipped to export markets or tothe Yarraville distillery. Shipments are made from CSR Ethanol’s liquidterminal at Mackay Harbour.

 

TheYarraville distillery receives standard ethanol (95% purity) from the Sarinadistillery, some of which it dehydrates to produce a higher grade ethanol. Theremaining standard ethanol is either distributed to customers in the formreceived from Sarina or blended before being distributed. The Yarravilledistillery also acts as CSR Sugar’s major ethanol distribution centre for theAustralian domestic market.

 

#### ***Sugar broking***

 

CSRSugar has a 42.5 percent investment in the world’s largest sugar broker, C.Czarnikow Limited (“Czarnikow”). Czarnikow handles over 8 million tonnes of sugar a year (estimated atabout 20 percent of total world trade a year).

 

**Other**

 

***Property management***

 

CSRactively manages its property portfolio. From time to time, properties becomeredundant from operations and can be developed or divested.

 

CSR’sinternal property division focuses on maximising the returns from formerindustrial and extractive industry sites. For example the ex CSR PGH, Woodcroftsite, on which CSR has entered a binding agreement with Mirvac Limited to developa 400 residential lot development, with estimated returns of A$40 million overthree years. Additionally, CSR is exploring the potential to develop a 100hectare industrial park at Erskine Park for a range of investor and end userpurposes. Both these sites are in prime locations in Sydney.

 

Asa result of the demerger, CSR’s beneficial 40 percent interest in Penrith LakesDevelopment Corporation Limited (“PLDC”) (Boral 40%, Hanson 20%), whichextracts the majority of the aggregates for the Sydney region, was transferredto Readymix. Readymix has agreed to share future profits produced from landsales equally with CSR. A significant portion of the PLDC land holdings havebeen identified as

 

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havingpotential, subject to planning approvals, for a major urban land development,creating approximately 4,900 residential lots.

 

Management expects that, subject to the completion of necessaryrezoning, site restoration, subdivision and other preparatory activities, willprovide an income stream for CSR over the next decade.

 

**The Rinker Group**

 

Approvalfor the demerger of the Rinker group from CSR was completed on March 28, 2003.The results of the Rinker group are included in the results of CSR group forthe year ended March 31, 2003 but the net assets of Rinker group were no longerheld by CSR at that date.

 

Rinkergroup companies are leading manufacturers and suppliers of heavy buildingmaterials in the US and Australia.  Inthe US, Rinker’s subsidiary Rinker Materials is one of the largest producers ofheavy building materials with its principal operations in Florida and Arizona,and additional operations in 29 other states. Products include aggregate, cement, concrete, concrete block, asphalt,concrete pipe, pre-stressed concrete products and polyethylene pipe. RinkerMaterials also has a gypsum wallboard distribution business in Florida.  Since 1998, the Rinker group has grownthrough a number of acquisitions, in particular through the followingacquisitions by Rinker Materials:

 
| •     American Limestone Company    |   | US$211 million |   | (A$353 million) |   | June 2000      |
|--------------------------------------------------------------|--------|----------------|--------|-----------------|--------|----------------|
|                                                         |   |           |   |            |   |           |
| •     Florida Crushed Stone Company |   | US$348 million |   | (A$598 million) |   | July 2000      |
|                                                         |   |           |   |            |   |           |
| •     Kiewit Materials Corporation  |   | US$540 million |   | (A$997 million) |   | September 2002 |

 

InAustralia, Rinker group’s subsidiary Readymix is one of the leading producersof aggregate, concrete, concrete pipe and other concrete products.  Readymix also holds substantial jointventure interests in cement and asphalt operations, and a 99% interest in aconcrete  business in China.  The chart below provides an overview ofRinker group companies’ operations.

 

 

**Rinker group**business segments arereported along geographic lines (Rinker Materials in the United States andReadymix in Australia and China) and within the United States, along productlines.  The business segments for RinkerMaterials are Aggregate; Cement; Concrete, concrete block and asphalt; Concretepipe and products; and Other.  Readymixis one segment.  These segments are thesame as those used for internal management as the basis for making decisionsregarding the allocation of resources.

 

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**Rinker Materials** business segments:

 

**•****            ****Aggregate:**RinkerMaterials extracts aggregate, which is crushed and sized for delivery tocustomers, primarily for use in the production of concrete, roadbase andasphalt.  Rinker Materials principaloperations are in Florida and Arizona. Overall, Rinker Materials is the fifth largest supplier of aggregate inthe US, with 92 quarries, sand and aggregate plant operations. Rinker Materialsis a market leader, as measured by production, in Florida, Nevada and Arizona.Rinker Materials (including annualized Kiewit volumes) produced over 75 milliontonnes of aggregate for the year ended March 31, 2003. For the year ended March31, 2003, Rinker Materials’ estimated end markets for aggregate by tradingrevenue were equally divided among residential, commercial and civilconstruction.

 

**•****            ****Cement:**Cement isproduced through a highly capital intensive process with limestone as the majorraw material.  Rinker Materials is the leading cementsupplier in Florida in terms of volume sold, operating two plants, whichproduced about 1.7 million tonnes for the year ended March 31, 2003.  Rinker Materials also has two strategicallylocated cement import terminals in Florida, which imported 1.6 million tonnesfor the year ended March 31, 2003.  Forthe year ended March 31, 2003, Rinker Materials’ estimated external end marketsfor cement by trading revenue were about 65% residential, 30% commercial and 5%civil construction.

 

**•****            ****Concrete,concrete block and asphalt:**Rinker Materials producesconcrete by combining cement, aggregate, water and additives in batch plants fordelivery to customers’ sites in mixer trucks. Rinker Materials (including annualized Kiewit volumes) produced over 11million cubic metres of concrete for the year ended March 31, 2003. RinkerMaterials is a market leader in Florida, Arizona and Nevada, and operated atotal of 148 concrete plants at March 31, 2003.  For year ended March 31, 2003, Rinker Materials’ estimated endmarkets for concrete by revenue were about 60% residential, 30% commercial and10% civil construction.

 

RinkerMaterials produced around 135 million units of concrete block for the yearended March 31, 2003.  Concrete block isused for residential and commercial building. Rinker Materials’ concrete blockoperations are principally located in Florida and Nevada, where it was the marketleader in terms of production for the year ended March 31, 2003.

 

RinkerMaterials also produces asphalt, which is used for roads, highways and airportswith plants located in Arizona, northern California, Oregon and Washingtonstate.

 

**•****            ****Concretepipe and products:** Concrete pipe is produced by inserting concreteinto a mould, which is subsequently removed. Rinker Materials, through itssubsidiary, Hydro Conduit, is one of the leading suppliers of reinforcedconcrete pipe and pre-cast concrete products in the United States withproduction of around 3.0 million tonnes for the year ended March 31, 2003 from52 plants located in 23 states.  HydroConduit’s principal product is concrete pipe, which is used for storm watertransmission, sewerage and irrigation. For the year ended March 31, 2003, Hydro Conduit’s estimated end marketsby trading revenue were about 30% residential, 25% commercial and 45% civilconstruction.

 

**•****            ****Otherbusinesses:**Rinker Materials’ other businesses include, gypsumsupply, pre-stressed concrete products and polyethylene pipe operations.

 

**Readymix:**

** **

InAustralia, Readymix operates a vertically integrated heavy building materialsbusiness with leading market positions. As at March 31, 2003, Readymix had 368 operating plants with 83 quarriesand sand mines, 234 concrete plants and 18 concrete pipe and productplants.  Concrete pipes and products areproduced by Readymix’s Humes business.

 

 

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OnMay 31, 2003, Readymix, Hanson Australia Pty Ltd (“Hanson”) and Holcim Ltdmerged their Australian cement interest – Australian Cement Holdings (50%Readymix, 50% Hanson) and Queensland Cement Limited (“QCL”, a 100%-owned Holcimsubsidiary) to form Cement Australia Pty Ltd. Readymix holds 25% of the new company, Hanson also owns 25%, and Holset,a Holcim subsidiary, holds the remaining 50%. Cement Australia will be the leading supplier of cement in Australia,with the capacity to produce around three million tonnes of cement a year fromthree plants in Gladstone, Queensland; Railton, Tasmania; and Kandos, New SouthWales.  In addition, on June 2, 2003Readymix acquired three aggregate operations and six concrete plants from asubsidiary of Cement Australia Pty. Ltd.

 

**Acquisitions and Divestitures**

 

TheCSR group made the following major acquisitions and divestitures during fiscalyears 2003, 2002 and 2001. See also Note 35 to the financial statements,included elsewhere in this annual report, for the fair value of net assetsacquired and disposed.

 

***Fiscal year 2003***

 

OnMarch 28, 2003, the Federal Court of Australia approved the demerger of theRinker group, comprising Rinker Materials and Readymix, from CSR. The bookvalue of net assets deconsolidated as a result of the demerger, less outsideequity interests, was A$3,023.8 million.

 

Alsoin fiscal year 2003, Rinker Materials acquired Kiewit, an integratedaggregates, concrete and asphalt company with operations in Arizona and otherwestern states of the United States, for US$540 million (A$997 million).

 

***Fiscal year 2002***

 

Duringfiscal year 2002 CSR sold its interest in the Downer Group Ltd for A$60 millionand Rinker Materials sold land and other non-core operations and assets for atotal of A$73 million.

 

Infiscal year 2002, Rinker Materials acquired five quarries in Missouri andKentucky from Cemex Inc., for US$42 million and the Las Vegas quarry andconcrete operations of Hanson plc for US$24 million.

 

***Fiscal year 2001***

 

Infiscal year 2001, CSR group sold its interest in Gove Aluminium Ltd, a bauxiteand alumina producer in the Northern Territory, Australia, to a subsidiary ofAlcan Aluminium Limited for net proceeds of A$412 million.

 

Infiscal year 2001, Rinker Materials acquired 100 percent of American LimestoneCompany Inc., an aggregates and pre-mixed concrete producer in Tennessee andVirginia, from Grupe Mexico’s ASARCO division for US$211 million. RinkerMaterials also acquired Wilson Concrete Company, a pipe and prestress productsmanufacturer in Missouri, Iowa, and Nebraska, and Leppert Concrete Products inIndiana for a total of US$84 million plus additional amounts for workingcapital.

 

Alsoin fiscal year 2001, Rinker Materials acquired 100 percent of Florida CrushedStone Company, an aggregate and cement producer in Florida and Georgia, forUS$348 million.

 

**Government Regulations**

 

***Environmental Matters***

 

CSRbelieves that the activities of the CSR group entities are in substantialcompliance in material aspects with applicable environmental laws andregulations as administered by the responsible regulatory authorities oragreements are in place to reach compliance within an agreed time.

 

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Australia’sprincipal laws governing environmental and sustainable management of naturaland physical resources are contained in legislation and regulations enacted bythe Commonwealth Government and the states and territories of the Commonwealthof Australia. This body of legislation regulates the operations of companiesprincipally in regard to air, water and noise emissions, waste disposal, landcontamination, and the handling and storage of environmentally hazardouschemicals and dangerous goods.

 

Asystem for monitoring environmental impacts is established across the CSRgroup’s operations and CSR measures key environmental performance indicators,with the aim of progressively reducing (per unit of production) wastegeneration, water use, energy consumption and carbon dioxide air emissions. Themonitoring information and actions taken are reported regularly to seniormanagement and the board’s Safety Health and Environment Committee along withkey environmental performance data.

 

InAustralia, CSR reports a range of emission data to the Australian FederalGovernment’s National Pollutant Inventory (“NPI”). Data supplied is from aseries of plants, which manufacture bricks and pavers, clay roof tiles,insulation and raw sugar. Many plants operate under EPA licences and, in somecases, fees are based on pollutant discharge levels.

 

CSRgroup’s environmental policies have not necessarily been adopted at the sitesof its investments (such as the aluminium smelter at Tomago, Sugar Australia,and Enviroguard), which are managed independently. Nevertheless, CSR believesthat each of these ventures has implemented environmental policies appropriatefor the environmental risks inherent in their operations.

 

CSRgroup’s safety, health and environment management system includes auditing ofall sites occupied by the CSR group over a three year period for environmentalcompliance. During fiscal year 2003 external audits at 131 sites werecompleted. CSR has established and implemented systemsto manage and report on land use planning issues and pollution control issuesat sites at which CSR carries out operations. These systems incorporatepolicies, standards, procedures and monitoring and measurement regimes andcontinue to be implemented by the CSR board. As part of the continued use ofthe systems the CSR board receives regular management reports on land useplanning issues and pollution control issues in addition to actions andexpenditure required to support environmental initiatives. Since 1998 a systemof comprehensive land use planning and pollution control assessment has beenadopted at relevant sites. These assessments have involved an audit of theoperations conducted at a site against regulatory and benchmark standards andthe reporting of environmental incidents. The assessments carried out did notidentify any material environmental liability.

 

Actionplans, based on these audits, are monitored and progress on closure of high andmedium priority items is reported to senior management and the board’s SafetyHealth and Environment Committee.

 

Themain activities in which expenditure is incurred on environmental complianceacross all businesses include stormwater management, waste treatment anddisposal, particulate and gaseous emissions, and storage of fuels, oils andchemicals.

 

CSRgroup’s environmental monitoring system has identified contamination on severalsites. Clean-up operations of these sites are planned or under way. Clean upcosts have been provided for and no material adverse impact on operations isexpected. CSR group policy requires that all wastes be taken off CSR group landfor disposal according to regulations in licensed and regulated landfills. Someinstances of past disposal of wastes on the CSR group’s land are known.Management considers only minor immediate remedial action to be necessary andthis is not to be anticipated to have a material effect on the CSR group’soperations or competitive position.

 

Followingthe demerger, the CSR group is responsible for any liabilities and costsassociated with environmental contamination and compliance in respect of thebusinesses it continues to own after the demerger.  Rinker group has agreed to indemnify CSR, to the maximum extentpermitted by law, in respect of the liabilities and costs associated withenvironmental contamination and compliance in respect

 

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of the businesses that are owned by theRinker group following the demerger, irrespective of when the contaminationoccurred or when the liabilities or costs arise. 

 

Disposal of non-putrescibleand non-hazardous solid waste in disused clay pits on land owned and controlledby the CSR group has been completed. The landfills have been capped andrestored. Enviroguard is a joint venture (50 percent owned by the CSR group)with Brambles Australia Limited, which operates two non-putrescible landfills indisused quarries in Sydney and Brisbane. The sites are licensed by relevantenvironment protection authorities, and operate under strict protocolsestablished by Enviroguard.

 

***Anti trust (trade practices) laws***

*** ***

CSRgroup companies in Australia are subject to regulation by the AustralianCompetition and Consumer Commission (“ACCC”) which administers the TradePractices Act 1974 (Cth).  While nospecific allegation of misconduct or threat of prosecution has been madeagainst CSR by the ACCC, nor any action been threatened against any company inthe CSR group, CSR group entities are from time to time involved ininvestigations conducted by the ACCC.

 

**Source andavailability of raw materials and inputs**

 

Alarge proportion of the raw materials and inputs used in CSR group products arebulk commodities, which are purchased under contract or agreements with outsidevendors. CSR’s management is not aware of any restrictions on the availabilityof raw materials, under normal circumstances and subject to normal competitiveforces, which would materially impact CSR’s result.

 

Adescription of raw materials and primary source of supply for each businesssegment follows:

 
| **Business segment** |   | **Primary Raw Materials**                                                                                |   | **Primary Source**                                                                                                                                            |   |
|----------------------|--------|----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Building  Products   |   | Gypsum  Paper  Clay  Cement  Sand  Glass (for Insulation manufacture)  Rock (for Insulation manufacture) |   | Joint  venture quarry  International manufacturers  Own quarries  Large Australian manufacturers  Local quarries  International manufacturers  Local quarries |   |
| Sugar                |   | Sugar  cane  Raw sugar (for refining)                                                                    |   | Queensland  cane growers  Queensland sugar pool                                                                                                               |   |
| Aluminium            |   | Alumina  Electricity                                                                                     |   | International  manufacturer  Large power generator                                                                                                            |   |

 

**Marketing channels and sales methods**

 

Detailsof marketing channels and sales methods are included in the business analysisabove.

 

BuildingProduct’s customers are a range of commercial building and constructioncompanies, and a variety of trades and individuals. Sales personnel operatefrom central regional locations or individual operating facilities. Some salesare on fixed term contracts.

 

SugarMilling sells all raw sugar to an industry body, QSL, while other Sugarbusinesses customers include large food and beverage and retail customers, forrefined sugar, and industrial customers in Australia and overseas for ethanol.

 

Aluminiumgenerally sells on long term contracts to large international customers.

 

CSR’smanagement does not believe the loss of any single contract would have amaterial impact on CSR’s group’s performance in the long term.

 

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**Seasonality**

 

Demand for building productscan be impacted by the Christmas holiday season in Australia. Historicallytherefore, trading revenue in the six months to March 31, has been lower thanthe first six months of the fiscal year.

 

The sugar cane crushingseason spans May to November with a large proportion of CSR Sugar revenueearned in the first half of the fiscal year. Aluminium sales are generally notseasonal.

 

**Competition**

** **

The building productsbusinesses in which the CSR group entities operate are highly competitive. Themarkets can generally be divided into two segments: residential building (bothnew single dwellings, multi story residential and renovations/additions) andcommercial building (for example, commercial offices, tourist-relatedbuildings, shopping centers). The industry is generally considered to becyclical.****CSR believes that thetwo segments of the market for building materials tend to move in differentcycles and have different impacts on the demand for building materialsproducts. Important factors affecting the building and construction cyclesinclude interest rates, government fiscal policy, unemployment, consumerconfidence, the level of net immigration into Australia and inter-state migrationflows. CSR group’s experience is that competition intensifies in the down cycle(particularly on the basis of price) resulting in pressure on CSR groupentities’ profit margins.

 

In Australia, theresidential building segment is estimated to represent approximately one-halfof the total market.****A commonfeature of most Australian building and construction materials markets,currently estimated at A$17 billion per year, is that generally three domesticsuppliers (including CSR group entities) account for a significant portion oftotal annual sales in each market. While competition varies from business to business, the CSR group’s twoprincipal competitors in the Australian building and construction materials industryare Boral Limited and Hanson plc (formerly Pioneer International Limited).  Intensity of competition varies from regionto region depending on the location of production, distribution or otherfacilities.  Additional smaller regionalcompanies compete in most of the product markets within the industry.

 

Competition in the CSRgroup’s other businesses (Sugar and Aluminium) is also strong.  The CSR group is a leading producer of rawsugar and ethanol in Australia and, through its joint venture operations, is aleading producer of refined sugar in Australia and New Zealand.  Competition in the Australian, New Zealandand other international sugar and ethanol markets remains very strong.  The CSR group’s aluminium interests arerelatively small in a global market dominated by major world producers andexporters of aluminium.

 

### **C.  OrganizationalStructure**

 

As at March 31, 2003 CSR isthe chief entity in a group of more than eighty consolidated entities inAustralia, New Zealand, and Asia.  Thecomplete list of these entities, with their country of incorporation andpercentage of CSR ownership, is listed at Note 36 to the financial statementsincluded elsewhere in this annual report.

 

### **D.  Description ofProperty, Plant and Equipment**

 

CSR group’s principalexecutive offices are located in Chatswood, New South Wales, Australia.

 

As at March 31, 2003,following the demerger of Rinker, CSR group entities had 51 production andmanufacturing facilities in Australia, New Zealand, and Asia.  These sites include:

 
| **Facilities**                                                |   | **Number** |   |
|---------------------------------------------------------------|--------|------------|--------|
| Building materials factories (10 are 50% owned)               |   | 44         |   |
| Aluminium Smelter (36.05% owned)                              |   | 1          |   |
| Sugar mills, refineries (three, 50% owned), and  distilleries |   | 12         |   |

 

 

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CSR group also operates from a number of other trading and distributionsites and sales centres.

 

Management believes that the facilities of CSR group entities aresuitable and adequate for its present needs and are well maintained and in goodoperating condition.  The CSR groupentities carry insurance covering property and casualty and certain other risksto which its facilities and operations may be subject.  The CSR group entities own most of theirprincipal operating facilities and lease the remainder.  Due to the Tomago aluminium smelter beingthe primary source of product for the Aluninium division, it is critical to theperformance of GAF and to CSR.

 

The following table is a list of the principal facilities in the CSRgroup. This list is not intended to be a complete list of all CSR groupoperating locations.

 
| **CSR LIMITED CORPORATE OFFICES** |   |             |   |              |
|-----------------------------------|--------|------------------|--------|-------------------|
|                              |   |             |   |              |
| **SITE**                          |   | **LOCATION**     |   | **PRODUCT  SOLD** |
| Chatswood  (leased)               |   | New  South Wales |   | Australia         |   | Administration |

 
| **BUILDING PRODUCTS DIVISION** |   |               |   |              |
|--------------------------------|--------|--------------------|--------|-------------------|
|                           |   |               |   |              |
| **SITE**                       |   | **LOCATION**       |   | **PRODUCT  SOLD** |
| Cecil  Park                    |   | New  South Wales   |   | Australia         |   | Bricks |
| East  Maitland                 |   | New  South Wales   |   | Australia         |   | Bricks |
| Golden  Grove                  |   | South  Australia   |   | Australia         |   | Bricks |
| Horsley  Park                  |   | New  South Wales   |   | Australia         |   | Bricks |
| Oxley                          |   | Queensland         |   | Australia         |   | Bricks |
| New  Lynn                      |   | Auckland           |   | New  Zealand      |   | Bricks |
| Schofields                     |   | New  South Wales   |   | Australia         |   | Bricks  and pavers |
| Strathpine                     |   | Queensland         |   | Australia         |   | Bricks  and pavers |
| Ingleburn                      |   | New  South Wales   |   | Australia         |   | Insulation |
| Coopers  Plains                |   | Queensland         |   | Australia         |   | Plasterboard |
| Wetherill  Park                |   | New  South Wales   |   | Australia         |   | Plasterboard  and Fibre Cement |
| Yaraville                      |   | Victoria           |   | Australia         |   | Plasterboard |
| Vermont                        |   | Victoria           |   | Australia         |   | Clay  roof tiles |
| Welshpool                      |   | Western  Australia |   | Australia         |   | Plasterboard  and Concrete roof tiles |
| Rosehill                       |   | New  South Wales   |   | Australia         |   | Clay  and concrete roof tiles |

 
| **ALUMINIUM DIVISION**  |   |             |   |              |   |      |
|-------------------------|--------|------------------|--------|-------------------|--------|-----------|
|                    |   |             |   |              |   |      |
| **SITE**                |   | **LOCATION**     |   | **PRODUCT  SOLD** |
| Tomago  (joint venture) |   | New  South Wales |   | Australia         |   | Aluminium |
|                    |   |             |   |              |   |      |
| **SUGAR DIVISION**      |   |             |   |              |   |      |
|                    |   |             |   |              |   |      |
| **SITE**                |   | **LOCATION**     |   | **PRODUCT  SOLD** |
| Chelsea  Refinery       |   | Auckland         |   | New  Zealand      |   | Sugar     |
| Inkerman  Mill          |   | Queensland       |   | Australia         |   | Sugar     |
| Invicta  Mill           |   | Queensland       |   | Australia         |   | Sugar     |
| Kalamia  Mill           |   | Queensland       |   | Australia         |   | Sugar     |
| Macknade  Mill          |   | Queensland       |   | Australia         |   | Sugar     |
| Pioneer  Mill           |   | Queensland       |   | Australia         |   | Sugar     |
| Plane  Creek Mill       |   | Queensland       |   | Australia         |   | Sugar     |
| Victoria  Mill          |   | Queensland       |   | Australia         |   | Sugar     |
| Sarina  Distillery      |   | Queensland       |   | Australia         |   | Ethanol   |
| Racecourse  Refinery    |   | Queensland       |   | Australia         |   | Sugar     |
| Yaraville  Refinery     |   | Victoria         |   | Australia         |   | Sugar     |
| Yarraville  Distillery  |   | Victoria         |   | Australia         |   | Ethanol   |

### ** **

 

 

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**Item 5****.  Operating and Financial Review and Prospects**

 

**SignificantEvents in fiscal year 2003**

 

•               Rinker Materials acquired Kiewitin September 2002 for US$540 million; and

 

•               Demerger of Rinker group from CSRwas approved by the Federal Court of Australia on March 28, 2003.

 

**US GAAP**

 

Thefollowing discussion and analysis should be read in conjunction with the CSRgroup’s financial statements included elsewhere in this annual report, preparedin conformity with Australian GAAP.  Fora reconciliation and explanation of the differences between Australian GAAP asfollowed by the CSR group and US GAAP, see Note 39 to the financial statements.

 

TheCSR group’s net profit reported under US GAAP is A$417 million which is A$1,636million lower than the net profit reported under Australian GAAP in fiscal year2003.  The difference relatesprincipally to the fair value adjustment of the Rinker demerger (-A$1,549million), write back of goodwill amortisation (A$85 million), adoption of AASB1044 (-A$205 million) and taxation effects of US GAAP adjustments (A$50million).

 

**Criticalaccounting policies**

 

TheCSR group financial statements are prepared under Australian GAAP. Adescription of the significant accounting policies is included in the financialstatements.

 

Inapplying Australian GAAP and US GAAP, CSR group’s management will often berequired to make individual estimates and assumptions that in some cases mayrelate to matters that are inherently uncertain. Actual results may differ fromestimated or assumed results and outcomes. Differences between estimates andactual outcomes will be included in the consolidated financial statements ofthe CSR group as soon as they are known. The individual estimates andassumptions generally do not involve a level of risk or uncertainty that wouldbe material to the consolidated financial statements of the CSR group as awhole because, although numerous in number, they generally are relativelyimmaterial in amount.

 

Thereare estimates and assumptions made by management in preparing the consolidatedfinancial statements of the CSR group for which actual results will emerge overlong periods of time. Although there is greater risk with respect to theaccuracy of long term estimates and assumptions because of the long period overwhich actual results will emerge, CSR group management believes that such riskis mitigated by its ability to closely monitor and periodically adjust theseestimates and assumptions over the same long period.

 

Theaccounting policies that the CSR group management believes could have amaterial impact on the CSR group’s future financial performance or conditionare discussed below.

 

*Depreciable lives of property, plant and equipment*

* *

TheCSR group depreciates its property, plant and equipment over their estimateduseful lives. This requires CSR group management to make estimates as totechnological and/or market redundancy issues affecting its assets as well asany potential physical asset life. CSR group had A$1,357 million of property,plant and equipment in its statement of financial position as at March 31, 2003after having transferred property, plant and equipment with a net book value ofA$2,676 million to Rinker as part of the demerger. Depreciation on the CSR groupand Rinker group assets together totaled A$353 million, or approximately 9percent on average of the book value of assets, for fiscal year 2003.Depreciation in fiscal year 2002 amounted to A$346 million, or approximately 8percent of book asset value on average. The annual review of the recoverablevalue of non current assets is undertaken to determine whether there are anymaterial errors in judgment in respect of the rate of depreciation of property,plant and equipment impacting the carrying value of these assets.

 

 

40

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*Impairment and recoverable value of non-currentassets*

* *

UnderAustralian GAAP, the CSR group is required to write-down non-current assets totheir estimated recoverable amount based on their proposed future use.Recoverable amounts involve significant judgments by CSR group management andrepresent the estimated current value of the cash flows arising from thecontinued use or the sale of the non-current assets. In calculating recoverableamount under Australian GAAP, CSR discounts cash flows to present value.

 

Managementcalculates the cash flows utilizing forecasts of how the business is expectedto operate based on the current performance and business environment but takinginto account expected future changes. These include approved strategicinitiatives by the CSR group, and any expected external factors such aseconomic activity levels, degree of competition and CSR group’s position in themarket for the business under review. CSR group management reviews these cash flow projections at leastannually and any assets with a carrying value not supported by their discountedfuture cash flows are written down to their estimated recoverable amount.Sensitivity analysis is applied to the calculation of future cash flows todetermine whether the asset carrying value is supported under differentassumptions.

 

Impairmentlosses are measured as the amount by which the carrying value of non currentassets exceeds their recoverable amount as calculated above. Impairment lossesare recognized immediately in earnings. Details of impairment losses in fiscalyears 2003 and 2001 are included in the following management discussion andanalysis of the financial results. There were no material impairment losses infiscal year 2002.

 

UnderUS GAAP, property, plant and equipment and intangible assets with finite usefullives are tested for impairment when an event or change in circumstanceindicates that the carrying amount of the asset may not be recoverable. Recoverabilityof such assets is measured by a comparison of the carrying amount of the asset(as adjusted from Australian GAAP to US GAAP) to future undiscounted net cashflows expected to be generated from the assets’ use at the lowest level atwhich identifiable cash flows are generated. Theundiscounted cash flow analysis is based on a number of estimates andassumptions, including the expected period over which the asset will beutilized, projected future operating results of the asset group, discount rateand long-term growth rate. When the cash flow analysis indicates anasset is impaired, the impairment loss to be recognized is measured by theamount by which the carrying amount of the asset exceeds the fair value of theasset. Fair value is determined by quoted market prices, discounted cash flowsor other valuation techniques.

 

*Amortization of goodwill*

* *

UnderAustralian GAAP, the CSR group amortizes goodwill over a maximum of 20 years ona straight-line basis. As at March 31, 2003 the carrying value of goodwill wasA$9 million, having transferred A$1,455 million to Rinker as part of thedemerger transaction.  The amortisationexpense in fiscal year 2003 amounted to A$85 million and fiscal year 2002amounted to A$72 million of which A$83 million for fiscal year 2003 and A$70million for fiscal year 2002 related to goodwill transferred to Rinker.  Any un-amortized goodwill is included inasset values that are tested at least annually for impairment.

 

Managementcalculates the cash flows utilizing forecasts of how the business is expectedto operate based on the current performance and business environment but takinginto account expected future changes. These include approved strategicinitiatives by the CSR group, and any expected external factors such aseconomic activity levels, degree of competition and CSR group’s position in themarket for the business under review. CSR group management reviews these cash flow projections at leastannually and any assets with a carrying value not supported by their discountedfuture cash flows are written down to their estimated recoverable amount.Sensitivity analysis is applied to the calculation of future cash flows todetermine whether the asset carrying value is supported under differentassumptions.

 

ForUS GAAP purposes pursuant to Statement of Financial Accounting Standards(“SFAS”) No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”) effectiveApril 1, 2002, CSR group does not amortize goodwill but reviews the carryingvalue for impairment on an annual basis and on an interim

 

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basiswhen impairment factors indicate. The identification and measurement ofgoodwill impairment involves the estimation of the fair value of reportingunits. The estimates of fair value of reporting units are based on the bestinformation available as of the date of assessment, which primarily incorporatemanagement assumptions utilizing forecasts of how the business is expected tooperate based on the current business environment but taking into account knownfuture changes, including approved strategic initiatives by the CSR group, andany known external factors.

 

Impairmentlosses are measured as the amount by which the carrying value of goodwillexceeds their recoverable amount as calculated above. Impairment losses arerecognized immediately in earnings. There were no material impairment lossesrelating to goodwill under either Australian GAAP or US GAAP in fiscal years2003, 2002 and 2001.

 

*Claims alleging personal injuries due to asbestosexposures*

*** ***

Inpreparing the consolidated financial statements of the CSR group, CSR groupmanagement is periodically faced with uncertainties, the outcomes of which arenot within its control and will not be known for prolonged periods of time. CSRgroup entities have been named as defendants in litigation in Australia and theUnited States by claimants alleging personal injuries due to exposure toasbestos. Claimants in these cases generally seek compensatory and punitivedamages. In almost all cases in which it is a party, a CSR group entity is oneof a number of companies named as defendants.

 

Forfiscal years 2002 and 2001, CSR concluded that it was not possible to estimatethe costs of settling asbestos-related personal injury claims in the UnitedStates over more than a limited period of time because of various uncertaintiesassociated with the litigation of those claims.  On April 1, 2002 the CSR group adopted AASB 1044. During thecurrent financial year, CSR reviewed its asbestos product liability provisionin consultation with independent experts as part of CSR’s ongoing estimationprocess and gave consideration to the nature of pending claims, recentsettlement activity, the completion of a detailed review of the claims databaseand the impact of additional guidance provided by AASB 1044.  CSR concluded that it would be possible todetermine an estimate of a reasonable forecast of the net present value ofestimated asbestos-related personal injury claims and associated legal costs inthe United States over the long term if certain assumptions believed by the CSRgroup to be reasonable were made. The key assumptions made in the estimation ofthe Australian and United States asbestos product liability provision aredetailed below.

 

Thetotal provision of A$332.3 million as of March 31, 2003 represents theestimated net present value of the estimated asbestos-related personal injuryclaims and associated legal costs in Australia and the United States over thenext 50 years.  CSR has determined thatthe appropriate discount rate to use under AASB 1044 is a risk free discountrate based on the notional long-term government bond rates, being 6.0 percentfor Australian liabilities and 5.1 percent for United States liabilities.  Prior to the adoption of AASB 1044 CSR useda rate of 10 percent to discount its Australian liabilities.  CSR did not discount its United Statesliabilities prior to the adoption of AASB 1044 due to the short period of cashflows accrued as discussed above.

 

Theculmination of the changes in estimates noted above was an increase in CSR’sasbestos product liability provision of A$205 million in fiscal year 2003.

 

Theprojections used by CSR to determine its asbestos product liability provisionin Australia and the United States were calculated by independent experts basedlargely upon the company’s database of claims and third party publicationspredicting asbestos exposure incidence in order to project the incidence ofinjuries, claims, settlement amounts and settlement patterns into thefuture.  Key assumptions adopted in theprojections are:

 

•       claims will only be received from classesof claimants for which CSR has historically received and settled claims;

•       there will be no legislative or othersystemic changes to the tort system in either Australia or the United States;

 

 

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•       CSR will continue toreceive claims at rates in line with historical experience;

•       inflation rates forAustralian and United States claims will continue to be in line with recenthistory; and

•       future settlement defensecosts will be similar to historical average settlement and defense costs perclaim.

 

Anychange in the above assumptions used or changes in exchange rates or interestrates could affect the reliability of the estimates.

 

CSRacknowledges there is a reasonable possibility that a loss exceeding theamounts already provided may be incurred; however, due to the uncertaintiespreviously outlined, a determination of the amount of such losses cannot bemade. However, CSR believes the asbestos litigation in the United States andAustralia will not have a material adverse impact on the CSR group’s financialcondition, results of operations or cash flows. This view is based upon theexperience of CSR group entities in the asbestos litigation to date; theresolution of a large number of matters on commercially acceptable terms; theprovisions already included in the CSR group’s financial statements; CSR’sbelief that it has strong evidence to support CSR’s position that the fibrecontained in Johns Manville gasket materials was not supplied by CSR; CSR’sexpectations concerning probable settlements in pending as well as futureclaims; CSR’s expectations concerning the number of claims likely to be broughtagainst it and/or its subsidiaries in the future; and the possibility of aninsurance recovery as a result of the New Jersey litigation. There can,however, be no assurance that the asbestos related personal injury litigationwill not have a material adverse impact on CSR’s financial condition, resultsof operations or cash flows.

 

See“Item 8. Financial Information - Legal Proceedings” and Note 21 and Note 38 tothe financial statements for details of provisions and contingent liabilities,respectively.

 

**New Accounting Standards**

 

***Australian Standards***

*** ***

Duringfiscal year 2003 CSR elected to adopt AASB 1044, under section 334(5) of theCorporations Act 2001, even though the standard is not required to be adopteduntil annual reporting periods beginning on or after July 1, 2002. The adoptionof AASB 1044 affects the timing of recording CSR’s dividend provision andincreases the amount of the asbestos product liability provision, as shown innote 21 to the financial statements included elsewhere in this annual report.Under Australian GAAP the adjustment on adoption of new accounting standards ismade against opening retained profits. The impact of this standard on theasbestos product liability provision in fiscal year 2003 is discussed above.

 

Duringfiscal year 2003, CSR group adopted the following revised or new AustralianAccounting Standards – AASB 1005 “Segment Reporting”; AASB 1012 “ForeignCurrency Translations”; AASB 1027 “Earnings per Share”; and AASB 1042“Discontinuing Operations”. These standards required additional disclosure,which have been added to the financial statements appearing elsewhere in thisannual report. The introduction of the standards had no impact on the reportedresults of CSR for fiscal year 2003 under Australian GAAP.

 

Duringfiscal year 2004, CSR group will be required to adopt revised AustralianAccounting Standard AASB 1028 “Employee Benefits”. This standard requiresadditional disclosure and changes the requirements for recognition ofliabilities and expenses relating to termination benefits such that liabilitiesare less likely to meet the criteria for recognition. This standard is notexpected to have any impact on the reported results of CSR group underAustralian GAAP.

 

Therevised Australian Accounting Standard, AASB 1020, “Income Taxes”, isapplicable to financial years ending on or after December 31, 2005 (fiscal year2006 for the CSR group) and is expected to have the following key implications:

 

 

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•                    For assets that havepreviously been revalued upwards, the CSR group will recognize the equivalentdeferred tax liability. When these assets are subsequently depreciated, theadditional depreciation will be tax effected and will result in an increasedprofit after tax compared to the existing standard.

•                    For acquisitions, assets andliabilities acquired are initially recorded by the CSR group at fair value(which may be above their tax bases). Under the new standard, the CSR groupwill have to record a deferred tax liability for this increased value. Thiswill cause differences in deferred tax balances and goodwill recorded inaccounting for the CSR group’s recent and past acquisitions. When the net fairvalues are greater than the tax bases, a deferred tax liability will berecorded causing goodwill to be increased.

 

Aproject is being undertaken by the CSR group to consider both the ongoingimpact to the CSR group and the impact on initial adoption. The transitionalprovisions require all previous acquisitions to be revisited where practicable.

 

On July 3 2002, the Australian Financial ReportingCouncil announced that Australia would adopt International Financial ReportingStandards (“IFRS”), formerly known as International Accounting Standards, forfinancial years beginning on or after January 1, 2005 (fiscal year 2006 forCSR).  The adoption of IFRS is expected to have a significant impact;however, CSR has not yet completed an assessment of the impact of IFRS on itsfinancial position or results of operations.

 

***US Standards***

*** ***

EffectiveJuly 1, 2001, CSR group adopted SFAS No. 141, “Business Combinations” (“SFAS141”).  SFAS 141 requires that thepurchase method of accounting be used for all business combinations initiatedafter June 30, 2001.  The adoption ofSFAS 141 did not have a material impact on the financial position or results ofoperations, financial position or liquidity of the CSR group for fiscal year2002 and 2003.

 

Asdiscussed above CSR group adopted SFAS 142 in fiscal year 2003.  Under this standard, for US GAAP purposes,CSR group does not amortize goodwill but reviews the carrying value forimpairment on an annual basis and on an interim basis when impairment factorsindicate. The identification and measurement of goodwill impairment involvesthe estimation of the fair value of reporting units based on future cash flows.As a result of the introduction of the standard, CSR made an adjustment ofA$84.6 million in its reconciliation of net profit reported under AustralianGAAP and that reported under US GAAP, included in note 39 to the financialstatements.

 

EffectiveJanuary 1, 2003, CSR group adopted SFAS No. 146, “Accounting for CostsAssociated with Exit or Disposal Activities” (“SFAS 146”). SFAS 146 requirescosts associated with exit or disposal activities initiated after December 31,2002 to be recognized when the costs are incurred, rather than at a date ofcommitment to an exit or disposal plan. SFAS 146 also establishes that thatliability should initially be measured and recorded at the fair value.  This standard will impact the timing ofrecognition of the initial measurement of liabilities for future costsassociated with exit or disposal activities. The adoption of SFAS 146 did not have a material impact on the CSR groupfinancial position or results of operations during the fourth quarter of theyear ended March 31, 2003 as there were no significant one-time severanceactions or other exit costs initiated after December 31, 2002 (as the demergerof Rinker group was initiated in November 2002).

 

EffectiveJanuary 1, 2003, CSR group adopted FASB Interpretation (“FIN”) No. 45,“Guarantor’s Accounting and Disclosure Requirements for Guarantees, IncludingIndirect Guarantees of Indebtedness of Others” (“FIN 45”).  FIN 45 requires that at the inception of aguarantee (issued or modified after December 31, 2002), the guarantor mustrecognize a liability for the fair value of the obligation it assumes underthat guarantee. The adoption of FIN 45 did not have a material impacton the CSR group financial position or results of operations.

 

Duringthe year ended March 31,  2003, CSRgroup adopted SFAS No. 148,  “Accountingfor Stock-Based Compensation - Transition and Disclosure” (“SFAS 148”) whichamends SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”).SFAS 148 provides alternative methods of transition for a

 

 

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voluntarychange to the fair value based method of accounting for stock-based employeecompensation.  CSR currentlyaccounts for stock-based compensation in accordance with Accounting PrinciplesBoard Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees” anddoes not intend to adopt the provisions of SFAS 123.  As such, the adoption of SFAS 148 did not have an impact on theCSR group financial position or results of operations.

 

OnAugust 16, 2001, the Financial Accounting Standards Board (“FASB”) issued SFASNo. 143, “Accounting for Asset Retirement Obligations” (“SFAS 143”) which iseffective for financial statements issued for fiscal years beginning after June15, 2002 (fiscal year 2004 for the CSR group). The pronouncement addresses therecognition and re-measurement of obligations associated with the retirement ofa tangible long-lived asset. Management is currently reviewing SFAS 143  and has not yet determined its likely impacton the CSR group financial position or results of operations.

 

OnApril 30, 2002, the FASB issued SFAS No. 145, “Rescission of FASB StatementsNo. 4, 44 and 64, Amendment of FASB Statement No. 13, and TechnicalCorrections” (“SFAS 145”).  Thepronouncement rescinds SFAS No. 4, “Reporting Gains and Losses fromExtinguishment of Debt” (“SFAS 4”) and an amendment to that statement, SFAS No.64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements” (“SFAS64”) so that all gains and losses from the extinguishment of debt areaggregated and will now be classified as extraordinary only if they meet thecriteria set forth in Accounting Principles Board (“APB”) Opinion No. 30,“Reporting the Results of Operations—Reporting the Effects of Disposal of aSegment of a Business, and Extraordinary, Unusual and Infrequently OccurringEvents and Transactions; rescinds SFAS No. 44, “Accounting for IntangibleAssets of Motor Carriers”; and amends SFAS No. 13, “Accounting for Leases” torequire that certain lease modifications that have economic effects similar tosale-leaseback transactions be accounted for in the same manner. The provisionsrelating to the rescission of SFAS 4 and SFAS 64,  are effective forfiscal years beginning after May 15, 2002 (fiscal year 2004 for the CSR group).The provisions relating to the amendment of SFAS 13 are effective fortransactions occurring after May 15, 2002. All other provisions of SFAS 145 areeffective for financial statements issued on or after May 15, 2002. SFAS 145will not have a material impact on the CSR group financial position or resultsof operations.

 

On January 17, 2003, the FASBissued FIN No. 46, “Consolidation of Variable Interest Entities - aninterpretation of ARB No. 51” (“FIN 46”).  The interpretation addresses consolidation bybusiness enterprises of Variable Interest Entities (“VIEs”) that either: (1) donot have sufficient equity investment at risk to permit the entity to financeits activities without additional subordinated financial support, or (2) theequity investors lack an essential characteristic of a controlling financialinterest.  FIN 46 requires disclosure ofVIEs in financial statements issued after January 31, 2003, if it is reasonablypossible that as of the transition date: (1) the enterprise will be the primarybeneficiary of an existing VIE that will require consolidation or, (2) theenterprise will hold a significant variable interest in, or have significantinvolvement with, an existing VIE. Pursuant to the transitional requirements ofFIN 46, CSR group will adopt the consolidation guidance applicable to anyexisting VIEs on March 1, 2004.  AnyVIEs created after January 31, 2003, are immediately subject to the consolidationguidance in FIN 46.  Management iscurrently reviewing FIN 46 and has not yet determined the impact of the adoption of FIN46 on the CSR group financial position or results of operations.

 

On April 30, 2003, the FASB issued SFAS No. 149,“Amendment of SFAS No. 133 on Derivative Instruments and Hedging Activities”(“SFAS 149”). The pronouncement amends and clarifies accounting for derivativeinstruments, including certain derivative instruments embedded in othercontracts, and for hedging activities under SFAS No. 133, “Accounting forDerivative Instruments and Hedging Activities.”  SFAS 149 is effective for contracts entered into or modifiedafter June 30, 2003, with certain exceptions, and for hedging relationshipsdesignated after June 30, 2003.  Managementis currently reviewing SFAS 149 and has not yet determined the impact of theadoption of SFAS 149 on the CSR group financial position or results ofoperations.

 

On May 15, 2003, the FASB issued SFAS No. 150,“Accounting for Certain Financial Instruments with Characteristics of bothLiabilities and Equity” (“SFAS 150”). The pronouncement**modifiesthe accounting for certain financial instruments that, under previous guidance,issuers could account for as equity and

 

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requires that those instruments be classified asliabilities in statements of financial position.  SFAS 150 is effective for financial instruments issued ormodified after May 31, 2003.  Managementis currently reviewing SFAS 150 and has not yet determined the impact of theadoption of SFAS 150 on the CSR group financial position or results ofoperations.

 

**A.Management discussion and analysis of financial results**

** **

OnMarch 28, 2003, the Federal Court of Australia approved the demerger of Rinkerfrom CSR, after shareholders voted in favour of the demerger on March 25, 2003.Rinker was admitted to the official list of theASX and its shares were quoted on the stock market conducted by the ASXeffective March 31, 2003 (on a deferred settlement basis). In accordancewith the terms of the demerger, Rinker issued 944.7 million shares on April 11,2003 to CSR shareholders.

 

*Impact on the results of the CSR group in fiscal year 2003*  

 

Asa consequence of the demerger of Rinker Group Limited on March 28, 2003, CSRrecorded a gain (after tax) of A$1,492.7 million which is included in CSRgroup’s net profit for fiscal year 2003. Key components of this gain include: 

 
|                                                                                                         |   | **A$  millions** |   |
|--------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
| Fair value of Rinker group disposal(1)                                                                       |   | 4,573.0          |   |
| Less:                                                                                                        |   |             |   |
| Book value of consolidated net assets of Rinker  group,  excluding outside equity interests (A$16.9 million) |   | (3,023.8         | )      |
| Demerger transaction costs                                                                                   |   | (74.2            | )      |
| Profit from ordinary activities before finance and  income tax impact                                        |   | 1,475.0          |   |
| Income tax benefits(2)                                                                                       |   | 17.7             |   |
| Net profit impact                                                                                            |   | 1,492.7          |   |

 

----

(1)         The fair value of A$4,573.0million was determined by taking the average Rinker share price for theperiod  March 31, 2003 to April 14, 2003of A$4.84 multiplied by the number of Rinker shares on issue after the demergerdistribution. 

(2)         Theaccounting gains on the demerger of Rinker were exempt from taxation inAustralia under the new demerger tax relief provisions, although income taxbenefits of A$17.7 million offset demerger transaction costs of A$74.2 million.  

 

Thefollowing discussion of the CSR group’s operating results uses financial dataprepared under Australian GAAP. See Note 39 to the financial statements,included elsewhere in this annual report, for a description of the principaldifferences between Australian GAAP and US GAAP as they relate to the CSR groupand a reconciliation of net profit and shareholders’ equity for the years andas of the dates therein indicated.

 

**Fiscal year 2003 compared with fiscal year 2002 and fiscalyear 2001**

** **

***Consolidated Results and CSR Group Overview***

*** ***

*Trading Revenue*

* *

CSRgroup trading revenue rose 4 percent to A$7,283 million for fiscal year 2003from A$6,985 million for fiscal year 2002. Trading revenues increased in all business segments, with increasedvolumes and prices in Rinker group and CSR Building Products and increasedvolumes in CSR Sugar and Aluminium partly offset by lower prices on globalcommodity markets for Sugar and Aluminum. CSR group trading revenue rose from A$6,424 million for fiscal year 2001to A$6,985 million for fiscal year 2002.

 

 

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*Other Revenue and Expenses from Ordinary Activities*

* *

CSRgroup’s other revenue from ordinary activities consists of all revenue that isnot received upon the sale of goods, excluding interest and dividend income.For fiscal year 2003, CSR group’s other revenue from ordinary activities wasA$4,774 million and principally related to the fair value adjustment of theRinker group disposal. Excluding the impact of the demerger, included in otherrevenue of $4,573 million, CSR group’s other revenue rose slightly to A$201million in fiscal year 2003 from A$183 million in fiscal year 2002. Otherrevenue was A$589 million in fiscal year 2001.

 

Thelargest items of other revenue in fiscal year 2003, other than the fair valueadjustment of the Rinker group disposal, were the sale of the surplus land atHornsby, New South Wales for A$25 million and in Florida for US$11.1 million(A$19.7 million). In fiscal year 2002 other revenue was A$183 million, thelargest item of which was the sale of Downer Group Limited investment for A$60million. Fiscal year 2001 other revenue of A$589 million included A$412 millionfrom the disposal of the Gove alumina and bauxite investment.  In addition, CSR recognized A$28 million inrevenue in fiscal year 2001 from shares in Sugar Terminals Limited receivedwhen the Sugar Bulk Terminal organization was privatized and its sharesdistributed to industry participants. Details are provided in Note 31 to the financial statements includedelsewhere in this annual report.

 

Otherexpenses primarily represent the book value of property, plant and equipmentand other assets sold as well as the charge relating to the increase in theproduct liability provision (A$19 million in fiscal year 2003, A$30 million infiscal year 2002 and A$65 million in fiscal year 2001). In fiscal year 2003,other expenses included the book value of the net assets of the Rinker group,excluding outside equity interests, of A$3,024 million, and transaction costsof A$74 million related to the demerger of the Rinker group.

 

*Cost ofSales*

 

Costof sales increased by 3.4 percent to A$4,594 million in fiscal year 2003 fromA$4,445 million in fiscal year 2002 and A$4,097 million in fiscal year2001.  As a percentage of tradingrevenue, cost of sales were 63 percent in fiscal year 2003, down slightly on 64percent in both fiscal year 2002 and fiscal year 2001, representing the ongoingcost improvement and synergies from acquisitions.  

 

*Warehouse and Distribution costs*

 

Warehouseand distribution costs rose 7.3 percent to A$1,063 million in fiscal year 2003from A$991 million in fiscal year 2002 and from A$874 million in fiscal year2001 with inflationary cost pressures in existing businesses, and from theaddition of new businesses through acquisition by Rinker Materials, offset inpart by operating cost improvements.  Infiscal year 2003 these costs were 14.6 percent of trading revenue compared to14.2 percent in fiscal year 2002 and 13.6 percent in fiscal year 2001.

 

*Selling, Administrative and Other Operating Costs*

* *

Sellingcosts rose 19.8 percent to A$218 million in fiscal year 2002 from A$182 millionin fiscal year 2002 and from A$157 million in fiscal year 2001 principally dueto increased trading activity and acquisitions.  In each of the fiscal years 2003, 2002 and 2001 these costs wereapproximately 3 percent of trading revenue.

 

Administrativeand other operating costs rose 4.3 percent to A$535 million in fiscal year 2002from A$513 million in fiscal year 2002 and from A$466 million in fiscal year2001 principally due to the increased trading activity and acquisitions.  In each of fiscal years 2003, 2002 and 2001these costs were approximately 7 percent of trading revenue.

 

*Profit from ordinary activities before finance and incometax*

 

Profitfrom ordinary activities before finance and income tax increased to A$2,449million in fiscal year 2003 from A$926 million in fiscal year 2002.  A$1,475 of fiscal year 2003 profit fromordinary activities

 

 

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before finance and incometax was derived from transactions related to the demerger and is described assignificant items below.  Excludingthese significant items, profit from ordinary activities before finance andincome tax increased by 5.2 percent to A$974 million in fiscal year 2003principally due to the improved performance of Rinker’s Readymix business andsmall improvements in CSR’s Building Products and Aluminium businesses.  Sugar segment profit of A$71 million forfiscal year 2003 included a writedown due to asset impairment of A$12.9million. Rinker Materials’ results improved by US$27.6 million to US$333.6million but these US dollar gains were offset in part by adverse exchange differenceswhen translated into Australian dollars.

 

Profitfrom ordinary activities before finance and income tax decreased to A$926million in fiscal year 2002 from A$980 million in fiscal year 2001. $57 millionof fiscal year 2001 profit from ordinary activities before finance and incometax was derived from transactions described as significant items below.Excluding these amounts, profit from ordinary activities before finance andincome tax in fiscal year 2002 and fiscal year 2001 were broadly the same.

 

*Significant items included in net profit*

 

Atthe end of fiscal year 2003 Rinker group demerged from CSR. The demergerresulted in a significant gain on disposal and significant reorganization andone off costs, which are referred to as “significant items”.  Details are summarized below: 

** **
|                                                                  |   | **A$  millions** |   |
|-----------------------------------------------------------------------|--------|------------------|--------|
| Fair value of Rinker group disposal(1)                                |   | 4,573.0          |   |
| Book value of demerged net assets(2)                                  |   | (3,023.8         | )      |
| Demerger transaction costs                                            |   | (74.2            | )      |
| Profit from ordinary activities before finance and  income tax impact |   | 1,475.0          |   |
| Income tax benefit                                                    |   | 17.7             |   |
| Net profit impact                                                     |   | 1,492.7          |   |

 

----

(1)          The fair value of A$4,573.0million was determined by taking the average Rinker share price for theperiod  March 31, 2003 to April 14, 2003of A$4.84 multiplied by the number of Rinker shares on issue immediately afterthe demerger.

(2)          Book value of consolidatednet assets of Rinker group of A$3,040.7 excluding outside equity interests of A$16.9 million.

 

There were no significantitems in fiscal year 2002.

 

During fiscal year 2001, due to difficult economic conditions in somemarkets, particularly Asia, CSR group entities conducted a strategic review ofcertain of their businesses, including decisions to exit or restructure, whichnecessitated an assessment of the recoverable amount of each of thesebusinesses on an individual basis, rather than as part of an overall regionalbusiness. The asset write downs and restructure provisions from this strategicreview resulted in a loss of A$94 million in fiscal year 2001 (after tax andoutside equity interests).  In addition,after undertaking an evaluation of asbestos litigation and claims in Australiaand the United States, CSR group recorded charges to product liability of A$46million after tax in fiscal year 2001. These charges were more than offset by the profit after tax from thesale of CSR group’s investment in Gove Aluminium Limited in fiscal year 2001 ofA$269 million. The net profit resulting from these significant items in fiscalyear 2001 was A$129 million, including income tax benefits of A$66 million andoutside equity interests of A$5.6 million.

 

Details of asset impairments are provided in note 39 of the financialstatements included elsewhere in this annual report.   

 

*Borrowing Costs*

* *

Borrowing costs decreased by 13.6 percent to A$114 million in fiscalyear 2003 from A$132 million in fiscal year 2002 and A$155 million in fiscalyear 2001.  The decrease in fiscal year2003 primarily reflected the 

 

 

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stronger Australian dollar impact of translating interest on US dollardenominated debt. In fiscal year 2002 borrowing costs were lower than fiscalyear 2001 as a result of lower interest rates averaging 6.1 percent in fiscalyear 2002 and 7.2 percent in fiscal year 2001. 

 

*Income Tax Expense Relating to Ordinary Activities*

* *

Income tax expense relating to ordinary activities increased by 9percent to A$266 million in fiscal year 2003, compared to A$244 million infiscal year 2002. The CSR group effective tax rate decreased from 29.8 percentin fiscal year 2002 to 11.4 percent in fiscal year 2003. The accounting gains on the demerger of Rinker were exempt from taxationin Australia under the new demerger tax relief provisions, although income taxbenefits of A$17.7 million were attributable to demerger transaction costs ofA$74.2 million. Excluding the gains and income tax benefits relatedto the demerger, the effective tax rate for fiscal year 2003 was 32.7 percent.

 

The increased proportion of CSR group’s profits being derived fromRinker Materials in fiscal year 2003, where the corporate income tax rate taxrate is 39 percent on United States earnings, was largely offset in fiscal year2003 by an appreciation of the A$ compared to the US$. In addition a A$33million tax benefit arose in fiscal year 2002 relating to the settlement of alegal case between CSR and the Australian Taxation Office, as described furtherin Note 8 to the financial statements resulting in a decrease in the fiscalyear 2002 effective tax rate compared to fiscal years 2003 (excluding the gainsand income tax benefits related to the demerger) and 2001.  

 

Income tax relating to ordinary activities in fiscal year 2001 wasA$179 million, an effective rate of 21.1 percent. This was reduced by an A$66million tax benefit relating to asset writedowns and disposals.  Excluding these amounts the effective taxrate for fiscal 2001 would have been 28.9 per cent.

 

The corporate tax rate in Australia declined from 34 per cent in fiscalyear 2001 to 30 percent in fiscal year 2002 and remained at 30 percent infiscal year 2003.

 

*Net Profit*

* *

 CSR group net profit increasedfrom A$552.6 million in fiscal year 2002 to A$2,053.5 million in fiscal year2003. Significant items amounting to A$1,492.7 million, all related to thedemerger, are included in the net profit for fiscal year 2003. Excluding thesesignificant items, net profit increased by A$8.2 million, or 1.5 percent, toA$560.8 million. This improved net profit, excluding significant items, wasmainly due to improved profitability by Rinker group companies (A$36.7 million)even after the negative impact of the stronger A$ compared to the US$, offsetin part by the writedown of Sugar assets (A$9 million).

 

CSR group net profit decreased by 12.9 percent from A$634.1 million infiscal year 2001 to A$552.6 million in fiscal year 2002, reflecting theinclusion in fiscal year 2001 of a net profit from significant items of A$129.2million. Excluding these significant items the net profit increased by 9.4percent from A$504.9 million in fiscal year 2001 to A$552.6 million in fiscalyear 2002. This improved operating result, excluding significant items, wasmainly due to improved profitability by Rinker Materials (A$49.9 million),Sugar (A$44.8 million) and tax benefits (A$33 million), offset by a decrease inAluminium net profit (A$39.7 million).

 

During fiscal year 2003, CSR group entities continued their focusedoperational improvement programs to reduce the costs of their operations.  In fiscal year 2003, the CSR group estimatedthat it saved approximately A$90 million before income tax from costimprovements in the operating performance of CSR group entities, followingsimilar estimated savings in fiscal years 2002 and 2001.

 

 

49

----

 

 

**Seasonality**

 

Demand for building productscan be impacted by the Christmas holiday season in Australia. Historicallytherefore, trading revenue in the six months to March 31, has been lower thanthe first six months of the fiscal year.

 

The sugar cane crushingseason spans May to November with a large proportion of CSR Sugar revenueearned in the first half of the fiscal year. Aluminium sales are generally notseasonal.

 

**Exchange rates**

 

For fiscal year 2003, 58percent of CSR group’s trading revenue was generated in the US. Accordingly,CSR group’s A$ earnings are impacted by the movement in the A$/US$ exchangerate. An appreciation of the A$ relative to the US$ would be expected to havean adverse impact on the CSR group’s results. The average exchange rates usedfor translation of the CSR group US$ transactions into A$ are set out in thetable below.

 
|                |   | **Year ended March 31,** |       |
|---------------------|--------|--------------------------|------------|
|                |   | **2003**                 |       | **2002** |   | **2001** |   |
|                |   |                     | ** ** |   | ** ** |   | ** ** |
| **A$/US$ average**  |   | 0.5654                   |       | 0.5112 |   | 0.5524 |   |
| Year-on-year change |   | 11                       | %          | (7 | )% | — |   |

 

Source: average of 9.55am hedge settlement rates at the end of thecalendar month.

 

**Summary by Business Segment**

 
|                                                               |   | **CSR Group**                                        |       |
|--------------------------------------------------------------------|--------|------------------------------------------------------|------------|
|                                                               |   | **Business Segment Revenues and  Segment Profit(1)** |
|                                                               |   | **A$ Millions**                                      |       |
|                                                               |   | **Year Ended March 31,**                             |       |
|                                                               |   | **2003**                                             |       | **2002** |   | **2001** |   |
|                                                               |   | **Trading****Revenue**                               |       | **Segment(1)****Profit** |   | **Trading****Revenue** |   | **Segment(1)****Profit** |   | **Trading****Revenue** |   | **Segment(1)****Profit** |   |
|                                                               |   |                                                 |       |   |   |   |   |   |   |   |   |   |   |
| **CSR Group continuing businesses**                                |   |                                                 |       |   |   |   |   |   |   |   |   |   |   |
| Building Products                                                  |   | 896                                                  |       | 120 |   | 806 |   | 109 |   | 860 |   | 86 |   |
| Aluminium(2)                                                       |   | 447                                                  |       | 126 |   | 443 |   | 110 |   | 520 |   | 447 |   |
| Sugar                                                              |   | 708                                                  |       | 71 |   | 694 |   | 74 |   | 529 |   | 16 |   |
| **Total CSR group continuing  businesses**                         |   | **2,051**                                            | ** ** | **317** | ** ** | **1,943** | ** ** | **293** | ** ** | **1,909** | ** ** | **549** | ** ** |
|                                                               |   |                                                 |       |   |   |   |   |   |   |   |   |   |   |
| **Rinker group businesses**                                        |   |                                                 |       |   |   |   |   |   |   |   |   |   |   |
| Rinker Materials                                                   |   | 4,218                                                |       | 592 |   | 4,116 |   | 598 |   | 3,590 |   | 496 |   |
| Readymix                                                           |   | 1,014                                                |       | 120 |   | 926 |   | 57 |   | 923 |   | 6 |   |
| **Total Rinker group (excluding  corporate overhead allocations)** |   | **5,232**                                            | ** ** | **712** | ** ** | **5,042** | ** ** | **655** | ** ** | **4,513** | ** ** | **502** | ** ** |
|                                                               |   |                                                 | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| Other unallocated items(3)                                         |   | —                                               |       | (55 | ) | — |   | (22 | ) | 2 |   | (71 | ) |
|                                                               |   |                                                 |       |   |   |   |   |   |   |   |   |   |   |
| **Demerger impact(4)**                                             |   | **—**                                           | ** ** | **1,475** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** |
| **Total CSR group**                                                |   | **7,283**                                            | ** ** | **2,449** | ** ** | **6,985** | ** ** | **926** | ** ** | **6,424** | ** ** | **980** | ** ** |

 

----

(1)               The sum of segment profitfor each segment, other unallocated items and demerger impact agrees to “Profitfrom ordinary activities before finance and income tax” for the CSR group (asshown on the face of the statement of financial performance included in thefinancial statements presented elsewhere in this annual report.)

(2)               Segment profit in fiscalyear 2001 includes A$235.4 million on the sale of CSR group’s interest in GoveAluminium Limited.

 

 

50

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(3)               Other unallocated items includes corporatecosts and items not specifically attributed to business segments.

(4)               Total CSR group includes both the CSR groupbusinesses post demerger and the Rinker group businesses. Segment profit forpurposes of the business segment analysis does not include the gain of A$1,475million in fiscal year 2003 relating to the demerger, which is attributable tothe demerger of Rinker group entities and does not relate to the tradingactivity of any individual segment.

 

**CSR Building Products**

 

CSR Building Products is aleading supplier within the Australian building materials industry.

 

The performance of theAustralian building materials industry is highly influenced by the level ofactivity within the building and construction industry. CSR Building Productssells its products primarily to the non-civil building and constructionindustry segments. For the year ended December 31, 2002, the Australian Bureauof Statistics estimates using 2000-2001 constant prices, total non-civilbuilding and construction expenditure in Australia to be about A$45 billion, 22percent higher than the year ended December 31, 2001.

 

Activity levels within thesesegments are generally influenced by a range of economic, demographic and otherfactors including:

•                    general state of theeconomy;

•                    levels of business andconsumer confidence;

•                    interest rates and debtlevels;

•                    state of the labour market;

•                    government policiesinfluencing immigration and public and private investment; and

•                    weather patterns.

 

Based on data from theAustralian Bureau of Statistics, Australian non-civil building and constructionactivity showed growth through the 1990s and reached a peak in the year endedJune 30, 2000. Activity levels fell sharply in the year ended June 30, 2001,before commencing a recovery through the period ended December 31, 2002.

 

The results of operationsfor the CSR Building Products segment for the years ended March 31, 2003, 2002and 2001 are set out below.

 

|                        |   | **Year ended  March 31,** |   |
|-----------------------------|--------|---------------------------|--------|
| **A$ million**              |   | **2003**                  |   | **2002** |   | **2001** |   |
| Trading  Revenue            |   | 896.2                     |   | 806.3 |   | 859.6 |   |
| Segment  profit             |   | 119.7                     |   | 108.8 |   | 86.5 |   |
| Segment  profit margin %(1) |   | 13.4                      |   | 13.5 |   | 10.1 |   |

 

----

(1)               Segment profitmargin % is segment profit divided by trading revenue

 

#### ***Year ended March 31, 2003 compared to the year endedMarch 31, 2002***

 

**Trading revenue:** Trading revenue of A$896.2 million for theyear ended March 31, 2003 represented an A$89.9 million, or 11.1 percent,increase compared to trading revenue for the year ended March 31, 2002 ofA$806.3 million. This reflected an increase in sales volumes of plasterboard,fibre cement, brick, insulation and roofing products attributable to animprovement in housing and construction activity in both Australia and NewZealand and 2 percent average price increases across most business units.

 

**Segment profit:** Segment profitof A$119.7 million for the year ended March 31, 2003 represented a A$10.9million, or 10.0 percent, increase compared to segment profit of A$108.8million for the year ended March 31, 2002. Segment profit margins improvedgenerally as a result of the impact of higher volumes on unit fixed costs andprice improvements, particularly in the brick and roofing businesses.Improvements in volumes (A$27 million) and price (A$15 million) were offset byincreased raw materials and other conversion costs; distribution costsassociated with increased volumes (A$20 million); overheads

 

 

51

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associated with the implementation of the SAPcomputer system and other inflationary pressures (A$11 million).

 

#### ***Year ended March 31, 2002 compared to the year endedMarch 31, 2001***

 

**Trading revenue:** Tradingrevenue of A$806.3 million for the year ended March 31, 2002 represented anA$53.3 million, or 6.2 percent, decrease compared to the year ended March 31,2001 trading revenue of A$859.6 million. The decrease primarily reflected afall in plasterboard and roofing volumes and prices attributable to lowerAustralian housing activity as well as lower prices for insulation products dueto competitor activity. This was partially offset by an increase in volumes andprices for fibre cement, bricks, pavers and aerated lightweight concrete.

 

**Segment profit:** Segment profitof A$108.8 million for the year ended March 31, 2002 represented a A$22.3million, or 25.8 percent increase compared to the year ended March 31, 2001segment profit of A$86.5 million. Fiscal year 2001 included A$48.6 million insignificant items related to the impairment of certain assets followingstrategic reviews of the businesses concerned. On trading activities, decreasesin segment profit were primarily as a result of the reduced volumes (A$16million) and price (A$6 million) due to lower Australian housing activity,adverse unit cost impact of lower production and freight and distributionvolumes, (A$12 million) especially in roofing and bricks, a roof tile kilnrecommissioning adding further costs. These were offset by a reduction in overheads (A$6 million). Details ofasset impairment are provided in note 39 to the financial statements includedelsewhere in this annual report.

 

**Aluminium**

 

CSR’s aluminium interest isheld through a 70 percent shareholding in Gove Aluminium Finance Limited(“GAF”), which in turn holds a 36.05 percent interest in the Tomago aluminiumsmelter joint venture. The smelter operates under an arrangement whereby eachjoint venture participant supplies its own alumina, pays its share of thesmelter operating costs and is entitled to its proportionate share ofproduction. The financial performance of GAF is highly influenced by aluminiumprices, the A$/US$ exchange rate and the extent to which both are hedged.

 

Sales of aluminium are pricedin US$ and are typically referenced to the three month London Metals Exchange(“LME”) aluminium price, with receipts mostly converted into A$. Lower US$aluminium prices or a higher A$/US$ exchange rate will reduce earnings (andvice versa). GAF’s exposure to aluminium prices and the A$/US$ is partiallyoffset by its major raw material, alumina, being purchased for amountsreferenced to the US$ LME aluminium price. The majority of GAF’s remainingexposure to aluminium prices and the A$/US$ is hedged for the next two to threeyears.

 

For the five years endedMarch 31, 2003, the LME aluminium price has fluctuated considerably. Thealuminium price hit a low over the past five years at US$1,163 a tonne in March1999 before rising to a peak of US$1,739 a tonne in January 2000 and thenfalling to US$1,3656 a tonne at March 31, 2003. This latest fall was primarilydue to the economic slowdown in the US and an estimated 4 percent fall in worldaluminium consumption. For fiscal year 2003, aluminium prices averaged US$1,364a tonne amid subdued global economic growth and higher aluminium exports fromChina.

 

The past three fiscal yearsthe average A$/US$ exchange rate and the LME average aluminium prices areincluded in the following table:

 

|                             |   | **Year ended  March 31,** |   |
|----------------------------------|--------|---------------------------|--------|
|                             |   | **2003**                  |   | **2002** |   | **2001** |   |
| **Exchange rates**               |   |                      |   |   |   |   |   |
| A$/US$ - average monthly rate(1) |   | 0.5654                    |   | 0.5112 |   | 0.5524 |   |
| **Aluminium prices**             |   |                      |   |   |   |   |   |
| LME, US$/tonne – average(2) |   | 1,364                     |   | 1,412 |   | 1,544 |   |
| A$ revenue per tonne(3)          |   | 2,695                     |   | 2,704 |   | 2,762 |   |

 

 

52

----

 

----

(1)               These rates represent an average of the monthend rates used by CSR (9:55 am hedge settlement rate) for the period indicated.

(2)               The LME aluminium prices represent an averageof the monthly three month LME aluminium price for the period indicated.

(3)               A$ revenue per tonne represents actual GAFrevenue per tonne in the period indicated. This amount differs from the LMEaluminium price at the exchange rates indicated due to the impact of hedgingand premiums charged to customers.

#### ** **

#### **Results of operations for Aluminium**

 

Theresults of operations for the Aluminium segment for the years ended March 31,2003, 2002 and 2001 are summarised below.

 
|                           |   | **Year ended  March 31,** |   |
|--------------------------------|--------|---------------------------|--------|
| **A$ million**                 |   | **2003**                  |   | **2002** |   | **2001** |   |
| Trading Revenue                |   | 446.5                     |   | 443.2 |   | 520.4 |   |
| Segment profit(1)              |   | 126.3                     |   | 110.0 |   | 446.9 |   |
| Segment profit margin %(1),(2) |   | 28.3                      | %      | 24.8 | % | 85.9 | % |

 

----

(1)               Segment profit in fiscal year 2001 includesA$235.4 million on the sale of CSR group’s interest in Gove Aluminium Limited.Segment profit margin was 40.6% excluding profit on sale of Gove AluminiumLimited.

(2)               Segment profit margin % is segment profitdivided by trading revenue.

 

#### ***Year ended March 31, 2003 compared to the year endedMarch 31, 2002***

 

**Trading revenue:** Tradingrevenue of A$446.5 million for the year ended March 31, 2003 represented anA$3.3 million, or 0.7 percent, increase compared to trading revenue for theyear ended March 31, 2002 of A$ 443.2 million. This principally reflectedhigher volumes, particularly of high value billet and slab aluminium, and thepositive impact of the stronger A$, largely offset by lower LME aluminiumprices. Volume of aluminium sold in fiscal year 2003 of 165,690 tonnes was arecord for the business, up from 163,862 tonnes  in fiscal year 2002 and 160,443 tonnes in fiscal year 2001.

 

**Segment profit:**  Segment profit of A$126.3 million for theyear ended March 31, 2003 represented an A$16.3 million, or 14.8 percent,increase compared to segment profit of A$110.0 million for the year ended March31, 2002. Segment profit margins improved as a result of lower alumina costsfollowing the reduction in world prices of aluminium and alumina.  Segment profit also improved as a result oflower exchange rate hedge costs and improved gains on aluminium metal hedges.

 

#### ***Year ended March 31, 2002 compared to the year endedMarch 31, 2001***

 

**Trading revenue:** Tradingrevenue of A$443.2 million for the year ended March 31, 2002 represented anA$77.2 million or 14.8 percent, decrease compared to the year ended March 31,2001 trading revenue of A$520.4 million. The decrease primarily relates to the divestment of Gove AluminiumLimited late in fiscal year 2001.

 

**Segment profit:**Segment profitof A$110.0 million for the year ended March 31, 2002 represented an A$336.9 million,or 75.4 percent, decrease compared to the year ended March 31, 2001 segmentprofit of A$446.9 million. Fiscal year 2001 included a profit of $235.4 millionon the sale of Gove Aluminium Limited. On trading activities, decreases insegment profit reflected the loss of segment profit from Gove Aluminium Limited(A$79 million), a decline in margins due to higher smelter operating costs,higher alumina costs and the adverse impact of lower A$/US$ exchange rates onraw material purchases.

 

 

53

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**CSR Sugar**

 
|                 |   | **Year  Ended March 31,** |       |
|----------------------|--------|---------------------------|------------|
| **A$ Millions**      |   | **2003**                  |       | **2002** |   | **2001** |   |
|                 |   | **Trading****Revenue**    |       | **Segment****Profit** |   | **Trading****Revenue** |   | **Segment****Profit** |   | **Trading****Revenue** |   | **Segment****Profit** |   |
| CSR Sugar Milling    |   | 634.8                     |       | 37.1 |   | 614.0 |   | 44.5 |   | 459.5 |   | (13.0 | ) |
| CSR Sugar Other      |   | 73.4                      |       | 33.7 |   | 79.7 |   | 29.3 |   | 69.8 |   | 29.5 |   |
| **Total  CSR Sugar** |   | **708.2**                 | ** ** | **70.8** | ** ** | **693.7** | ** ** | **73.8** | ** ** | **529.3** | ** ** | **16.5** | ** ** |

 

***CSR Sugar Milling***

 

CSR Sugar Milling’sactivities include the milling of sugarcane to produce raw sugar and othervaluable by-products such as molasses, which is primarily used for ethanolproduction and stock feed. Raw sugar produced in Queensland is compulsorilyacquired by statute, marketed and sold to both domestic and export customers byQSL. QSL is an industry organisation owned by Queensland sugarcane growers andmillers. QSL pools all the revenue received for raw sugar sold and afterdeducting costs, distributes net proceeds to millers on the basis of tonnage ofsugar supplied. This net price is known as the QSL pool price and is quoted onan Australian dollar per tonne basis. The QSL pool price is highly influenced by the NY#11 sugar price and theA$/US$ exchange rate. The global sugar industry is characterised by a series ofdemand and supply factors that have resulted in fluctuations in the sugarprice:

 
|                                              |   | **Year ended  March 31,** |   |
|---------------------------------------------------|--------|---------------------------|--------|
| **Sugar prices**                                  |   | **2003**                  |   | **2002** |   | **2001** |   |
| NY#11  daily average (US cents per pound)         |   | 6.76                      |   | 7.64 |   | 9.19 |   |
| CSR assumed pool price (A$ per tonne)(1)          |   | 274.00                    |   | 331.00 |   | 252.00 |   |
| QSL  – final pool price(A$ per tonne)(2),(3) |   | na                        |   | 331.60 |   | 253.00 |   |

 

----

(1)          Prices are a CSR estimate of the final QSL poolprice which is determined in the July following the completion of the season.Any difference between these prices assumed at March and the final QSL poolprice is taken up in the following financial year.

(2)          The QSL pool price is the average realised sugarprice received and reflects the impact of QSL hedging.

(3)          2003 final pool price is confirmed by QSL in July2003 therefore it is not available (“na”) at the date of this annual report.

 

CSR Sugar Milling’s rawsugar production is influenced by the volume of the sugarcane crop and theunderlying sugar content. The Australian sugar industry traditionally definesits seasons as the calendar year in which milling occurs. For example the 2002season would generally have been harvested between June and December 2002 andis reflected in CSR Sugar’s results for the year ended March 31, 2003. The 2000and 2001 sugarcane growing seasons were adversely affected by weatherconditions and disease. The 2002 season sugarcane crop produced 14.1 milliontonnes of sugarcane for processing by CSR Sugar.

* *

*Sugar production and sugarcane processing*

* *
|                                  |   | **Year ended  March 31,** |   |
|---------------------------------------|--------|---------------------------|--------|
|                                  |   | **2003**                  |   | **2002** |   | **2001** |   |
| Sugarcane processed (million tonnes)  |   | 14.1                      |   | 11.6 |   | 11.4 |   |
| Raw sugar production (million tonnes) |   | 2.1                       |   | 1.8 |   | 1.7 |   |
| CCS% of sugarcane(1)                  |   | 14.86                     |   | 14.94 |   | 14.12 |   |

 

----

(1)              CCS is a measure of the sugar content of sugarcane andis a measure of sugar yield from sugar cane.

 

 

54

----

 

#### ***Results of operations forCSR Sugar Milling***

 

The results of operationsfor the CSR Sugar Milling segment for the years ended March 31, 2003, 2002 and2001 are set out below.

 
|                           |   | **Year ended  March 31,** |   |
|--------------------------------|--------|---------------------------|--------|
| **A$ million**                 |   | **2003**                  |   | **2002** |   | **2001** |   |
| **Trading revenue**            |   | 634.8                     |   | 614.0 |   | 459.5 |   |
| **Segment profit**             |   | 37.1                      |   | 44.5 |   | (13.0 | ) |
| **Segment profit margin %(1)** |   | 5.8                       |   | 7.2 |   | (2.8 | ) |

 

----

(1)               Segment profit margin % is segment profitdivided by trading revenue

 

#### ***Year ended March 31, 2003 compared to the year endedMarch 31, 2002***

 

**Trading revenue:** Tradingrevenue of A$634.8 million for the year ended March 31, 2003 represented anA$20.8 million, or 3.4 percent increase compared to trading revenue for theyear ended March 31, 2002 of A$614.0 million. This reflected the impact of animproved crop offset in part by lower estimated QSL pool prices as detailedabove.

 

**Segment profit:** Segment profitof A$37.1 million for the year ended March 31, 2003 represented a A$7.4million, or 16.6 percent, decrease compared to segment profit of A$44.5 millionfor the year ended March 31, 2002. For fiscal year 2003 segment profit includesa writedown due to impairment of value of A$12.9 million in respect of aspecialised sugar plant at one of CSR’s Queensland sugar mills.  Excluding this writedown, segment profit infiscal year 2003 of A$50.0 million increased by A$5.5 million compared toA$44.5 million in fiscal year 2002. This reflects increases in volumes and higher molasses prices, offset byreduced sugar prices, with small gains being made on sugar and foreign exchangehedges.

 

Detailsof asset impairments are provided in note 39 of the financial statementsincluded elsewhere in this annual report.

 

#### ***Year ended March 31, 2002 compared to the year endedMarch 31, 2001***

 

**Trading revenue:** Tradingrevenue of A$614.0 million for the year ended March 31, 2002 represented anA$154.5 million, or 33.6 percent increase compared to the year ended March 31,2001 trading revenue of A$459.5 million. This reflected a higher QSL poolprice, higher molasses prices and a slightly improved crop as detailed above.

 

**Segment profit:** Segment profitof A$44.5 million for the year ended March 31, 2002 represented an A$57.5million increase compared to the year ended March 31, 2001 segment profit of(A$13.0) million. Segment profit margins increased primarily as a result ofhigher QSL pool and molasses prices.

 

***CSR Sugar Other***

 

CSR Sugar Other encompassesan ethanol business, a 50 percent interests in refining businesses in Australia(Sugar Australia) and New Zealand (New Zealand Sugar Company), a 42.5 percentinterest in sugar broker C. Czarnikow Limited and CSR Sugar head office. Thefinancial performance of CSR Sugar Other is primarily influenced by returnsfrom the refinery joint ventures, ethanol prices (export and domestic) andmolasses costs.

 

CSR’s interest in SugarAustralia, New Zealand Sugar Company and Czarnikow are accounted for under theequity accounting method. Accordingly figures presented do not include revenueassociated with these ventures. Reference to revenue primarily relates to salesof ethanol, fertiliser (a by-product of the ethanol production process) and anagency business. The segment profit figures presented for these businessesrepresent the CSR group’s share of their net profit determined under the equityaccounting method.

 

55

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#### ***Results of operations for CSR Sugar Other***

 

The results of operations for the CSR Sugar Other segment for the yearsended March 31, 2003, 2002 and 2001 are set out below.

** **

|                                                          |   | **Year ended  March 31,** |   |
|---------------------------------------------------------------|--------|---------------------------|--------|
| **A$ million**                                                |   | **2003**                  |   | **2002** |   | **2001** |   |
| **Revenue**                                                   |   | 73.4                      |   | 79.7 |   | 69.8 |   |
| **Segment profit**                                            |   | 33.7                      |   | 29.3 |   | 29.5 |   |
| **Segment profit margin (excluding associate entities) %(1)** |   | 11.3                      |   | 14.4 |   | 15.7 |   |

 

----

(1)               Segment profit margin % is segment profitdivided by trading revenue.

 

#### ***Year ended March 31, 2003 compared to the year endedMarch 31, 2002***

 

**Trading revenue:** Tradingrevenue of A$73.4 million for the year ended March 31, 2003 represented anA$6.3 million, or 7.9 percent, decrease compared to trading revenue for theyear ended March 31, 2002 of A$79.7 million. This reflected a loss of someagency product lines (food ingredients) and lower export ethanol volume andprices, partially offset by higher domestic ethanol sales.

 

**Segment profit:** Segment profitof A$33.7 million for the year ended March 31, 2003 represented a A$4.4million, or 15.0 percent, increase compared to segment profit of A$29.3 millionfor the year ended March 31, 2002. This was primarily due to improved volumesand margins from Sugar Australia and New Zealand Sugar Company, partiallyoffset by a lower ethanol segment profit.

 

#### ***Year ended March 31, 2002 compared to the year endedMarch 31, 2001***

 

**Trading revenue:** Tradingrevenue of A$79.7 million for the year ended March 31, 2002 represented anA$9.9 million, or 14.2 percent, increase compared to the year ended March 31,2001 revenue of A$69.8 million. This reflected increased export ethanol volumesand prices, increased agency product sales and higher fertiliser sales volumes.

 

**Segment profit:** Segment profitof A$29.3 million for the year ended March 31, 2002 represented an A$0.2million or 0.7 percent decrease compared to the year ended March 31, 2001segment profit of A$29.5 million. This reflected lower margins in SugarAustralia due to higher raw sugar prices, partially offset by an improvedsegment profit contribution from ethanol principally due to higher volumes andprices.

 

56

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**Rinker group**

 

Rinker group’s results ofoperations by segment for the years ended March 31, 2003, 2002 and 2001 are setout below.

 
|                                 |   | **Rinker group  Business Segment trading revenues and segment profit(1)A$ millions  Year Ended March 31,** |       |
|--------------------------------------|--------|------------------------------------------------------------------------------------------------------------|------------|
|                                 |   | **2003**                                                                                                   |       | **2002** |   | **2001** |   |
|                                 |   | **Trading****revenue**                                                                                     |       | **Segment****profit** |   | **Trading****revenue** |   | **Segment****profit** |   | **Trading****revenue** |   | **Segment****profit** |   |
| Aggregates                           |   | 1,108.6                                                                                                    |       | 185.4 |   | 957.0 |   | 175.0 |   | 737.4 |   | 127.5 |   |
| Cement                               |   | 579.2                                                                                                      |       | 153.5 |   | 610.4 |   | 150.1 |   | 523.6 |   | 129.6 |   |
| Concrete, concrete block and asphalt |   | 1,782.8                                                                                                    |       | 151.3 |   | 1,506.7 |   | 123.7 |   | 1,280.4 |   | 92.7 |   |
| Concrete pipe and products           |   | 777.2                                                                                                      |       | 107.6 |   | 947.4 |   | 153.8 |   | 747.7 |   | 124.1 |   |
| Other(1)                             |   | 703.5                                                                                                      |       | (5.8 | ) | 786.5 |   | (4.1 | ) | 858.5 |   | 22.6 |   |
| Eliminations(2)                      |   | (733.7                                                                                                     | )          | — |   | (692.5 | ) | — |   | (558.1 | ) | — |   |
| **Total Rinker Materials**           |   | **4,217.6**                                                                                                | ** ** | **592.0** | ** ** | **4,115.5** | ** ** | **598.5** | ** ** | **3,589.5** | ** ** | **496.5** | ** ** |
| **Readymix**                         |   | **1,014.1**                                                                                                | ** ** | **119.5** | ** ** | **925.5** | ** ** | **56.7** | ** ** | **922.5** | ** ** | **5.8** | ** ** |
| **Total Rinker group**               |   | **5,231.7**                                                                                                | ** ** | **711.5** | ** ** | **5,041.0** | ** ** | **655.2** | ** ** | **4,512.0** | ** ** | **502.3** | ** ** |

* *

----

(1)*              *Other includes Gypsum Supply,Pre-stressed concrete, Polypipe and Rinker corporate costs.

(2)               Aggregates andCement sell products to other Rinker segments. This internal revenue iseliminated on consolidation.

 

**Results of Rinker Materials**

*** ***

***Impact of currency exchange rate***

 

As Rinker Materials recordsits transactions in its own financial statements in US dollars and theseresults are translated into Australian dollars for the purposes ofconsolidation into the financial statements of the CSR group, the CSR group hasbeen susceptible to changes in the exchange rate between the US dollar and theAustralian dollar. An appreciation of the A$ relative to the US$ has had anadverse impact on the CSR group’s reported results.

 

The table below sets out theresults of Rinker Materials in both US$ and A$.  The average month end 9:55am hedge settlement rates (“US$/A$average exchange rate”) used for translation of the Rinker Materials US$transactions into A$ for the years ended March 31, 2003, 2002 and 2001 is alsoincluded in the table below.

 
|                          |   | **Rinker Materials  Trading revenues and segment profit  $ Millions unless stated otherwise  Year Ended March 31,** |   |
|-------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|
|                          |   | **2003**                                                                                                            |   | **2002** |   | **2001** |   |
|                          |   | **Trading****revenue**                                                                                              |   | **Segment****profit** |   | **Trading****revenue** |   | **Segment****profit** |   | **Trading****revenue** |   | **Segment****profit** |   |
| Total Rinker Materials in US$ |   | **2,383.0**                                                                                                         |   | **333.6** | ** ** | **2,103.7** | ** ** | **306.0** | ** ** | **1,974.2** | ** ** | **274.2** |   |
| Total Rinker Materials in A$  |   | **4,217.6**                                                                                                         |   | **592.0** | ** ** | **4,115.5** | ** ** | **598.5** | ** ** | **3,589.5** | ** ** | **496.5** | ** ** |
| US$/A$ average exchange rate  |   | 0.5654                                                                                                              |   |   |   | 0.5112 |   |   |   | 0.5524 |   |   |   |

 

57

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Compared to the fiscal year2002 exchange rate, the appreciation of the A$ in fiscal year 2003 has had anegative impact on Rinker Materials’ A$ trading revenue of A$444 million, andon A$ segment profit of A$61 million. Compared to the fiscal year 2001 exchangerate, the appreciation of the A$ in fiscal year 2003 has had a negative impacton Rinker Materials’ trading revenue of $96 million, and on segment profit ofA$12 million.

 

Given that Rinker Materialsrecords its transactions in its own financial statements in US dollars, for thepurpose of this management discussion and analysis of the financial results ofRinker Materials, management believes it is most useful to present thatdiscussion in US dollars having discussed the impact of the currency exchangerates above.

 

***Aggregates***

 

*Year ended March 31, 2003 compared to the year ended March31, 2002*

 

**Trading Revenue:** In A$, trading revenue increased to A$1,108.6 million in fiscalyear 2003 from A$957.0 million in fiscal year 2002, or 16 percent.

 

In US$, trading revenue ofUS$627.2 million for the year ended March 31, 2003 represented a US$137.9million, or 28 percent, increase compared to trading revenue for the year endedMarch 31, 2002 of US$489.3 million.

 

The increase principallyreflects:

 

•                    The Kiewitacquisition on September 26, 2002 which, together with a full year contributionfrom the acquisition of the Nevada quarry operations previously owned by HansonPlc (purchased September 2001) and the Kentucky quarry operations previouslyowned by Cemex (purchased December 2001), accounted for approximately $110million of additional trading revenue;

•                    Increasedvolumes and prices in the Florida residential market supported by civilprojects that were accelerated pursuant to a state government initiative(Mobility 2000) which increased revenue by US$28 million; and

•                    Weaker tounchanged results in the Tennessee, Washington state and Georgia operations inline with economic conditions in those markets, which overall decreased revenueby US$5 million.

 

Excluding Kiewit, aggregatevolumes increased by 9.5 percent and average prices increased by approximately4  percent over the previous fiscalyear.

 

The difference in the rateof increase between US$ trading revenue and A$ trading revenue reflects thechange in the exchange rate between US$ and A$.

 

**Segment profit**: In A$, segment profitincreased to A$185.4 million in fiscal year 2003 from A$175.0 million in fiscalyear 2002, or 6 percent.

 

In US$, segment profit ofUS$104.0 million for the year ended March 31, 2003 represented a US$14.6million, or 16 percent increase compared to segment profit for the year endedMarch 31, 2002 of US$89.4 million. This was due principally to full year’scontribution from the Hanson and Cemex businesses acquired in fiscal year 2002and segment profit resulting from the September 2002 Kiewit acquisition.  In addition, volume and price improvementsin “heritage businesses” (heritage businesses exclude acquisitions not includedin Rinker Materials for the full prior fiscal year) contributed to the increasedsegment profit.

 

The difference in the rateof increase between US$ segment profit and A$ segment profit reflects thechange in the exchange rate between US$ and A$.

 

*Year ended March 31, 2002 comparedto the year ended March 31, 2001*

 

**Trading Revenue**: In A$, trading revenueincreased to A$957.0 million in fiscal year 2002 from A$737.4 million in fiscalyear 2001, or 30 percent.

 

58

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In US$, trading revenue ofUS$489.3 million for the year ended March 31, 2002 represented a US$83.9million, or 21 percent, increase compared to the year ended March 31, 2001trading revenue of US$405.4 million. The increase reflects increased revenuefrom acquisitions and volume and price increases in heritage businesses.

 

Acquisitions contributedUS$34 million of the increase.  Theprincipal increases came from full year revenue contributions from theaggregate operations of Florida Crushed Stone and American Limestone Company,and to a lesser extent from trading revenue provided by the Las Vegas quarryoperations acquired from Hanson PLC in September 2001 and the Kentucky quarryoperations acquired from Cemex in December 2001.

 

Heritage operationscontributed an approximately US$48 million of the increase in trading revenue:

 

•                    Volumesincreased 2.2 million tonnes or 6.5 percent due to supply to large projects inFlorida including the widening of Interstate 95, the Better JacksonvilleInitiative, and the Miami and Tampa International airports, combined withstrong volumes to the internal concrete business as the Florida residentialmarket strengthened.

•                    Average quarryprices in Florida increased over 8 percent. In Nevada and Washington state, price increases were generally in linewith inflation, while prices in Georgia were down marginally.

 

The difference in the rateof increase between US$ trading revenue and A$ trading revenue reflects thechange in the exchange rate between US$ and A$.

 

**Segment profit**: In A$, segment profitincreased to A$175.0 million in fiscal year 2002 from A$127.5 million in fiscalyear 2001, or 37 percent.

 

In US$, segment profit ofUS$89.4 million for the year ended March 31, 2002 represented a US$19.8million, or 28 percent, increase compared to the year ended March 31, 2001segment profit of US$69.6 million. This was principally due to volume and priceincreases in heritage businesses, and to a lesser extent, the impact of theacquisitions summarized above and a significant improvement in Nevadaoperations.

 

The difference in the rateof increase between US$ segment profit and A$ segment profit reflects thechange in the exchange rate between US$ and A$.

 

***Cement***

 

*Year ended March 31, 2003 comparedto the year ended March 31, 2002*

 

**Trading Revenue**: In A$, trading revenuedecreased by 5 percent to A$579.2 million in fiscal year 2003 from A$610.4million in fiscal year 2002.

 

In US$, trading revenue of US$327.2million for the year ended March 31, 2003 represented a US$15.1 million, or 5percent, increase compared to the trading revenue for the year ended March 31,2002 of US$312.1 million. The increase in trading revenue reflected 2.4 percentincrease in total volumes , improved manufacturing cost as the Miami cementmill increased production, and an increase in transport revenue from the cementtanker fleet.

 

Prices were flat, comparedto the year ended March 31, 2002, principally due to increased manufacturingcapacity coming on line in Florida.

 

The difference between anincrease between US$ trading revenue and a decrease in A$ trading revenuereflects the change in the exchange rate between US$ and A$.

 

59

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**Segment profit:**In A$, segment profitincreased to A$153.5 million in fiscal year 2003 from A$150.1 million in fiscalyear 2002, or 2 percent.

 

In US$, segment profit ofUS$86.8 million for the year ended March 31, 2003 represented a US$10.0million, or 13 percent, increase compared to segment profit for the year endedMarch 31, 2002 of US$76.8 million.  Thiswas principally due to improved cost performance at the Miami cement mill, anda reduction in import cement prices, with increased volumes also contributingto the improvement.

 

The difference in the rateof increase between US$ segment profit and A$ segment profit reflects thechange in the exchange rate between US$ and A$.

 

*Year ended March 31, 2002 comparedto the year ended March 31, 2001*

 

**Trading Revenue:**In A$, trading revenueincreased to A$610.4 million in fiscal year 2002 from A$523.6 million in fiscalyear 2001, or 16 percent.

 

In US$, trading revenue ofUS$312.1 million for year ended March 31, 2002 represented a US$25.2 million,or a 9 percent, increase compared to year ended March 31, 2001 trading revenueof US$286.9 million. The increase was principally due to a full year of tradingrevenue from the Brooksville mill, (part of the Florida Crushed Stoneacquisition) and an increase in heritage volumes from the Miami mill, partlyoffset by a reduction in imported and traded cement, as increased tonnage wassourced from the Miami mill.

 

The difference in the rateof increase between US$ trading revenue and A$ trading revenue reflects thechange in the exchange rate between US$ and A$.

 

**Segment profit:**In A$, segment profitincreased to A$150.1 million in fiscal year 2002 from A$129.6 million in fiscalyear 2001, or 15 percent.

 

In US$, segment profit ofUS$76.8 million for year ended March 31, 2002 represented a US$5.9 million, or8 percent, increase compared to the year ended March 31, 2001 segment profit ofUS$70.9 million. This was principally due to a full year’s segment profitcontribution from the Florida Crushed Stone acquisition.

 

The difference in the rateof increase between US$ segment profit and A$ segment profit reflects thechange in the exchange rate between US$ and A$.

 

***Concrete, concrete block and asphalt***

 

*Year ended March 31, 2003 comparedto the year ended March 31, 2002*

 

**Trading Revenue**: In A$, trading revenueincreased to A$1,782.8 million in fiscal year 2003 from A$1,506.7 million infiscal year 2002, or 18 percent.

 

In US$, trading revenue ofUS$1,010.1 million for the year ended March 31, 2003 represented a US$239.6million, or 31 percent, increase compared to trading revenue for the year endedMarch 31, 2002 of US$770.5 million. The Kiewit acquisition accounted for $183.0million or 76 percent of the increase. Trading revenue was also positivelyimpacted, in decreasing order, by:

 

•                    Improvedtrading revenues from heritage operations in Florida, where both concrete andconcrete block volumes were at record levels due to growth in the Floridaresidential market;

•                    Incrementaltrading revenues from the Hanson and Mid Coast Concrete acquisitions which hada first full year contribution to results in fiscal year 2003;

•                    Increasedconcrete volumes and prices in Nevada; and

•                    Trading revenuefrom Callaway Concrete purchased in January 2003.

 

 

60

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Block volumes in Nevadadeclined due to a slowdown in the housing market. Concrete operations were alsosubdued in Tennessee and Washington state, which are both experiencing weakmarkets.

 

Excluding Kiewit, concretevolumes increased by 6 percent and block volumes increased by 2 percent.  Also excluding Kiewit, average concreteprices increased by 2.7 percent and block prices by 4.8 percent.

 

The difference in the rateof increase between US$ trading revenue and A$ trading revenue reflects thechange in the exchange rate between US$ and A$.

 

**Segment profit:**In A$, segment profitincreased to A$151.3 million in fiscal year 2003 from A$123.7 million in fiscalyear 2002, or 22 percent.

 

In US$, segment profit ofUS$85.8 million for the year ended March 31, 2003 represented a US$22.5million, or 36 percent, increase compared to segment profit for the year endedMarch 31, 2002 of US$63.3 million. The increase in segment profit mainlyreflected contributions to segment profit from the acquisition of Kiewit,together with contributions from the Hanson and Mid Coast acquisitions madeduring fiscal year 2002 and a small contribution from Callaway Concrete.  Segment profit was also positively affectedby improvements in margins in the Florida business as strong volumes enablelower unit fixed costs, offset in part by decreased results in the Washingtonstate and Tennessee regions, which were impacted by weaker markets.

 

The difference in the rateof increase between US$ segment profit and A$ segment profit reflects thechange in the exchange rate between US$ and A$.

 

*Year ended March 31, 2002 comparedto the year ended March 31, 2001*

 

**Trading Revenue:**In A$, trading revenueincreased to A$1,506.7 million in fiscal year 2002 from A$1,280.4 million infiscal year 2001, or 18 percent.

 

In US$, trading revenue ofUS$770.5 million for year ended March 31, 2002 represented a US$65.6 million,or 9 percent, increase compared to year ended March 31, 2001 trading revenue ofUS$704.9 million. This principally reflected additional trading revenue fromincreased volumes in Florida and Nevada following the Mid-Coast Concrete andHanson acquisitions during fiscal year 2002 together with higher prices fromheritage operations in these markets. Incremental revenue from a full year’scontribution from the American Limestone concrete operations, acquired duringfiscal year 2001, largely offset by decreased volumes in the Washington statemarket principally due to a general regional economic downturn.

 

The difference in the rateof increase between US$ trading revenue and A$ trading revenue reflects thechange in the exchange rate between US$ and A$.

 

**Segment profit**: In A$, segment profitincreased to A$123.7 million in fiscal year 2002 from A$92.7 million in fiscalyear 2001, or 33 percent.

 

In US$, segment profit ofUS$63.3 million for year ended March 31, 2002 represented a US$12.2 million, or24 percent, increase compared to the year ended March 31, 2001 segment profitof US$51.1 million. This was principally due to volume and price improvementsin the Florida market, together with a one-off gain from the divestment of theLejeune concrete plant in south Florida, improvement in the Nevada concrete andblock operations (excluding acquisitions) and segment profit contributions fromthe acquisitions of Mid Coast Concrete in Florida and the Hanson operations inLas Vegas.

 

The difference in the rateof increase between US$ segment profit and A$ segment profit reflects thechange in the exchange rate between US$ and A$.

 

 

61

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***Concrete pipe and products***

 

*Year ended March 31, 2003 comparedto the year ended March 31, 2002*

 

**Trading Revenue**: In A$, trading revenuedecreased to A$777.2 million in fiscal year 2003 from A$947.4 million in fiscalyear 2002, or 18 percent.

 

In US$, trading revenue ofUS$437.0 million for the year ended March 31, 2003 represented a US$47.0million, or 10 percent, decrease compared to trading revenue for the year endedMarch 31, 2002 of US$484.0 million. This decrease was principally due to an 8percent decline in concrete pipe volumes including a reduction in revenue ofUS$15 million from the divestment of operations in Everett, Washington andPortland, Oregon. Lower market activity in most regions, and to a lesser extentthe impact of alternative products and new market entrants, reduced revenue byUS$32 million.

 

The difference in the rateof decrease between US$ trading revenue and A$ trading revenue reflects thechange in the exchange rate between US$ and A$.

 

**Segment profit:**In A$, segment profitdecreased to A$107.6 million in fiscal year 2003 from A$153.8 million in fiscalyear 2002, or 30 percent.

 

In US$, segment profit****of US$60.1 million for the year endedMarch 31, 2003 represented a US$18.3 million, or 23 percent, decrease comparedto segment profit for the year ended March 31, 2002 of US$78.4 million..   The lower segment profit margin includesthe impact from fixed depreciation and amortization costs, the impact ofallocating selling and administration costs over a lower trading revenue base,and an increase in employee pension and medical benefit plan costs.

 

The difference in the rateof increase between US$ segment profit and A$ segment profit reflects thechange in the exchange rate between US$ and A$.

 

*Year ended March 31, 2002 comparedto the year ended March 31, 2001*

 

**Trading Revenue**: In A$, trading revenueincreased to A$947.4 million in fiscal year 2002 from A$747.7 million in fiscalyear 2001, or 27 percent.

 

In US$, trading revenue ofUS$484.0 million for year ended March 31, 2002 represented a US$73.4 million,or 18 percent, increase compared to year ended March 31, 2001 trading revenueof US$410.6 million.  This largelyreflected a full year of trading revenue from the fiscal year 2001 acquisitionsof Wilson Concrete Company, Leppert Concrete Products, Southern Culvert LC, BayConcrete Products, Dura-Crete, Inc. and United States Concrete ProductsLimited, together with the acquisition of the remaining 50 percent of the NewEngland Joint Venture, and an increase in average selling price of 6 percent.

 

The difference in the rateof increase between US$ trading revenue and A$ trading revenue reflects thechange in the exchange rate between US$ and A$.

 

**Segment profit**: In A$, segment profitincreased to A$153.8 million in fiscal year 2002 from A$124.1 million in fiscalyear 2001, or 24 percent.

 

In US$, segment profit ofUS$78.4 million for year ended March 31, 2002 represented a US$10.1 million, ora 15 percent, increase compared to the year ended March 31, 2001 segment profitof US$68.3 million.

 

The increase was the resultof the program of bolt on acquisitions, principally from a full year contributionto segment profit from the fiscal year 2001 acquisitions, together with a fullyear 100 percent contribution to segment profit from the New England plants(previously 50 percent share under the New England Joint Venture), althoughpartially offset by a decrease in gains on sale of assets from the previousfiscal year.

 

The difference in the rateof increase between US$ segment profit and A$ segment profit reflects thechange in the exchange rate between US$ and A$.

 

62

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***Other***

 

*Year ended March 31, 2003 comparedto the year ended March 31, 2002*

** **

**Trading Revenue:**In A$, trading revenuedecreased to A$703.5 million in fiscal year 2003 from A$786.5 million in fiscalyear 2002, or 11 percent.

 

In US$, trading revenue ofUS$396.6 million for the year ended March 31, 2003 represented a US$5.3 millionor 1 percent decrease compared to the trading revenue for the year ended March31, 2002 of US$401.9 million.

 

Gypsum supply tradingrevenue increased 11 percent as a result of both volume (8 percent increase inwallboard volumes) and prices (6 percent increase in wallboard prices).

 

Pre-stressed concretetrading revenue decreased by 6 percent, reflecting lower market activity in theUS midwest and the mix of projects undertaken.

 

Polyethylene pipe andinstallation trading revenue declined by 17 percent primarily as a result oflower polyethylene pipe prices consistent with weaker demand in thetelecommunications sector, and the adverse impact on trading revenues of thesale of the installation business on August 1, 2002.

 

The difference in the rateof decrease between US$ trading revenue and A$ trading revenue reflects thechange in the exchange rate between US$ and A$.

 

**Segment profit:**In A$, segment profit forthe total Other segment, including Rinker Materials’ corporate costs, decreasedto a loss of A$5.8 million in fiscal year 2003 from a loss of A$4.1 million infiscal year 2002.

 

In US$, excluding RinkerMaterials corporate costs, segment profit was US$8.1 million for the year endedMarch 31, 2003 representing a US$2.7 million or 25 percent decrease compared tosegment profit of US$10.8 million for the year ended March 31, 2002.

 

Gypsum Supply segment profitwas unchanged. Although volumes and prices increased, gross margins declineddue to increased maintenance and insurance costs.

 

Polypipe earned a positivesegment profit after incurring a loss in the previous fiscal year.  This was primarily the result of divestingthe loss making pipeline rehabilitation business in August 2002 and an increasein volume and improved cost control.

 

Prestress resultsdeteriorated, impacted by the decrease in volumes and revenue, and increasedcosts and decreased margins on a few very technically challenging projects.

 

Rinker Materials’ corporatecosts decreased by US$1.5 million to US$11.2 million compared to costs ofUS$12.7 million for the prior year. Costs are net of gains on land sales that were an increase of US$8.9million over the previous fiscal year. These gains were partly offset by increased legal and insurance costs.

 

The difference in the rateof decrease between US$ segment profit and A$ segment profit reflects thechange in the exchange rate between US$ and A$.

 

*Year ended March 31, 2002 comparedto the year ended March 31, 2001*

 

**Trading Revenue**: In A$, trading revenuedecreased to A$786.5 million in fiscal year 2002 from A$858.5 million in fiscalyear 2001, or 8 percent.

 

In US$, trading revenue ofUS$401.9 million for year ended March 31, 2002 represented a US$72.0 million,or 15 percent, decrease compared to the year ended March 31, 2001 tradingrevenue of US$473.9 million.

 

 

63

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Gypsum supply tradingrevenues declined by 17 percent primarily as a result of a modest decline inwallboard volumes and a significant decrease in prices which had beenabnormally high in the previous two fiscal years due to supply shortages.

 

The weaker commercialconstruction market in the US, particularly Indiana and Oklahoma, negatively impactedvolumes and prices in pre-stressed concrete products, which resulted in tradingrevenues declining by 8 percent.

 

Polyethylene pipe volumesdeclined 17 percent as a result of reduced demand from the oil and gas andducting markets which resulted in trading revenues declining by 21 percent.

 

The difference in the rateof increase between US$ trading revenue and A$ trading revenue reflects thechange in the exchange rate between US$ and A$.

 

**Segment profit**: In A$, segment profitdecreased to a loss of A$4.1 million in fiscal year 2002 from a profit ofA$22.5 million in fiscal year 2001, or 118 percent.

 

In US$, excluding RinkerMaterials’ corporate costs, segment profit was US$10.8 million for year endedMarch 31, 2002 representing a US$14.5 million decrease compared to the yearended March 31, 2001 segment profit of US$25.3 million.

 

Included in segment profitin fiscal year 2001 was a write down of US$9.4 million (A$19.1 million) inrelation to Rinker Materials’ under performing pipeline rehabilitationbusiness. Net assets were written down to theirrecoverable amount based on the projection of future discounted cash flows.

 

The remaining decline insegment profit was principally due the significantly lower price in GypsumSupply noted above and to lower volumes and prices across all other products,with lower project margins in pre-stress operations due to a weaker commercialmarket, partially offset by segment profit improvements from the restructure ofthe pipe rehabilitation business during the year.

 

Rinker Materials’ corporatecosts increased by US$1.7 million to US$12.7 million compared to costs ofUS$11.0 million for the prior year. Costs are net of gains on land sales, which decreased by US$1.4 millionover the previous fiscal year.

 

The difference in the rateof increase between US$ segment profit and A$ segment profit reflects thechange in the exchange rate between US$ and A$.

 

**Results of the Readymix segment**

 

*Year ended March 31, 2003 comparedto the year ended March 31, 2002*

 

**Trading Revenue**: Trading revenue ofA$1,014.1 million for the year ended March 31, 2003 represented an A$88.6million, or 10 percent, increase compared to trading revenue for the year endedMarch 31, 2002 of A$925.5 million.  The increasein trading revenue comprised A$71 million from price increases in both concreteand aggregates, together with increased concrete volumes of $25 million fromgreater residential and commercial construction activity and an increase of $11million from Chinese operations which benefited from higher volumes due togovernment infrastructure operations. This was offset by reduced aggregates revenue of A$12 million due to thecompletion of a number of major infrastructure projects, a reduction of A$4 millionthrough closure of the Taiwan operations, and lower trading revenue fromdecreased pipe and product volumes of A$2 million.

 

**Segment profit**: Segment profit of A$119.5million for the year ended March 31, 2003 represented an A$62.8 million, or 111percent, increase compared to segment profit of A$56.7 million for the yearended March 31, 2002.  The increase inthe segment profit was due to improved margin of A$50 million from concrete andaggregates reflecting increased concrete and aggregate prices partially offsetan increase in cost

 

64

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of sales, together with improved segmentprofit from the pipes and concrete products business generated from sellingprice increases and cost reduction initiatives.  Segment profit in the Chinese operations also increased due toincreased volumes.

 

*Year ended March 31, 2002 comparedto the year ended March 31, 2001*

 

**Trading Revenue**: Trading revenue of A$925.5million for year ended March 31, 2002 represented an A$3 million, or 0.3percent increase compared to the year ended March 31, 2001 trading revenue ofA$922.5 million.  This marginal increasein revenue was due to growth in Australian residential activity and Asian salesincreases due the supply of products to a number of government infrastructurecontracts, partially offset by a decline in civil and commercial constructionin Australia due to the delayed commencement of approved public and privateinfrastructure projects.

 

**Segment profit**: Segment profit of A$56.7million for year ended March 31, 2002 represented an A$50.9 million or 878percent increase compared to the year ended March 31, 2001 segment profit ofA$5.8 million.

 

The increase in segmentprofit during 2002 was largely attributed to the non recurring A$45.4 millionimpairment write down in fiscal year 2001 of the businesses in China andTaiwan, together with improved earnings from Readymix 50 percent cementinvestment in ACH due to increased selling prices and cost reductioninitiatives.

### ** **

### **B.            Liquidity and Capital Resources**

 

The liquidity of the CSRgroup improved in fiscal year 2003 as the funds required for capitalexpenditure, dividends and interest were more than offset by the A$1,172million of cash from operating activities. In fiscal year 2004, CSR group entities expect to finance their fundingneeds from net cash from operating activities and existing lines of credit.

 

Net cash from operatingactivities decreased slightly to A$1,172 million for fiscal year 2003 fromA$1,195 million for fiscal year 2002, up from $1,024 million for fiscal year2001. The decrease in fiscal year 2003 was due to a tax refund in fiscal year2002 of A$33 million, with improved profit from ordinary activities beforefinance and income tax offset by other negative cash flows from operatingactivities.  In fiscal year 2002 netcash from operating activities of A$1,195 million showed an improvement overfiscal year 2001 due to the tax refund in fiscal year 2002 and other negativecash flows in fiscal year 2001 relating to working capital and tax.

 

## **Statement of cash flows**

 
|                                         |   | **Fiscal  years** |   |
|----------------------------------------------|--------|-------------------|--------|
| **A$ millions**                              |   | **2003**          |   | **2002** |   | **2001** |   |
| Net cash from operating activities           |   | 1,172             |   | 1,195 |   | 1,024 |   |
| Net cash (used in) investing activities      |   | (1,115            | )      | (437 | ) | (580 | ) |
| Net cash from (used in) financing activities |   | 346               |   | (800 | ) | (390 | ) |
| Net increase (decrease) in cash              |   | 403               |   | (42 | ) | 54 |   |

 

CSR’s main source ofliquidity has been cash generated by the operations of the CSR group andexternal borrowings in fiscal year 2003. Net cash from operating activitiesincludes interest received and is after tax paid.

 

*Fiscal year 2003*

 

In fiscal year 2003, cashfrom operations and financing activities was mainly directed to capitalexpenditure of A$1,287 million net of assumed debt, (A$1,345 million on anaccruals basis and excluding debt assumed on acquisition, as detailed below).

 

 

65

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In fiscal year 2003, netproceeds from borrowings totaled A$666.2 million, with A$1,254.8 million raisedthrough bond issues and bank loan facilities, offset by $588.6 million in repayments.

 

Divestment proceeds of A$170million were derived from the sale of small non-core businesses and surplusland. The largest single item related to the sale of surplus land by RinkerMaterials in Florida for US$11 million (A$19 million).

 

After funding net capitalexpenditure, net cash from operating and financing activities was used mainlyto fund dividends and interest of A$357 million.

 

*Fiscal year 2002*

 

In fiscal year 2002, cashfrom operations was mainly directed to capital expenditure of A$584 million (onan accruals basis). Divestment proceeds of A$136 million included A$60 millionfrom the sale of the CSR group’s investment in the Downer Group equity.

 

After funding net capitalexpenditure, net cash from operating activities was used mainly to repay debtof A$243 million, fund dividends and interest of A$374 million and fund a sharebuyback of A$209 million.

 

*Fiscal year 2001*

 

In fiscal year 2001, cashflow from operations and increased borrowings of A$436 million was mainly usedto fund net capital expenditure of A$608 million (after disposals and excludingdebt assumed on acquisition), dividends and finance costs of A$444 million anda share buyback of A$341 million. Net capital expenditure of A$608 million, netof debt assumed on acquisition, consisted of A$1,660 million (on an accrualsbasis and excluding debt assumed on acquisition) spent on new businesses andassets, mainly by Rinker Materials in the United States, offset by A$876million of divestment proceeds. The divestment proceeds primarily related tothe sale of the GAL bauxite and alumina business (A$412 million) and thereceipt of deferred payments from timber divestments (A$313 million paid infiscal year 2001 relating to the sale in fiscal year 2000).

 

*Capital Expenditure*

 

Capital expenditure (on anaccrual basis and excluding debt assumed on acquisition) was A$1,345 million,A$584 million, and A$1,660 million for fiscal years 2003, 2002, and 2001,respectively. Of the fiscal year 2003 amount, A$997 million (US$540 million)related to the acquisition of Kiewit by Rinker Materials in the United States.The remaining amount expended during fiscal year 2003 mainly related to small“bolt-on” acquisitions by Rinker Materials, the refurbishment of existingfacilities and plant and equipment replacements.

 
|                                |   | **Capital Expenditure during the  Year Ended March 31** |       |
|-------------------------------------|--------|---------------------------------------------------------|------------|
|                                |   | **2003**                                                |       | **2002** |   | **2001** |   |
|                                |   | **(A$  Millions)**                                      |       |
| Building Products Division          |   | 42                                                      |       | 52 |   | 28 |   |
| Sugar Division                      |   | 21                                                      |       | 23 |   | 22 |   |
| Aluminium Division                  |   | 9                                                       |       | 10 |   | 13 |   |
| Other                               |   | 20                                                      |       | 23 |   | 15 |   |
| **Total CSR continuing businesses** |   | **92**                                                  | ** ** | **108** | ** ** | **78** | ** ** |
| Rinker Materials Corporation        |   | 1,187                                                   |       | 433 |   | 1,537 |   |
| Readymix                            |   | 66                                                      |       | 43 |   | 45 |   |
| **Total Rinker group**              |   | **1,253**                                               | ** ** | **476** | ** ** | **1,582** | ** ** |
| **Total**                           |   | **A$1,345**                                             | ** ** | **A$584** | ** ** | **A$1,660** | ** ** |

 

 

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At March 31, 2003, CSR hadcommitted to capital expenditure of A$13.3 million in relation to theimprovement and renewal of existing property, plant and equipment in continuingbusinesses.

 

From April 1, 2003 to May31, 2003, CSR group entities have incurred A$10 million on capital expenditureand at May 31, 2003, CSR group entities have commitments to capital expenditureof A$5 million outstanding. relating to plant and equipment renewal andupgrades.

 

#### **Net debt position**

 

Net debt (total debt lesscash and short term lending) fell 87 percent to A$ 226 million at March 31,2003 from A$1,738 million at March 31, 2002 and A$2,100 million at March 31,2001.  In fiscal year 2003, thereduction was due primarily to the transfer of debt of A$1,580 million toRinker as part of the demerger. In fiscal year 2002, the moderate levels ofcapital expenditure enabled debt repayments to be made from net cash fromoperating activities. The net debt position also improved in fiscal year 2002due to a A$161 million reduction on translation of US dollar debt due to thestrengthening of the Australian dollar. The increase in debt during fiscal year2001 was mainly due to significant US acquisitions by Rinker Materials.

 

The CSR group’s debt profileduring the last five fiscal years has been as follows:

 
|                             |   | **Group Debt  Profile as at March 31**    |   |
|----------------------------------|--------|-------------------------------------------|--------|
|                             |   | **2003**                                  |   | **2002** |   | **2001** |   | **2000** |   | **1999** |   |
|                             |   | **(A$ millions, except where indicated)** |   |
| Long term debt(1)                |   | 273                                       |   | 1,791 |   | 2,230 |   | 1,149 |   | 1,763 |   |
| Total debt(2)                    |   | 598                                       |   | 1,895 |   | 2,300 |   | 1,215 |   | 1,837 |   |
| Net debt(3)                      |   | 226                                       |   | 1,738 |   | 2,100 |   | 1,088 |   | 1,749 |   |
| Debt to capitalization  ratio(4) |   | 19                                        | %      | 31 | % | 36 | % | 22 | % | 33 | % |

 

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(1)          Debt maturing in excess of twelve months from periodend.

(2)          Long term debt plus short term debt (including bankoverdrafts).

(3)          Total debt less cash and short term lending.

(4)          Ratio of long term debt to long term debt plus totalshareholders’ equity.

 

Of total debt at March 31,2003, A$273 million was classified as non-current (not repayable within12 months) of which approximately 3 percent is repayable in Thai baht andapproximately 97 percent in Australian dollars.

### ** **

Details of borrowings,credit facilities and maturity profiles are given in Note 19 and Note 20 of thefinancial statements, included elsewhere in this annual report.  Details of financial instruments used forhedging purposes are given in Note 28 of the financial statements.

 

At March 31, 2003, the CSRgroup had a total of A$500 million committed standby facilities, with CSRgroup’s six relationship banks, of which A$237.5 million was not drawn.  These facilities have fixed maturity datesthrough April 2008. Most of these credit lines can be drawn on short notice inboth Australian dollars and United States dollars.  The CSR group also utilizes commercial paper facilities in Australia,completed a Rule 144A bond issue in February 1994 and completed a publicregistered bond issue in the United States in July 1995.  Details of credit facilities are provided inNote 20 to the financial statements.

 

CSR believes that theworking capital of the CSR group is sufficient for the CSR group’s presentrequirements.

 

There are no legal oreconomic restrictions on the ability of its subsidiaries to transfer funds toCSR in the form of cash dividends, loans or advances.

 

67

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CSRis not aware of any restrictions on the use of committed borrowing facilitiesother than as detailed above. Borrowing requirements are not normally subjectto any seasonal factors.

 

**Changes in contributed equity**

 

In May 2001, CSR announced ashare buyback plan with the intent to purchase up to 10 percent of its fullypaid ordinary shares. 1,100,000 shares were repurchased in fiscal year 2003,34,081,215 shares in fiscal year 2002 and 77,643,304 in fiscal year 2001. Thisresulted in a reduction of share capital of A$6.7 million in fiscal year 2003,A$ 208.5 million in fiscal year 2002 and A$340.7 million in fiscal year 2001.On May 20, 2003, CSR announced a further share buyback plan with a target ofpurchasing up to 5 percent of its fully paid ordinary shares.

 

In recent years, capital hasbeen raised by: (i) the conversion of partly paid shares issued under rightsissues in 1986-90 to fully paid shares, and (ii) the issue of CSR shares (oroptions in respect of CSR shares) under the following CSR Employee IncentivePlans:

 

The figures for the amountsraised from the above sources over the past five fiscal years are as follows:

 
|                     |   | **Capital Raising for the Year Ended March 31** |   |
|--------------------------|--------|-------------------------------------------------|--------|
|                     |   |                                            |   |   |   |   |   |   |   |   |   |
|                     |   | **2003**                                        |   | **2002** |   | **2001** |   | **2000** |   | **1999** |   |
|                     |   | **(A$ millions)**                               |   |
| Employee Incentive Plans |   | 42.8                                            |   | 25.5 |   | 16.1 |   | 6.1 |   | 15.2 |   |
| Non-cash share issues(1) |   | —                                          |   | 2.6 |   | 1.7 |   | 4.9 |   | 7.0 |   |
|                     |   | A$42.8                                          |   | A$22.9 |   | A$14.4 |   | A$1.2 |   | A$8.2 |   |

 

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(1)A portion of employee shares prior to fiscal year 2003 were financed by interest-freeloans

 

Details of contributedequity are given in Note 22 of the financial statements, included elsewhere inthis annual report.

 

### **C.**                                   Research and Development, Patents and Licenses

 

CSR group companies incur research and development (“R&D”) costs ina number of business areas, which are expensed when incurred. In Australia,certain research and development project expenditure qualifies for AustralianR&D tax concessions. The amounts for the fiscal years ended March 31, were:

 
| 2001 |   | A$6 million |   |
|------|--------|-------------|--------|
| 2002 |   | A$6 million |   |
| 2003 |   | A$6 million |   |

 

### **D.**                                   Trend Information

 

Relevant industry and market trends for CSR group as a whole arediscussed in “Item 5 – Management discussion and analysis of financialresults”.

 

Except as previously discussed, the CSR group is not aware of anytrends, uncertainties, demands, commitments or events that are reasonablylikely to have a material effect on the CSR group’s trading revenues, incomefrom continuing operations, profitability, liquidity or capital resources, orthat would cause reported financial information not necessarily to beindicative of future operating results or financial condition.

 

The operating environment for CSR remains quite challenging. CSR expectsa slow down in CSR Building Products’ residential construction markets. CSRSugar faces continuing depressed world sugar prices.  These issues are expected to be offset to some extent by improvedreturns for Aluminium based on prior year hedging and the start of ongoing returnsfrom the development and sale of surplus properties.

 

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### **E.**                                     Off-Balance SheetFinancial Arrangements

 

The CSR group does not usespecial purpose vehicles or any other significant form of off-balance sheetfinancing.

 

The CSR group has some leaseobligations as outlined below in the table of “Contractual Obligations andCommercial Commitments”.

 

*Trading Activities Involving Commodity Contracts*

 

The entities of the CSRgroup use a variety of instruments to manage financial and commodity price risks.CSR does not use or issue derivatives or financial instruments for speculativeor trading purposes.

 

*Hedging or Commodities -*Aluminium sales are hedgedby the use of futures and commodity swaps. The level of hedging is based on theestimated future sales of aluminium. As at June 23, 2003, approximately 73percent of estimated fiscal year 2004 net aluminium sales are hedged.

 

All raw sugar produced inQueensland is compulsorily acquired by QSL, which is the single desk seller ofthat raw sugar. Sugar sales are hedged by QSL, by the use of futurescontracts and futures options.   Thelevel of QSL hedging is based on estimated future sales.  Of 2004 sales, as at June 13, 2003,approximately 38 percent had been hedged by the QSL.

 

*Hedging of foreign exchange –*CSR enters intoforeign exchange risk management instruments such as forward contracts,currency options and swaps. These instruments are used to hedge receiptsresulting from sales denominated in foreign currencies and disbursements forraw materials and capital equipment. They are also used to hedge foreigncurrency borrowings and assets. The purpose of these financial instruments isto protect the CSR group against potential adverse changes in exchange rates.

 

*Hedging of Interest Rates –*The CSR group enters intotransactions involving financial instruments to reduce the potential impact ofinterest rate changes to within certain specified parameters. This enables theCSR group to obtain a more stable and predictable interest expense.

 

Details of these hedges areprovided in Note 28 to the financial statements, included elsewhere in thisannual report.

 

### **F.**                                     ContractualObligations and Commercial Commitments

 

The CSR group’s long termobligations and commitments are detailed below:

** **
| **A$ million**                            |   | **Payments  Due by Period** |   |
|-------------------------------------------|--------|-----------------------------|--------|
| **As at  March 31, 2003**                 |   | **Total**                   |   | **Less than  1 year** |   | **1 to 2  years** |   | **2 to 5  years** |   | **Over 5  years** |   |
| Short term debt (excluding interest)      |   | 325.6                       |   | 325.6 |   | — |   | — |   | — |   |
| Long term debt (excluding interest)       |   | 272.7                       |   | 87.5 |   | 10.0 |   | 175.0 |   | 0.2 |   |
| Lease obligations – Finance leases   |   | 0.3                         |   | 0.1 |   | 0.2 |   | — |   | — |   |
| Lease obligations – Operating leases |   | 45.9                        |   | 14.3 |   | 12.9 |   | 17.2 |   | 1.5 |   |
| Contracted capital expenditure            |   | 13.3                        |   | 13.3 |   | — |   | — |   | — |   |
| Other long-term  obligations              |   | 3.6                         |   | 0.9 |   | 1.0 |   | 1.7 |   | — |   |
| Total contractual  cash obligations       |   | 661.4                       |   | 441.7 |   | 24.1 |   | 193.9 |   | 1.7 |   |

 

The CSR group believes it iswell placed to satisfy its short term and long term obligations andcommitments, from cash deposits at March 31, 2003 of A$372.4 million and futureoperating cash flows. In each of the last three fiscal years the CSR group hasgenerated over A$1 billion of cash from its operating activities, of whichA$279 million was derived from businesses which remain in the CSR group. AtMarch 31, 2003, the CSR group had a total of A$500 million committed standbyfacilities, with CSR group’s six

 

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relationship banks, of which A$237.5 millionwas not drawn.  These facilities havefixed maturity dates through April 2008. Most of these credit lines can bedrawn on short notice in both Australian dollars and United Statesdollars.  The CSR group also utilizescommercial paper facilities in Australia, completed a Rule 144A bond issue inFebruary 1994 and completed a public registered bond issue in the United Statesin July 1995.  Details of creditfacilities are provided in Note 20 to the financial statements. For adiscussion of factors that could adversely affect the operating results of theCSR group in future financial reporting periods, see “Item 3 — Key Information– Risk Factors”.

 

At March 31, 2003, CSR hasoutstanding pre demerger guarantees on 2004 and 2005 Rinker Materials’ bondsamounting to A$499.1 million and other performance guarantees provided to thirdparties and other contingent liabilities amounting to A$3.8 million. In respectof the 2004 and 2005 bonds Rinker and RinkerMaterials have agreed to indemnify CSR for any obligations that come due underCSR’s guarantee obligations in respect of the (i) US$49.8 million outstanding6.875% bonds due on March 1, 2004 issued by Rinker Materials and guaranteed byRinker and CSR and (ii) US$250 million outstanding 6.875% bonds due on July21, 2005 issued by Rinker Materials and guaranteed byRinker and CSR. To support its indemnity, Rinker Materials has obtained, underits US$1,077.5 million bank credit facilities, bank letters of credit for CSR’sbenefit for any obligations that come due under CSR’s guarantee in respect ofthe those bonds that remain outstanding.

 

CSR is not aware of anytrends, uncertainties, demands, commitments or events that are reasonablylikely to have a material effect on the CSR group’s net trading revenues,income from continuing operations, profitability, liquidity or capitalresources, or that would cause reported financial information not necessarilyto be indicative of future operating results or financial condition, other thanstated in the “Trends” above.

 

### **G. Major restructuring and rationalization charges and related assetimpairment**

 

A number of items haveoccurred in recent fiscal years which were considered significant items, inthat their size, nature or incidence are relevant in explaining the financialperformance of the CSR group, and as such were disclosed separately. Many ofthese items related to major restructuring and rationalization events whichgave rise to charges, asset impairment or profit on sale of businesses.

 

In the fiscal year 2003,Rinker group demerged from CSR. The demerger resulted in a significant gain ondisposal and significant reorganization and one off costs. Details are providedin Note 3 to the financial statements, included elsewhere in this annualreport, and are summarized below:

 
|                                                                  |   | **A$  millions** |   |
|-----------------------------------------------------------------------|--------|------------------|--------|
| Fair value of Rinker group disposal(1)                                |   | 4,573.0          |   |
| Book value of demerged net assets(2)                                  |   | (3,023.8         | )      |
| Demerger transaction costs                                            |   | (74.2            | )      |
| Profit from ordinary activities before finance and  income tax impact |   | 1,475.0          |   |
| Income tax benefit                                                    |   | 17.7             |   |
| Net profit impact                                                     |   | 1,492.7          |   |

 

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(1)          The fair value of A$4,573.0 million was determinedby taking the average Rinker share price for the period March 31, 2003 to April14, 2003 of A$4.84 multiplied by the number of Rinker shares on issueimmediately after the demerger.

(2)          Book value of consolidated net assets of Rinkergroup of A$3,040.7 million less outside equity interests of A$16.9 million.

 

Also in fiscal year 2003,CSR Sugar wrote down A$12.9 million due to the impairment in value of aspecialized sugar plant at one of CSR’s Queensland sugar mills. After review ofthe operations and future cash flows, CSR could not support the carrying valueof the assets based on expected future cash flows.

 

There were no materialrestructuring or reorganization costs in fiscal year 2002.

 

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During fiscal year 2001, dueto difficult economic conditions in some markets, particularly Asia, CSR groupentities conducted a strategic review of certain of their businesses, includingdecisions to exit or restructure, which necessitated an assessment of the recoverable amount of each of thesebusinesses on an individual basis, rather than as part of an overall regionalbusiness. The asset write downs and restructure provisions from this strategicreview resulted in a significant loss of A$113.1 million in fiscal year 2001(before tax and outside equity interests). Of this, A$74.8 million related tothe writedown of property, plant and equipment, A$17.9 million related to thewritedown of other assets and A$20.4 million related to provisions for closure costs.

 

After undertaking an evaluation of asbestos litigation and claims inAustralia and the United States, CSR group recorded charges to productliability of A$65.0 million before income tax in fiscal year 2001.  The profit after tax from the sale of CSR group’sinvestment in Gove Aluminium Limited in fiscal year 2001 was A$268.6 million.

 

The net profit resulting from these significant items in fiscal year2001 was A$129.2 million, including income tax benefits of A$66.3 million andoutside equity interests of A$5.6 million.

 

Details of asset impairments are provided in note 39 of the financialstatements included elsewhere in this annual report.

 

In addition included in Note 21 to the financial statements is arestructure and rationalization provision of A$12.2 million at March 31, 2003.This provision mainly consists of:

 

•                         In 2000 and2001 CSR sold its Timber businesses to various purchasers.  There are still a number of outstandingclaims and issues for which CSR holds provisions at March 31, 2003 totalingA$5.0 million, including,

•Provision for lease payments in excess of subleasesreceivable (A$0.7 million);

• Provision for legal issues relating to allegedfaulty products (A$2.1 million); and

• Provision for outstanding employee claims andcosts associated with occupationalhealth and safety prosecutions (A$1.5 million).

 

•                         As part of itsongoing project to rationalize its holding of land and buildings in 1996 CSRsold a Sydney property for development on the basis that CSR would share in thecost of clearing the land. At March 31, 2003 CSR held a provision of A$2.3million in respect of this liability.

 

•                         As a result ofthe demerger there is excess floor space at Corporate headquarters. This willbe sublet. A provision of A$1.5 million was created in fiscal year 2003 tocover the period when the floor space is expected to be unoccupied but notsublet.

 

### **H. Details of defined benefits pension plans**

 

CSR group entitiesparticipate in a number of superannuation funds in Australia, New Zealand andother countries where they operate.  Thefunds provide benefits either on a defined benefit or cash accumulation basis,for employees on retirement, resignation, or disablement, or to theirdependants on death. Employer contributions are legally enforceable, with theright to terminate, reduce or suspend those contributions upon giving writtennotice to the trustees.  However, CSRand its Australian controlled entities are required to provide a minimum levelof superannuation support for employees under the Australian SuperannuationGuarantee legislation, currently 9 percent of base remuneration.

 

*Asset backing*

 

The assets of the HarwoodSuprerannuation Fund and the Monier PGH Superannuation Fund were sufficient tosatisfy all benefits, which would have been vested in the event of terminationof the funds, or in the event of the voluntary or compulsory termination of theemployment of each employee at March 31, 2003.

 

 

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*Defined benefit funds*

 

The benefits provided bydefined benefit funds are based on length of service or membership and salaryof the member at or near retirement. Member contributions, based on a percentage of salary, are specified bythe rules of the fund.

 

Employer contributionsgenerally vary based on actuarial advice and may be reduced or even cease whena fund is in actuarial surplus.  Thesecontributions are expensed in the period they are incurred.

** **

**Defined benefit funds sponsored by CSR**

** **
|                                                         |   | **Accrued  benefits** |       | **Market  value  of assets** |       | **Surplus  (Deficit)** |       | **Vested  benefits** |       | **Contributions** |       |
|--------------------------------------------------------------|--------|-----------------------|------------|------------------------------|------------|------------------------|------------|----------------------|------------|-------------------|------------|
| **Amounts in A$ million**                                    |   |                  |       |                         |       | **Paid**               |       | **Payable**          |       |
| Harwood Superannuation Fund Defined Benefit  Division(1),(2) |   | 165.6                 |       | 167.9                        |       | 2.3                    |       | 164.8                |       | 38.5              |       | — |   |
| Monier PGH Superannuation Fund                               |   |                  | ** ** |                         | ** ** |                   | ** ** |                 | ** ** |              | ** ** |   | ** ** |
| Defined Benefit Division(3)                                  |   | 47.9                  |       | 54.0                         |       | 6.1                    |       | 47.6                 |       | 3.0               |       | 0.3 |   |

 

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(1)          These amounts are calculated at March 31, 2003,based on the assumptions used for the last actuarial review which was performedon June 30, 2001.

(2)          Actuarial Liabilities are determined to be pastservice liabilities based on membership accrued up to March 31, 2003. As atMarch 31, 2003, the assets of the Harwood Superannuation Fund attributable tothe Defined Benefit Division (“DBD”) were 101% of the corresponding actuarialliabilities.  There is an enforceableobligation for CSR Limited and Rinker Group Limited to contribute such amountsas to ensure that the assets attributable to the DBD are not less than 120% ofthe amount required to meet the actuarial liabilities of the DBD. CSR Limitedhas made available to the Trustee of the Fund a bank guarantee to satisfy thatcommitment. Rinker Group Limited is required to cover, in effect, 50% of suchobligations.

(3)           Last actuarial assessment performed on July 1,2002.

 

*Key assumptions*

 

In performing thecalculations of accrued pension benefits at March 31, 2003, the following rates(weighted by total fund assets) have been used: discount 6.2% (2002: 6.1%,2001: 6.7%), compensation increase 4.5% (2002: 4.8%, 2001: 4.8%) and return onassets 7.2% (2002: 7.3%, 2001: 7.7%).

 

A change in the discount rate used tocalculate benefits obligations under the CSR group defined benefit plans by 25basis points would result in an estimated change in the fund surplus at March31, 2003 of A$3 million.

 

*US GAAP*

 

In accounting for definedbenefit superannuation funds, Australian GAAP requires the recognition of anexpense to the CSR group only when contributions are paid or payable to thesuperannuation funds. Under US GAAP, the amount charged to the income statementin each accounting period is the net retirement benefit expense (net periodicpension income) which comprises actual service cost of the plan to the CSRgroup and the interest cost of the projected benefit obligations of the fund,less the actual return achieved by the assets invested in the plan and netamortisation and deferral of costs.

 

The Harwood SuperannuationFund has changed the way gains and losses are recognized for US GAAP purposes.The amount of gains and losses recognized exceeds the minimum amount requiredto be recognized under SFAS No. 87, “ Employers’ Accounting and Pensions” andno corridor has been used in determining the amount recognized. The accumulatedexperience gains and losses are amortized over the expected future workinglifetime of active defined benefit division members.

 

As detailed in note 39 to the financial statements, included elsewherein this annual report, for fiscal year 2003 the adjustment to US GAAP netprofit was an increase of A$30.7 million (fiscal year 2002, decrease of A$8.0million; fiscal year 2001 increase of A$5.0 million).

 

For 1998 to September 2001,the CSR group’s annual contribution to the Accumulation Division of the HarwoodSuperannuation Fund (essentially a defined contribution plan) was funded by atransfer from the

 

 

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surplus of the Defined Benefit Division,resulting in no expense recognition by the company. Under US GAAP, this isaccounted for as an asset reversion to the company and subsequent expense.

 

Under US GAAP if anadditional minimum pension liability is recognized, an equal amount shall berecognized as an intangible asset, provided that the asset recognized can notexceed the amount of unrecognized prior service cost. If an additional minimumpension liability required to be recognized exceeds unrecognized prior servicecost, the excess (which represents a net loss not yet recognized as netperiodic pension cost) must be reported as a separate component of equity. Nosuch adjustment is required for Australian GAAP. The net impact in fiscal year2003 was a reduction in US GAAP shareholders’ equity of A$57.9 million (fiscalyear 2002 A$7.4 million).

 

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## **Item** 6.    Directors, Senior Management, and Employees

 

### **A.            Details of directors and seniormanagement**

 

The board of CSR sets thecompany’s strategic direction and delegates responsibility for the managementof the CSR group to the managing director. CSR’s constitution provides that thenumber of non-executive directors shall be such number from five to ten as thedirectors from time to time determine. In addition, the directors may appointup to five executive directors of whom one may be the managing director of CSR.As of the date of this annual report, the number of directors is six, one ofwhom is the managing director.

 

Non-executivedirectors may be appointed by the board of directors to fill a vacancy on theboard or to increase the number of non-executive directors. Executive directorsand non-executive directors, who are appointed by the board of directors, holdoffice until the next General Meeting when they must retire and seek electionby the shareholders. Additionally, two non-executive directors (or such greaternumber as the listing rules of the ASX may require, or the board of directorsmay from time to time determine) are required to retire at each Annual GeneralMeeting by order of seniority of election or, if equal in seniority, asdetermined by the directors. Directors, other than the managing director, maynot continue to hold office without re-election or ratification of theirappointment by the shareholders after the third Annual General Meetingfollowing their last election or ratification of their appointment by theshareholders. CSR’s Constitution requires each director to own a minimum of2,000 ordinary shares in CSR.

 

Detailsof the directors in office at June 23, 2003 are as follows:

 

**Ian Blackburne,**BSc(Hons), PhD, MBA, age 57. Chairman.

 

Joined the board in 1999.Ian is a former managing director of Caltex Australia Ltd, with 25 years’experience in petroleum refining, distribution, and marketing. He is chairmanof Australian Nuclear Science and Technology Organisation, and the RoyalBotanic Gardens and Domain Trust (NSW); a director of Suncorp-Metway Limitedand Teekay Shipping Corporation; and a member of the Australian Graduate Schoolof Management Advisory Council.Resides in Sydney.

** **

**Alec Brennan**, BSc(Hons), MBA(Dist), age 56. Managing Director.

 

Joined CSR in 1969, appointedto the board as an executive director in 1996, became deputy managing directorin 1998 and managing director in March 2003. Alec has had senior CSR managementexperience in raw sugar marketing, sugar refining, aluminium, building productsand construction materials. He is a director of the Garvan Research Foundation.Resides in Sydney.

** **

**Carolyn Hewson**, BEc(Hons), MA(Econ), age 47.

 

Joined the board in 1995.Carolyn’s directorships include Westpac Banking Corporation, The Australian GasLight Co and the Economic Development Board of South Australia. A formerexecutive director of Schroders Australia Ltd, she has had substantialexperience in the finance industry. Carolyn is president of the YWCA of Sydney.Resides in Sydney.

** **

**Barry Jackson**, BCom(Hons), age 58.

 

Joined the board in April2003. Barry, a former managing director of the Pacifica Group Ltd and chiefexecutive of BTR Nylex’s Building Products Group, has had over 30 years’experience in manufacturing and industrial marketing. He is a director ofAlesco Corporation Ltd, Equity Trustees Ltd and PaperlinX Ltd and a member ofthe board of management of St Vincent’s Institute of Medical Research. Residesin Melbourne.

 

**John Story**, BA, LLB, age 57.

 

Joined the board in April2003. John has over 30 years’ experience as a senior lawyer advising incorporate and commercial law. John is the non-executive chairman of CorrsChambers Westgarth Lawyers; the chairman of Suncorp-Metway Ltd; a director ofJupiters Ltd, Breakwater Island Ltd, Ruralco Holdings Ltd and AustralianMagnesium Corporation Ltd; the vice-president of the Queensland Council of theAustralian Institute of Company Directors; and an adjunct Professor of Law ofthe University of Queensland. Resides in Brisbane.

 

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**John Wylie**, MPhil, BCom(Hons), age 42.

 

Joined the board in 2001.Previously head of investment banking and non-executive chairman of CreditSuisse First Boston Australia Investment Banking, John is a leading Australianinvestment banker with extensive overseas experience. He established CarnegieWylie and Company in 2000. He is chairman of the Melbourne Cricket Ground Trustand a director of DSL Group Pty Ltd. Resides in Melbourne.

** **

**Changes to the CSR board.** Chairman JohnMorschel, directors John Arthur and John Ballard and executive director DavidClarke retired from the CSR board following the demerger of Rinker and havejoined the Rinker board. Barry Jackson and John Story joined the CSR boardafter the demerger. CSR’s managing director Peter Kirby retired on March31,  2003, but remains employed with theCSR group until July 31, 2003.

 

SeniorManagement of CSR who are not directors at the date of this annual report areas follows:

 

**Chris Bertuch,**BEc, LLM, age41. General Counsel

 

Chris Bertuch joined CSR asa corporate lawyer in 1993. Previously he was a partner in the law firm GadensLawyers in Sydney. Chris has extensive experience in corporate, commercial andtrade practice law, and dispute resolution.

 

**TonyCarlton,**BCom, MCom, age 49. Executive General ManagerStrategy and Development

 

TonyCarlton has been general manager strategy and development for CSR since 2000.Since joining CSR in 1976, Tony has held a number of senior finance andcommercial positions, including those of general manager finance and grouptreasurer.

 

**GrahamHughes,**BCom, age 51. Company Secretary

 

GrahamHughes has been senior manager corporate development for the past five years.Since joining CSR in 1970, he has held a variety of senior finance positions, mostrecently managing a number of divestment and restructuring transactions.

 

**WarrenSaxelby,**BCom, age 51. Chief Financial Officer

 

WarrenSaxelby joined CSR as chief financial officer in October 2001. Previously hewas vice president finance for BHP Steel, having joined BHP in 1970 andsubsequently holding a number of senior management positions in finance andplanning.

 

**John Dyer**, BA, Dip Lab Rel & Law, age 57. General Manager Human Resources

 

John Dyer joined CSR as general manager humanresources in January 1999. Prior to this, from 1987 to 1999 he was senior vicepresident Human Resources for Burns Philp & Co Ltd, from 1982 to 1987 hewas employed by CSR as Chief Manager Organisation & Personnel Development.

 

**Andree Taylor**, BA, 30. General Manager Investor Relations

 

Andree Taylor joined CSR as general managerinvestor relations in March 2003.  Priorto this, from May 2001 to November 2002, she was a consultant with College HillAssociates, a financial public relations firm in London, UK.  From 1994 to 2000, she was employed byCredit Suisse First Boston in the investment banking division in New York andSydney, Australia.

 

**GraemePettigrew**, FNIA, age 53. Chief Executive CSR BuildingProducts

 

GraemePettigrew joined CSR in 1996 as executive general manager CSR BuildingProducts. Previously Graeme was managing director of Chubb Australia Ltd from1988 before which he held a number of executive positions with WormaldInternational in the UK and Australia.

 

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**John Davies**, BAppSc, age53. General Manager Gove Aluminium Finance Ltd

 

JohnDavies joined CSR in 1979 and has held his present position since January 2001.Previously John was technical manager Gove Aluminium Finance and has had 17years’ experience in the aluminium industry in production, technical andmarketing management roles.

 

**IanMcMaster**, BSc, ME, age 54. Chief Executive CSR Sugar

 

IanMcMaster joined CSR as chief executive Sugar in 1999.Previously Ianwas group general manager, BHP Hot Briquetted Iron, and held various otherroles in his 33 years at BHP, including president BHP China and group generalmanager Sheet and Coil Products Division.

 

Thereare no family relationships between any of the Directors or Senior Management

 

### **B.            Compensation of Directors and SeniorManagement**

 

Theaggregate remuneration paid and accrued to individuals named as Directors andSenior Management of CSR group entities, including superannuation andtermination payments for fiscal year 2003, was A$28.4 million. Of this amountA$10.9 million related to the Peter Kirby, Managing Director, who retired fromthe CSR board on March 31, 2003, as a result of the demerger, and A$8.2 millionrelated to directors and senior managers who were transferred from CSR toRinker as a result of the demerger. The aggregate amount set aside or accruedby CSR during fiscal year 2003, to provide pension and retirement benefits fordirectors and senior management of CSR was A$0.5 million. Further compensationdetails are provided in Note 26 to the financial statements and in the tablebelow.

 

**Remuneration Details of Executive Directors and SeniorManagement**

 
| **FISCAL YEAR 2003**                                                            |   | **FIXED  REMUNERATION(a)  A$** |   | **VARIABLE  REMUNERATION(b)  A$** |   | **OTHER  COMPENSATION  A$** |      | **TOTAL  COMPENSATION  A$** |   | **OPTIONS  AWARDED(c)  (NUMBER)** |      |
|---------------------------------------------------------------------------------|--------|--------------------------------|--------|-----------------------------------|--------|-----------------------------|-----------|-----------------------------|--------|-----------------------------------|-----------|
| **Executive  Directors of CSR**                                                 |   |                           |   |                              |   |                        |      |                        |   |                              |      |
| Peter Kirby  Managing Director and   chief executive officer                    |   | 1,587,375                      |   | 4,529,683                         |   | 4,792,740                   | (d)  | 10,909,798                  |   | —                            |      |
| Alec Brennan  Director Strategy and  Investments and  Deputy Managing Director  |   | 889,680                        | (e)    | 1,366,072                         |   | 30,006                      | (f)  | 2,285,758                   |   | —                            |      |
| David Clarke(g)  Executive Director and president  Rinker Materials Corporation |   | 1,422,651 (US$804,367     | )      | 4,682,066 (US$2,647,240      | )      | 41,967  (US$23,728          | (h)  )    | 6,146,684  (US$3,475,335    | )      | —                            |      |
| **CSR  senior management**                                                      |   |                           |   |                              |   |                        |      |                        |   |                              |      |
| Karl Watson, Jr(i)  Chief executive, Readymix                                   |   | 617,495                        |   | 500,000                           |   | 510,036                     |      | 1,627,531                   |   | 300,000                           | (c)  |
| Ian McMaster  Chief executive Sugar                                             |   | 724,965                        |   | 807,612                           |   | —                      |      | 1,532,577                   |   | —                            |      |
| Graeme Pettigrew  Chief executive  Building Materials                           |   | 736,950                        |   | 607,612                           |   | —                      |      | 1,344,562                   |   | —                            |      |
| Warren Saxelby  Chief financial officer                                         |   | 581,655                        |   | 737,612                           |   | —                      |      | 1,319,267                   |   | —                            |      |
| Mark Campbell  Chief operating officer Concrete                                 |   | 408,836                        |   | 286,013                           |   | —                      |      | 694,849                     |   | —                            |      |
| **Rinker  group senior management**                                             |   |                           |   |                              |   |                        |      |                        |   |                              |      |
| Karl Watson, Sr  President Rinker Construction Materials                        |   | 628,980 (US$355,625       | )      | 765,830 (US$433,000          | )      | 31,358 (US$17,730      | (h)  )    | 1,426,168 (US$806,355  | )      | —                            |      |
| Tom Burmeister  Chief Financial Officer                                         |   | 644,598 (US$364,456       | )      | 707,464 (US$400,000          | )      | 27,942  (US$15,798     | (h)  )    | 1,380,004 (US$780,254  | )      | —                            |      |

 

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(a.)       Cost to the company of remuneration packagecomprising cash salary, CSR shares under the Employee Share Acquisition Planapproved by shareholders, superannuation contributions for members of cashaccumulation plans, motor vehicle, long service leave provisions, financialadvice and club memberships, if any.

 

 

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(b)         Short-term andlong-term incentives. Rinker Materials senior executives participate in a cashlong-term incentive plan based on increasing shareholder value, with thelong-term incentive being paid progressively over three years, from March 2001.The final payment, determined on the basis of Rinker Material’s three yearsended March 2002 results, amounting to US$2.772 million, was paid in the yearended March 31, 2003. For Australian based executives, the value of performanceshares is included (see page 70).

(c)          Options weregranted by CSR Limited to Karl Watson Jnr in June 2002 under the Executive ShareOption Plan and have an option price of A$6.39 per option.  Due to the impending demerger, the Boarddeclared a special circumstance in February 2003, which allowed the options tobe exercised prior to the demerger taking effect.  As the performance hurdle was satisfied, Karl Watson Jnrexercised his 300,000 options in March 2003. The value of the options using theBlack-Scholes option pricing model was A$1.30 per option.

Thedeclaration of a special circumstance in February 2003 which allowed optionsheld by senior executives to be exercised prior to the demerger takingeffect.  All options satisfied theperformance hurdle and could be exercised during the trading window from lateFebruary to April 4, 2003.  ForAustralian senior management, only those options with an exercise price lessthan the market price of CSR shares during the trading window wereexercised.  Those options with anexercise price greater than the market price during the trading window, werenot exercised prior to the demerger. Following the demerger, CSR’s share price has been trading atapproximately 25% of its pre-demerger value, these remaining options areunlikely to be exercised and will lapse by February 2004. Rinker Materials’senior managers entered into an agreement not to exercise all of their optionsand instead received a cash payment under the long term incentive scheme.  The options not exercised by the RinkerMaterials’ senior managers will formally lapse in December 2003.

(d.)       Includes A$4,725,000 relating to a payment due inJuly 2003 for loss of the office of Managing Director and Chief ExecutiveOfficer of CSR. Remuneration of A$2.5 million to be paid to Peter Kirby for theperiod of his employment in the year ending March 31, 2004 is not included. Theremainder is for spouse travel and other expenses.

(e)          Excludes thevalue of Alec Brennan’s defined benefit superannuation entitlement becauseCSR’s contribution to the defined benefit fund cannot be individuallyattributed.  If Alec Brennan had retiredat March 31, 2003 he would have received a pension of A$428,820 per annumindexed to the CPI, compared with an indexed pension of A$370,764 per annum ifhe retired at March 31, 2002.

(f)            Spouse travelexpenses.

(g)         David Clarkeretains membership of an Australian cash accumulation superannuation fund towhich contributions ended on his departure from Australia in 1988. Hiswithdrawal benefit is underpinned by a minimum defined benefit formula.

(h)         Health insuranceand club membership fees for Rinker senior management in the US.

(i)             Karl Watson Jrwas seconded from Rinker Materials to CSR in October 2001. The figures in theabove table reflect the remuneration paid in respect of his Rinker Materialsand CSR appointments. His other compensation covers expatriate benefits in Australia(school fees, return airfares and motor vehicle expenses including applicableFBT, plus housing rental) and health insurance and club membership fees in theUS.

 

**Remuneration Details of CSR Non Executive Directors**

 
| **FISCAL YEAR 2003** |   | **DIRECTORS’  FEES(1)** |   | **COMMITTEE  FEES** |   | **RETIREMENT  ALLOWANCE** |   | **STATUTORY SUPERANNUATION  CONTRIBUTIONS(2)** |   |
|----------------------|--------|------------------------------|--------|---------------------|--------|---------------------------|--------|------------------------------------------------|--------|
| John Arthur(3)       |   | 80,000                       |   | 6,000               |   | —                    |   | 7,525                                          |   |
| John Ballard(3)      |   | 80,000                       |   | 6,000               |   | —                    |   | 7,525                                          |   |
| Ian Blackburne       |   | 80,000                       |   | 12,000              |   | —                    |   | 8,050                                          |   |
| Carolyn Hewson       |   | 80,000                       |   | 18,000              |   | —                    |   | 8,575                                          |   |
| John Morschel(3)     |   | 240,000                      |   | —              |   | —                    |   | —                                         |   |
| John Wylie           |   | 80,000                       |   | 6,000               |   | —                    |   | 7,525                                          |   |

 

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(1)     Includes cash payments and CSR shares under theEmployee Share Acquisition Plan.

(2)     Each director’s superannuation entitlementsattributable to these contributions are deducted from their retirementallowance when they leave the CSR board ( in the caseof Ian Blackburne, Carolyn Hewson and John Wylie) or the Rinker board (in thecase of John Morschel, John Arthur and John Ballard).

(3)     Retired from the CSR board on April 12, 2003 havingjoined the board of Rinker.

 

Executivedirectors and senior managers have agreements with CSR relating to theirengagement as senior executives. Remuneration is at such rates and payable atsuch times as CSR may from time to time determine. The remuneration ofexecutives in CSR group entities is structured to reflect performance. Toincrease shareholder value, the remuneration system focuses individual and teamefforts on the achievement of business strategies and goals.

 

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Remunerationfor senior executives has three parts:

 

•                    **Fixed remuneration** is made up of cash salary, salary sacrificeto purchase shares, superannuation and other benefits such as motor vehicles;

 

•                    **Short term incentives -**paid in cash or sacrificedto purchase shares, directly earned by senior managers successfully achievingspecific financial and operating targets. Incentives depend on achievingimprovements in shareholder returns and are paid for targets achieved, afterthe cost of incentives has been funded; and

 

•                    **Long term incentives -**issues of options under aperformance share plan or a five year option plan (not currently in use) —CSR’s shareholders returns must exceed the average of certain listed Australianindustrial companies over specific periods.

 

Theproportions of fixed and variable remuneration vary for executives of CSR groupentities outside Australia. Arrangements for Rinker Materials executives, for instance, wereconsistent with US practice.

 

Theremuneration of CSR non-executive directors is from time to time determined bythe CSR board of directors within an aggregate limit approved by the CSRshareholders in general meeting, currently A$750,000 per annum.  The directors may also be reimbursed forexpenses they incur in performing their duties.

 

Executivedirectors and senior managers, whose employment is terminated as a consequenceof redundancy, are entitled to retrenchment payments, which vary according toterm of service and remuneration at time of termination.

 

Executivedirectors and most senior managers in Australia are members of one of the twodivisions of a CSR sponsored superannuation fund. The defined benefit divisionprovides lump sum benefits on withdrawal prior to the age of 52, and lump sumor pension benefits, or a combination of the two, on retirement from the age of52. The accumulation division provides lump sum benefit equal to the balance ofa member’s account, which includes contributions made by the member and CSR,together with net fund earnings. The defined benefit division has an actuarialsurplus.

 

Underthe Commonwealth Superannuation Guarantee legislation, CSR is required to makecontributions to a superannuation fund on behalf of all Australian executivesand directors, including non-executive directors under the age of 70, equal to9 percent (increasing from 8 percent on July 1, 2002) of their remuneration.

 

Thethree non-executive directors who joined the CSR board before April 1, 2003 areentitled to retirement benefits under CSR’s non-executive directors’ retirementplans. Those plans provided for payment of a maximum amount equal to adirector’s last three years remuneration after five years of service (pro ratafor a lesser period). The ASX Corporate Governance Council has recentlypublished its *Principles of Good CorporateGovernance and Best Practice Recommendations,* which is notsupportive of such plans. As such the board has agreed that non-executive directors appointed after April 1, 2003 will have noentitlement to retirement allowances and the formula for calculatingentitlements for the non-executive directors appointed before April 1, 2003 hasbeen adjusted with the result that it generally now takes longer to accrue themaximum benefit.

 

Executivedirectors and senior managers may participate in the following share basedincentive plans operated by CSR: an Executive Share Option Plan, a newExecutive Option Plan (not currently in use) and a Cash Award Share Plan.  Participation by executive directors inthese plans is subject to prior approval from CSR’s shareholders in GeneralMeeting.

 

Theaggregate number of (a) ordinary shares issued under all CSR employee andexecutive incentive plans, and (b) ordinary shares to which options may laterbe converted, held by all employees of CSR entities, cannot exceed 5 percent ofthe number of ordinary shares on issue and outstanding at any time.

 

 

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**ExecutiveShare Option Plan (“ESOP”)**

 

At CSR’s Annual General Meeting on July 13, 1998the shareholders approved an option plan for senior management, the ExecutiveShare Option Plan (“ESOP”).

 

Options under ESOP were issued in fiscal years 1999, 2000, 2001, 2002 and 2003 and were eligible for exercise ifperformance hurdles had been met after nominated minimum holding periods.

 

As a consequence of the demerger, CSR declared aspecial circumstance in February 2003, which allowed all eligible options to beexercised prior to the demerger taking effect. All options satisfied the performance hurdle and could be exercisedduring the trading window from late February to April 4, 2003.  ForAustralian senior management, only those options with an exercise price lessthan the market price of CSR shares during the trading window wereexercised.  Those options with anexercise price greater than the market price during the trading window were notexercised prior to the demerger.

 

Following the demerger, CSR’s share price has beentrading at approximately 25% of its pre-demerger value, consequently theseremaining options are unlikely to be exercised and will lapse by February 2004.

 

Further, Rinker Materials’ senior managers enteredinto an agreement not to exercise all of their options and instead received acash payment under thelong term incentive scheme.  The optionsnot exercised by the Rinker Materials’ senior managers will formally lapse inDecember 2003.

 

US legislative changes prohibiting loans to directors or executive officers willpreclude the future use of ESOP in its present form. Accordingly, while theplan documentation will be retained, CSR does not intend to use it for optionissues in the future.

 

**NewExecutive Option Plan**

 

A new executive option plan has been adopted toenable the CSR board to issue options to executives of CSR after the demerger.The new plan will be subject to the rules contained in Division 13A of theIncome Tax Assessment Act 1936 in respect of participants who are Australian tax residents.

 

No options have yet been granted under the newplan.

 

A summary of the new share option plan termsfollows.

 

*Eligibility*

 

The CSR board may offer options to selected employees of CSR group companies,including executive directors. The number of options offered to employees isdetermined at the discretion of the CSR board (subject to the ASX ListingRules).

 

*Options*

 

Each option will initially be an option tosubscribe for one ordinary share in CSR (but this may change if there is abonus issue). The options will be unlisted and will generally be granted for noconsideration or at nominal consideration unless the CSR board determines tothe contrary. The options may not be transferred without the prior approval ofthe CSR board. The shares issued on exercise of the options will rank equallywith other CSR shares already on issue on the date of exercise of the option.CSR will apply to the ASX for official quotation of shares issued on exerciseof the options.

 

*Option price and exerciseprice of options*

 

The sum of the option price and the exercise pricefor an option must be not less than the volume weighted average price for allCSR shares sold on ASX during the one week period up to and including the dateof the grant of the option (or such other date or period as determined by theCSR board).

 

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*Performance hurdle andminimum holding period*

 

A performance hurdle will be set by the CSR board,which must be met before the options may be exercised. The performance hurdlemay be adjusted as the CSR board determines if the new performance hurdle is,in the CSR board’s opinion, an appropriate incentive to encourage and recognizethe performance of the participants and is in the best interests of CSR or,subject to the ASX Listing Rules, or circumstances have changed sufficiently torequire such an adjustment in the best interests of CSR.

 

Although the CSR board has discretion to set theminimum period before options can be exercised (assuming the performance hurdlehas been met), it is CSR’s present intention that most options will be able tobe exercised between three and five years following the grant date, providedthe performance hurdle is satisfied in that period, otherwise the options willlapse.

 

The minimum holding period can be amended if, inthe CSR board’s opinion, circumstances have changed sufficiently to requiresuch an adjustment in the best interests of CSR, subject to the ASX ListingRules.

 

Special provisions exist for the exercising orlapsing of options when a participant ceases employment and in various othercircumstances.

 

*Participation in futureissues: capital reconstruction*

 

Upon any pro rata issue of shares to holders ofshares (other than a bonus issue), the exercise price may be adjusted by theCSR board, if appropriate, in accordance with the relevant formula set out inthe ASX Listing Rules.

 

Upon any pro rata bonus issue of shares to holdersof shares, the number of unissued shares over which an option is exercisableshall be increased by the number of bonus shares which the participant holdingthe option would have received if the option had been exercised before therecord date for the bonus issue (as defined in the Listing Rules).

 

In the event of any reconstruction (includingconsolidation, sub-division, reduction or return) of the issued capital of CSR,the number of options to which each holder is entitled and the exercise priceshall be reconstructed in the manner specified by the ASX Listing Rules.

 

Options carry no right to receive dividends or voteat company meetings.

 

*Variation and termination*

 

Subject to the ASX Listing Rules the CSR board mayvary the plan rules (with the approval of three quarters of any participantswho are prejudiced by the variation).

 

The plan may be terminated at any time byresolution of the CSR board.

 

**Cash Award Share Plan (“CASP”)**

 

CASP was introduced in 2002 to complement ESOP andprovide the CSR board with greater flexibility in the remuneration of CSRexecutives. Under CASP, the CSR board may from time to time in its absolutediscretion make an offer to participate in CASP to any eligible employee of aCSR group company, including executive directors. The offers may be on whateverterms, consistent with the CASP rules, that the CSR board decides.

 

Under CASP, CSR funds the purchase of CSR shares bythe CASP trustee to be held on behalf of participants. The CSR shares areacquired in the ordinary course of trading on the ASX. The shares vest subjectto any time and corporate performance hurdles specified in the terms of theoffer being met. Unless otherwise specified, each offer under CASP will besubject to the service duration requirement,

 

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which means shares cannot be withdrawn from CASPunless 10 years have elapsed from the date the relevant shares were acquiredor, if earlier, the participant is not an employee of any CSR group company.

 

The performance hurdle will be satisfied if CSR’stotal shareholder returns following the demerger exceed the weighted averageshareholder returns of certain listed Australian industrial companies after adate approximately three years after the date that shares were originally to beacquired for relevant employees under CASP before the purchases were deferred.The performance hurdle will also be taken to be satisfied in othercircumstances set out in the offer, including redundancy, retirement or death.The service duration requirement will be shortened for this offer to continuingCSR group employees to reflect the original proposed date of acquisition.

 

Asregulatory approval for CASP was not obtained in sufficient time to make anoffer to senior managers prior to the demerger, in March 2003 the following CSR shares were acquired under the Employee ShareAcquisition Plan (“ESAP”), as part of the remuneration of these senior managersdisclosed above; 60,000 shares for Alec Brennan, managing director; 55,000shares for Ian McMaster, chief executive, CSR Sugar; 55,000 shares for GraemePettigrew, chief executive CSR Building Products; and 55,000 shares for WarrenSaxelby, chief financial officer. ESAP is a share acquisition plan open to awide range of CSR executives, which enables employees of CSR group companies topurchase CSR shares with pre-tax remuneration and bonuses. Share purchased inESAP are held in trust on behalf of the beneficiaries.

 

As at June 23, 2003 no shares have yet beenacquired under CASP.

 

## **C.  Board Practices**

 

Detailsof board and board committee meetings for the year ended March 31, 2003 are asfollows:

 
| **Name**         |   | **CSR board** |   | **Audit  Committee** |   | **Safety, Health &****Environment    Committee** |   | **Remuneration & Human  Resources****Committee** |   | **Demerger due diligence   committee** |   |
|------------------|--------|---------------|--------|----------------------|--------|------------------------------------------------------|--------|------------------------------------------------------|--------|----------------------------------------|--------|
|             |   | **Held(1)**   |   | **Attended(2)**      |   | **Held(1)**                                          |   | **Attended(2)**                                      |   | **Held(1)**                            |   | **Attended(2)** |   | **Held(1)** |   | **Attended(2)** |   | **Held(1)** |   | **Attended(2)** |   |
| John Arthur(4)   |   | 13            |   | 13                   |   |                                                 |   |                                                 |   | 4                                      |   | 4 |   |   |   |   |   | 15 |   | 14 |   |
| John Ballard(4)  |   | 13            |   | 13                   |   |                                                 |   |                                                 |   |                                   |   |   |   | 5 |   | 5 |   |   |   |   |   |
| Ian Blackburne   |   | 13            |   | 13                   |   |                                                 |   |                                                 |   | 4                                      |   | 4 |   |   |   |   |   |   |   |   |   |
| Alec Brennan     |   | 13            |   | 13                   |   |                                                 |   |                                                 |   |                                   |   |   |   |   |   |   |   | 15 |   | 14 |   |
| David Clarke(4)  |   | 13            |   | 13                   |   |                                                 |   |                                                 |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Carolyn Hewson   |   | 13            |   | 13                   |   | 5                                                    |   | 5                                                    |   |                                   |   |   |   | 5 |   | 5 |   | 15 |   | 15 |   |
| Peter Kirby(3)   |   | 13            |   | 13                   |   |                                                 |   |                                                 |   | 4                                      |   | 4 |   |   |   |   |   |   |   |   |   |
| John Morschel(4) |   | 13            |   | 13                   |   | 5                                                    |   | 5                                                    |   | 4                                      |   | 4 |   | 5 |   | 5 |   |   |   |   |   |
| John Wylie       |   | 13            |   | 13                   |   | 5                                                    |   | 5                                                    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |

 

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(1)          Meetings heldwhile a member.

(2)          Meetingsattended.

(3)          Retired March31,  2003.

(4)          Retired April12, 2003 having joined the board of Rinker.

 

**Board Committees**

 

Toincrease its effectiveness, the board has three committees, each with a charterapproved by the board.

 

The**Remuneration and Nominations Committee**,comprising all non executive directors, is chaired by Ian Blackburne. Thiscommittee now performs the roles previously performed by the Remuneration andHuman Resources Committee (which met five times last year) and the BoardCommittee. Together with its overview of human resources issues, particularlysuccession and development planning, the committee advises the board onremuneration policies and practices, evaluates the performance of the managingdirector against pre-agreed goals and makes recommendations to the board onremuneration for the managing director and senior managers reporting to him.The committee considers independent advice on

 

 

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policiesand practices to attract, motivate and retain strong performers. Furtherdetails on CSR’s remuneration policy and its relationship to the company’sperformance last year are set out above.

 

Itis also this committee’s role to consider the appropriate size and compositionof the board, criteria for board membership, candidates for board membershipand the terms and conditions of appointment to and retirement from the board.The non executive directors met on a number of occasions during the year toconsider the changes to the composition of the board, as part of the demergerprocess. The new Remuneration and Nominations Committee has since met toconsider the changes to non executive director remuneration.

 

The**Audit Committee** is chaired byCarolyn Hewson, the other members being Ian Blackburne and John Wylie. Thecommittee met five times last year. The external audit firm partner in chargeof the CSR audit attends by invitation, together with the internal auditmanager and relevant senior managers.

 

Thecommittee advises the board on all aspects of internal and external audit –including the independence of CSR’s external auditor, which is carefullyscrutinised – and the adequacy of accounting and risk management procedures,systems, controls and financial reporting. Specific responsibilities includeadvising the board on the appointment of external auditors, the yearly auditplan and on the yearly and half yearly financial reports. The committee preapproves any non audit services to be provided by the audit firm.

 

Thecommittee is a direct link for providing the views of internal and externalauditors to the board, if necessary, independently of management influence.

 

Theprocess for approval of financial statements has for some years involvedsignoff by various levels of management, including the chief financial officerand chief executive officer.

 

Thescope of these sign-offs is being expanded to cover more explicitly theinternal controls and procedures for financial reporting. As a consequence, thecompany is formalising its process to define and evaluate the effectiveness ofits compliance, control and risk management system.

 

Theexternal audit firm partner in charge of the CSR audit is available to answershareholder questions at the company’s annual general meeting.

 

Inaccordance with CSR’s policy that this position be rotated every five years,Greg Couttas, a senior partner of Deloitte Touche Tohmatsu, replaced HarleyMcHutchison as the partner in charge of the external audit of CSR from May 21,2003.

 

The**Safety, Health and Environment Committee**consists of Barry Jackson (chairman), Ian Blackburne and John Story. Thecommittee met four times last year.

 

Thecommittee reviews and reports to the board on the management of the company’ssafety, health and environmental responsibilities.

 

Thecommittee receives regular reports from management, reviews the adequacy ofmanagement systems and performance, ensures that appropriate improvementtargets and benchmarks are in place and monitors potential liabilities, changesin legislation, community expectations, research findings and technologicalchanges.

 

In2002, the board established a **Due DiligenceCommittee**to oversee the due diligence program necessary forpreparation of the demerger explanatory booklet. The committee was chaired byCarolyn Hewson and included John Arthur, Alec Brennan, and legal, investmentbanking and accounting advisors. Most of the other directors generally attendedthese meetings. The committee’s final meeting was held in March 2003.

 

Themanaging director, Alec Brennan, attends, by invitation, meetings of boardcommittees. He is not present if this could compromise the objectivity ofproceedings.

 

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### **D.            Employees**

 

Asat March 31, 2003, CSR group entities employed 4,546 people, which represents adecline of 11,511, or 72 percent compared to March 31, 2002. 3,672 people wereemployed in Australia, and the balance in China, South East Asia, Taiwan andNew Zealand. 13,030 employees of Rinker group left the CSR group on March 31,2003 as a result of the demerger.

 
|                                          |   | **Employees As Of March 31,** |       |
|-----------------------------------------------|--------|-------------------------------|------------|
|                                          |   |                          |       |   |   | **2002-2003** |   |   |   |
|                                          |   | **2003**                      |       | **2002** |   | **% Change** |   | **2001** |   |
| Australia and New Zealand                     |   | 3,764                         |       | 3,861 |   | (2.5 | )% | 3,802 |   |
| Asia                                          |   | 782                           |       | 842 |   | (7.1 | )% | 915 |   |
| **Total CSR group entities**                  |   | **4,546**                     | ** ** | **4,703** | ** ** | **(3.3** | **)%** | **4,717** | ** ** |
| Rinker Materials, US                          |   | 10,262                        |       | 8,667 |   | 18.4 | % | 8,591 |   |
| Readymix, Australia                           |   | 2,162                         |       | 2,117 |   | 2.1 | % | 2,269 |   |
| Asia (including China)                        |   | 525                           |       | 570 |   | (7.9 | )% | 557 |   |
| Australia Shared services                     |   | 68                            |       | — |   | — |   | — |   |
| Rinker executive support (Australia)          |   | 13                            |       | — |   | — |   | — |   |
| **Total Rinker group entities**               |   | **13,030**                    | ** ** | **11,354** | ** ** | **14.8** | **%** | **11,417** | ** ** |
|                                          |   |                          | ** ** |   | ** ** |   | ** ** |   | ** ** |
| **Total Employees in CSR and Rinker  Groups** |   | **17,576**                    | ** ** | **16,057** | ** ** | **9.5** | **%** | **16,134** | ** ** |

 

Theoverall safety statistics for CSR group entities improved significantly infiscal year 2003, with the total recordable injury frequency rate, whichincludes medical treatment and restricted work injuries in addition to losttime injuries, falling 19 percent from 27.3 per million hours to 22.1 permillion hours.  A program of externalsafety, health and environment audits of operating sites is ongoing, with theobjective of having all sites audited every three years.

 

Laborpolicies of CSR group entities were not necessarily adopted by the operationsof its investments in the aluminium smelter at Tomago, Sugar Australia, ACH,Emoleum or Enviroguard.  Nevertheless,CSR believes that each of these ventures has implemented labor policiesappropriate for the labor relations in their operations.

 

Themajor unions which represent employees of the CSR group’s entities in Australiaare the Australian Workers’ Union (“AWU”), the Australian Liquor, Hospitalityand Miscellaneous Workers’ Union, the AustralianManufacturing Workers Union, the Brick, Tile and Pottery Union, and theCSR Officers’ Association.

 

Employeesare covered by various Federal and State awards which prescribe minimum wagesand conditions for the type of work performed in Australia.  In addition to these awards,enterprise-based agreements exist at most sites, which address productivity andefficiency initiatives at those sites and provide for over award wages andworking arrangements.  Enterpriseagreements are typically negotiated annually between local management,employees and their union representatives. While the level of industrial disputes at the CSR group’s Australianworkplaces is low, during June 2001 the Sugar Division was negotiating acertified agreement with the AWU, AustralianManufacturing Workers Union and Electrical Trades Union. As a result ofnot being able to reach agreement on wage increases, the unions imposedovertime bans, which prevented the sugar mills from running steam trials inpreparation for crushing. CSR locked out employees from all seven sugar millsfor one week. There was also a strike at the Clayton Rockwool operation inVictoria, which lasted in excess of one month. This was over the negotiation ofa new enterprise agreement.

 

 

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### **E.             Share Ownership**

 

Nodirector or senior manager has beneficial ownership of one percent or more ofthe voting securities.  Note 32 to thefinancial statements shows actual shareholdings of directors, each of whom isrequired by the CSR constitution to own a minimum of 2,000 shares in his or hername.  As at June 23, 2003, 2003, the holdingsof directors and senior management (all of whom are also shareholders) of CSR,as a group, of CSR’s voting securities were as follows:

 
| **Title of Class** |   | **Identity of Person or Group** |   | **Number  Owned** |   | **Percent  of Class** |   |
|--------------------|--------|---------------------------------|--------|-------------------|--------|-----------------------|--------|
|               |   |                            |   |              |   |                  |   |
| Ordinary  shares   |   | Directors  and Senior managers  |   | 3,408,534         |   | 0.3                   | %      |

 

Dueto the impending demerger, the Board declared a special circumstance inFebruary 2003 which allowed options held by the executive director and seniormanagers to be exercised prior to the demerger taking effect.  All options satisfied the performance hurdleand could be exercised during the trading window from late February to April 4,2003. Only those options with an exercise price less than the market price ofCSR shares during the trading window were exercised.  Those options with an exercise price greater than the marketprice during the trading window, were not exercised prior to the demerger.  Following the demerger, CSR’s share pricehas been trading at approximately 25% of its pre-demerger value, these remainingoptions are unlikely to be exercised and will lapse by February 2004. As atJune 23, 2003, 765,000 options held by directors and senior managers remainunexercised.

 

Asat June 23, 2003, 12.6 million ordinary shares were owned by current seniormanagers and all other employees of CSR group entities in the various CSR shareplans.

## ** **

## **84**

## ****

## ** **

 

## **It**em 7.    Major Shareholders and Related PartyTransactions

### ** **

### **A.**            Major Shareholders

 

CSRis not directly or indirectly controlled by another corporation or by anyforeign government and does not know of any arrangement, the operation ofwhich, may at a subsequent date, result in a change of control of CSR.

 

Asat June 23, 2003, there were two holders known to CSR of more than five percentof the CSR’s outstanding voting securities. Perpetual Trustees Australia Limited held 120.2 million ordinary shares,or 12.7 percent, of CSR’s issued capital. Maple-Brown Abbott Limited held 49.2million ordinary shares, or 5.3 percent, of CSR’s issued capital. The sharesare held as nominee for numerous beneficiaries, most of whom are believed to bepension funds but whose identity is not known to CSR.  None of these holders of larger blocks of shares have votingrights that are different from the rights of other shareholders.

 

As at June 23, 2003, 759,308 fully paidordinary shares were held by 1,252 shareholders who, on record, are residentsin the United States.

 

### **B.            Related Party Transactions**

 

Asat March 31, 2003, total interest free loans to the directors of CSR and itsconsolidated entities amounted to A$0.03 million. During fiscal year 2003, nodirectors of CSR or any of its subsidiaries and their director-related entitieshave received or are entitled to receive any additional benefit, other than abenefit shown in the accompanying financial statements (specifically, Note 26“Directors’ and executives’ remuneration”, Note 10 “Receivables” and Note 32“Related party information”) by reason of a contract made by CSR or a relatedparty with the Directors, or with a firm or company in which they have asubstantial financial interest or over which they have a significant influence.

 

**Relationship with Rinker group**

 

***Separation matters***

 

OnMarch 28, 2003, the Federal Court of Australia approved the demerger of Rinkerfrom CSR. Rinker was admitted to theofficial list of the ASX and its shares were quoted on the stock marketconducted by the ASX effective March 31, 2003 (on a deferred settlement basis).

 

Priorto the demerger, Rinker was a 100 percent owned subsidiary of CSR.  As a result of the demerger, Rinker became aseparately listed company and CSR and Rinker now operate independently of eachother.

 

Aspart of the demerger transition process, CSR and Rinker have entered intovarious contractual arrangements dealing with the separation and the ongoingbusiness relationships and operations between CSR and Rinker as independentcompanies as detailed below:

 

***Property***

 

Readymixhas agreed to share future profits from certain land sales with CSR.  This arrangement is summarized under “Item 4B- Business Overview - Other.”

 

***Indemnity and claims management***

 

CSRhas granted Rinker, its subsidiaries, directors, officers and employees and thedirectors, officers and employees of its subsidiaries an indemnity againstliability (to the extent it is not covered by Rinker’s insurance) arising fromany claim made against any of them arising from any actions or omissions,including negligence and other alleged torts, breach of contract or law or anyother act committed, omitted or done by CSR or any of the businesses beingconducted by members of the CSR group after the demerger (or businesses thatwould have been conducted by any member of the CSR group after the demergerexcept that

 

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thosebusinesses have been closed before the demerger), regardless of when theliability or loss to which the claim relates arises

 

Rinkerhas granted CSR, its subsidiaries, directors, officers and employees and thedirectors, officers and employees of its subsidiaries an indemnity againstliability (to the extent it is not covered by CSR’s insurance) arising from anyclaim made against any of them arising from any actions or omissions, includingnegligence and other alleged torts, breach of contract or law or any other actcommitted, omitted or done by Rinker or any of the businesses being conductedby members of the Rinker group after the demerger (or businesses that wouldhave been conducted by any member of the Rinker group after the demerger exceptthat those businesses have been closed before the demerger), regardless of whenthe liability or loss to which the claim relates arises.

 

Itis not clear at law whether these indemnities would be enforceable in respectof fines or pecuniary penalties of a penal nature.

 

Inaccordance with the indemnity, CSR and Rinker have agreed arrangements pursuantto which the economic and management responsibility for claims will bedetermined. CSR and Rinker have agreed to assist each other in respect of theconduct of claims to which the indemnity relates.

 

Further,CSR has agreed to indemnify Rinker, its subsidiaries, directors, officers andemployees and the directors, officers and employees of its subsidiaries againstliability incurred by them arising from any claim made against them arisingfrom a failure of the demerger booklet, Rinker’s listing memorandum to the ASXor marketing or other material distributed or published in connection with thedemerger (including any associated refinancing) to comply with any applicablelegal requirement where the failure is caused by, or arises out of, informationabout the businesses which are to be conducted by any member of the CSR groupafter the demerger(or businesses that would have been conducted by any memberof the CSR group after the demerger except that those businesses have beenclosed before the demerger).

 

Rinkerhas agreed to indemnify CSR, its subsidiaries, directors, officers andemployees and the directors, officers and employees of its subsidiaries againstliability incurred by them arising from any claim made against them arisingfrom a failure of the demerger booklet, Rinker’s listing memorandum to the ASXor marketing or other material distributed or published in connection with the demerger(including any associated refinancing) to comply with any applicable legalrequirement where the failure is caused by, or arises out of, information aboutthe businesses which are to be conducted by any member of the Rinker groupafter the demerger (or businesses that would have been conducted by any memberof the Rinker group after the demerger except that those businesses have beenclosed before the demerger).

 

***Insurance***

 

Rinkeris responsible for its own insurance arrangements, including directors’ andofficers’ insurance following the demerger. However, the directors and officersof Rinker and CSR at March 28, 2003 will continue to have the benefit of thedirectors and officers run off insurance held by CSR in respect of matterswhich occurred before the demerger took effect.

 

***Guarantees and financial support***

 

Rinkerhas agreed to use its best endeavours to procure the release of all guaranteesand financial support given by CSR group in respect of the businesses to beconducted by the Rinker group after the demerger except as otherwise agreed.CSR will have reciprocal obligations.

 

Eachof CSR and Rinker indemnify the other against liabilities in relation to suchguarantees and financial support until they are released.

 

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***Statutory licences***

 

CSRand Rinker have agreed to co-operate and to act reasonably in relation to thetransfer of statutory licences from members of CSR group to members of theRinker group.

 

***Tax liability***

 

TheRinker group is responsible for, and has indemnified CSR in respect of, taxliabilities relating to the businesses to be conducted by Rinker groupcompanies after the demerger as though the relevant Rinker group companies hadalways owned and operated those businesses, and the CSR group is responsiblefor, and has indemnified Rinker in respect of, tax liabilities relating to thebusinesses conducted by the CSR group after the demerger.

 

***Financial and tax assistance***

 

Rinkerand CSR have agreed to assist each other in relation to past and futurefinancial and tax matters and each will allow the other access to records inconnection with the preparation of tax returns or tax audits by the AustralianTaxation Office or State Revenue authorities.

 

***Business records***

 

Rinkerhas agreed to maintain the business records transferred to it as part of theinternal restructuring prior to the demerger for a period of seven years afterthe demerger and allow CSR to access and make copies of those records. CSR hasagreed to maintain any business records that relate to the Rinker group’sbusinesses and which were not transferred to the Rinker group as part of theinternal restructuring for a period of seven years after the demerger and allowRinker to access and make copies of those records.

 

***Transition and shared servicesarrangements***

 

Rinkerand CSR have entered into an agreement pursuant to which CSR will supply, orprocure the supply of, a variety of services to the Rinker group during atransitional period. It is expected that the transitional period will be nomore than 18 months and with respect to some services a shorter period.

 

Theservices to be provided include:

•              administrativeand processing resources for payroll, employee share plan and generalaccounting services;

•              access to anduse of certain IT environments and networks;

•              access tocertain IT systems and resources so that Rinker may create its own version ofthose systems; and

•              access toshared premises.

 

CSRwill invoice Rinker monthly for the services provided. The services will becharged at cost.

 

CSRis only liable for loss or damage suffered by Rinker where that loss or damagewas due to the fraud or wilful default of CSR. CSR’s liability will be limitedto the resupply of the service or payment for its resupply, at CSR’s option.

 

Aparty is able to terminate the agreement for an unremediated breach by theother or if an insolvency event happens to the other.  CSR is also able to terminate the agreement if Rinker proposes ascheme of arrangement with its members or a person obtains voting power (asthat term is defined in the Australian Corporations Act) of 50 percent or morein Rinker.

 

Witheffect on and from March 28, 2003, the CSR group and the Rinker group eachgranted the other a consideration free licence to use copyright in certainworks which are required for the business operations of the Rinker group andCSR group respectively.

 

 

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CSRhas licensed the Rinker group to continue to display ‘CSR’ in its signage(including on vehicles and at sites) for 12 months from March 28, 2003 toenable the Rinker group to remove it in an orderly manner.

 

***Bond guarantees***

 

Asdescribed in “Item 5.F – Contractual Obligations and Commercial Commitments”, Rinker and Rinker Materials have agreed to indemnify CSR for anyobligations that come due under CSR’s guarantee obligations in respect of the(i) US$49.8 million outstanding 6.875% bonds due on March 1, 2004 issued byRinker Materials and guaranteed by Rinker and CSR and (ii) US$250 millionoutstanding 6.875% bonds due on July 21, 2005 issuedby Rinker Materials and guaranteed by Rinker and CSR. To support its indemnity,Rinker Materials has obtained, under its US$1,077.5 million bank creditfacilities, bank letters of credit for CSR’s benefit for any obligations thatcome due under CSR’s guarantee in respect of the those bonds that remainoutstanding.

 

***Workers’ compensation arrangements***

 

CSRand Rinker have entered into Deeds of Indemnity and Agency Agreements relatingto workers’ compensation claims relating to incidents prior to the demerger.The Deeds of Indemnity provides for indemnities in respect of common law andstatutory workers’ compensation liabilities, the key features of which areconsistent with the following principles:

 

•                    Rinker isresponsible for all common law and statutory workers’ compensation claims whichhave arisen or arise out of the businesses to be conducted by companies in theRinker group after the demerger;

 

•                    CSR isresponsible for all common law and statutory workers’ compensation claims whichhave arisen or arise out of the businesses to be conducted by companies in theCSR group after the demerger; and

 

•                    Rinker hasagreed to indemnify CSR in respect of any amounts CSR is required to pay as aconsequence of a common law or statutory workers’ compensation claim for whichRinker is responsible.

 

Agencyagreements have been executed by CSR and Rinker, whereby the party responsiblefor the payment of any claim is also responsible for its administration anddefence.

 

***Superannuation arrangements***

 

TheHarwood Superannuation Fund (previously CSR Australian Superannuation Fund) andthe Monier PGH Superannuation Fund continue to provide ongoing benefits foremployees of CSR and Rinker in Australia (including expatriates in China andHong Kong).  CSR and Rinker have agreedto each, in effect, cover 50 percent of the funding of the accrued definedbenefit liabilities of the Harwood Superannuation Fund as at March 31, 2003,which will be revalued by the actuary at least annually.  Subject to that arrangement, Rinker and CSRare separately responsible for funding defined benefits and accumulationbenefits for their respective employees and CSR continues to be responsible forpensioners and deferred members as at March 31, 2003.

 

### **C.            Interests of Experts and Counsel**

 

Notapplicable

 

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## **Item 8.    FinancialInformation**

 

### **A.            Consolidated statements and otherfinancial information**

 

See“Item 18. Financial statements”.

 

**Legal Proceedings**

 

#### **General**

 

Inaddition to the proceedings described below and under “Asbestos Litigation”,there are outstanding court proceedings, claims and possible claims against CSRgroup entities arising in the ordinary course of business, the aggregate amountof which cannot be readily quantified.

 

WhileCSR can give no assurance in respect of these other legal proceedings, it doesnot believe that any adverse decision would have a material adverse effect onthe financial condition, results of operations or cash flows of the CSR group.

 

#### **Asbestos litigation**

 

CSRand several CSR group entities have been named as defendants in litigation inAustralia and the United States by claimants alleging personal injuries due toexposure to asbestos. Claimants in these cases generally seek compensatory andpunitive damages. In almost all cases in which it is a party, a CSR groupentity is one of a number of companies named as defendants.

 

***Australian asbestos litigation -historical overview***

 

Theinvolvement of CSR and its subsidiaries in asbestos litigation in Australiaarises from the mining of raw asbestos fibre by one of CSR’s subsidiaries, aswell as the sale by CSR and by certain of its subsidiaries ofasbestos-containing products. Claimants in this litigation include former employees,contractors and carriers of raw fibre, and users of asbestos products.

 

Thefirst common law claim naming CSR or a subsidiary as a defendant in Australiawas asserted in 1973. As at March 31, 2003, CSR and its subsidiaries had beennamed in approximately 1,913 such claims, of which approximately,

 

•               108 werecommenced in the year ended March 31, 1997;

•               91 in the yearended March 31, 1998;

•               81 in the yearended March 31, 1999;

•               99 in the yearended March 31, 2000;

•               142 in the yearended March 31, 2001;

•               109 in the yearended March 31, 2002; and

•               178 in the yearended March 31, 2003.

 

Thefollowing approximate number of claims in Australia were resolved by settlementpayment by CSR,

 

•               66 in the yearended March 31, 1997;

•               61 in the yearended March 31, 1998;

•               58 in the yearended March, 31, 1999;

•               61 in the yearended March 31, 2000;

•               86 in the yearended March, 31, 2001;

•               90 in the yearended March 31, 2002; and

•               71 in the yearended March 31, 2003.

 

 

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Asat March 31, 2003, approximately 1,112 Australian claims had been settled and afurther 220 had been dismissed voluntarily or by a successful CSR defense. Thetotal costs of settlements and judgments were approximately A$99 million. Theapproximate amounts spent per year (excluding legal costs) on claims paid andsettled are,

 

•               A$5.3 millionin the year ended March 31, 1997;

•               A$4.6 millionin the year ended March 31, 1998;

•               A$6.3 millionin the year ended March, 31, 1999;

•               A$2.7 millionin the year ended March 31, 2000;

•               A$7.0 millionin the year ended March, 31, 2001;

•               A$8.9 millionin the year ended March 31, 2002; and

•               A$5.5 millionin the year ended March 31, 2003.

 

Theaverage settlement amount from fiscal years 1997 to 2003 is approximatelyA$0.08 million per claim. The approximate average settlement amount per yearare,

 

•               A$0.08 millionin the year ended March 31, 1997;

•               A$0.08 millionin the year ended March 31, 1998;

•               A$0.11 millionin the year ended March, 31, 1999;

•               A$0.04 millionin the year ended March 31, 2000;

•               A$0.08 millionin the year ended March, 31, 2001;

•               A$0.10 millionin the year ended March 31, 2002; and

•               A$0.08 millionin the year ended March 31, 2003.

 

Therehas been a single punitive damages award, in the Rabenalt case, which wasagainst a subsidiary in the amount of A$250,000. It was entered in 1988.

 

Asat March 31, 2003, the total defense costs, relating to Australian claims wasapproximately A$33 million. The approximate amounts spent per year on defensecosts are,

 

•               A$1.9 millionin the year ended March 31, 1997;

•               A$2.2 millionin the year ended March 31, 1998;

•               A$1.5 millionin the year ended March, 31, 1999;

•               A$1.5 millionin the year ended March 31, 2000;

•               A$1.8 millionin the year ended March, 31, 2001;

•               A$2.0 millionin the year ended March 31, 2002; and

•               A$1.7 millionin the year ended March 31, 2003.

 

***Australian asbestos litigation -current status***

 

Asat March 31, 2003, there were approximately 578 asbestos claims pending againstCSR and/or its subsidiaries in Australia (March 31, 2002 – 558, March 31, 2001– 538). Settlement payments and legal costs incurred by CSR and itssubsidiaries continue to be affected by a variety of factors, includingprincipally the type of injury alleged to have been sustained by the claimant,the nature and extent of the claimant’s alleged exposure to raw asbestos fibreor asbestos-containing products manufactured or supplied by CSR or itssubsidiaries and the presence of other defendants to the claim.

 

***United States asbestos litigation -historical overview***

 

Theinvolvement of CSR and its subsidiaries in asbestos litigation in the UnitedStates arises from sales of asbestos fibre mined by an Australian subsidiary ofCSR and sold by CSR acting as its subsidiary’s sales agent. The last such saleoccurred in 1966.

 

Priorto 1990, the vast majority of the asbestos claims against CSR were commenced byor on behalf of employees of Johns Manville Corporation, the principalpurchaser of asbestos fibre sold by CSR as sales

 

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agentfor its subsidiary. These individuals generally claimed exposure to such fibreduring the course of their employment at the Johns Manville plants where thefibre was used in the manufacture of certain asbestos cement pipes. Suchclaims, as well as claims of other persons allegedly exposed to raw asbestossupplied by CSR, are collectively referred to as ‘Plant-worker Claims’. In theearly stages of the litigation, settlements by CSR of United States asbestosclaims for the most part involved Johns Manville Plant-worker Claims. CSR hasentered into a number of global settlements of such claims with variousclaimants’ counsel.

 

Beginningin late 1990, CSR began to be named as a defendant in United States lawsuitsbrought by persons alleging occupational exposure to finished asbestosproducts, particularly specialty gasket material and asbestos cement pipe. Suchclaims are referred to as ‘Finished Product Claims’. CSR does not believeFinished Product Claims are meritorious, and has defended them on the basesthat, among other things: there is no evidence that asbestos fibre supplied byCSR was incorporated into the particular products to which these claimants wereallegedly exposed; there is no personal jurisdiction over CSR; CSR did not owea duty to warn users of finished products manufactured by Johns Manville, asophisticated and knowledgeable asbestos company in its own right, of thepotential consequences under certain circumstances of the inhalation ofasbestos fibre; and any alleged failure by CSR to warn Johns Manville of suchpotential consequences was not the cause of claimants’ injuries. CSR believesthat the primary reason for its inclusion in Finished Product Claims is thebankruptcy in 1982 of Johns Manville and the consequent unavailability of afull remedy against Johns Manville for injuries allegedly caused by itsproducts.

 

Thefirst United States asbestos claims naming CSR or a subsidiary as a defendantwere Plant-worker Claims asserted against CSR in 1980. As at March 31,  2003, CSR and/or its subsidiaries had beennamed in approximately 3,100 Plant-worker Claims and approximately 124,000Finished Product Claims.

 

Ofthe approximately 3,100 Plant-worker Claims, approximately,

 

•               48 wereasserted in the year ended March 31, 1997;

•               23 in the yearended March 31, 1998;

•               25 in the yearended March 31, 1999;

•               29 in the yearended March 31, 2000;

•               28 in the yearended March 31, 2001;

•               39 in the yearended March 31, 2002; and

•               71 in the yearended March 31, 2003.

 

Thefollowing approximate number of Plant-worker Claims were resolved by settlementpayment by CSR,

 

•               81 in the yearended March 31, 1997;

•               43 in the yearended March 31, 1998;

•               309 in the yearended March, 31, 1999;

•               58 in the yearended March 31, 2000;

•               52 in the yearended March, 31, 2001;

•               70 in the yearended March 31, 2002; and

•               37 in the yearended March 31, 2003.

 

Asat March 31, 2003, approximately 3,000 Plant-worker Claims had been resolved ordecided and 153 were pending. As at March 31, 2003, the total of the cost ofsettlements and judgments was approximately A$91 million. The approximateamounts spent per year (excluding legal costs) on Plant-worker Claims paid andsettled are,

 

•               A$2.8 millionin the year ended March 31, 1997;

•               A$2.1 millionin the year ended March 31, 1998;

•               A$21.3 millionin the year ended March, 31, 1999;

•               A$4.0 millionin the year ended March 31, 2000;

 

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•               A$5.5 millionin the year ended March, 31, 2001;

•               A$12.3 millionin the year ended March 31, 2002; and

•               A$12.7 millionin the year ended March 31, 2003.

 

Theaverage settlement amount for Plant-worker Claims from fiscal years 1997 to2003 is approximately A$0.09 million per claim. The approximate averagesettlement amount per year are ,

 

•               A$0.03 millionin the year ended March 31, 1997;

•               A$0.05 millionin the year ended March 31, 1998;

•               A$0.07 millionin the year ended March, 31, 1999;

•               A$0.07 millionin the year ended March 31, 2000;

•               A$0.11 millionin the year ended March, 31, 2001;

•               A$0.18 millionin the year ended March 31, 2002; and

•               A$0.34 millionin the year ended March 31, 2003.

 

Ofthe approximately 124,000 Finished Product Claims, approximately,

 

•               4,655 were assertedin the year ended March 31, 1997;

•               9,829 in theyear ended March 31, 1998;

•               4,120 in theyear ended March 31, 1999;

•               233 in the yearended March 31, 2000;

•               1,379 in theyear ended March 31, 2001;

•               14,165 in theyear ended March 31, 2002; and

•               1,986 in theyear ended March 31, 2003.

 

The following approximate number of FinishedProduct Claims were resolved by settlement payment by CSR,

 

•               33,357 in theyear ended March 31, 1997;

•               7,247 in theyear ended March 31, 1998;

•               5,230 in theyear ended March, 31, 1999;

•               17,879 in theyear ended March 31, 2000;

•               1,294 in theyear ended March, 31, 2001;

•               8,864 in theyear ended March 31, 2002; and

•               1,325  in the year ended March 31, 2003.

 

Asat March 31, 2003, approximately 121,000 Finished Product Claims had beenresolved and approximately 2,962 were pending at March 31, 2003. As at March31, 2003, the total of the cost, both paid and committed, of settlements andjudgments was approximately A$54 million. The approximate amounts spent peryear (excluding legal costs) on Finished Product Claims paid and settled are,

 

•               A$27.1 millionin the year ended March 31, 1997;

•               A$3.5 millionin the year ended March 31, 1998;

•               A$3.4 millionin the year ended March, 31, 1999;

•               A$6.6 millionin the year ended March 31, 2000;

•               A$1.3 millionin the year ended March, 31, 2001;

•               A$4.0 millionin the year ended March 31, 2002; and

•               A$3.5 millionin the year ended March 31, 2003.

 

Theaverage settlement amount from fiscal years 1997 to 2003 is A$0.0007 millionper claim. The approximate average settlement amount per year are,

 

•               A$0.0008million in the year ended March 31, 1997;

•               A$0.0005million in the year ended March 31, 1998;

•               A$0.0007million in the year ended March, 31, 1999;

•               A$0.0004million in the year ended March 31, 2000;

 

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•               A$0.0010million in the year ended March, 31, 2001;

•               A$0.0005million in the year ended March 31, 2002; and

•               A$0.0026million in the year ended March 31, 2003.

 

Asat March 31, 2003, the total defense costs, relating to both Plant-workerClaims and Finished Product Claims was approximately A$44 million. Theapproximate amounts spent per year on defense costs are,

 

•               A$4.7 millionin the year ended March 31, 1997;

•               A$1.6 million inthe year ended March 31, 1998;

•               A$0.5 millionin the year ended March, 31, 1999;

•               A$0.8 millionin the year ended March 31, 2000;

•               A$0.9 millionin the year ended March, 31, 2001;

•               A$1.3 millionin the year ended March 31, 2002; and

•               A$1.9 million inthe year ended March 31, 2003.

 

Theonly judgments entered to date against CSR in the United States asbestoslitigation occurred in August 1993 in the Abrams case in Mississippi. That caseinvolved Johns Manville Finished Product Claims by nine shipyard workersclaiming exposure to Johns Manville gasket material allegedly containing fibresupplied by CSR as sales agent. In that case, a jury verdict was enteredagainst CSR in favour of four of the former shipyard workers for compensatorydamages totalling US$2,150,000 and punitive damages totalling US$215,000. Inaddition to deciding the claims of the nine shipyard workers, the jury inAbrams also decided certain common issues with respect to approximately 6,700of the approximately 16,000 claims then pending against CSR in Mississippi. Thejury found that the Johns Manville gasket material had been used at theshipyard where the claimants were employed; that CSR may be liable for injuriescaused by such material; and that punitive damages in the amount of 10 percentof compensatory damages were appropriate against CSR. CSR has reachedsettlements of all claims made in Mississippi with various claimants’attorneys. While the attorneys’ clients have the right to opt out of thesettlement, it is CSR’s belief that relatively few, if any, claimants willchoose to do so, and none has done so to date. An integral part of thesettlement agreement provided for and resulted in the shipyard worker specificand common issues verdicts being vacated as against CSR.

 

Althoughclaims have been brought against CSR in 34 states, the bulk of the claimsagainst CSR have been Finished Product Claims in four particular states:Mississippi (17%), West Virginia (21%), Texas (28%) and Ohio (16%), each as atMarch 31, 2003. Each of these states permits so-called ‘mass trials’ ofclaimants’ claims. CSR does not believe these or other Johns Manville FinishedProduct Claims are meritorious. However, given their large number; the risk ofadverse rulings, particularly in mass trial states; and the costs of defendingthe claims, CSR has settled and intends to continue to settle such claims wherethe prevailing circumstances cause it to believe that it is commerciallyadvantageous to do so. CSR has entered into a number of agreements with variousclaimants’ counsel pursuant to which the parties will attempt to resolve thecounsels’ future claims on an agreed upon basis prior to litigation.

 

***United States asbestos litigation -current status***

 

Asat March 31, 2003, there were approximately 3,115 asbestos claims pendingagainst CSR in the United States (March 31, 2002 – 2,271, March 31, 2001 –1,988).

 

Thesettlement payments by CSR in the United States continue to be affected by avariety of factors, including principally the type of injury alleged to havebeen sustained by the claimant, the nature and extent of the claimant’s allegedexposure to fibre supplied by CSR as sales agent for one of its subsidiaries,the jurisdiction of the suit, and whether the claim is to be part of a groupsettlement. A number of defendants in the United States litigation, in additionto Johns Manville, have declared bankruptcy. This may cause plaintiffs’ counselto seek to join CSR in additional actions and/or seek higher settlementamounts.

 

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***Insurance issues***

 

OnMarch 3, 1995, in settlement of litigation commenced by CSR and for theassumption by CSR of certain indemnity and other obligations, CSR received anundissected lump sum payment of A$100 million in full and final settlement ofall present and future claims CSR has or may have had against certain insurersissuing liability policies to it from 1955 to at least 1978. Subsequent to thesettlement of these coverage and damages claims, CSR and a then subsidiary commencedlitigation in the United States District Court for the District of New Jerseyagainst other insurers that issued policies to CSR from approximately 1978 to1989, seeking, among other things, coverage for United States asbestos claimsagainst them and damages. Some of these insurers then commenced their ownlitigation against CSR and the then subsidiary in the Supreme Court of NewSouth Wales, seeking, among other things, a declaration that the insurers haveno obligation to provide any such coverage. The Supreme Court of New SouthWales issued a preliminary injunction barring CSR and the then relevant CSRsubsidiary from prosecuting the United States coverage suit without furtherorder of the Supreme Court of New South Wales. CSR and its then subsidiarysuccessfully appealed to the High Court of Australia against that injunction.The High Court lifted the injunction and ordered that the proceedings commencedin New South Wales be stayed pending the outcome of the United States coveragesuit. On April 24, 2001, the New Jersey court denied motions brought by theinsurers to stay or dismiss the United States action. Discovery is continuingand no trial date has yet been set.

 

***Management’s views***

 

In light of the difficulty of predicting thenumber of further claims, the severity and mix of diseases involved, the costsof defense and indemnity associated with such claims, and other changes in thelitigation environment that might affect CSR’s position or that of itssubsidiaries, CSR cannot determine with certainty the amount of its ultimateliability with respect to asbestos claims nor their effect on net profit orloss in future reporting periods. On April 1, 2002, CSR adopted AASB 1044 whichimposes new requirements for the determination of uncertain liabilities,including providing significant additional guidance on the measurement of suchliabilities as well as on discounting provisions to their present value using arate which is lower than that previously used by CSR. In accordance with AASB1044, CSR has recognised as a provision the present value of anticipatedsettlement payments and legal costs arising from asbestos claims by discountingat a pre-tax rate that reflects the current market assessment of the time valueof money based on notional long-term government bond rates and risks specificto those liabilities. As a result of the adoption of AASB 1044, CSR’s productliability provision as at April 1, 2002 increased by A$205.2 million. Theprovision was A$332.3 million as at March 31, 2003. The change in CSR’s productliability provision does not reflect any material change in CSR’s underlyingproduct liability risk profile nor does it include any potential benefit fromsettlements with insurers. CSR’s asbestos provision is reviewed at each accountingperiod and adjusted to reflect any material change to CSR’s anticipatedliabilities and material fluctuations in exchange rates and interest rates.

 

CSRbelieves the asbestos litigation in the United States and Australia will nothave a material adverse impact on the CSR group’s financial condition, resultsof operations or cash flows. This view is based upon the experience of CSRgroup entities in the asbestos litigation to date; the resolution of a largenumber of matters on commercially acceptable terms; the provisions alreadyincluded in the CSR group’s financial statements; CSR’s belief that it has evenstronger evidence than presented during the Mississippi trial to support CSR’sposition that the fibre contained in Johns Manville gasket materials was notsupplied by CSR; CSR’s expectations concerning probable settlements in pendingas well as future claims; CSR’s expectations concerning the number of claimslikely to be brought against it and/or its subsidiaries in the future; and thepossibility of an insurance recovery as a result of the New Jersey litigation.There can, however, be no assurance that the asbestos related personal injurylitigation will not have a material adverse impact on CSR’s financialcondition, results of operations or cash flows.

 

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#### **Other litigation**

 

CSRsold its interest in Gove Aluminium Limited to Alcan Northern Territory AluminaPty Limited (“Alcan”) on January 31, 2001. On January 31, 2003 CSR receivednotice from Alcan of claims totaling around A$22.5 million in respect of thatsale.  CSR disputes those claims andwill defend them.  CSR has raised claimsagainst Alcan in respect of an adjustment for diesel fuel rebates totalingUS$21.9 million (A$36.2 million) pursuant to adjustment provisions under thesale agreement and regulations which CSR believes became effective on May 15,2003.  CSR has notified Alcan of theclaim but is yet to receive a response, however, CSR believes it is likely thatAlcan will dispute the claim.

 

**Dividend Policy**

 

Thepayment and amount of any dividends depends on CSR’s current and futureearnings, cash flow, financial condition and other factors.  Subject to the Australian Corporations Act2001, the Directors may declare a dividend and set the amount and date for itspayment.  Dividends are payable toshareholders of fully paid shares equally, and fractionally to shareholders ofpartly paid shares.  Generally, shares rankfor dividend from their date of allotment.

 

Ademerger dividend of A$0.69 for each CSR share was declared and applied onbehalf of shareholders to acquire Rinker shares under the terms of thedemerger.

 

Infiscal year 2003, CSR paid an interim dividend of A$0.11 and subsequentlydeclared a dividend of A$0.06 per share, with final payment to be made July 3,2003. Both the initial and final payments were 70 percent franked.

 

### **B.            Significant Changes**

 

OnMay 20, 2003, CSR announced a buyback of up to 5 percent of its fully paidordinary shares. No other significant changes have occurred since March 31,2003.

 

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## **Item 9.    TheOffer and Listing**

### ** **

### **Nature of Trading Market**

 

Theprincipal trading market for CSR’s fully paid ordinary shares is the ASX.  CSR’s fully paid Ordinary Shares were also listedon the London stock exchange until May 31, 2003. CSR listed on the LSE over adecade ago but no CSR shares have ever been traded on the exchange. Given thesize of CSR following the demerger and its focus on the Australian market, itis not cost-effective to maintain this listing.

 

Inthe United States, Morgan Guaranty Trust Company of New York, as Depositary(the “Depositary”), has issued ADRs evidencing ADSs. Each ADS represents fourfully paid Ordinary Shares.  Since March1990, the ADRs have been traded in sponsored American Depositary Receipt formon the over-the-counter market.

 

Thefollowing table sets forth, for the fiscal years indicated, the high and lowsales prices in A$ per Ordinary Share as reported by the ASX and the high andlow sales prices in US$ per ADS as reported by the Depositary.

 
|                |   |            |   | **Per Ordinary Share  (A$)** |   | **Per ADS(2) (US$)** |   |
|---------------------|--------|-----------------|--------|------------------------------|--------|----------------------|--------|
|                |   |            |   | **High**                     |   | **Low**              |   | **High** |   | **Low** |   |
|                |   | Fiscal  year    |   |                         |   |                 |   |   |   |   |   |
|                |   | 1999            |   | 5.24                         |   | 3.20                 |   | 11.75 |   | 7.50 |   |
|                |   | 2000            |   | 4.80                         |   | 3.31                 |   | 12.63 |   | 8.25 |   |
|                |   | 2001            |   | 5.38                         |   | 3.44                 |   | 11.81 |   | 8.13 |   |
|                |   | 2002            |   | 7.23                         |   | 5.20                 |   | 15.06 |   | 10.14 |   |
|                |   | 2003            |   |                         |   |                 |   |   |   |   |   |
|                |   | Quarter  ending |   |                         |   |                 |   |   |   |   |   |
| Fiscal  year  2002: |   | June            |   | 7.20                         |   | 5.20                 |   | 14.91 |   | 10.14 |   |
|                |   | September       |   | 7.23                         |   | 5.50                 |   | 15.06 |   | 11.08 |   |
|                |   | December        |   | 6.94                         |   | 6.05                 |   | 14.21 |   | 12.40 |   |
|                |   | March           |   | 7.17                         |   | 6.30                 |   | 14.65 |   | 13.23 |   |
|                |   |            |   |                         |   |                 |   |   |   |   |   |
| Fiscal  year  2003: |   | June            |   | 6.78                         |   | 5.94                 |   | 15.19 |   | 12.91 |   |
|                |   | September       |   | 6.85                         |   | 5.70                 |   | 15.52 |   | 12.39 |   |
|                |   | December        |   | 6.35                         |   | 5.33                 |   | 14.25 |   | 11.76 |   |
|                |   | March           |   | 6.65                         |   | 6.01                 |   | 16.33 |   | 13.99 |   |

 
|   |   | **Month Ending**                                                                                   |   | **Per Ordinary Share  (A$)** |   | **Per ADS(2) (US$)** |   |
|--------|--------|----------------------------------------------------------------------------------------------------|--------|------------------------------|--------|----------------------|--------|
|   |   |                                                                                               |   | **High**                     |   | **Low**              |   | **High** |   | **Low** |   |
|   |   |                                                                                               |   |                         |   |                 |   |   |   |   |   |
| 2002   |   | December                                                                                           |   | 6.35                         |   | 6.07                 |   | 14.25 |   | 13.63 |   |
| 2003   |   | January                                                                                            |   | 6.37                         |   | 6.01                 |   | 14.74 |   | 13.99 |   |
|   |   | February                |   | 6.61                         |   | 6.06                 |   | 15.97 |   | 14.26 |   |
|   |   | March  1 to March 28(1)                                                                            |   | 6.65                         |   | 6.26                 |   | 16.33 |   | 14.90 |   |
|   |   | March  31 to April 30(1)                                                                           |   | 1.81                         |   | 1.58                 |   | 15.19 |   | 3.80 |   |
|   |   | May(1)                                                                                             |   | 1.87                         |   | 1.77                 |   | 5.07 |   | 4.49 |   |
|   |   | June  (June 23)(1)                                                                                 |   | 2.00                         |   | 1.83                 |   | 5.35 |   | 4.85 |   |

 

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(1)               On March 28, 2003, theFederal Court of Australia approved the demerger of Rinker from CSR Rinker was admitted to the official list of the ASXand its shares were quoted on the stock market conducted by the ASX effectiveMarch 31, 2003 (an a deferred settlement basis). In the first 5 datys oftrading following the listing of Rinker on March 31, 2003, CSR shares traded at25% of their pre demerger value. In accordance with the termsof the demerger, Rinker issued 944.7 million shares on April 11, 2003 to CSRshareholders. Rinker shares traded in the range of A$4.50 to A$5.46 for theperiod March 31, 2003 to June 23, 2003.

(2)               ADS data is sources fromInteractive Data Corporation. In the month of April 2003, the ADS pricemovement reflects the timing of the issue of Rinker shares, part of the monthtrading at the pre demerger price.

 

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AtMarch 31, 2003, 944,668,106 fully paid ordinary shares were outstanding andwere held by 109,823 holders of record. In accordance with Australian law, CSRshares have no par value. As at March 31, 2003, 1,517,293 ADSs representing6,069,172 ordinary shares, or approximately 0.37 percent of the ordinary sharesoutstanding on such date, were held by 181 holders with registered addresses inthe United States.

 

## **Item 10.             AdditionalInformation**

### ** **

## **A.            Share Capital**

 

Notapplicable

 

## **B.            Constitution**

 

CSR’scorporate organization and conduct is governed by its constitution (the *“Constitution”*). Set forth

belowis a summary of the provisions of the principal terms of the Constitution.

 

***Company Objects & Purposes***

 

CSRis taken to be registered as a public company limited by shares under theCorporations Act 2001 of the Commonwealth of Australia (the *“Corporations Act”*) and is registered withAustralian Business Number 90 000 001 276.

 

TheConstitution was adopted on 24 July 2000 and most recently amended on 25 March2003. The Constitution does not specify CSR’s objects and purposes. Rather,under section 124 of the Corporations Act, CSR has the legal capacity andpowers of an individual person.

 

***Directors’ Powers &Qualifications***

 

(a)         No director is permitted tovote or be counted in the quorum as a director in respect of any matter inwhich the director has a personal material interest unless permitted by theCorporations Act (clause 70.5).

 

 (b)     Directorsremuneration is to be determined by them from time to time and in suchproportions and manner as they determine, provided that the aggregateremuneration paid to directors in any year must not exceed the amount approvedin general meeting (clause 57).

 

(c)         In addition, every directoris entitled to be paid all travelling, hotel and other expenses properlyincurred by them in attending and returning from meetings of directors of CSRor any committee of the directors or general meetings of CSR (clause 57.6).

 

(d)        Directors may exercise allthe powers of CSR to borrow money, charge property, issue debentures (or giveother security) and provide guarantees for the company’s purposes (clause 67).

 

(e)         The office of a directorimmediately becomes vacant (unless prohibited by applicable law) upon thedirector attaining the age of 70 years (clause 66).

 

(f)           A director must hold 2000fully paid shares in CSR in his or her own name as a qualification for office(clause 63).

 

(g)        At each Annual GeneralMeeting a prescribed number of non-executive directors retire from the officeand are subject to re-election. In any event, a non-executive director shallretire from office at the conclusion of the third Annual General Meeting afterthe general meeting at which he or she was last elected or re-elected.  An executive director, other than themanaging director, shall retire at the conclusion of the third Annual GeneralMeeting after the general meeting at which he or she was ratified, unless suchan appointment is further ratified at that meeting.

 

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***Rights & Restrictions Attachingto Each Class of Shares***

 

(a)         CSR has only one class ofshares, the ordinary class. The rights attached to ordinary shares include theright to dividends in the event that the directors declare them. Directors maydetermine that a dividend is payable, fix the amount, the date at which theentitlement accrues, date for payment and the method of payment.

 

(b)        Dividends, which have notbeen claimed for one year after having been declared, may be invested orotherwise made use of by the directors for the benefit of CSR until claimed ordisposed of according to law (clause 95).

 

(c)         The voting right attached toordinary shares is the right to vote in person, by representative, attorney orproxy in general meeting.

 

(d)        On a show of hands eachshareholder (regardless of the number of shares held) has one vote. On a polleach shareholder may exercise one vote for each fully paid ordinary share held.In respect of partly paid shares, the shareholder has a vote equivalent to theproportion which the amount paid up bears to the total amounts paid andpayable, whether or not called, on the share when the poll is taken (clause42.1).

 

(e)         In the event of a windingup, ordinary shares rank equally in the division of any surplus.

 

(f)           Shareholders cannot redeemordinary shares.

 

(g)        The holders of fully paidordinary shares have no further liability to CSR in respect of those shares.The holders of partly paid shares are liable to CSR once a call is made for thepayment of the unpaid amount.

 

(h)        There is no provision in theConstitution which discriminates against an existing or prospective shareholderas a result of that shareholder owning a substantial number of shares unlesssuch ownership leads to a partial takeover offer (see heading “*Partial Takeover Approval*” below).

 

(i)            The rights attached to anyclass of shares may be varied in accordance with the Corporations Act (clause8.1).

 

***General Meetings of CSR***

 

Theboard or a director may convene general meetings of CSR to be held at suchtimes and places and in the manner determined by the Board. Shareholders mayconvene a general meeting in accordance with the procedures set out in theCorporations Act.

 

Subjectto the Corporations Act and the ASX Listing Rules, notices of a generalmeetings convened by the board may be given in the form and in the mannerdetermined by the board. At least 28 days notice must be given of a generalmeeting (section 249HA of the Corporations Act).

 

Allshareholders may attend general meetings in person, or be represented by theattendance of a representative, attorney or by proxy (who need not beshareholders of CSR in their own right).

 

Thequorum for a general meeting is twelve members entitled to vote, present in person,by proxy or attorney or by representative, together holding not fewer than80,000 shares (clause 33.2). If within 30 minutes of the time appointed forholding the meeting a quorum is not present, the meeting, if convened byrequisition, is dissolved, but in all other cases stands adjourned to the sameday in the next week at the same time and place or to another day, time andplace determined by directors (clause 33.3). If at the adjourned meeting aquorum is not present within 30 minutes from the time appointed for holding themeeting, two members shall constitute a quorum.

 

 

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***Limitations on the Right to OwnSecurities***

 

CSR’sConstitution does not impose limitations on the right to own securities.

 

***Other Takeover Limitations***

 

Therights of non-resident or foreign shareholders to hold or exercise votingrights on CSR’s securities are subject to the *ForeignAcquisitions and Takeovers Act 1975 (Cth)*. The Treasurer of theAustralian Federal Government has the power to prohibit the acquisition of acontrolling interest in any Australian company by a foreign person or foreignpersons, if the Treasurer is of the opinion that the acquisition would becontrary to the national interest. For this purpose, a shareholding of 15% ormore held by a single foreign person or 40% or more held by two or more foreignpersons is deemed to constitute a controlling interest.

 

Section50 of the *Trade Practices Act 1974 (Cth)*prohibitsan acquisition of shares that would have the effect, or be likely to have theeffect, of substantially lessening competition in a substantial market forgoods or services, unless the acquisition is authorized by the AustralianCompetition and Consumer Commission.

 

***Partial Takeover Approval***

 

Inthe event that there is an offer made under a *“proportionaltakeover bid”* (within the meaning given to that expression byChapter 6 of the Corporations Act) to acquire shares in CSR, the registrationof a transfer giving effect to a contract resulting from the acceptance of thebid, is prohibited unless and until a resolution to approve the proportionaltakeover bid is passed in accordance with clause 22 of CSR’s Constitution. Thisresolution is to be voted on at a meeting convened and conducted by CSR, of thepersons entitled to vote on the resolution. The resolution is taken to havebeen passed if the proportion that the number of votes in favor of theresolution bears to the total number of votes on the resolution is greater thanone-half. The provisions of clause 22 of CSR’s Constitution cease to haveeffect on the third anniversary of the date of their adoption or last renewal.

 

***Disclosure of Share Ownership***

 

TheConstitution does not prescribe an ownership threshold above which shareholdersmust disclose their holding to CSR. However, Part 6C.1 of the Corporations Actimposes disclosure requirements on persons who acquire or cease to hold asubstantial holding (see section 9 of the Corporations Act) in CSR. Thedisclosure must be given to CSR and the ASX within the prescribed time.

 

***Changes in Share Capital***

 

CSRmay alter its share capital in one or more of the ways provided for, and in themanner prescribed by, the Corporations Act.

 

### **C.**                                    Material Contracts

 

*Demerger Deed*

 

OnMarch 27, 2003, Rinker and CSR Limited entered into a Demerger Deed tofacilitate the orderly separation of the Rinker group companies from CSR.  The arrangements were intended to assistRinker to function as an independent company after the demerger.  The key terms of the deed are summarizedbelow.

 

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*Demerger Principle*

 

Theunderlying principle of the demerger is that, following its implementation theRinker group will have the entire economic benefit, commercial risk andliabilities of the businesses to be conducted by the Rinker group companiesafter the demerger as through the Rinker group companies had always owned andoperated those businesses.  The CSRgroup will have the entire economic benefit, commercial risk and liabilities ofthe businesses to be conducted by the CSR group after the demerger.  Rinker and CSR acknowledged in the deed thatthe restructure of the Rinker group within the CSR group prior to the demergeroccurred in accordance with the internal restructure agreements and thedemerger principle.

 

*Limited Rights in Accordance with the DemergerPrinciple*

 

Rinkerand CSR acknowledged that once the demerger was complete, no member of the CSRgroup will have any rights against, or obligations to, a member of the Rinkergroup and no member of the Rinker group will have any rights against, orobligations to, a member of the CSR group except those rights and obligationsexpressly contained in or conferred by the Demerger Deed, the agreementseffecting the internal restructure or any agreement between a member of theRinker group and a member of the CSR group executed after the DemergerDeed.  The release of rights included arelease of rights to make a claim for loss or damage arising in relation to theinternal restructure of the Rinker group within the CSR group that occurredprior to the demerger and the demerger generally.

 

*Accounting Separation*

 

TheDemerger Deed confirmed that Rinker and CSR will prepare separate accounts on ademerged basis from April 1, 2003, or such other date as may be agreed betweenCSR and Rinker.  No such other date wasagreed between Rinker and CSR.

 

*Other Assets*

 

TheDemerger Deed provides that the Rinker group and the CSR group will agreemechanisms for the future transfer between them of, or other access to, anyasset, contract or intellectual property which either owns or holds after theeffective date of the demerger but which forms part of or is required toconduct the other’s business, which was incorrectly transferred as part of theinternal restructure or the owning or holding of which is inconsistent with thedemerger principle.

 

*Additional Liabilities*

 

Eachof Rinker and CSR agreed to accept any liabilities that in accordance with thedemerger principle should have been assigned to, or assumed by, it pursuant tothe internal restructure, but which were not so assigned or assumed.

 

*Indemnity and Claims Management*

 

Thesearrangements are summarized under this heading in “Item 7.B – Related PartyTransactions”.

 

*Insurance*

 

Thesearrangements are summarized under this heading in “Item 7.B – Related PartyTransactions”.

 

*Guarantees and Financial Support*

 

Thesearrangements are summarized under this heading in “Item 7.B – Related PartyTransactions”.

 

*Statutory Licenses*

 

Thesearrangements are summarized under this heading in “Item 7.B – Related PartyTransactions”.

 

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*Tax Liability*

 

Thesearrangements are summarized under this heading in “Item 7.B – Related PartyTransactions”.

 

*Financial and Tax Assistance*

 

Thesearrangements are summarized under this heading in “Item 7.B – Related PartyTransactions”.

 

*Business Records*

 

Thesearrangements are summarized under this heading in “Item 7.B – Related PartyTransactions”.

 

***Indemnification Agreement***

 

Asdescribed in “Item 5.F – Contractual Obligations and Commercial Commitments “, Rinker and Rinker Materials have agreed to indemnify CSR for anyobligations that come due under CSR’s guarantee obligations in respect of the(i) US$49.8 million outstanding 6.875% bonds due on March 1, 2004 issued byRinker Materials and guaranteed by Rinker and CSR and (ii) US$250 millionoutstanding 6.875% bonds due on July 21, 2005 issuedby Rinker Materials and guaranteed by Rinker and CSR. To support its indemnity,Rinker Materials has obtained, under its US$1,077.5 million bank creditfacilities, bank letters of credit for CSR’s benefit for any obligations thatcome due under CSR’s guarantee in respect of the those bonds that remainoutstanding.

 

***Transition and Shared ServicesAgreement***

 

Thisagreement is summarized in “Item 7.B – Related Party Transactions - Transitionand Shared Services Arrangements”.

 

### **D.            Exchange Controls and OtherLimitations Affecting Security Holders**

 

Thereare no foreign exchange controls or other governmental laws, decrees orregulations, other than in relation to withholding taxes (see Taxation below),which affect the remittance of dividends, interest or other payments by CSR tonon-resident holders of CSR securities in the United States.

 

Subjectto the exceptions referred to below, there are no limitations on the right ofUnited States residents or owners to hold or vote CSR ordinary shares imposedby Australian law or CSR’s Constitution.

 

Changesin interests held by foreign persons in Australian companies may be subject toreview and approval by the Treasurer of the Commonwealth of Australia under theForeign Acquisitions and Takeovers Act 1975. Generally, that statute requires prior notification of any acquisitionwhich would result in a foreign person together with any associates eitherholding interests in 15 percent or more of an Australian company’s issuedshares or controlling 15 percent or more of the voting power in thecompany.  The statute also requiresprior notification of any acquisition resulting in two or more foreign personsand their associates similarly holding interests in 40 percent or more of anAustralian company’s issued shares or controlling, in the aggregate, 40 percentor more of its total voting power.  Ineach case, the Treasurer may prohibit any part of the acquisition if theTreasurer is satisfied it would be contrary to the national interest ofAustralia.

 

Further,the Corporations Act 2001 regulates the acquisition of shares in publiccompanies in Australia.  Subject tocertain exceptions, it prohibits such an acquisition if (1) after theacquisition the acquirer and the acquirer’s associates would be entitled tomore than 20 percent of the company’s issued ordinary shares and (2) theacquisition does not satisfy one of a number of specified exceptions.  The more significant exceptions are: aformal, registered takeover offer to all the shareholders in the targetcompany, acquisitions by a broker on the stock market under a formal takeoverannouncement, acquisitions of no more than 3 percent of the target company’svoting share capital every six months or acquisitions approved by the targetcompany’s shareholders in general meeting.

 

 

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### **E.             Taxation**

 

Thetaxation discussion set forth below is intended only as a descriptive summaryand does not purport to be a comprehensive technical analysis of all potentialtax consequences for United States residents investing in shares in anAustralian incorporated company. Investors contemplating the purchase of shares are advised to consulttheir own tax advisers with respect to the tax consequences relevant to theirspecific situations.

 

Exceptas otherwise noted, the statements of Australian tax laws set out below arebased on the laws in force as of the date of this annual report, and aresubject to any changes in Australian law, and in any double taxation conventionbetween the United States and Australia occurring after that date.

 

***Australian Taxation***

 

*Dividends*

 

Since1987, Australia has had a dividend imputation system which relieves doubletaxation on certain dividends by imputing tax paid at the company level toshareholders by means of imputation credits attached to dividends received bythem.  Where an Australian tax residentshareholder receives a “franked” dividend, a tax credit (at the corporate taxrate, currently 30 percent) attaches to the extent to which the dividend paidis a franked dividend. This tax credit can be offset against the Australianincome tax payable by the shareholder. Since the introduction of the dividend imputation system, all dividendsprior to fiscal year 1994 were fully franked. Since then:

 

•                    The interim and finaldividends for fiscal year 1998 were 50 percent and one third frankedrespectively.

 

•                    The dividends for fiscalyears 1999 and 2000 were one third franked.

 

•                    The interim dividend forfiscal year 2001 was one third franked. The final dividend was 40 percent franked.

 

•                    The interim dividend forfiscal year 2002 was 40 percent franked. The final dividend was 70 percentfranked.

 

•                    The interim dividend forfiscal year 2003 was 70 percent franked. The final dividend for fiscal year2003, declared on May 19, 2003, will be 70 percent franked.

 

Allordinary shareholders and ADR holders will be advised as to the extent to whicheach future dividend will be franked as dividends are declared.  Broadly, shareholders who are non-residentsfor Australian tax purposes, rather than receiving a tax credit on “franked”dividends, are exempt from Australian dividend withholding tax in respect offranked dividends received.  Any part ofa dividend, paid to a United States tax resident who is a non-resident ofAustralia, which is not franked will attract Australian dividend withholdingtax at a rate of 15 percent.  However,if such a shareholder carries on a business in Australia through a permanentestablishment and unfranked dividends paid by CSR are effectively connectedwith that permanent establishment, tax at the rate of 30 percent willapply.  Notwithstanding this, unfrankeddividends paid to a United States tax resident in either of the abovesituations will be free of withholding tax to the extent such dividends aresourced from CSR’s foreign dividend account.

 

TheUnited States of America and Australia signed a Protocol on September 27, 2001that will amend the Convention between Australia and the United States ofAmerica for the avoidance of double taxation and the prevention of fiscalevasion.  Once this Protocol enters intoforce it will reduce the Australian dividend withholding tax rate to zero,whether or not the dividend is franked. The Protocol will enter into force whenboth countries have formally ratified it, but this cannot be until July 1, 2003at the earliest.

 

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Someforeign shareholders are exempt from Australian dividend withholding tax ondividends that are not franked; most notably, foreign superannuation/pensionfunds that are exempt from income tax in their home jurisdiction.

 

*Gain or Loss on Disposal*

 

Capitalgains tax is payable in Australia on realized gains over the period in whichthe shares have been held.  In workingout the cost base of shares acquired on or before September 21, 1999,expenditure incurred may be indexed for inflation up to September 30,1999.  Indexation is not relevant toshares acquired after September 21, 1999.

 

Whereshares were acquired on or before September 21, 1999, and such a shareholderdoes not choose the indexation option, or where shares were acquired afterSeptember 21, 1999, the capital gain may be discounted by an appropriatepercentage.  For individuals or trusts,this is 50 percent.  For complyingsuperannuation funds it is 33 1/3 percent. Companies are automatically entitled to indexation up to September 30,1999, but cannot choose the discount.

 

Forindexation to be available, as well as a condition of the discount, it isusually necessary that the shareholder held the shares for at least 12 months.

 

Subjectto the following two exceptions, a non-resident of Australia for tax purposesdisposing of shares in Australian public companies will be free from capitalgains tax in Australia:

 

(i)             Shares used as part of atrade or business conducted through a permanent establishment inAustralia.  In such case any profit ondisposal will be subject to capital gains tax or, depending on such usage, maybe assessable to ordinary income tax. Losses would constitute capital loss deductions or normal deductions.

 

(ii)          Shares held in publiccompanies where such shares represent a holding of 10 percent or more (togetherwith associates, if any) in the issued share capital of the company.

 

*Stamp Duty*

 

Anytransfer of ordinary shares (including a transfer from the Depositary or anyCustodian to a holder of ADSs) would, in almost all cases, require the paymentin Australia of stamp duty calculated on their value.  If the transfer takes place on the ASX that stamp duty (atpresent normally 0.3 percent) is split between the transferor and thetransferee.  In other cases, thetransferee is liable for the duty and the rate of duty will normally be 0.6percent.  Duty is payable in New SouthWales on the transfer of ADRs calculated on the value of the ADRs transferredat a rate of 0.6 percent (except where the transferee is not a resident ofAustralia and is acting on its own behalf or on behalf of a trustee for anothernon-resident of Australia and the transfer is registered outside Australia orif the ADR’s are registered on a recognized stock exchange outside Australia.  The ADRs are not currently registered on arecognized stock exchange outside Australia). The transferee is liable for the duty. The duty must be paid before a transfer of ordinary shares can beregistered. Where a transfer of ADR’s is not exempt from duty, duty must bepaid on that transfer before it can be registered.

 

103

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**United states federal income tax consequences**

 

Thissection describes the material United States federal income tax consequences ofownership of CSR shares or ADSs by U.S. holders, as defined below.  It applies to a U.S. holder only if the U.S.holder holds CSR shares or ADSs as capital assets for tax purposes.  This section does not apply to a U.S holderif the U.S holder is a member of a special class of holders subject to specialrules, including:

 

•                    a dealer in securities,

 

•                    a trader in securities thatelects to use a mark-to-market method of accounting for your securitiesholdings,

 

•                    a tax-exempt organization,

 

•                    a life insurance company,

 

•                    a person liable foralternative minimum tax,

 

•                    a person that actually orconstructively owns 10 percent or more of the voting stock of CSR,

 

•                    a person that holds CSRshares or ADSs as part of a straddle or a hedging or conversion transaction, or

 

•                    a person whose functionalcurrency is not the U.S. dollar.

 

Thissection is based on the Internal Revenue Code of 1986, as amended, itslegislative history, existing and proposed regulations, published rulings andcourt decisions, as well as on the Convention Between the United States ofAmerica and Australia (the “Treaty”). These laws are subject to change, possibly on a retroactive basis. Inaddition, this section is based in part upon the representations of theDepositary and the assumption that each obligation in the Deposit Agreement andany related agreement will be performed in accordance with its terms.

 

Forthe purpose of this discussion, a U.S. holder is any beneficial owner of CSRshares or ADSs that is:

 

•                    a citizen or resident of theUnited States,

 

•                    a domestic corporation,

 

•                    an estate whose income issubject to United States federal income tax regardless of its source, or

 

•                    a trust if a United Statescourt can exercise primary supervision over the trust’s administration and oneor more United States persons are authorized to control all substantialdecisions of the trust.

 

Ingeneral, and taking into account the earlier assumptions, for United Statesfederal income tax purposes, holders of ADRs evidencing ADSs will be treated asthe owners of the CSR shares represented by those ADRs. Exchanges of CSR sharesfor ADRs, and ADRs for CSR shares, generally will not be subject to UnitedStates federal income tax.

 

*U.S. holders should consult their own tax advisorregarding the United States federal, state and local tax consequences of owningand disposing of CSR shares and ADSs in their particular circumstances.*

 

*Taxation of Dividends*

 

Underthe United States federal income tax laws, and subject to the passive foreigninvestment company, or PFIC, rules discussed below, U.S. holders must includein gross income the gross amount of any dividend paid by CSR out of its currentor accumulated earnings and profits (as determined for United States federal

 

104

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income tax purposes). Dividends paid to a noncorporate U.S. holder after December 31, 2003 and before January 1, 2009 thatconstitute qualified dividend income will be taxable to such holders at amaximum tax rate of 15% provided that the non corporate U.S. holder holds theCSR shares or ADSs for more than 60 days during the 120 day period beginning 60days before the ex-dividend date and meets other holding periodrequirements.  Dividends that CSR payswith respect to the CSR shares or ADSs will be qualified dividend income.   The U.S. Holder must include any Australiantax withheld from the dividend payment in this gross amount even though the U.Sholder does not in fact receive it.  Thedividend is taxable to the U.S. holder when the U.S. holder in the case of CSRshares, or the Depositary, in the case of ADSs, receives the dividend, actuallyor constructively.  The dividend willnot be eligible for the dividends-received deduction generally allowed toUnited States corporations in respect of dividends received from other UnitedStates corporations.  The amount of thedividend distribution that the U.S. holder must include in income will be theU.S. dollar value of the Australian payments made, determined at the spotAustralian dollar/U.S. dollar rate on the date the dividend distribution isincludible in income, regardless of whether the payment is in fact convertedinto U.S. dollars.  Generally, any gainor loss resulting from currency exchange fluctuations during the period fromthe date the U.S. holder includes the dividend payment in income to the datethe U.S. holder converts the payment into U.S. dollars will be treated asordinary income or loss and will not be eligible for the special tax rateapplicable to qualified dividend income. The gain or loss generally will be income or loss from sources withinthe United States for foreign tax credit limitation purposes.  Distributions in excess of current andaccumulated earnings and profits, as determined for United States federalincome tax purposes, will be treated as a non-taxable return of capital to theextent of the U.S. holder’s basis in the CSR shares or ADSs and thereafter ascapital gain.

 

Subjectto certain limitations, the Australian tax withheld in accordance with theTreaty and paid over to Australia will be creditable against United Statesfederal income tax liability. Special rules apply in determining the foreigntax credit limitation with respect to dividends that are subject to the maximum15% tax rate.

 

Dividendswill be income from sources outside the United States, but generally will be“passive income” or “financial services income” which is treated separatelyfrom other types of income for purposes of computing the foreign tax creditallowable to U.S. holders.

 

*Taxation of Capital Gains*

 

Subjectto the PFIC rules discussed below, a U.S. holder that sells or otherwisedisposes of CSR shares or ADSs will recognize capital gain or loss for UnitedStates federal income tax purposes equal to the difference between the U.S.dollar value of the amount that the U.S. holder realizes and the U.S. holder’stax basis, determined in U.S. dollars, in their CSR shares or ADSs.  Capital gain of a non corporate U.S. holderthat is recognized on or after May 6, 2003 and before January 1, 2009 isgenerally taxed at a maximum rate of 15% where the property is held for morethan one year. The gain or loss will generally be income or loss from sourceswithin the United States for foreign tax credit limitation purposes.

 

*PFIC Rules*

 

CSRmanagement believes that the CSR shares and ADSs should not be treated as stockof a PFIC for United States federal income tax purposes, but this conclusion isa factual determination that is made annually and thus may be subject tochange.  If CSR were to be treated as aPFIC, unless a U.S. holder elects to be taxed annually on a mark-to-marketbasis with respect to the CSR shares or ADSs, gain realized on the sale orother disposition of CSR shares or ADSs would in general not be treated ascapital gain.  Instead, a U.S. holderwould be treated as if the U.S. holder had realized such gain and certain“excess distributions” ratably over the U.S. holder’s holding period for theCSR shares or ADSs and would be taxed at the highest tax rate in effect foreach such year to which the gain was allocated, together with an interestcharge in respect of the tax attributable to each such year. In addition,dividends that a U.S. holder receives from CSR will not be eligible for thespecial tax rates applicable to qualified dividend income if CSR is a PFICeither in the taxable year of the distribution or the preceding taxable year,but instead will be taxable at rates applicable to ordinary income.

 

105

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### **F.**              Dividends and Paying Agents

 

Not applicable.

 

**G.    Statement by Experts**

 

Not applicable.

 

### **H.**            Documents on Display

 

Copies of certain of the documents referred toin this annual report on Form 20-F may be inspected on request at CSR’sprincipal executive offices. It is also possible to read and copy documentsthat have been filed with the Securities and Exchange Commission (“SEC”) at theSEC’s public reference room located at 450 Fifth Street, NW, Washington DC20549.  Please telephone the SEC at1-800-SEC-0330 to obtain information on the operation of the public referenceroom.  Since November, 2002, CSR’sfilings with the SEC have been made electronically on the SEC’s EDGAR systemand can be accessed at www.sec.gov.

 

### **I.**                 Subsidiary Information

 

All controlled entities are 100 percent owned,unless otherwise indicated.  CSR’ssignificant subsidiaries are described in note 36 to the financial statements.

 

106

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## **Item 11.                 Quantitative and QualitativeDisclosures about Market Risk**

 

TheCSR group is exposed to the following types of market risk: (i) commodityprices, (ii) foreign currencies, and (iii) interest rates.

 

TheCSR group has in place principles and policies approved by CSR’s board ofdirectors designed to manage financial risks associated with exposures toforeign currencies, commodity prices and interest rates. These risks aremanaged through a variety of means including natural hedges, forward salescontracts, forward foreign exchange contracts, futures, swaps, caps, collarsand other foreign exchange, commodity price and interest rate options. CSR’spolicies prohibit speculative transactions, restrict hedging transactions topreset limits and require senior management approval of hedging instruments.  In addition, the policies limit who mayauthorize transactions and segregate relevant functions among differentindividuals.

 

EachDivisional chief executive officer is responsible for managing exposures intheir Division in accordance with the policies and is required to do so in consultationwith specialist advice from CSR Treasury. Except for certain sugar and aluminium commodity price hedgingactivities, and some Strategic Business Units operating outside Australia, allsuch transactions are executed through CSR Treasury.

 

CSRgroup entities utilize a variety of domestic and international financialinstitutions as counter parties for hedging transactions. Transaction limitsbased on credit ratings are placed on each financial institution and reviewedregularly.  Predominantly, CSR groupentities will only utilize counter parties with a Moody Investor Services orStandard & Poors “A3/A -” equivalent rating or higher.  In a few instances where no Moody InvestorServices or Standard & Poors rating is available management may assign a smalllimit based on alternative arrangements.

 

Itis management’s opinion that CSR group entities in the past year have notengaged in any financial transactions of a trading or speculative nature.

 

**Commodity Price Sensitivity and Risk Management**

 

TheCSR group’s commodity exposures relate predominantly to raw sugar andaluminium.

 

Rawsugar exposures are predominantly managed by QSL, an industry based companywhich, under statutory authority, compulsorily acquires all Queensland producedraw sugar and arranges for its sale. As at June 13, 2003, 38 percent of volumeis protected from adverse commodity price movements.  For the remaining exposure, a hypothetical US 1 cent per poundmovement from the end of period market price for sugar will result in an A$15 millionchange in CSR group net profit.

 

A portion of aluminium sales is hedged with a viewto reducing the effects of commodity price movements on the cash flows of thebusiness. The portion hedged will vary from time to time, but management’sintention is to hedge to provide a base level of profitability and to reduceearnings volatility.

 

For fiscal year 2004, on an unhedged basis, the CSRgroup expects revenue from 125,000 tonnes of aluminium (equivalent to US$ 174million / A$ 291 million) to be subject to movements in the world price ofaluminium. Of this aluminium exposure, 73 percent is protected from movementsin the world price of aluminium by fixed rate hedges. For the unhedged metalexposure, a hypothetical US$100 (A$167) per tonne movement in the worldaluminium price will result in a A$5 million change in CSR group net profit.

 

Specificinformation concerning commodity price exposures and financial instruments usedto limit that exposure is disclosed in Note 28 of the financial statements.

 

107

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**Foreign Exchange Sensitivity and Risk Management**

 

TheCSR group is exposed to fluctuations in foreign currencies in some of itsentities’ businesses.  CSR groupentities enter into foreign currency hedging contracts, including forwards andoptions, to manage their exposure to changes in currency exchanges rates.  The CSR group’s primary ongoing exposures toforeign currency movements relate to US dollar revenues.

 

CSRgroup entities receive Australian dollars for their share of US dollardenominated raw sugar exports. Currency exposures for these exports are managedby QSL.

 

For fiscal year 2004, it is estimated thatAluminium will have net US dollar revenues of US$160 million, of which 94percent are protected from exchange rate movements as at March 31, 2003. On theexposed portion, a hypothetical one cent movement in the A$/US$ exchange ratewill result in an A$0.3 million change in the CSR group’s net profit.

 

Specificinformation concerning the currency exposure and financial instruments used tolimit that exposure is reviewed in Note 28 of the financial statements.

 

**Interest Rate Sensitivity and Risk Management**

 

Interestrate exposure is managed with an objective of reducing year to year volatilityin interest costs to obtain a stable and predictable interest expenseoutcome.  To achieve this result, CSRgroup entities enter into interest rate hedges, including interest rate swaps,swaptions, caps and collars.

 

Asat March 31, 2003 approximately 43 percent of the CSR group’s gross debt is USdollar denominated and all but A$0.2 million was on floating interest rates. Itis estimated that a hypothetical 100 basis point movement would have an A$2.8million impact on the CSR group’s future net profit.

 

Specificinformation concerning interest rate exposure and financial instruments used tolimit that exposure is disclosed in Note 19 and 28 of the financial statements.

 

108

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## **Item 12.                 Description of Securities OtherThan Equity Securities**

 

Not applicable.

 

# **PART II**

 

## **Item13.                 Defaults**, Dividend Arrearages and Delinquencies

 

None.

## ** **

## **Item 14.                 MaterialModifications** to the Rights of SecurityHolders and Use of Proceeds

 

None.

 

# **PART III**

 

## **Item 15.                 Controlsand Procedures**

 

Withinthe 90-day period prior to the filing date of this annual report, an evaluationwas carried out under the supervision and with the participation of CSR’smanagement, including the Managing Director and Chief Financial Officer, of theeffectiveness of the design and operation of our disclosure controls andprocedures (as defined in Rule 13a-14(c) under the Securities Exchange Actof 1934). Based upon that evaluation, the Managing Director and Chief FinancialOfficer concluded that the design and operation of these disclosure controlsand procedures were effective. No significant changes were made in our internalcontrols or in other factors that could significantly affect these controlssubsequent to the date of their evaluation.

 

## **Item 16.                **Not applicable

 

# **PART IV**

 

## **Item 17.                 Financialstatements**

 

Not Applicable.

## ** **

## **Item 18.                 Financialstatements**

### ** **

Report of Independent Auditors

 

Consolidated financial statements as at March 31,2003

 

See pages F-1 through F-74.

## ** **

## **Item19.                 Exhibits**

 

Documents filed as exhibits to this annual report:

 

**Exhibit 1** -  Constitution of CSR

 

Constitution of CSR Limited effective, March 25,2003.

 

 

109

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**Exhibit 4****-Materials Contracts**

 
| 4.1.1  |   | Demerger Deed, dated March 27, 2003                                                                                            |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                           |
| 4.1.2  |   | Bond Guarantee Indemnity Deed among CSR  Limited, Rinker Group Limited and Rinker Materials Corporation, dated March  27, 2003 |
|   |   |                                                                                                                           |
| 4.1.3  |   | Transition and Shared Services Agreement  between Rinker Group Limited and CSR Limited dated March 27, 2003                    |
|   |   |                                                                                                                           |
| 4.1.4  |   | ***Management  Contracts***                                                                                                    |
|   |   |                                                                                                                           |
|   |   | Contract of employment, dated August 24,  2001, between Warren Saxelby and CSR Limited.                                        |
|   |   |                                                                                                                           |
|   |   | Contract of employment, dated June 26, 2003,  between Alec Brennan and CSR Limited.                                            |

 

 

**Exhibit 8 - SignificantSubsidiaries**

 

List of significant subsidiaries

## ** **

## **Signature**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this annual report to be signed on its behalf by the undersigned,thereunto duly authorized.

 

 
| **CSR LIMITED** |                       |
|-----------------|----------------------------|
| (Registrant)    |                       |
|            |                       |   |
|            |                       |   |
|            |                       |   |
| By:             | **/s/ ALEC BRENNAN**       |   |   |
|            | A.N.  Brennan              |   |
|            | CEO  and Managing Director |   |
|            |                       |
| Dated:          | July  2, 2003              |   |
|                 |                            |  |  |  |

 

 

110

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**Certification**

 

I, Alec Brennan, certify that:

 

1.               I have reviewed this annualreport on Form 20-F of CSR Limited;

 

2.               Based on my knowledge, thisannual report does not contain any untrue statement of a material fact or omitto state a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this annual report;

 

3.               Based on my knowledge, thefinancial statements, and other financial information included in this annualreport, fairly present in all material respects the financial condition,results of operations and cash flows of the registrant as of, and for, theperiods presented in this annual report;

 

4.               The registrant’s othercertifying officers and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and15d-14) of the registrant and have:

 

a)              Designed such disclosure controls and procedures toensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this annual report is being prepared;

b)             Evaluated the effectiveness of the registrant’sdisclosure controls and procedures as of a date within 90 days prior the filingdate of this annual report (the “Evaluation Date”); and

c)              Presented in this annual report our conclusions aboutthe effectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date;

 

5.               The registrant’s other certifyingofficers and I have disclosed, based on our most recent evaluation, to theregistrant’s auditors and the audit committee of registrant’s board ofdirectors (or persons performing the equivalent function):

 

a) All significant deficiencies in the designor operation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

 

b) Any fraud, whether or not material, thatinvolves management or other employees who have a significant role in theregistrant’s internal controls; and

 

6.               The registrant’s othercertifying officers and I have indicated in this annual report whether or notthere were significant changes in internal controls or in other factors thatcould significantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 

 

Dated: July 2, 2003

 
|   |   |   | **/s/ ALEC BRENNAN**      |   |
|--------|--------|--------|---------------------------|--------|
|   | Name:  |   | Alec Brennan              |
|   | Title: |   | CEO and Managing Director |

 

111

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**Certification**

 

I,Warren Saxelby, certify that:

 

1.               I have reviewed this annualreport on Form 20-F of CSR Limited;

 

2.               Based on my knowledge, thisannual report does not contain any untrue statement of a material fact or omitto state a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this annual report;

 

3.               Based on my knowledge, thefinancial statements, and other financial information included in this annualreport, fairly present in all material respects the financial condition,results of operations and cash flows of the registrant as of, and for, theperiods presented in this annual report;

 

4.               The registrant’s othercertifying officers and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and15d-14) of the registrant and have:

 

a)              Designed such disclosure controls and procedures to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries,is made known to us by others within those entities, particularly during theperiod in which this annual report is being prepared;

b)             Evaluated the effectiveness of the registrant’s disclosure controls andprocedures as of a date within 90 days prior the filing date of this annualreport (the “Evaluation Date”); and

c)              Presented in this annual report our conclusions about the effectivenessof the disclosure controls and procedures based on our evaluation as of theEvaluation Date;

 

5.               The registrant’s othercertifying officers and I have disclosed, based on our most recent evaluation,to the registrant’s auditors and the audit committee of registrant’s board ofdirectors (or persons performing the equivalent function):

 

a) All significant deficiencies in the design or operation of internalcontrols which could adversely affect the registrant’s ability to record,process, summarize and report financial data and have identified for theregistrant’s auditors any material weaknesses in internal controls; and

 

b) Any fraud, whether or not material, that involves management or otheremployees who have a significant role in the registrant’s internal controls;and

 

6.               The registrant’s othercertifying officers and I have indicated in this annual report whether or notthere were significant changes in internal controls or in other factors thatcould significantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 

 
| Dated:  July 2, 2003 |   |                    |   |
|---------------------------|--------|-------------------------|--------|
|                      |   |                    |   |
|                      |   | **/s/ WARREN SAXELBY**  |   |
|                      | Name:  | Warren Saxelby          |   |
|                      | Title: | Chief Financial Officer |   |

 

 

112

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**FinancialReport**

 

for the year ended March 31, 2003

 
| **Report of Independent  Auditors**                                 |                                                                          |
|---------------------------------------------------------------------|-------------------------------------------------------------------------------|
|                                                                |                                                                          |
| **Consolidated  statement of financial performance**                |                                                                          |
|                                                                |                                                                          |
| **Consolidated  statement of financial position**                   |                                                                          |
|                                                                |                                                                          |
| **Consolidated  statement of cash flows**                           |                                                                          |
|                                                                |                                                                          |
| **Consolidated  statement of changes in shareholders’ equity** |
|                                                                |
| **Significant accounting  policies**                                |                                                                          |
|                                                                |                                                                          |
| **Notes to  the consolidated financial statements**                 |
|                                                                |
| 1                                                                   | Segment  information                                                          |
| 2                                                                   | Other  revenue and expenses from ordinary activities                          |
| 3                                                                   | Significant items                                                             |
| 4                                                                   | Interest income                                                               |
| 5                                                                   | Net  finance expense                                                          |
| 6                                                                   | Depreciation and  amortisation                                                |
| 7                                                                   | Dividends and franking  credits                                               |
| 8                                                                   | Income tax                                                                    |
| 9                                                                   | Net cash                                                                      |
| 10                                                                  | Receivables                                                                   |
| 11                                                                  | Inventories                                                                   |
| 12                                                                  | Investments  accounted for using the equity method                            |
| 13                                                                  | Other  financial assets                                                       |
| 14                                                                  | Property, plant and equipment                                                 |
| 15                                                                  | Movements in property, plant and equipment                                    |
| 16                                                                  | Intangibles                                                                   |
| 17                                                                  | Other assets                                                                  |
| 18                                                                  | Current payables                                                              |
| 19                                                                  | Interest bearing  liabilities                                                 |
| 20                                                                  | Credit  facilities and maturity profile                                       |
| 21                                                                  | Provisions                                                                    |
| 22                                                                  | Contributed equity                                                            |
| 23                                                                  | Reserves                                                                      |
| 24                                                                  | Outside  equity interests in controlled entities                              |
| 25                                                                  | Interest in joint  venture operation                                          |
| 26                                                                  | Directors’ and executives’ remuneration                             |
| 27                                                                  | Auditors’  remuneration                                                  |
| 28                                                                  | Financial  instruments                                                        |
| 29                                                                  | Contracted capital  expenditure                                               |
| 30                                                                  | Contracted lease  and hire expenditure                                        |
| 31                                                                  | Non-cash  financing and investing activities                                  |
| 32                                                                  | Related party information                                                     |
| 33                                                                  | Superannuation commitments                                                    |
| 34                                                                  | Equity accounting  information                                                |
| 35                                                                  | Acquisitions  and disposals of controlled entities and businesses             |
| 36                                                                  | Particulars  relating to controlled entities                                  |
| 37                                                                  | Discontinued  operations                                                      |
| 38                                                                  | Contingent  liabilities                                                       |
| 39                                                                  | United  States Generally Accepted Accounting Principles (US GAAP) information |
| 40                                                                  | Consolidating  financial information                                          |
|                                                                     |                                                                               |  |

 

 

 

F-1

----

 

**REPORT OF INDEPENDENT AUDITORS**

 

 

*To the Board of Directors and Shareholders of CSR Limited:*

 

We have audited theaccompanying consolidated statements of financial position of CSR Limited (acompany incorporated in New South Wales, Australia) and its controlled entities(the ‘Company’) as at March 31, 2003 and 2002 and the related consolidatedstatements of financial performance, cash flows and changes in shareholders’equity for each of the three years in the period ended March 31, 2003 (allexpressed in Australian dollars). These consolidated financial statements arethe responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audits.

 

We conducted our auditsin accordance with auditing standards generally accepted in Australia and theUnited States of America. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financialstatements.  An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, suchconsolidated financial statements referred to above present fairly, in allmaterial respects, the consolidated financial position of CSR Limited and itscontrolled entities at March 31, 2003 and 2002, and the consolidated results ofits financial performance and its cash flows for each of the three years in theperiod ended March 31, 2003, in conformity with accounting principles generallyaccepted in Australia.

 

Accounting principlesgenerally accepted in Australia vary in certain significant respects fromaccounting principles generally accepted in the United States of America.  The application of the latter would haveaffected the determination of net profit for each of the three years endedMarch 31, 2003, and the determination of shareholders’ equity as at March 31,2003, and 2002, to the extent summarized in Note 39.

 

Our audits alsocomprehended the translation of the Australian dollar amounts into U.S. dollaramounts and, in our opinion,  suchtranslation has been made in conformity with the basis stated in theSignificant Accounting Policies detailed on page F-10.  Such US dollar amounts are presented solelyfor the convenience of the readers in the United States of America.

 

 
| **DELOITTE TOUCHE  TOHMATSU**                                                  |
|--------------------------------------------------------------------------------|
|                                                                           |   |
| Deloitte  Touche Tohmatsu                                                      |
| Chartered  Accountants                                                         |   |
|                                                                           |   |
| Sydney,  Australia                                                             |   |
|                                                                           |   |
| May  20, 2003 except for Notes 39 and 40, as to which the date is July 2, 2003 |   |
|                                                                                |  |  |

 

 

F-2

----

 

Thispage intentionally left blank.

 

 

 

 

 

 

F-3

----

 

**Consolidatedstatement of financial performance**

 

Year ended March 31

 

CSR Limited and its controlled entities

 
| **(million except per share data)**                                                                                        |   | **Note** |       | **2003  US$** |       | **2003  A$** |       | **2002  A$** |       | **2001  A$** |       |
|----------------------------------------------------------------------------------------------------------------------------|--------|----------|------------|---------------|------------|--------------|------------|--------------|------------|--------------|------------|
| Trading revenue - sale of goods                                                                                            |   |     |       | **4,402.5**   | ** ** | **7,282.9**  | ** ** | 6,984.7      |       | 6,424.0      |       |
| Cost of sales(a)                                                                                                           |   |     |       | **(2,777.1**  | **)**      | **(4,594.1** | **)**      | (4,444.8     | )          | (4,097.2     | )          |
| Warehouse and distribution costs(a)                                                                                        |   |     |       | **(642.6**    | **)**      | **(1,063.0** | **)**      | (991.1       | )          | (874.1       | )          |
| Selling costs(a)                                                                                                           |   |     |       | **(131.6**    | **)**      | **(217.6**   | **)**      | (182.4       | )          | (156.7       | )          |
| Administration and other operating costs(a)                                                                                |   |     |       | **(323.2**    | **)**      | **(534.7**   | **)**      | (512.5       | )          | (466.1       | )          |
| Share of partnership net loss                                                                                              |   |     |       | **(0.2**      | **)**      | **(0.3**     | **)**      | (0.3         | )          | (0.8         | )          |
| Share of associate entities’ net profit                                                                               |   |     |       | **32.4**      | ** ** | **53.6**     | ** ** | 45.7         |       | 50.2         |       |
| Operating profit                                                                                                           |   |     |       | **560.2**     | ** ** | **926.8**    | ** ** | 899.3        |       | 879.3        |       |
| Other revenue from ordinary activities                                                                                     |   | 2        | ** ** | **2,885.7**   | ** ** | **4,773.8**  | ** ** | 183.0        |       | 588.9        |       |
| Other expenses from ordinary activities                                                                                    |   | 2        | ** ** | **(1,967.1**  | **)**      | **(3,254.1** | **)**      | (158.8       | )          | (489.7       | )          |
| Dividend income from others                                                                                                |   |     |       | **1.4**       | ** ** | **2.3**      | ** ** | 2.3          | ** ** | 1.4          |       |
| Profit from ordinary activities before finance and income tax                                                              |   |     |       | **1,480.2**   | ** ** | **2,448.8**  | ** ** | 925.8        | ** ** | 979.9        |       |
| Interest income                                                                                                            |   | 4        | ** ** | **5.4**       | ** ** | **8.9**      | ** ** | 24.8         |       | 23.7         |       |
| Borrowing costs                                                                                                            |   | 5        | ** ** | **(69.0**     | **)**      | **(114.2**   | **)**      | (132.1       | )          | (155.4       | )          |
| **Profit from ordinary activities before income tax**                                                                      |   |     |       | **1,416.6**   | ** ** | **2,343.5**  | ** ** | 818.5        | ** ** | 848.2        |       |
| Income tax expense relating to ordinary activities                                                                         |   | 8        | ** ** | **(161.0**    | **)**      | **(266.3**   | **)**      | (243.7       | )          | (179.1       | )          |
| **Net profit before outside equity interests**                                                                             |   |     | ** ** | **1,255.6**   | ** ** | **2,077.2**  | ** ** | 574.8        |       | 669.1        |       |
| Net profit attributable to outside equity interests                                                                        |   |     | ** ** | **14.3**      | ** ** | **23.7**     | ** ** | 22.2         |       | 35.0         |       |
| **Net profit attributable to members of CSR Limited**                                                                      |   |     | ** ** | **1,241.3**   | ** ** | **2,053.5**  | ** ** | 552.6        |       | 634.1        |       |
| Decrease in asset revaluation reserve arising on revaluation of  property, plant and equipment                             |   | 23       | ** ** | **—**    | ** ** | **—**   | ** ** | —       |       | (4.5         | )          |
| (Decrease)/increase in foreign currency translation reserve arising  on translation of self-sustaining foreign operations  |   | 23       | ** ** | **(128.6**    | **)**      | **(212.8**   | **)**      | (104.9       | )          | 241.3        |       |
| Adjustment to opening retained profits on adoption of AASB 1044 -  asbestos                                                |   |     |       | **(86.9**     | **)**      | **(143.7**   | **)**      | —       |       | —       |       |
| **Total revenue, expense and valuation adjustments  attributable to members of CSR Limited recognised directly in equity** |   |     |       | **(215.5**    | **)**      | **(356.5**   | **)**      | (104.9       | )          | 236.8        |       |
| **Total changes in equity not resulting from  transactions with owners as owners**                                         |   |     |       | **1,025.8**   | ** ** | **1,697.0**  | ** ** | 447.7        | ** ** | 870.9        |       |
| **Reconciliation of retained profits**                                                                                     |   |     |       |          | ** ** |         | ** ** |         | ** ** |         | ** ** |
| Retained profits at the beginning of the financial year                                                                    |   |     |       | **968.6**     | ** ** | **1,602.3**  | ** ** | 1,273.9      | ** ** | 860.8        |       |
| Net profit attributable to members of CSR Limited(f)                                                                       |   |     |       | **1,241.3**   | ** ** | **2,053.5**  | ** ** | 552.6        | ** ** | 634.1        |       |
| Demerger distribution(b)                                                                                                   |   |     |       | **(2,005.2**  | **)**      | **(3,317.2** | **)**      | —       | ** ** | —       |       |
| Adjustment to opening retained profits on adoption of AASB 1044 -  asbestos                                                |   |     |       | **(86.9**     | **)**      | **(143.7**   | **)**      | —       | ** ** | —       |       |
| Adjustment to opening retained profits on adoption of AASB 1044 -  dividend                                                |   |     |       | **73.6**      | ** ** | **121.7**    | ** ** | —       | ** ** | —       |       |
| Aggregate of amounts transferred from reserves                                                                             |   | 23       | ** ** | **33.7**      | ** ** | **55.7**     | ** ** | 0.8          |       | 1.5          |       |
| **Total available for appropriation**                                                                                      |   |     | ** ** | **225.1**     | ** ** | **372.3**    | ** ** | 1,827.3      |       | 1,496.4      |       |
| Dividends provided for or paid                                                                                             |   |     | ** ** | **136.0**     | ** ** | **225.0**    | ** ** | 225.0        |       | 222.5        |       |
| **Retained profits at the end of the financial year**                                                                      |   |     | ** ** | **89.1**      | ** ** | **147.3**    | ** ** | 1,602.3      |       | 1,273.9      |       |
|                                                                                                                       |   |     | ** ** |          | ** ** |         | ** ** |         |       |         | ** ** |
| **Basic earnings, dollars per share based on net  profit attributable to members of CSR Limited**(c)(e)                    |   |     | ** ** | **1.32**      | ** ** | **2.19**     | ** ** | 0.59         |       | 0.63         |       |
|                                                                                                                       |   |     | ** ** |          | ** ** |         | ** ** |         |       |         | ** ** |
| **Diluted earnings, dollars per share based on net  profit attributable to members of CSR Limited(**d)(e)                  |   |     | ** ** | **1.32**      | ** ** | **2.19**     | ** ** | 0.58         |       | 0.62         |       |

 

----

(a)           Operating costsare detailed on page F-5

(b)           The fair value of the demerged businesses (A$4,573.0million) was determined using the average Rinker Group Limited share price forthe first ten trading days. The demerger distribution is calculated as the fairvalue of Rinker Group Limited less the amount of the capital reduction(A$1,255.8 million).

(c)           Calculation based on 937.7 million (2002: 944.8million, 2001: 1,003.3 million) weighted average number of ordinary shares onissue and earnings of A$2,053.5 million.

(d)           Calculation based on 937.7 million (2002: 944.8million, 2001: 1,003.3 million) weighted average number of ordinary shares onissue, and 2.1 million (2002: 10.8 million, 2001 15.5 million) average numberof potential shares issued due to dilutive options and earnings of A$2,053.5million.

(e)           Earnings per share before significant items (see fbelow) is basic: $A 0.60 and diluted: $A 0.60.

(f)            As described in note 37 (discontinued operations),the CSR group demerged its Rinker Materials and Readymix businesses on March28, 2003. The statement of financial performance includes the net profit ofthese businesses up to the date of demerger. In addition, net profit of the CSRgroup includes a net profit of A$1,492.7 million arising from accounting forthe demerger at fair value (refer note 3 for details). Excluding thissignificant item, net profit is A$560.8 million. Assets distributed toshareholders in the demerger comprise the book value of those assets and thesignificant profit.

 

Notes to the consolidated financial statements are annexed

 

F-4

----

 
| **(million)**                                                                           |   | **Note** |       | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   | **2001  A$** |   |
|-----------------------------------------------------------------------------------------|--------|----------|------------|---------------|------------|--------------|--------|--------------|--------|--------------|--------|
|                                                                                    |   |     |       |          |       |         |   |         |   |         |   |
| **Discontinued operations included in operating profit  after income tax**              |   |     |       |          |       |         |   |         |   |         |   |
|                                                                                    |   |     |       |          |       |         |   |         |   |         |   |
| Income from operations of demerged Rinker Group Limited (less  applicable income taxes) |   | 37       | ** ** | **235.2**     | ** ** | **389.1**    |   | 354.5        |   | 286.3        |   |
| Gain on disposal of Rinker Group Limited, net of tax benefit of  A$17.7 million         |   | 3        | ** ** | **902.3**     | ** ** | **1,492.7**  |   | —       |   | —       |   |
| Net income from discontinued operations                                                 |   |     |       | **1,137.5**   | ** ** | **1,881.8**  |   | 354.5        |   | 286.3        |   |
|                                                                                    |   |     |       |          |       |         |   |         |   |         |   |
| **Operating costs**                                                                     |   |     |       |          |       |         |   |         |   |         |   |
| • research and development                                                         |   |     |       | **3.9**       | ** ** | **6.4**      |   | 5.8          |   | 6.3          |   |
| • mining royalties paid to governments                                             |   |     |       | **2.0**       | ** ** | **3.3**      |   | 2.7          |   | 5.7          |   |
| • operating lease and rental payments                                              |   |     |       | **36.5**      | ** ** | **60.4**     |   | 66.9         |   | 65.6         |   |
| • contributions to employee retirement funds                                       |   | 33       | ** ** | **53.3**      | ** ** | **88.1**     |   | 49.1         |   | 36.2         |   |
| • repairs and maintenance                                                          |   |     | ** ** | **145.5**     |       | **240.7**    |   | 265.9        |   | 239.3        |   |

 

Notes to the consolidated financial statementsare annexed

 

 

F-5

----

 

**Consolidatedstatement of financial position**

 

As at March 31

 

CSR Limited and its controlled entities

 
| **(million)**                                     |   | **Note** |       | **2003  US$** |       | **2003****A$** |   | **2002A$** |   |
|---------------------------------------------------|--------|----------|------------|---------------|------------|----------------|--------|------------|--------|
| **Current assets**                                |   |     |       |          |       |           |   |       |   |
| Cash                                              |   | 9        | ** ** | **225.1**     | ** ** | **372.4**      |   | 156.6      |   |
| Receivables                                       |   | 10       | ** ** | **197.2**     | ** ** | **326.2**      |   | 988.0      |   |
| Inventories                                       |   | 11       | ** ** | **94.5**      | ** ** | **156.3**      |   | 572.5      |   |
| Other current assets                              |   | 17       | ** ** | **1.4**       | ** ** | **2.3**        |   | 25.5       |   |
| **Current assets**                                |   |     | ** ** | **518.2**     |       | **857.2**      |   | 1,742.6    |   |
|                                              |   |     |       |          |       |           |   |       |   |
| **Non-current assets**                            |   |     |       |          |       |           |   |       |   |
| Receivables                                       |   | 10       | ** ** | **28.0**      | ** ** | **46.3**       |   | 50.9       |   |
| Inventories                                       |   | 11       | ** ** | **11.7**      | ** ** | **19.4**       |   | 129.2      |   |
| Investments accounted for using the equity method |   | 12       | ** ** | **83.7**      | ** ** | **138.4**      |   | 316.6      |   |
| Other financial assets                            |   | 13       | ** ** | **13.5**      | ** ** | **22.4**       |   | 40.2       |   |
| Property, plant and equipment                     |   | 14       | ** ** | **820.5**     | ** ** | **1,357.4**    |   | 4,137.9    |   |
| Intangibles                                       |   | 16       | ** ** | **21.8**      | ** ** | **36.1**       |   | 1,111.6    |   |
| Deferred income tax assets                        |   | 8        | ** ** | **122.6**     | ** ** | **202.8**      |   | 283.0      |   |
| Other non-current assets                          |   | 17       | ** ** | **33.5**      | ** ** | **55.5**       |   | 138.7      |   |
| **Non-current assets**                            |   |     | ** ** | **1,135.3**   |       | **1,878.3**    |   | 6,208.1    |   |
| **Total assets**                                  |   |     | ** ** | **1,653.5**   |       | **2,735.5**    |   | 7,950.7    |   |
|                                              |   |     |       |          |       |           |   |       |   |
| **Current liabilities**                           |   |     |       |          |       |           |   |       |   |
| Payables                                          |   | 18       | ** ** | **145.7**     | ** ** | **241.1**      |   | 745.3      |   |
| Interest-bearing liabilities                      |   | 19       | ** ** | **196.8**     | ** ** | **325.6**      |   | 104.0      |   |
| Income tax liabilities                            |   |     | ** ** | **8.0**       |       | **13.3**       |   | 17.3       |   |
| Provisions                                        |   | 21       | ** ** | **83.9**      | ** ** | **138.8**      |   | 352.6      |   |
| **Current liabilities**                           |   |     |       | **434.4**     | ** ** | **718.8**      |   | 1,219.2    |   |
|                                              |   |     |       |          |       |           |   |       |   |
| **Non-current liabilities**                       |   |     |       |          |       |           |   |       |   |
| Payables                                          |   | 19       | ** ** | **0.9**       | ** ** | **1.5**        |   | 43.2       |   |
| Interest-bearing liabilities                      |   | 19       | ** ** | **164.8**     | ** ** | **272.7**      |   | 1,790.7    |   |
| Deferred income tax liabilities                   |   | 8        | ** ** | **129.1**     | ** ** | **213.5**      |   | 519.6      |   |
| Provisions                                        |   | 21       | ** ** | **229.8**     | ** ** | **380.2**      |   | 273.6      |   |
| **Non-current liabilities**                       |   |     |       | **524.6**     | ** ** | **867.9**      |   | 2,627.1    |   |
| **Total liabilities**                             |   |     |       | **959.0**     | ** ** | **1,586.7**    |   | 3,846.3    |   |
| **Net assets**                                    |   |     |       | **694.5**     | ** ** | **1,148.8**    |   | 4,104.4    |   |
|                                              |   |     |       |          |       |           |   |       |   |
| **Equity**                                        |   |     |       |          |       |           |   |       |   |
| Contributed equity                                |   | 22       | ** ** | **556.0**     | ** ** | **919.7**      |   | 2,139.4    |   |
| Reserves                                          |   | 23       | ** ** | **7.6**       | ** ** | **12.6**       |   | 281.1      |   |
| Retained profits                                  |   |     |       | **89.1**      | ** ** | **147.3**      |   | 1,602.3    |   |
| **Equity attributable to members of CSR Limited** |   |     |       | **652.7**     | ** ** | **1,079.6**    |   | 4,022.8    |   |
| Outside equity interests in controlled entities   |   | 24       | ** ** | **41.8**      | ** ** | **69.2**       |   | 81.6       |   |
| **Total equity**                                  |   |     |       | **694.5**     | ** ** | **1,148.8**    |   | 4,104.4    |   |

 

TheCSR group demerged its Rinker Materials and Readymix businesses on March 28,2003.  The 2003 statement of financialposition excludes all the assets and liabilities that were demerged.  Details of demerged (discontinued)businesses are given in notes 35 and 37.

 

Notes to the consolidated financial statements are annexed.

 

F-6

----

 

**Consolidatedstatement of cash flows(****a)**

 

Year ended March 31

 

CSR Limited and its controlled entities

 
| **(million)**                                                                                                  |   | **Note** |       | **2003  US$** |       | **2003  A$** |       | **2002  A$** |   | **2001  A$** |   |
|----------------------------------------------------------------------------------------------------------------|--------|----------|------------|---------------|------------|--------------|------------|--------------|--------|--------------|--------|
| **Cash flows from operating activities**                                                                       |   |     |       |          | ** ** |         | ** ** |         |   |         |   |
| Receipts from customers                                                                                        |   |     |       | **4,577.7**   | ** ** | **7,572.7**  | ** ** | 7,258.3      |   | 6,719.2      |   |
| Payments to suppliers and employees                                                                            |   |     |       | **(3,797.1**  | **)**      | **(6,281.3** | **)**      | (5,987.1     | )      | (5,545.3     | )      |
| Dividends and distributions from associate entities and controlled  entities                                   |   |     |       | **42.0**      | ** ** | **69.5**     | ** ** | 54.6         |   | 39.1         |   |
| Interest received                                                                                              |   |     |       | **5.3**       | ** ** | **8.8**      | ** ** | 27.8         |   | 24.7         |   |
| Tax refund from Australian Taxation Office                                                                     |   | 8        | ** ** | **—**    | ** ** | **—**   | ** ** | 33.0         |   | —       |   |
| Income tax paid                                                                                                |   |     |       | **(119.4**    | **)**      | **(197.6**   | **)**      | (191.8       | )      | (213.5       | )      |
| **Net cash from operating activities**                                                                         |   |     |       | **708.5**     | ** ** | **1,172.1**  | ** ** | 1,194.8      |   | 1,024.2      |   |
|                                                                                                           |   |     |       |          | ** ** |         | ** ** |         |   |         |   |
| **Cash flows from investing activities**                                                                       |   |     |       |          | ** ** |         | ** ** |         |   |         |   |
| Purchase of property, plant and equipment and other non-current  assets                                        |   |     |       | **(190.5**    | **)**      | **(315.2**   | **)**      | (427.0       | )      | (391.1       | )      |
| Proceeds from sale of property, plant and equipment and other  non-current assets                              |   |     |       | **59.1**      | ** ** | **97.7**     | ** ** | 120.6        |   | 92.4         |   |
| Purchase of controlled entities and businesses net of cash acquired                                            |   | 35       | ** ** | **(587.5**    | **)**      | **(971.8**   | **)**      | (158.5       | )      | (1,093.1     | )      |
| Return of capital from associate entities                                                                      |   |     | ** ** | **—**    | ** ** | **—**   | ** ** | —       |   | 5.6          |   |
| Proceeds from sale of interests in controlled entities and businesses                                          |   | 35       | ** ** | **43.4**      | ** ** | **71.8**     | ** ** | 15.5         |   | 783.7        |   |
| Return of capital from Sugar Terminals Ltd                                                                     |   |     |       | **3.3**       | ** ** | **5.4**      | ** ** | —       |   | —       |   |
| Loans and receivables advanced                                                                                 |   |     |       | **(4.6**      | **)**      | **(7.6**     | **)**      | (1.2         | )      | (2.1         | )      |
| Loans and receivables repaid                                                                                   |   |     |       | **2.8**       | ** ** | **4.6**      | ** ** | 13.3         |   | 25.1         |   |
| **Net cash used in investing activities**                                                                      |   |     |       | **(674.0**    | **)**      | **(1,115.1** | **)**      | (437.3       | )      | (579.5       | )      |
|                                                                                                           |   |     |       |          | ** ** |         | ** ** |         |   |         |   |
| **Cash flows from financing activities**                                                                       |   |     |       |          | ** ** |         | ** ** |         |   |         |   |
| Proceeds from issue of shares - CSR shareholders                                                               |   |     |       | **25.9**      | ** ** | **42.8**     | ** ** | 22.9         |   | 14.4         |   |
| Share buyback                                                                                                  |   |     |       | **(4.1**      | **)**      | **(6.7**     | **)**      | (208.5       | )      | (340.7       | )      |
| Net proceeds from (repayment of) borrowings(b)                                                                 |   |     |       | **402.7**     | ** ** | **666.2**    | ** ** | (243.0       | )      | 436.2        |   |
| Dividends paid                                                                                                 |   |     |       | **(148.2**    | **)**      | **(245.1**   | **)**      | (256.2       | )      | (276.5       | )      |
| Interest and other finance costs paid                                                                          |   |     |       | **(67.3**     | **)**      | **(111.4**   | **)**      | (118.3       | )      | (167.5       | )      |
| Hedging of foreign operations                                                                                  |   |     |       | **—**    | ** ** | **—**   | ** ** | 3.3          |   | (56.1        | )      |
| **Net cash from (used in) financing activities**                                                               |   |     |       | **209.0**     | ** ** | **345.8**    | ** ** | (799.8       | )      | (390.2       | )      |
|                                                                                                           |   |     |       |          | ** ** |         | ** ** |         |   |         |   |
| **Net increase (decrease) in cash held**                                                                       |   |     |       | **243.5**     | ** ** | **402.8**    | ** ** | (42.3        | )      | 54.5         |   |
| Cash at the beginning of the financial year                                                                    |   |     |       | **94.6**      | ** ** | **156.6**    | ** ** | 199.5        |   | 120.7        |   |
| Cash in demerged entities                                                                                      |   |     |       | **(111.7**    | **)**      | **(184.8**   | **)**      | —       |   | —       |   |
| Effects of exchange rate changes                                                                               |   |     |       | **(5.1**      | **)**      | **(8.5**     | **)**      | (0.6         | )      | 24.3         |   |
| **Net cash at the end of the financial year**(b)                                                               |   | 9        | ** ** | **221.3**     | ** ** | **366.1**    | ** ** | 156.6        |   | 199.5        |   |
|                                                                                                           |   |     |       |          | ** ** |         | ** ** |         |   |         |   |
| **Reconciliation of net profit attributable to members  of CSR Limited to net cash from operating activities** |   |     |       |          | ** ** |         | ** ** |         |   |         |   |
| Net profit attributable to members of CSR Limited                                                              |   |     |       | **1,241.3**   | ** ** | **2,053.5**  |       | 552.6        |   | 634.1        |   |
| Depreciation and amortisation                                                                                  |   | 6        | ** ** | **285.1**     | ** ** | **471.6**    | ** ** | 452.9        |   | 415.4        |   |
| Transfer from provisions                                                                                       |   |     |       | **(22.0**     | **)**      | **(36.4**    | **)**      | (47.0        | )      | (50.0        | )      |
| Interest expense                                                                                               |   |     |       | **63.5**      | ** ** | **105.1**    | ** ** | 131.7        |   | 157.3        |   |
| Other profit from ordinary activities                                                                          |   | 2        | ** ** | **(918.7**    | **)**      | **(1,519.7** | **)**      | (24.2        | )      | (99.2        | )      |
| Outside equity interests’ share of profit                                                                 |   |     |       | **(14.3**     | **)**      | **(23.7**    | **)**      | 22.2         |   | 35.0         |   |
| (Increase) decrease in trade receivables and other current assets                                              |   |     |       | **(14.3**     | **)**      | **(23.7**    | **)**      | 18.1         |   | 105.2        |   |
| Decrease (increase) in current inventories                                                                     |   |     |       | **6.2**       | ** ** | **10.2**     | ** ** | 29.0         |   | (46.9        | )      |
| Increase (decrease) in trade payables                                                                          |   |     |       | **33.1**      | ** ** | **54.8**     | ** ** | (53.0        | )      | (88.1        | )      |
| Net change in tax balances                                                                                     |   |     |       | **41.5**      | ** ** | **68.6**     | ** ** | 84.9         |   | (59.1        | )      |
| Other                                                                                                          |   |     |       | **7.1**       | ** ** | **11.8**     | ** ** | 27.6         |   | 20.5         |   |
| **Net cash from operating activities**                                                                         |   |     |       | **708.5**     | ** ** | **1,172.1**  | ** ** | 1,194.8      |   | 1,024.2      |   |

 

----

(a)           The consolidated statement of cashflows is preparedin accordance with Australian GAAP and therefore results in compliance withInternational Accounting Standard IAS No.7 “CashFlow Statements.”

 

(b)           A$255.3 million was borrowed prior to March 31, 2003to settle amounts owing to Rinker group. The cash was paid to Rinker group onApril 2, 2003.

 

Credit facilities are shown in note 20.

Non-cash financing and investing activities are shown in note 31.

 

Notes to the consolidated financial statements are annexed.

 

 

F-7

----

 

**Consolidatedstatement of changes in shareholders’ equity**

 

Year ended March 31

 

CSR Limited and its controlled entities

 
| **(million)**                                                                |   | **2003  US$** |       | **2003  A$** |       | **2002  A$** |   | **2001  A$** |   |
|------------------------------------------------------------------------------|--------|---------------|------------|--------------|------------|--------------|--------|--------------|--------|
| **Issued and paid-up capital**(a)                                            |   |          |       |         | ** ** |         |   |         |   |
| Balance at the beginning of the financial year                               |   | **1,293.3**   | ** ** | **2,139.4**  | ** ** | 2,322.4      |   | 2,647.0      |   |
| Share buyback                                                                |   | **(4.1**      | **)**      | **(6.7**     | **)**      | (208.5       | )      | (340.7       | )      |
| Universal Share/Option Plan                                                  |   | **1.3**       | ** ** | **2.1**      | ** ** | 4.0          |   | 2.7          |   |
| Executive Share Option Plan (options converted)                              |   | **23.2**      | ** ** | **38.3**     | ** ** | 20.0         |   | 12.3         |   |
| Executive Share/Option Plan (partly to fully paid)                           |   | **1.4**       | ** ** | **2.4**      | ** ** | 1.5          |   | 1.1          |   |
| Return of capital due to demerger of Rinker Group Limited                    |   | **(759.1**    | **)**      | **(1,255.8** | **)**      | —       |   | —       |   |
| Balance at the end of the financial year                                     |   | **556.0**     | ** ** | **919.7**    | ** ** | 2,139.4      |   | 2,322.4      |   |
|                                                                         |   |          |       |         | ** ** |         |   |         |   |
| **Retained profits**                                                         |   |          |       |         | ** ** |         |   |         |   |
| Balance at the beginning of the financial year                               |   | **968.6**     | ** ** | **1,602.3**  | ** ** | 1,273.9      |   | 860.8        |   |
| Aggregate of amounts transferred (to) from reserves                          |   | **(0.8**      | **)**      | **(1.4**     | **)**      | 0.8          |   | 1.5          |   |
| Net profit attributable to members of CSR Limited                            |   | **1,241.3**   | ** ** | **2,053.5**  | ** ** | 552.6        |   | 634.1        |   |
| Total available for appropriation                                            |   | **2,209.1**   | ** ** | **3,654.4**  | ** ** | 1,827.3      |   | 1,496.4      |   |
| Dividends provided for or paid                                               |   | **(136.0**    | **)**      | **(225.0**   | **)**      | (225.0       | )      | (222.5       | )      |
| Adjustment to retained earnings on adoption of AASB1044 - product  liability |   | **(86.9**     | **)**      | **(143.7**   | **)**      | —       |   | —       |   |
| Adjustment to retained earnings on adoption of AASB1044 - dividend           |   | **73.6**      | ** ** | **121.7**    | ** ** | —       |   | —       |   |
| Transferred from reserves on demerger                                        |   | **34.5**      | ** ** | **57.1**     | ** ** | —       |   | —       |   |
| Demerger distribution                                                        |   | **(2,005.2**  | **)**      | **(3,317.2** | **)**      | —       |   | —       |   |
| Balance at the end of the financial year                                     |   | **89.1**      | ** ** | **147.3**    | ** ** | 1,602.3      |   | 1,273.9      |   |
|                                                                         |   |          |       |         | ** ** |         |   |         |   |
| **Capital reserves**                                                         |   |          |       |         | ** ** |         |   |         |   |
| Balance at the beginning of the financial year                               |   | **18.1**      | ** ** | **30.0**     | ** ** | 30.8         |   | 39.2         |   |
| Decrement on revaluation of non-current assets                               |   | **—**    | ** ** | **—**   | ** ** | —       |   | (4.5         | )      |
| Transfer to retained profits                                                 |   | **—**    | ** ** | **—**   | ** ** | (0.8         | )      | (3.9         | )      |
| Transferred to retained earnings on demerger                                 |   | **(18.1**     | **)**      | **(30.0**    | **)**      |         |   |         |   |
| Balance at the end of the financial year                                     |   | **—**    | ** ** | **—**   | ** ** | 30.0         |   | 30.8         |   |
|                                                                         |   |          |       |         | ** ** |         |   |         |   |
| **Foreign currency translation reserve**                                     |   |          |       |         | ** ** |         |   |         |   |
| Balance at the beginning of the financial year                               |   | **151.8**     | ** ** | **251.1**    | ** ** | 356.0        |   | 112.3        |   |
| Exchange differences relating to overseas net assets                         |   |          |       |         | ** ** |         |   |         |   |
| • net (loss) gain on translation                                        |   | **(146.7**    | **)**      | **(242.7**   | **)**      | (130.2       | )      | 330.2        |   |
| • net gain (loss) on hedge transactions                                 |   | **18.1**      | ** ** | **29.9**     | ** ** | 25.3         |   | (88.9        | )      |
| Transfer from retained profits                                               |   | **0.8**       | ** ** | **1.4**      | ** ** | —       |   | 2.4          |   |
| Transferred to retained earnings on demerger                                 |   | **(16.4**     | **)**      | **(27.1**    | **)**      |         |   |         |   |
| Balance at the end of the financial year                                     |   | **7.6**       | ** ** | **12.6**     | ** ** | 251.1        |   | 356.0        |   |
| **Total shareholders’ equity attributable to members  of CSR Limited**  |   | **652.7**     | ** ** | **1,079.6**  | ** ** | 4,022.8      |   | 3,983.1      |   |

 

(a)           Refer to note 22 foradditional information.

 

Notes to the consolidated financial statementsare annexed.

 

F-8

----

 

 

**Significantaccounting policies**

 

CSR Limited and its controlled entities

 

**Basis ofaccounting**

This general purpose financial report isprepared in accordance with the Corporations Act 2001, applicable accountingstandards and urgent issues group consensus views, and complies with otherrequirements of the law. In Australia the financial report is based onhistorical cost, except for certain assets which are at deemed cost. Theaccounting policies adopted are consistent with those of the previous years,unless otherwise stated. Details of significant accounting policies adopted aregiven below.

 

**Principlesof consolidation**

The consolidated financial statements havebeen prepared by aggregating the financial statements of all the entities thatcomprise the consolidated entity, being CSR Limited (“CSR”) and its controlledentities (collectively, the “CSR group”). In these consolidated financialstatements: 

•     results of each controlled entity areincluded from the date CSR obtains control and until such time as it ceases tocontrol an entity; and

•     all inter-entity balances and transactionsare eliminated.

Entities controlled by CSR are under noobligation to accept responsibility for liabilities of other common controlledentities except where such an obligation has been specifically undertaken.

 

**Recoverableamount of non-current assets**

Non-current assets are reviewed annually toensure the carrying values are not in excess of recoverable amounts.  Recoverable amounts are determined as thepresent value of the net cash inflows from the continued use and subsequentdisposal of the non-current asset.

 

**Intangibles**

Goodwill arising from the purchase ofcontrolled entities or businesses is amortised over the period over which thebenefits are expected to arise to a maximum of twenty years. Patents,trademarks and other intellectual property acquired are valued at the lower ofcost and recoverable amount and are amortised over the period in which thebenefits are expected to arise varying from five to 40 years.

 

**Statementof cash flows**

Net cash is defined as cash at banks and onhand and cash equivalents net of bank overdrafts. Cash equivalents includehighly liquid investments which are readily convertible to cash.

 

**Capitalisationof interest**

The CSR Group capitalises interest expenseduring the new construction or upgrade of qualifying assets.  Following commissioning, the totalcapitalised cost including interest is amortised over the expected useful lifeof the project. Interest expense capitalised is shown in note 5.

 

**Acquisitionof assets**

Assets acquired are recorded at the cost ofacquisition, being the purchase consideration determined as at the date ofacquisition plus costs incidental to the acquisition.  In the event that settlement of all or part of the cashconsideration given in the acquisition of an asset is deferred, the fair valueof the purchase consideration is determined by discounting the amounts payablein the future to their present value as at the date of acquisition.

 

**Depreciation(including amortisation and depletion)**

Depreciable assets other than quarry andother raw material reserves are depreciated at rates based upon their expectedeconomic life, using the straight-line method. Quarry and other raw materialreserves are depleted after taking into account the life of the quarry and itsestimated residual value. Depletion is determined by production for the year asa proportion of recoverable reserves. The economic lives of property, plant andequipment assets are detailed in note 14.

 

**Inventories**

Inventories including work in progress andland held for resale are valued at the lower of cost and net realisable value.Costs included in inventories consist of materials, labour, and manufacturingoverheads which are related to the purchase and production of inventories.

The value of inventory is derived by themethod most appropriate to each particular class of inventory. The majorportion is valued on either a first-in-first-out or average cost basis.

 

**Softwareand system development**

The cost of developing new systems, includingpurchased software, is deferred and subsequently amortised over a period offive to seven years, being the period over which the benefits are expected toarise. Costs associated with software developed or purchased for internal useare capitalised when both a project stage is completed and management of CSRgroup has authorised whatever funding is required so that the entire project isprobable of completion for the function intended.

Capitalised internal-use software costsinclude only:

1) External direct costs of materials andservices consumed in developing or obtaining the software; 

2) Payroll and payroll-related costs foremployees who are directly associated with and who devote time to the project;and 

3) Interest costs incurred, when material,while developing the software.

Capitalisation of these costs ceases no laterthan the point at which the project is substantially complete and ready for itsintended purpose.

 

**Restorationand environmental rehabilitation**

Provision is made for the restoration ofareas from which natural resources are extracted. The restoration cost isprovided over the period in which the recoverable mineral reserves are expectedto be extracted. Estimates are based on current technology. Changes inestimates are dealt with on a prospective basis.

Provision is also made for the expected costof environmental rehabilitation of commercial sites which require remediationof existing conditions resulting from present and past operations. Theliability is immediately recognised when the environmental exposure isidentified and the rehabilitation costs can be reliably estimated.

 

**Contributionto superannuation funds**

The CSR Group participates in several superannuationfunds which provide benefits upon the disability, retirement or death ofemployees. Contributions to these funds are expensed as incurred. Additionaldetails on superannuation funds are provided in note 33.

 

**Researchand development**

All expenditure on research and developmentis expensed in the year in which it is incurred except where future benefitscan be assured beyond reasonable doubt. Projects are continually under review.

 

 

F-9

----

 

**Tax effectaccounting**

The liability method of tax effect accountingis applied in the calculation of provisions for current and future tax.

Tax expense for the year isbased on pre-tax accounting profit adjusted for items which, as a result oftreatment under income tax legislation, create permanent differences betweenpre-tax accounting profit and taxable income.

To arrive at tax payable,adjustments to income tax are made for items which have been included inperiods for accounting purposes which differ from those specified by income taxlegislation.  The extent to which thesetiming differences give rise to income tax becoming payable earlier or laterthan is indicated by accounting treatment, is recorded in the statement offinancial position as a deferred income tax asset or a deferred income taxliability.

Deferred income tax assetsarising from timing differences are not carried forward as an asset unlessrealisation is assured beyond reasonable doubt, whereas deferred income taxassets arising from tax losses are not carried forward as an asset unless thelosses can be regarded as being virtually certain of realisation.

No provision for withholdingtax has been made on undistributed earnings of foreign controlled entitieswhere there is no intention to distribute those earnings.

 

**CapitalGains Tax**

No liability has been provided in thefinancial statements in respect of possible future capital gains tax that mayarise on the disposal of assets, as no decision has been made to sell any ofthese assets. Such liability is provided at the time of disposal of assets.Where assets were revalued, no provision for potential capital gains tax hasbeen made.

 

**Use ofestimates**

The preparation of the financial statementsnecessarily requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the balance sheet dates and the reported amounts ofrevenue and expense during the reported periods. Actual results could differ fromthose estimates.

 

**Payables**

Trade creditors and other accounts payableare recognised when the economic entity becomes obliged to make future paymentsresulting from the purchase of good and services.

 

**Accountingstandards not yet effective**

***Revised Australian Accounting Standard AASB 1020*** “Income Taxes”will be required to be adopted for CSR’s financial year ended March 31, 2006.This standard requires the recognition of a deferred tax liability equivalentto assets previously revalued upwards. When these assets are subsequentlydepreciated, the additional depreciation will be tax effected. In the case ofacquisitions, where the fair value of assets and liabilities, as recorded by the CSR Group upon acquisition,is greater than their tax bases, a deferred tax liability for this increasewill have to be recognised causing goodwill to be increased. It has not yetbeen determined whether this standard will have a material impact on CSR’sfinancial statements.

 

**Translationto US dollars**

The financial statements are stated inAustralian dollars, the currency of the country in which CSR Limited isincorporated and operates. The translations of Australian dollar amounts intoUS dollar amounts are included solely for the convenience of readers in theUnited States of America (US) and have been made at the rate of US$0.6045 toA$1, the Federal Reserve Bank of New York noon buying rate at March 31, 2003.Such translations should not be construed as representations that theAustralian dollar amounts could be converted into US dollars at the above orany other rate.

 

**Derivativeand hedging activities**

The CSR group uses derivative financialinstruments (“derivatives”) to hedge exposures to interest rate, commodity andforeign exchange risk. In order to be designated as a hedge, at inception andduring the term of the hedging instrument, it must be expected that the hedgewill be effective in reducing exposure to the risks being hedged. The itemshedged include recognised assets and liabilities and anticipated transactions thatare probable of occurring.

 

Interest rate

Interest rate swaps and options are used tovary the consolidated entity’s mix of fixed and variable rate borrowings. Thesederivatives are accounted for on an accrual basis consistent with theaccounting treatment of the underlying borrowings. Both payments and receiptsunder the swaps are included in interest expense. The related amount payableto, or receivable from counterparties, is included in other receivables orother payables. Option premiums are deferred and amortised over the term of theoption.

 

Foreign exchange andcommodities

Forward exchange contracts, cross currencyswaps and options are used to hedge foreign currency receivables, payables,borrowings and anticipated transactions. Commodity futures, swaps and optionsare used to hedge anticipated purchases and sales of commodities. Derivativeshedging recognised assets and liabilities are measured at net fair value andincluded in other receivables or other payables. Gains or losses are recognisedin net profit or loss as they occur and offset translation gains and losses ofthe underlying hedged item. Gains and losses on derivatives hedging anticipatedtransactions are deferred and recognised in the measurement of the hedged itemwhen it occurs. If a derivative is terminated, sold, redesignated or is nolonger effective and the anticipated transaction is still probable ofoccurring, gains and losses up to the time of termination, sale, redesignationor loss of effectiveness, continue to be accounted for as stated above. If theanticipated transaction is no longer probable, all deferred gains and lossesare recognised immediately in net profit or loss. Derivatives are not enteredinto for speculative reasons. However, if a derivative ceases to be designatedas a hedge, for example, where the designated item is sold, extinguished,terminated or no longer probable of occurring, further gains and losses arerecognised in net profit or loss until the derivative matures or is terminatedor sold. Option premiums are deferred and amortised over the term of theoption.

 

F-10

----

 

Net investment inself-sustaining foreign operations

Both derivative and non-derivative financialinstruments are used to hedge foreign currency movements on net investments inforeign operations. Derivatives are measured at fair value and included inother receivables or other payables. Gains and losses related to time value arerecognised in net profit or loss. The remaining gains and losses (net of tax)are recognised in the foreign currency translation reserve to offsettransaction gains or losses.

 

**Interest-bearingliabilities**

Bank loans and other loans are recorded at anamount equal to the net proceeds received. Interest expense is recognised on an accrual basis.

 

**Productliability**

Provision is made for the present value,using a risk free discount rate, of the best estimate of the considerationrequired to settle the present obligation as at the reporting date.

 

**Comparativefigures**

The CSR Group has adopted AustralianAccounting Standards AASB 1018 “Statement of Financial Performance”, AASB 1034“Financial Report Presentation and Disclosures” and AASB 1040 “Statement ofFinancial Position” from April 1, 2001. Comparative figures were adjusted toconform with the requirements of these standards. The reclassification ofcomparative amounts did not result in a change in aggregate amounts of currentassets, non-current assets, current liabilities, non-current liabilities orequity or the net profit recorded in the 2001 financial year.

 

**Rounding**

Unless otherwise shown in the financialreport, amounts have been rounded to the nearest tenth of a million dollars andare shown by A$ million.

CSR Limited is a company ofthe kind referred to in the Australian Securities and Investments CommissionClass Order 98/100 issued July 10, 1998.

 

**Jointventure operations**

Interests in joint venture operations arerecorded in the financial statements by including the entity’s share of assetsemployed, the share of liabilities incurred, and the share of any expensesincurred in relation to joint ventures in their respective categories.

 

**Jointventure entities, associates and partnerships**

Investments in joint venture entities,associates and partnerships have been accounted for under the equity method inthe consolidated financial statements as the CSR group has significantinfluence over the investees.

 

**Significantitems**

Significant items are those which by theirsize, nature or incidence are relevant in explaining the financial performanceof the CSR Group, and as such are disclosed separately. They include all itemspreviously classified as abnormal.

 

**Employeeentitlements**

Provision is made for benefits accruing toemployees in respect of wages and salaries, annual leave, long service leaveand other employee obligations when it is probable that settlement will berequired and they are capable of being reliably measured.

 

**AustralianAccounting Standard AASB 1044**

In the CSR Group’s financial report for theyear ended March 31, 2002 directors foreshadowed the potential effect of a newaccounting standard, AASB 1044 “Provisions, Contingent Liabilities andContingent Assets” (“AASB 1044”). The directors have now considered the effectsof AASB 1044 and have elected, under section 334(5) of the Corporations Act2001, to apply the new standard for CSR’s financial year commencing April 1,2002, even though the standard is not required to be adopted until annualreporting periods beginning on or after July 1, 2002. The adoption of AASB 1044affects the timing of recording CSR’s dividend provision and increases theamount of the product liability provision, as shown in note 21.

 

**Foreigncurrency**

All foreign currency transactions during theyear have been brought to account using the exchange rate in effect at the dateof the transaction. Foreign currency monetary items at reporting date aretranslated at the exchange rate existing at that date. Exchange differences arebrought to account in the statement of financial performance in the period inwhich they arise except if designated as hedges.  Exchange differences net of tax relating to foreign currencymonetary items forming part of  the netinvestment in a self-sustaining foreign operation are taken directly to theforeign currency translation reserve. Financial statements of self-sustaining foreign controlled entities aretranslated at reporting date using the current rate method and exchangedifferences are brought to account by entries made directly to the foreigncurrency translation reserve.

 

**DeferredCosts**

Deferred costs are capitalised to the extentthat they provide future economic benefits. They are amortised over the periodthose benefits are expected to occur and their carrying value is reviewedannually as part of the business recoverable amounts test.

 

**RevenueRecognition**

Sales revenue is measured at the fair valueof the consideration received, and is recognised when each of the followingconditions are met:

(i)        Persuasive evidence ofan arrangement exists, which is usually in the form of a contractualarrangement.

(ii)       Control of the producthas transferred to the buyer.

(iii)      The seller’s price tothe buyer is fixed or determinable.

(iv)      Collectibility isreasonably assured.

 

Other than raw sugar sales, other productsand services are sold on normal trade terms and conditions. In the case of rawsugar sold by the CSR Group, revenue is recognised on a provisional basis atthe time of title transfer to the centralised marketing authority, based onprevailing prices, and is subject to final adjustment when the final price isadvised by the centralised marketing authority. In the current and prior yearsthis financial adjustment was immaterial.

 

 

F-11

----

 

**Notes tothe consolidated financial statement**s

CSR Limited and itscontrolled entities

 
| **(million)**                                                                                               |   | **2003  US$** |       | **2003  A$** |   | **2002A$** |   | **2001A$** |   |
|-------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------------|--------|------------|--------|------------|--------|
| **1              Segment  information**(h) |   |          |       |         |   |       |   |       |   |
| **Business segments**                                                                                       |   |          |       |         |   |       |   |       |   |
| **Profit from ordinary activities before income tax**                                                       |   |          |       |         |   |       |   |       |   |
| Rinker Materials Corporation(l)                                                                             |   |          |       |         |   |       |   |       |   |
| Aggregates                                                                                                  |   | **112.1**     | ** ** | **185.4**    |   | 175.0      |   | 127.5      |   |
| Cement                                                                                                      |   | **92.8**      | ** ** | **153.5**    |   | 150.1      |   | 129.6      |   |
| Concrete, concrete block, asphalt                                                                           |   | **91.5**      | ** ** | **151.3**    |   | 123.7      |   | 92.7       |   |
| Concrete pipe and products                                                                                  |   | **65.0**      | ** ** | **107.6**    |   | 153.8      |   | 124.1      |   |
| Other                                                                                                       |   | **(3.5**      | **)**      | **(5.8**     | )      | (4.1       | )      | 22.6       |   |
| • Total Rinker Materials Corporation                                                                   |   | **357.9**     | ** ** | **592.0**    |   | 598.5      |   | 496.5      |   |
| • Readymix(l)                                                                                          |   | **72.2**      | ** ** | **119.5**    |   | 56.7       |   | 5.8        |   |
| • Building Products                                                                                    |   | **72.4**      | ** ** | **119.7**    |   | 108.8      |   | 86.5       |   |
| Sugar - milling                                                                                             |   | **22.4**      | ** ** | **37.1**     |   | 44.5       |   | (13.0      | )      |
| Sugar - other                                                                                               |   | **20.4**      | ** ** | **33.7**     |   | 29.3       |   | 29.5       |   |
| • Total Sugar                                                                                          |   | **42.8**      | ** ** | **70.8**     |   | 73.8       |   | 16.5       |   |
| • Aluminium(a)                                                                                         |   | **76.3**      | ** ** | **126.3**    |   | 110.0      |   | 446.9      |   |
| **Segment total**                                                                                           |   | **621.6**     | ** ** | **1,028.3**  |   | 947.8      |   | 1,052.2    |   |
| • Corporate costs(g)                                                                                   |   | **(19.5**     | **)**      | **(32.3**    | )      | (34.3      | )      | (32.0      | )      |
| • Restructure costs, asset sales and other(b)                                                          |   | **(13.4**     | **)**      | **(22.2**    | )      | 12.3       |   | (40.3      | )      |
|                                                                                                        |   | **588.7**     |       | **973.8**    |   | 925.8      |   | 979.9      |   |
| Finance(c)                                                                                                  |   | **(63.7**     | **)**      | **(105.3**   | )      | (107.3     | )      | (131.7     | )      |
| Profit from ordinary activities before demerger related items and  income tax                               |   | **525.0**     | ** ** | **868.5**    |   | 818.5      |   | 848.2      |   |
| Demerger related items                                                                                      |   | **891.6**     | ** ** | **1,475.0**  |   | —     |   | —     |   |
| **Profit from ordinary activities before income tax**                                                       |   | **1,416.6**   | ** ** | **2,343.5**  |   | 818.5      |   | 848.2      |   |
|                                                                                                        |   |          |       |         |   |       |   |       |   |
| **Income tax**                                                                                              |   |          |       |         |   |       |   |       |   |
| Rinker Materials Corporation(l)                                                                             |   |          |       |         |   |       |   |       |   |
| Aggregates                                                                                                  |   | **40.7**      | ** ** | **67.4**     |   | 63.5       |   | 45.2       |   |
| Cement                                                                                                      |   | **39.2**      | ** ** | **64.8**     |   | 63.2       |   | 53.2       |   |
| Concrete, concrete block, asphalt                                                                           |   | **36.1**      | ** ** | **59.7**     |   | 47.4       |   | 36.4       |   |
| Concrete pipe and products                                                                                  |   | **25.6**      | ** ** | **42.3**     |   | 59.3       |   | 48.8       |   |
| Other                                                                                                       |   | **(0.6**      | **)**      | **(1.0**     | )      | (0.6       | )      | 11.4       |   |
| • Total Rinker Materials Corporation                                                                   |   | **141.0**     | ** ** | **233.2**    |   | 232.8      |   | 195.0      |   |
| • Readymix(l)                                                                                          |   | **15.4**      | ** ** | **25.5**     |   | 8.9        |   | 10.6       |   |
| • Building Products                                                                                    |   | **21.2**      | ** ** | **35.1**     |   | 32.8       |   | 37.4       |   |
| Sugar- milling                                                                                              |   | **6.8**       | ** ** | **11.3**     |   | 13.7       |   | (3.7       | )      |
| Sugar- other                                                                                                |   | **3.9**       | ** ** | **6.4**      |   | 2.8        |   | 7.7        |   |
| • Total Sugar                                                                                          |   | **10.7**      | ** ** | **17.7**     |   | 16.5       |   | 4.0        |   |
| • Aluminium(a)                                                                                         |   | **23.4**      | ** ** | **38.7**     |   | 31.4       |   | 39.9       |   |
| **Segment total**                                                                                           |   | **211.7**     | ** ** | **350.2**    |   | 322.4      |   | 286.9      |   |
| • Corporate costs(g)                                                                                   |   | **(6.1**      | **)**      | **(10.1**    | )      | (9.9       | )      | (13.3      | )      |
| • Restructure costs, asset sales and other(b)                                                          |   | **(9.7**      | **)**      | **(16.1**    | )      | (27.7      | )      | (37.9      | )      |
|                                                                                                        |   | **195.9**     |       | **324.0**    |   | 284.8      |   | 235.7      |   |
| Finance(c)                                                                                                  |   | **(24.2**     | **)**      | **(40.0**    | )      | (41.1      | )      | (56.6      | )      |
| Income tax before demerger related items                                                                    |   | **171.7**     | ** ** | **284.0**    |   | 243.7      |   | 179.1      |   |
| Demerger related items                                                                                      |   | **(10.7**     | **)**      | **(17.7**    | )      | —     |   | —     |   |
| **Income tax after demerger related items**                                                                 |   | **161.0**     | ** ** | **266.3**    |   | 243.7      |   | 179.1      |   |

 

F-12

----

 
| **(million)**                                                     |   | **2003  US$** |       | **2003  A$** |   | **2002A$** |   | **2001A$** |   |
|-------------------------------------------------------------------|--------|---------------|------------|--------------|--------|------------|--------|------------|--------|
| **Business segments**                                             |   |          |       |         |   |       |   |       |   |
| **Outside equity interest**                                       |   |          |       |         |   |       |   |       |   |
| Rinker Materials Corporation(l)                                   |   |          |       |         |   |       |   |       |   |
| Aggregates                                                        |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Cement                                                            |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Concrete, concrete block, asphalt                                 |   | **0.2**       | ** ** | **0.3**      |   | —     |   | —     |   |
| Concrete pipe and products                                        |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Other                                                             |   | **1.2**       | ** ** | **2.0**      |   | 0.7        |   | (0.1       | )      |
| • Total Rinker Materials Corporation                         |   | **1.4**       | ** ** | **2.3**      |   | 0.7        |   | (0.1       | )      |
| • Readymix(l)                                                |   | **1.3**       | ** ** | **2.1**      |   | 1.1        |   | (3.7       | )      |
| • Building Products                                          |   | **(1.6**      | **)**      | **(2.6**     | )      | 1.1        |   | (2.8       | )      |
| Sugar - milling                                                   |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Sugar - other                                                     |   | **—**    |       | —       |   | —     |   | —     |   |
| • Total Sugar                                                |   | **—**    |       | —       |   | —     |   | —     |   |
| • Aluminium(a)                                               |   | **14.4**      | ** ** | **23.9**     |   | 20.4       |   | 40.5       |   |
| **Segment total**                                                 |   | **15.5**      | ** ** | **25.7**     |   | 23.3       |   | 33.9       |   |
| Finance(c)                                                        |   | **(1.2**      | **)**      | **(2.0**     | )      | (1.1       | )      | 1.1        |   |
| Outside equity interest before demerger related items             |   | **14.3**      | ** ** | **23.7**     |   | 22.2       |   | 35.0       |   |
| Demerger related items                                            |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| **Outside equity interest after demerger related items**          |   | **14.3**      | ** ** | **23.7**     |   | 22.2       |   | 35.0       |   |
|                                                              |   |          |       |         |   |       |   |       |   |
| **Net profit**                                                    |   |          |       |         |   |       |   |       |   |
| Rinker Materials Corporation(l)                                   |   |          |       |         |   |       |   |       |   |
| Aggregates                                                        |   | **71.4**      | ** ** | **118.0**    |   | 111.5      |   | 82.3       |   |
| Cement                                                            |   | **53.6**      | ** ** | **88.7**     |   | 86.9       |   | 76.4       |   |
| Concrete, concrete block, asphalt                                 |   | **55.2**      | ** ** | **91.3**     |   | 76.3       |   | 56.3       |   |
| Concrete pipe and products                                        |   | **39.4**      | ** ** | **65.3**     |   | 94.5       |   | 75.3       |   |
| Other                                                             |   | **(4.1**      | **)**      | **(6.8**     | )      | (4.2       | )      | 11.3       |   |
| • Total Rinker Materials Corporation                         |   | **215.5**     | ** ** | **356.5**    |   | 365.0      |   | 301.6      |   |
| • Readymix(l)                                                |   | **55.5**      | ** ** | **91.9**     |   | 46.7       |   | (1.1       | )      |
| • Building Products                                          |   | **52.8**      | ** ** | **87.2**     |   | 74.9       |   | 51.9       |   |
| Sugar - milling                                                   |   | **15.6**      | ** ** | **25.8**     |   | 30.8       |   | (9.3       | )      |
| Sugar - other                                                     |   | **16.5**      | ** ** | **27.3**     |   | 26.5       |   | 21.8       |   |
| • Total Sugar                                                |   | **32.1**      | ** ** | **53.1**     |   | 57.3       |   | 12.5       |   |
| • Aluminium(a)                                               |   | **38.5**      | ** ** | **63.7**     |   | 58.2       |   | 366.5      |   |
| **Segment total**                                                 |   | **394.4**     | ** ** | **652.4**    |   | 602.1      |   | 731.4      |   |
| • Corporate costs(g)                                         |   | **(13.4**     | **)**      | **(22.2**    | )      | (24.4      | )      | (18.7      | )      |
| • Restructure costs, asset sales and other(b)                |   | **(3.7**      | **)**      | **(6.1**     | )      | 40.0       |   | (2.4       | )      |
|                                                              |   | **377.3**     |       | **624.1**    |   | 617.7      |   | 710.3      |   |
| Finance(c)                                                        |   | **(38.3**     | **)**      | **(63.3**    | )      | (65.1      | )      | (76.2      | )      |
| Net profit before demerger related items                          |   | **339.0**     | ** ** | **560.8**    |   | 552.6      |   | 634.1      |   |
| Demerger related items                                            |   | **902.3**     | ** ** | **1,492.7**  |   | —     |   | —     |   |
| **Net profit after demerger related items**                       |   | **1,241.3**   | ** ** | **2,053.5**  |   | 552.6      |   | 634.1      |   |
|                                                              |   |          |       |         |   |       |   |       |   |
| **Significant items before income tax**(refer note 3  for detail) |   |          |       |         |   |       |   |       |   |
| Rinker Materials Corporation(l)                                   |   |          |       |         |   |       |   |       |   |
| Aggregates                                                        |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Cement                                                            |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Concrete, concrete block, asphalt                                 |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Concrete pipe and products                                        |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Other                                                             |   | **—**    | ** ** | **—**   |   | —     |   | (19.1      | )      |
| • Total Rinker Materials Corporation                         |   | **—**    | ** ** | **—**   |   | —     |   | (19.1      | )      |
| • Readymix(l)                                                |   | **—**    | ** ** | **—**   |   | —     |   | (45.4      | )      |
| • Building Products                                          |   | **—**    | ** ** | **—**   |   | —     |   | (48.6      | )      |
| • Aluminium(a)                                               |   | **—**    | ** ** | **—**   |   | —     |   | 235.4      |   |
| • Sugar                                                      |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| • Corporate costs(g)                                         |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| • Restructure costs, asset sales and other(b)                |   | **891.6**     | ** ** | **1,475.0**  |   | —     |   | (65.0      | )      |
| **Segment totals**                                                |   | **891.6**     | ** ** | **1,475.0**  |   | —     |   | 57.3       |   |
| Finance(c)                                                        |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| **Total Significant items before income tax**                     |   | **891.6**     | ** ** | **1,475.0**  |   | —     |   | 57.3       |   |

 

 

F-13

----

 

 
| **(million)**                                           |   | **2003  US$** |       | **2003  A$** |   | **2002A$** |   | **2001A$** |   |
|---------------------------------------------------------|--------|---------------|------------|--------------|--------|------------|--------|------------|--------|
| **Business segments**                                   |   |          |       |         |   |       |   |       |   |
| **Total trading revenue**                               |   |          |       |         |   |       |   |       |   |
| Rinker Materials Corporation(l)                         |   |          |       |         |   |       |   |       |   |
| Aggregates                                              |   | **670.1**     | ** ** | **1,108.6**  |   | 957.0      |   | 737.4      |   |
| Cement                                                  |   | **350.1**     | ** ** | **579.2**    |   | 610.4      |   | 523.6      |   |
| Concrete, concrete block, asphalt                       |   | **1,077.7**   | ** ** | **1,782.8**  |   | 1,506.7    |   | 1,280.4    |   |
| Concrete pipe and products                              |   | **469.8**     | ** ** | **777.2**    |   | 947.4      |   | 747.7      |   |
| Other                                                   |   | **425.3**     | ** ** | **703.5**    |   | 786.5      |   | 858.5      |   |
| Eliminations and unallocated                            |   | **(443.5**    | **)**      | **(733.7**   | )      | (692.5     | )      | (558.1     | )      |
| • Total Rinker Materials Corporation               |   | **2,549.5**   | ** ** | **4,217.6**  |   | 4,115.5    |   | 3,589.5    |   |
| • Readymix(l)                                      |   | **613.0**     | ** ** | **1,014.1**  |   | 925.5      |   | 922.5      |   |
| • Building Products                                |   | **541.8**     | ** ** | **896.2**    |   | 806.3      |   | 859.6      |   |
| Sugar - milling                                         |   | **383.7**     | ** ** | **634.8**    |   | 614.0      |   | 459.5      |   |
| Sugar -other                                            |   | **44.4**      | ** ** | **73.4**     |   | 79.7       |   | 69.8       |   |
| • Total Sugar                                      |   | **428.1**     | ** ** | **708.2**    |   | 693.7      |   | 529.3      |   |
| • Aluminium(a)                                     |   | **269.9**     | ** ** | **446.5**    |   | 443.2      |   | 520.4      |   |
| **Segment totals**                                      |   | **4,402.3**   | ** ** | **7,282.6**  |   | 6,984.2    |   | 6,421.3    |   |
| • Corporate                                        |   | **0.2**       | ** ** | **0.3**      |   | 0.5        |   | 2.7        |   |
| **Total trading revenue**                               |   | **4,402.5**   | ** ** | **7,282.9**  |   | 6,984.7    |   | 6,424.0    |   |
|                                                    |   |          |       |         |   |       |   |       |   |
| **Total external revenue**(k)                           |   |          |       |         |   |       |   |       |   |
| Rinker Materials Corporation(l)                         |   |          |       |         |   |       |   |       |   |
| Aggregates                                              |   | **418.6**     | ** ** | **692.5**    |   | 614.1      |   | 452.9      |   |
| Cement                                                  |   | **162.6**     | ** ** | **269.0**    |   | 300.9      |   | 260.5      |   |
| Concrete, concrete block, asphalt                       |   | **1,083.6**   | ** ** | **1,792.6**  |   | 1,519.0    |   | 1,297.2    |   |
| Concrete pipe and products                              |   | **490.1**     | ** ** | **810.8**    |   | 953.1      |   | 781.4      |   |
| Other                                                   |   | **451.1**     | ** ** | **746.2**    |   | 794.6      |   | 876.2      |   |
| Eliminations                                            |   | —        |       | —       |   | —     |   | —     |   |
| • Total Rinker Materials Corporation               |   | **2,606.1**   | ** ** | **4,311.1**  |   | 4,181.7    |   | 3,668.2    |   |
| • Readymix(l)                                      |   | **633.6**     | ** ** | **1,048.1**  |   | 940.8      |   | 927.5      |   |
| • Building Products                                |   | **549.7**     | ** ** | **909.4**    |   | 813.0      |   | 874.4      |   |
| Sugar - milling                                         |   | **388.9**     | ** ** | **643.4**    |   | 616.4      |   |       |   |
| Sugar - other                                           |   | **45.8**      | ** ** | **75.8**     |   | 82.4       |   | 534.0      |   |
| • Total Sugar                                      |   | **434.7**     | ** ** | **719.2**    |   | 698.8      |   | 534.0      |   |
| • Aluminium(a)                                     |   | **272.1**     | ** ** | **450.2**    |   | 445.7      |   | 934.4      |   |
| **Segment totals**                                      |   | **4,496.2**   | ** ** | **7,438.0**  |   | 7,080.0    |   | 6,938.5    |   |
| • Restructure, asset sales and other(b)            |   | **29.0**      | ** ** | **48.0**     |   | 90.0       |   | 75.8       |   |
| • Interest revenue                                 |   | **5.4**       | ** ** | **8.9**      |   | 24.8       |   | 23.7       |   |
| External revenue before demerger related items          |   | **4,530.6**   | ** ** | **7,494.9**  |   | 7,194.8    |   | 7,038.0    |   |
| Demerger related items                                  |   | **2,764.4**   | ** ** | **4,573.0**  |   | —     |   | —     |   |
| **Total external revenue after demerger related items** |   | **7,295.0**   | ** ** | **12,067.9** |   | 7,194.8    |   | 7,038.0    |   |
|                                                    |   |          |       |         |   |       |   |       |   |
| **Total internal revenue**(m)                           |   |          |       |         |   |       |   |       |   |
| Rinker Materials Corporation(l)                         |   |          |       |         |   |       |   |       |   |
| Aggregates(m)                                           |   | **258.7**     | ** ** | **428.0**    |   | 388.1      |   | 303.8      |   |
| Cement(m)                                               |   | **188.8**     | ** ** | **312.4**    |   | 316.8      |   | 266.9      |   |
| Concrete, concrete block, asphalt                       |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Concrete pipe and products                              |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Other                                                   |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Eliminations                                            |   | **(447.6**    | **)**      | **(740.4**   | )      | (704.9     | )      | (570.7     | )      |
| • Total Rinker Materials Corporation               |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| • Readymix(l)                                      |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| • Building Products                                |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Sugar - milling                                         |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| Sugar - other                                           |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| • Total Sugar                                      |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| • Aluminium(a)                                     |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| **Segment totals**                                      |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| • Restructure, asset sales and other(b)            |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| • Interest revenue                                 |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |
| **Total internal revenue**                              |   | **—**    | ** ** | **—**   |   | —     |   | —     |   |

 

 

F-14

----

 

 
| **(million)**                                   |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   | **2001  A$** |   |
|-------------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|--------------|--------|
| **Business segments**                           |   |          |       |         |   |         |   |         |   |
| **Total Revenue(1)**                            |   |          |       |         |   |         |   |         |   |
| Rinker Materials Corporation(1)                 |   |          |       |         |   |         |   |         |   |
| Aggregates                                      |   | **677.3**     | ** ** | **1,120.5**  |   | 1,002.2      |   | 756.7        |   |
| Cement                                          |   | **351.5**     | ** ** | **581.4**    |   | 617.7        |   | 527.4        |   |
| Concrete, concrete block, asphalt               |   | **1,083.6**   | ** ** | **1,792.6**  |   | 1,519.0      |   | 1,297.2      |   |
| Concrete pipe and products                      |   | **490.1**     | ** ** | **810.8**    |   | 953.1        |   | 781.4        |   |
| Other                                           |   | **451.1**     | ** ** | **746.2**    |   | 794.6        |   | 876.2        |   |
| Eliminations                                    |   | **(447.6**    | **)**      | **(740.4**   | )      | (704.9       | )      | (570.7       | )      |
| • Total Rinker Materials Corporation       |   | **2,606.1**   | ** ** | **4,311.1**  |   | 4,181.7      |   | 3,668.2      |   |
| • Readymix(1)                              |   | **633.6**     | ** ** | **1,048.1**  |   | 940.8        |   | 927.5        |   |
| • Building Products                        |   | **549.7**     | ** ** | **909.4**    |   | 813.0        |   | 874.4        |   |
| Sugar - milling                                 |   | **388.9**     | ** ** | **643.4**    |   | 616.4        |   | 0.0          |   |
| Sugar - other                                   |   | **45.8**      | ** ** | **75.8**     |   | 82.4         |   | 534.0        |   |
| • Total Sugar                              |   | **434.7**     | ** ** | **719.2**    |   | 698.8        |   | 534.0        |   |
| • Aluminium(a)                             |   | **272.1**     | ** ** | **450.2**    |   | 445.7        |   | 934.4        |   |
| **Segment total**                               |   | **4,496.2**   | ** ** | **7,438.0**  |   | 7,080.0      |   | 6,938.5      |   |
| • Restructure, asset sales and other(b)    |   | **29.0**      | ** ** | **48.0**     |   | 90.0         |   | 75.8         |   |
| • Interest revenue                         |   | **5.4**       | ** ** | **8.9**      |   | 24.8         |   | 23.7         |   |
| **Total revenue before demerger related items** |   | **4,530.6**   | ** ** | **7,494.9**  |   | 7,194.8      |   | 7,038.0      |   |
| • Demerger related items                   |   | **2,764.4**   | ** ** | **4,573.0**  |   | —       |   | —       |   |
| **Total revenue**                               |   | **7,295.0**   | ** ** | **12,067.9** |   | 7,194.8      |   | 7,038.0      |   |
|                                            |   |          |       |         |   |         |   |         |   |
| **Total assets**                                |   |          |       |         |   |         |   |         |   |
| Rinker Materials Corporation(1)                 |   |          |       |         |   |         |   |         |   |
| Aggregates                                      |   | **—**    | ** ** | **—**   |   | 1,321.5      |   | 1,394.6      |   |
| Cement                                          |   | **—**    | ** ** | **—**   |   | 792.5        |   | 871.8        |   |
| Concrete, concrete block, asphalt               |   | **—**    | ** ** | **—**   |   | 787.7        |   | 783.1        |   |
| Concrete pipe and products                      |   | **—**    | ** ** | **—**   |   | 914.3        |   | 939.6        |   |
| Other                                           |   | **—**    | ** ** | **—**   |   | 572.8        |   | 685.1        |   |
| Eliminations                                    |   | **—**    | ** ** | **—**   |   | (37.8        | )      | (40.7        | )      |
| • Total Rinker Materials Corporation       |   | **—**    | ** ** | **—**   |   | 4,351.0      |   | 4,633.5      |   |
| • Readymix(1)                              |   | **—**    | ** ** | **—**   |   | 953.0        |   | 986.8        |   |
| • Building Products                        |   | **454.1**     | ** ** | **751.3**    |   | 761.6        |   | 742.4        |   |
| Sugar - milling                                 |   | **432.2**     | ** ** | **714.9**    |   | 720.2        |   | 755.9        |   |
| Sugar - other                                   |   | **100.8**     | ** ** | **166.8**    |   | 176.2        |   | 179.7        |   |
| • Total Sugar                              |   | **533.0**     | ** ** | **881.7**    |   | 896.4        |   | 935.6        |   |
| • Aluminium(a)                             |   | **224.8**     | ** ** | **371.9**    |   | 398.6        |   | 435.4        |   |
| **Segment totals(j)**                           |   | **1,211.9**   | ** ** | **2,004.9**  |   | 7,360.6      |   | 7,733.7      |   |
| • Corporate                                |   | **93.9**      | ** ** | **155.4**    |   | 150.5        |   | 157.6        |   |
|                                            |   | **1,305.8**   |       | **2,160.3**  |   | 7,511.1      |   | 7,891.3      |   |
| Finance(e)                                      |   | **225.1**     | ** ** | **372.4**    |   | 156.6        |   | 200.2        |   |
| Tax assets(n)                                   |   | **122.6**     | ** ** | **202.8**    |   | 283.0        |   | 370.1        |   |
| **Total assets**                                |   | **1,653.5**   | ** ** | **2,735.5**  |   | 7,950.7      |   | 8,461.6      |   |

 

 

F-15

----

 
| **(million)**                             |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   | **2001  A$** |   |
|-------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|--------------|--------|
| **Business segments**                     |   |          |       |         |   |         |   |         |   |
| **Total liabilites**                      |   |          |       |         |   |         |   |         |   |
| Rinker Materials Corporation(1)           |   |          |       |         |   |         |   |         |   |
| Aggregates                                |   | **—**    | ** ** | **—**   |   | 85.7         |   | 115.4        |   |
| Cement                                    |   | **—**    | ** ** | **—**   |   | 37.1         |   | 29.9         |   |
| Concrete, concrete block, asphalt         |   | **—**    | ** ** | **—**   |   | 137.3        |   | 174.1        |   |
| Concrete pipe and products                |   | **—**    | ** ** | **—**   |   | 78.5         |   | 119.0        |   |
| Other                                     |   | **—**    | ** ** | **—**   |   | 295.9        |   | 217.7        |   |
| Eliminations                              |   | **—**    | ** ** | **—**   |   | (37.8        | )      | (40.8        | )      |
| • Total Rinker Materials Corporation |   | **—**    | ** ** | **—**   |   | 596.7        |   | 615.3        |   |
| • Readymix(1)                        |   | **—**    | ** ** | **—**   |   | 186.1        |   | 192.2        |   |
| • Building Products                  |   | **77.8**      | ** ** | **128.7**    |   | 133.2        |   | 120.0        |   |
| Sugar - milling                           |   | **60.1**      | ** ** | **99.5**     |   | 76.3         |   | 87.6         |   |
| Sugar - other                             |   | **7.4**       | ** ** | **12.2**     |   | 7.6          |   | 8.7          |   |
| • Total Sugar                        |   | **67.5**      | ** ** | **111.7**    |   | 83.9         |   | 96.3         |   |
| • Aluminium(a)                       |   | **33.9**      | ** ** | **56.1**     |   | 46.0         |   | 62.7         |   |
| **Segment total**                         |   | **179.2**     | ** ** | **296.5**    |   | 1,045.9      |   | 1,086.5      |   |
| • Corporate                          |   | **281.1**     | ** ** | **465.1**    |   | 368.8        |   | 425.2        |   |
|                                      |   | **460.3**     |       | **761.6**    |   | 1,414.7      |   | 1,511.7      |   |
| Interest bearing liabilities              |   | **361.6**     | ** ** | **598.3**    |   | 1,894.7      |   | 2,300.1      |   |
| Tax liabilities(n)                        |   | **137.1**     | ** ** | **226.8**    |   | 536.9        |   | 568.8        |   |
| **Total liabilities**                     |   | **959.0**     | ** ** | **1,586.7**  |   | 3,846.3      |   | 4,380.6      |   |
|                                      |   |          |       |         |   |         |   |         |   |
| **Depreciation**                          |   |          |       |         |   |         |   |         |   |
| Rinker Materials Corporation(1)           |   |          |       |         |   |         |   |         |   |
| Aggregates                                |   | **63.2**      | ** ** | **104.6**    |   | 95.2         |   | 75.9         |   |
| Cement                                    |   | **22.1**      | ** ** | **36.6**     |   | 39.2         |   | 30.9         |   |
| Concrete, concrete block, asphalt         |   | **45.2**      | ** ** | **74.7**     |   | 55.2         |   | 46.8         |   |
| Concrete pipe and products                |   | **34.6**      | ** ** | **57.3**     |   | 58.6         |   | 45.4         |   |
| Other                                     |   | **27.3**      | ** ** | **45.1**     |   | 51.4         |   | 47.6         |   |
| • Total Rinker Materials Corporation |   | **192.4**     | ** ** | **318.3**    |   | 299.6        |   | 246.6        |   |
| • Readymix(l)                        |   | **28.2**      | ** ** | **46.7**     |   | 47.2         |   | 50.3         |   |
| • Building Products                  |   | **21.1**      | ** ** | **34.9**     |   | 33.8         |   | 38.4         |   |
| Sugar - milling                           |   | **20.8**      | ** ** | **34.4**     |   | 34.7         |   | 35.2         |   |
| Sugar - other                             |   | **1.0**       | ** ** | **1.7**      |   | 1.7          |   | 1.8          |   |
| • Total Sugar                        |   | **21.8**      | ** ** | **36.1**     |   | 36.4         |   | 37.0         |   |
| • Aluminium(a)                       |   | **13.6**      | ** ** | **22.4**     |   | 21.7         |   | 29.8         |   |
| **Segment total**                         |   | **277.1**     | ** ** | **458.4**    |   | 438.7        |   | 402.1        |   |
| • Corporate                          |   | **8.0**       | ** ** | **13.2**     |   | 14.2         |   | 13.3         |   |
| **Total depreciation**                    |   | **285.1**     | ** ** | **471.6**    |   | 452.9        |   | 415.4        |   |
|                                      |   |          |       |         |   |         |   |         |   |
| **Capital expenditure (accrued basis)**   |   |          |       |         |   |         |   |         |   |
| Rinker Materials Corporation(l)           |   |          |       |         |   |         |   |         |   |
| Aggregates                                |   | **272.9**     | ** ** | **451.4**    |   | 187.0        |   | 673.7        |   |
| Cement                                    |   | **7.0**       | ** ** | **11.5**     |   | 9.6          |   | 397.9        |   |
| Concrete, concrete block, asphalt         |   | **409.0**     | ** ** | **676.6**    |   | 95.7         |   | 95.7         |   |
| Concrete pipe and products                |   | **21.0**      | ** ** | **34.7**     |   | 125.6        |   | 357.6        |   |
| Other                                     |   | **7.7**       | ** ** | **12.8**     |   | 15.3         |   | 12.4         |   |
| • Total Rinker Materials Corporation |   | **717.5**     | ** ** | **1,187.0**  |   | 433.2        |   | 1,537.3      |   |
| • Readymix(1)                        |   | **40.1**      | ** ** | **66.3**     |   | 43.1         |   | 44.9         |   |
| • Building Products                  |   | **25.3**      | ** ** | **41.8**     |   | 52.3         |   | 27.5         |   |
| Sugar - milling                           |   | **11.9**      | ** ** | **19.7**     |   | 21.6         |   | 19.9         |   |
| Sugar - other                             |   | **0.8**       | ** ** | **1.4**      |   | 1.4          |   | 1.8          |   |
| •Total Sugar                         |   | **12.7**      | ** ** | **21.1**     |   | 23.0         |   | 21.7         |   |
| • Aluminium(a)                       |   | **5.4**       | ** ** | **8.9**      |   | 9.5          |   | 13.1         |   |
| **Segment total**                         |   | **801.0**     | ** ** | **1,325.1**  |   | 561.1        |   | 1,644.5      |   |
| • Corporate                          |   | **12.3**      | ** ** | **20.3**     |   | 22.8         |   | 15.2         |   |
| **Total capital expenditure**             |   | **813.3**     | ** ** | **1,345.4**  |   | 583.9        |   | 1,659.7      |   |

 

 

F-16

----

 
| **(million)**                                                 |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   | **2001  A$** |   |
|---------------------------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|--------------|--------|
| **Business segments**                                         |   |          |       |         |   |         |   |         |   |
| **Associate entities’ and partnership income**           |   |          |       |         |   |         |   |         |   |
| Rinker Materials Corporation(1)                               |   |          |       |         |   |         |   |         |   |
| Aggregates                                                    |   | **(0.2**      | **)**      | **(0.4**     | )      | —       |   | —       |   |
| Cement                                                        |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| Concrete, concrete block, asphalt                             |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| Concrete pipe and products                                    |   | **—**    | ** ** | **—**   |   | —       |   | 0.9          |   |
| Other                                                         |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| • Total Rinker Materials Corporation                     |   | **(0.2**      | **)**      | **(0.4**     | )      | —       |   | 0.9          |   |
| • Readymix(1)                                            |   | **14.9**      | ** ** | **24.7**     |   | 23.1         |   | 25.3         |   |
| • Building Products                                      |   | **2.2**       | ** ** | **3.6**      |   | 4.5          |   | 4.7          |   |
| Sugar - milling                                               |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| Sugar - other                                                 |   | **15.3**      | ** ** | **25.4**     |   | 17.8         |   | 18.5         |   |
| • Total Sugar                                            |   | **15.3**      | ** ** | **25.4**     |   | 17.8         |   | 18.5         |   |
| • Aluminium(a)                                           |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| **Segment total**                                             |   | **32.2**      | ** ** | **53.3**     |   | 45.4         |   | 49.4         |   |
| • Corporate                                              |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| **Total associate entities’ and partnership income**     |   | **32.2**      | ** ** | **53.3**     |   | 45.4         |   | 49.4         |   |
|                                                          |   |          |       |         |   |         |   |         |   |
| **Investments in associate entities and partnerships**        |   |          |       |         |   |         |   |         |   |
| Rinker Materials Corporation(1)                               |   |          |       |         |   |         |   |         |   |
| Aggregates                                                    |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| Cement                                                        |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| Concrete, concrete block, asphalt                             |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| Concrete pipe and products                                    |   | **—**    | ** ** | **—**   |   | —       |   | 11.8         |   |
| Other                                                         |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| • Total Rinker Materials Corporation                     |   | **—**    | ** ** | **—**   |   | —       |   | 11.8         |   |
| • Readymix(1)                                            |   | **—**    | ** ** | **—**   |   | 178.5        |   | 180.0        |   |
| • Building Products                                      |   | **5.8**       | ** ** | **9.6**      |   | 5.1          |   | 4.9          |   |
| Sugar - milling                                               |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| Sugar - other                                                 |   | **77.9**      | ** ** | **128.8**    |   | 133.0        |   | 138.1        |   |
| • Total Sugar                                            |   | **77.9**      | ** ** | **128.8**    |   | 133.0        |   | 138.1        |   |
| • Aluminium(a)                                           |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| **Segment total**                                             |   | **83.7**      | ** ** | **138.4**    |   | 316.6        |   | 334.8        |   |
| • Corporate                                              |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| **Total investments in associate entities and  partnerships** |   | **83.7**      | ** ** | **138.4**    |   | 316.6        |   | 334.8        |   |

 

 
| **(million)**                                                                          |   | **US$**     |       | **A$**      |   | **A$**  |   | **A$**  |   |
|----------------------------------------------------------------------------------------|--------|-------------|------------|-------------|--------|---------|--------|---------|--------|
| **Geographical segments**                                                              |   |        |       |        |   |    |   |    |   |
|                                                                                   |   |        |       |        |   |    |   |    |   |
| Total revenue before demerger related items and interest income(d)                     |   |        |       |        |   |    |   |    |   |
| • Australia domestic                                                              |   | **1,240.0** | ** ** | **2,051.2** |   | 1,875.1 |   | 2,276.1 |   |
| • Australia export(f)                                                             |   | **576.9**   | ** ** | **954.3**   |   | 956.6   |   | 922.4   |   |
| • North America                                                                   |   | **2,606.1** | ** ** | **4,311.1** |   | 4,181.7 |   | 3,668.2 |   |
| • New Zealand                                                                     |   | **25.3**    | ** ** | **41.8**    |   | 31.7    |   | 30.7    |   |
| • Asia                                                                            |   | **77.1**    | ** ** | **127.6**   |   | 124.9   |   | 116.9   |   |
| **Total revenue**                                                                      |   | **4,525.4** | ** ** | **7,486.0** |   | 7,170.0 |   | 7,014.3 |   |
|                                                                                   |   |        |       |        |   |    |   |    |   |
| Profit from ordinary activities before demerger related items,  finance and income tax |   |        |       |        |   |    |   |    |   |
| • Australia                                                                       |   | **217.8**   | ** ** | **360.3**   |   | 308.9   |   | 401.6   |   |
| • North America                                                                   |   | **357.9**   | ** ** | **592.0**   |   | 598.5   |   | 515.5   |   |
| • New Zealand                                                                     |   | **7.9**     | ** ** | **13.0**    |   | 9.8     |   | 8.6     |   |
| • Asia                                                                            |   | **5.1**     | ** ** | **8.5**     |   | 8.6     |   | (3.1    | )      |
| **Total profit before demerger related items, finance  and income tax**                |   | **588.7**   | ** ** | **973.8**   |   | 925.8   |   | 922.6   |   |

 

F-17

----

 
| **(million)**                                         |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   | **2001  A$** |   |
|-------------------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|--------------|--------|
| **Geographical segments**                             |   |          |       |         |   |         |   |         |   |
|                                                  |   |          |       |         |   |         |   |         |   |
| Significant items before tax                          |   |          |       |         |   |         |   |         |   |
| • Australia                                      |   | **891.6**     | ** ** | **1,475.0**  |   | —       |   | 154.1        |   |
| • North America                                  |   | **—**    | ** ** | **—**   |   | —       |   | (19.1        | )      |
| • New Zealand                                    |   | **—**    | ** ** | **—**   |   | —       |   | —       |   |
| • Asia                                           |   | **—**    | ** ** | **—**   |   | —       |   | (77.7        | )      |
| **Total significant items before tax**                |   | **891.6**     | ** ** | **1,475.0**  |   | —       |   | 57.3         |   |
|                                                  |   |          |       |         |   |         |   |         |   |
| Capital expenditure                                   |   |          |       |         |   |         |   |         |   |
| • Australia                                      |   | **91.9**      | ** ** | **151.9**    |   | 148.4        |   | 117.2        |   |
| • North America                                  |   | **717.5**     | ** ** | **1,187.0**  |   | 433.2        |   | 1,537.3      |   |
| • New Zealand                                    |   | **0.4**       | ** ** | **0.7**      |   | 0.9          |   | 0.4          |   |
| • Asia                                           |   | **3.5**       | ** ** | **5.8**      |   | 1.4          |   | 4.8          |   |
| **Total capital expenditure**                         |   | **813.3**     | ** ** | **1,345.4**  |   | 583.9        |   | 1,659.7      |   |
|                                                  |   |          |       |         |   |         |   |         |   |
| Segment Assets                                        |   |          |       |         |   |         |   |         |   |
| • Australia                                      |   | **1,232.4**   | ** ** | **2,038.8**  |   | 2,983.1      |   | 3,061.1      |   |
| • North America                                  |   | **—**    | ** ** | **—**   |   | 4,351.0      |   | 4,633.5      |   |
| • New Zealand                                    |   | **28.0**      | ** ** | **46.3**     |   | 45.5         |   | 45.4         |   |
| • Asia                                           |   | **45.5**      | ** ** | **75.2**     |   | 131.5        |   | 151.3        |   |
| **Segment assets**                                    |   | **1,305.9**   | ** ** | **2,160.3**  |   | 7,511.1      |   | 7,891.3      |   |
|                                                  |   |          |       |         |   |         |   |         |   |
| Long-lived assets (property, plant and equipment)     |   |          |       |         |   |         |   |         |   |
| • Australia                                      |   | **775.6**     |       | 1,283.1      |   | 1,814.7      |   | 1,843.6      |   |
| • North America                                  |   | **0.0**       |       | 0.0          |   | 2,217.3      |   | 2,307.6      |   |
| • New Zealand                                    |   | **8.5**       |       | 14.1         |   | 13.4         |   | 13.7         |   |
| • Asia                                           |   | **36.4**      |       | 60.2         |   | 92.5         |   | 108.5        |   |
| **Long-lived assets (property, plant and equipment)** |   | **820.5**     |       | 1,357.4      |   | 4,137.9      |   | 4,273.4      |   |

 

**Products and services of industry segments**

Business segments are based along product andmajor geographical lines and are the same as those used for internal managementreporting. these segments has a dedicated management team and is managedseparately, primarily because of differences in products.

 
| **Rinker  Materials Corporation**                                                                                                                                                                                  |   | **Building  Products**                                                                                                             |   |                   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|
| pre-mixed concrete,  asphalt and other quarry products; cement; concrete pipes and other  reinforced concrete products; underground pipeline rehabilitation:  polyethylene pipes; building materials distribution. |   | plasterboard; fibre  cement; glasswool and rockwool insulation; clay bricks and pavers; roof  tiles; lightweight concrete products |   |                   |
|                                                                                                                                                                                                               |   | **Aluminium**                                                                                                                      |   |                   |
|                                                                                                                                                                                                               |   | aluminium; bauxite;  alumina                                                                                                       |   |                   |
| **Readymix**                                                                                                                                                                                                       |   | **Sugar  Milling**                                                                                                                 |   | **Sugar  Other**       |
| pre-mixed concrete,  asphalt and other quarry products; cement; concrete pipe and other reinforced  concrete products                                                                                              |   | raw sugar                                                                                                                          |   | refined sugar; ethanol |

 

----

**Notes**

** **
| (a)    | In January 2001  CSR sold its interest in the Gove Alumina refinery and bauxite mine to Alcan.  Details of the CSR group’s interests in joint venture operations are shown in  note 25.                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                     |
| (b)    | Includes profit  (loss) on major asset sales, product liability charges and certain  rationalisation costs.                                                                                                                                              |
|   |                                                                                                                                                                                                                                                     |
| (c)    | Refer to note 5  for details of finance expense.                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                     |
| (d)    | Geographic  revenue is based on location of non-current assets, except for Australian  exports which are based on location of end customer.                                                                                                              |
|   |                                                                                                                                                                                                                                                     |
| (e)    | Refer to note 9  for details of finance assets.                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                     |
| (f)    | Includes CSR’s  share of exports made by the Queensland government on behalf of the sugar  industry.                                                                                                                                                |
|   |                                                                                                                                                                                                                                                     |
| (g)    | Represents  unallocated overhead costs.                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                     |
| (h)    | Revised AASB  1005 “Segment Reporting” has been applied for the first time in this  financial report, accordingly, comparative information has been restated in  accordance with the requirements of the revised standard.                     |
|   |                                                                                                                                                                                                                                                     |
| (i)    | Total revenue  includes trading and other revenue from ordinary activities as well as  interest and dividend income.                                                                                                                                     |
|   |                                                                                                                                                                                                                                                     |
| (j)    | Segment assets  represent those assets that are employed by the segment in its operating  activities, excluding finance and tax assets.                                                                                                                  |
|   |                                                                                                                                                                                                                                                     |
| (k)    | Total external  revenue means revenue recognised in segment profit from ordinary activities  before income tax resulting from the activities of the segment, excluding  revenue generated from sales to other segments within the group.                 |
|   |                                                                                                                                                                                                                                                     |
| (l)    | Rinker  Materials Corporation and Readymix demerged from the CSR group to form the  Rinker group. As such, Rinker Materials Corporation and Readymix are  reflected as discontinued operations in these consolidated financial  statements. See note 37. |
|   |                                                                                                                                                                                                                                                     |
| (m)    | Internal  revenue means revenue generated from sales between segments, with prices  based upon the actual prices charged to the segment’s largest external  customers in each market.                                                               |

 

 

F-18

----

 
| **(million)**                                                                                                                            |   | **Note** |       | **2003  US$** |       | **2003  A$** |       | **2002  A$** |   | **2001  A$** |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|------------|---------------|------------|--------------|------------|--------------|--------|--------------|--------|
| **2              Other  revenue and expenses from ordinary activities** |   |     |       |          |       |         |       |         |   |         |   |
| **Revenue**                                                                                                                              |   |     |       |          |       |         |       |         |   |         |   |
| Significant items                                                                                                                        |   | 3        | ** ** | **2,764.4**   | ** ** | **4,573.0**  | ** ** | **—**   |   | 412.4        |   |
| Disposal of property, plant and equipment and other assets                                                                               |   |     | ** ** | **105.1**     |       | **174.0**    |       | 99.1         |   | 140.8        |   |
| Disposal of investments                                                                                                                  |   |     | ** ** | **—**    |       | **—**   |       | 59.8         |   | —       |   |
| Gift of shares in Sugar Terminals Limited                                                                                                |   |     | ** ** | **—**    |       | **—**   |       | —       |   | 27.5         |   |
| Other                                                                                                                                    |   |     | ** ** | **16.2**      |       | **26.8**     |       | 24.1         |   | 8.2          |   |
| **Total other revenue from ordinary activities**                                                                                         |   |     | ** ** | **2,885.7**   |       | **4,773.8**  |       | 183.0        |   | 588.9        |   |
| **Expenses**                                                                                                                             |   |     |       |          |       |         |       |         |   |         |   |
| Significant items                                                                                                                        |   |     |       | **(1,872.7**  | **)**      | **(3,098.0** | )          | —       |   | (355.1       | )      |
| Disposal of property, plant and equipment and other assets                                                                               |   |     |       | **(69.8**     | **)**      | **(115.4**   | **)**      | (82.2        | )      | (121.9       | )      |
| Disposal of investments                                                                                                                  |   |     | ** ** | **—**    |       | **—**   |       | (53.9        | )      | —       |   |
| Increase in product liability provision                                                                                                  |   |     |       | **(11.5**     | **)**      | **(19.1**    | **)**      | (30.0        | )      | —       |   |
| Other restructure and rationalisation costs                                                                                              |   |     |       | **(7.8**      | **)**      | **(12.9**    | **)**      | 9.9          |   | —       |   |
| Other                                                                                                                                    |   |     |       | **(5.3**      | **)**      | **(8.7**     | **)**      | (2.6         | )      | (12.7        | )      |
| **Total other expenses from ordinary activities**                                                                                        |   |     |       | **(1,967.1**  | **)**      | **(3,254.1** | **)**      | (158.8       | )      | (489.7       | )      |
|                                                                                                                                     |   |     |       |          |       |         |       |         |   |         |   |
| **3              Significant items**                                    |   |     |       |          |       |         |       |         |   |         |   |
| **Sale of Gove Aluminium Ltd**                                                                                                           |   |     |       |          |       |         |       |         |   |         |   |
| Net proceeds on sale                                                                                                                     |   |     | ** ** | **—**    |       | **—**   |       | —       |   | 412.4        |   |
| Book value of assets sold and selling costs                                                                                              |   |     | ** ** | **—**    |       | **—**   |       | —       |   | (177.0       | )      |
| Income tax benefit                                                                                                                       |   |     | ** ** | **—**    |       | **—**   |       | —       |   | 33.2         |   |
|                                                                                                                                     |   |     |       | **—**    |       | **—**   |       | —       |   | 268.6        |   |
| **Asset writedowns and rationalisation costs**                                                                                           |   |     |       |          |       |         |       |         |   |         |   |
| Writedown of property, plant and equipment                                                                                               |   |     | ** ** | **—**    |       | **—**   |       | —       |   | (74.8        | )      |
| Writedown of other assets                                                                                                                |   |     | ** ** | **—**    |       | **—**   |       | —       |   | (17.9        | )      |
| Rationalisation costs                                                                                                                    |   |     | ** ** | **—**    |       | **—**   |       | —       |   | (20.4        | )      |
|                                                                                                                                     |   |     |       | **—**    |       | **—**   |       | —       |   | (113.1       | )      |
| Income tax benefit                                                                                                                       |   |     | ** ** | **—**    |       | **—**   |       | —       |   | 13.6         |   |
| Outside equity interest                                                                                                                  |   |     | ** ** | **—**    |       | **—**   |       | —       |   | 5.6          |   |
|                                                                                                                                     |   |     |       | **—**    |       | **—**   |       | —       |   | (93.9        | )      |
| **Demerger(a)**                                                                                                                          |   |     |       |          |       |         |       |         |   |         |   |
| Fair value adjustment of Rinker Group Limited                                                                                            |   |     |       | **2,764.4**   | ** ** | **4,573.0**  |       | —       |   | —       |   |
| Book value of demerged assets                                                                                                            |   |     |       | **(1,827.9**  | **)**      | **(3,023.8** | **)**      | —       |   | —       |   |
| Demerger transaction costs                                                                                                               |   |     |       | **(44.9**     | **)**      | **(74.2**    | **)**      | —       |   | —       |   |
| Income tax benefit                                                                                                                       |   |     |       | **10.7**      | ** ** | **17.7**     |       | —       |   | —       |   |
|                                                                                                                                     |   |     |       | **902.3**     |       | **1,492.7**  |       | —       |   | —       |   |
|                                                                                                                                     |   |     |       |          |       |         |       |         |   |         |   |
| **Product liability**                                                                                                                    |   |     |       |          |       |         |       |         |   |         |   |
| Increase in provision                                                                                                                    |   |     | ** ** | **—**    |       | **—**   |       | —       |   | (65.0        | )      |
| Income tax benefit                                                                                                                       |   |     | ** ** | **—**    |       | **—**   |       | —       |   | 19.5         |   |
|                                                                                                                                     |   |     |       | **—**    |       | **—**   |       | —       |   | (45.5        | )      |
| **Analysis of significant items**                                                                                                        |   |     |       |          |       |         |       |         |   |         |   |
| Revenue                                                                                                                                  |   |     |       | **2,764.4**   | ** ** | **4,573.0**  |       | —       |   | 412.4        |   |
| Expenses                                                                                                                                 |   |     |       | **(1,872.7**  | **)**      | **(3,098.0** | **)**      | —       |   | (355.1       | )      |
| Net profit before income tax                                                                                                             |   |     |       | **891.6**     | ** ** | **1,475.0**  |       | —       |   | 57.3         |   |
| Income tax benefit                                                                                                                       |   |     |       | **10.7**      | ** ** | **17.7**     |       | —       |   | 66.3         |   |
| Outside equity interests                                                                                                                 |   |     |       | —        | ** ** | **—**   |       | —       |   | 5.6          |   |
| **Total significant items**                                                                                                              |   |     |       | **902.3**     | ** ** | **1,492.7**  |       | —       |   | 129.2        |   |

 

----

(a)     The demerger of RinkerGroup Limited was effective from March 28, 2003. Refer to note 37 for detailsof the discontinued operations.  Thefair value of Rinker Group Limited was determined using the average RinkerGroup Limited share price for the first ten days trading. Book value of the demergednet assets was A$3,040.7 million as disclosed in note 37 less A$16.9 millionattributable to outside equity interests.

 

 
| **4   Interest income**    |   |       |       |       |   |   |   |   |   |
|--------------------------------------|--------|------------|------------|------------|--------|--------|--------|--------|--------|
|                                 |   |       |       |       |   |   |   |   |   |
| Short-term interest income           |   | **4.3**    | ** ** | **7.1**    |   | 8.9    |   | 20.2   |   |
| Long-term interest income from       |   |       |       |       |   |   |   |   |   |
| • Australian Taxation Office(a) |   | **—** | ** ** | **—** |   | 11.4   |   | — |   |
| • others                        |   | **1.1**    |       | **1.8**    |   | 4.5    |   | 3.5    |   |
| **Total interest income**            |   | **5.4**    |       | **8.9**    |   | 24.8   |   | 23.7   |   |

 

----

(a)     refer to note 8 for details

 

 

F-19

----

 

 
| **(million)**                                                                                            |   | **Note** |       | **2003  US$** |       | **2003****A$** |   | **2002  A$** |   | **2001A$** |   |
|----------------------------------------------------------------------------------------------------------|--------|----------|------------|---------------|------------|----------------|--------|--------------|--------|------------|--------|
| **5              Net  finance expense** |   |     |       |          |       |           |   |         |   |       |   |
| Interest paid or payable on                                                                              |   |     |       |          |       |           |   |         |   |       |   |
| • short-term debt                                                                                   |   |     | ** ** | **2.1**       |       | **3.4**        |   | 7.8          |   | 7.8        |   |
| • long-term debt                                                                                    |   |     | ** ** | **61.3**      |       | **101.3**      |   | 125.1        |   | 150.3      |   |
| Finance leases                                                                                           |   |     | ** ** | **0.2**       |       | **0.4**        |   | 0.6          |   | 0.7        |   |
| Total interest expense                                                                                   |   |     | ** ** | **63.6**      |       | **105.1**      |   | 133.5        |   | 158.8      |   |
| Less amount capitalised                                                                                  |   |     | ** ** | **—**    |       | **—**     |   | 1.8          |   | 1.5        |   |
| Add                                                                                                      |   |     |       |          |       |           |   |         |   |       |   |
| • funding costs                                                                                     |   |     | ** ** | **2.3**       |       | **3.8**        |   | 3.2          |   | 0.8        |   |
| • foreign exchange loss (gain)                                                                      |   |     | ** ** | **3.2**       |       | **5.3**        |   | (2.8         | )      | (2.7       | )      |
| **Borrowing costs**                                                                                      |   |     | ** ** | **69.0**      |       | **114.2**      |   | 132.1        |   | 155.4      |   |
| less interest income                                                                                     |   | 4        | ** ** | **5.4**       | ** ** | **8.9**        |   | 24.8         |   | 23.7       |   |
| **Net finance expense**                                                                                  |   |     | ** ** | **63.6**      |       | **105.3**      |   | 107.3        |   | 131.7      |   |

 

**6              Depreciation and amortisation**

 
| Amounts incurred for depreciation, amortisation and depletion of |   |   |       |      |   |      |   |   |   |   |   |
|------------------------------------------------------------------|--------|--------|------------|-----------|--------|-----------|--------|--------|--------|--------|--------|
| • deferred costs(a)                                         |   |   | ** ** | **14.3**  |   | **23.7**  |   | 23.4   |   | 22.5   |   |
| • goodwill                                                  |   |   | ** ** | **51.1**  |   | **84.6**  |   | 72.0   |   | 57.7   |   |
| • property, plant and equipment                             |   |   | ** ** | **213.5** |   | **353.2** |   | 346.2  |   | 326.3  |   |
| • other intangibles                                         |   |   | ** ** | **6.2**   |   | **10.1**  |   | 11.3   |   | 8.9    |   |
| **Total depreciation and amortisation**                          |   |   | ** ** | **285.1** |   | **471.6** |   | 452.9  |   | 415.4  |   |

 

----

(a)     amortisation of deferred software and systems development costsand quarry development costs.

 

 
| **(A$ million)**                                                                                                   |   | **2003**       |       | **2002**   |   | **2001**             |
|--------------------------------------------------------------------------------------------------------------------|--------|----------------|------------|------------|--------|----------------------|
|                                                                                                               |   | **Per  Share** |       | **Total**  |   | **Cents  Per Share** |   | **Total** |   | **Cents  Per Share** |   | **Total** |   |
| **7              Dividends and franking credits** |   |           |       |       |   |                 |   |   |   |   |   |   |   |
| **Dividends**                                                                                                      |   |           |       |       |   |                 |   |   |   |   |   |   |   |
| ***Recognised Amounts***                                                                                           |   |           |       |       |   |                 |   |   |   |   |   |   |   |
| **Fully Paid Ordinary Shares**                                                                                     |   |           |       |       |   |                 |   |   |   |   |   |   |   |
| Interim dividend:                                                                                                  |   |           |       |       |   |                 |   |   |   |   |   |   |   |
| • Franked to 70% (2002: 40%, 2001: 33%)                                                                       |   | **11.0**       | ** ** | **103.3**  |   | 11.0                 |   | 103.0 |   | 11.0 |   | 108.1 |   |
| Final Dividend:                                                                                                    |   |           |       |       |   |                 |   |   |   |   |   |   |   |
| • Franked to 70% (2002: 70%, 2001: 40%)(a)                                                                    |   | **—**     | ** ** | **—** |   | 13.0                 |   | 122.0 |   | 12.0 |   | 114.4 |   |
|                                                                                                               |   |           |       | **103.3**  |   |                 |   | 225.0 |   |   |   | 222.5 |   |
|                                                                                                               |   |           |       |       |   |                 |   |   |   |   |   |   |   |
| ***Unrecognised Amounts***                                                                                         |   |           |       |       |   |                 |   |   |   |   |   |   |   |
| **Fully Paid Ordinary Shares**                                                                                     |   |           |       |       |   |                 |   |   |   |   |   |   |   |
| Final dividend                                                                                                     |   |           |       |       |   |                 |   |   |   |   |   |   |   |
| • Franked to 30%                                                                                              |   | **6.0**        | ** ** | **56.7**   |   | —               |   | — |   | — |   | — |   |
|                                                                                                               |   |           |       | **56.7**   |   |                 |   | — |   |   |   | — |   |

 

----

(a)      Includes A$0.3 million under accrual of final dividend for yearended March 31, 2001.

 

The final dividend in respect of ordinary sharesfor the year ended March 31, 2003 has not been recognised in this financialreport because the final dividend was declared after March 31, 2003. On thebasis that directors will continue to publicly recommend dividends in respectof ordinary shares subsequent to reporting date, in future financial reportsthe amount disclosed as “recognised” will be the final dividend in respect ofthe prior financial year, and the interim dividend in respect of the currentfinancial year.

 
|                                               |   | **2003** |   | **2002(b)** |   | **2001(b)** |   |
|----------------------------------------------------|--------|----------|--------|-------------|--------|-------------|--------|
|                                               |   |     |   |        |   |        |   |
| Adjusted franking account balance (tax paid basis) |   | 0.6      |   | 5.8         |   | 11.9        |   |

 

----

(b)     Due to the changes inAustralian income tax legislation, from July 1, 2002 franking accounts aremaintained on a “tax paid” rather than an “after tax distributable profits”basis. The comparative franking account balances have been restated on the “taxpaid basis” so as to be comparable with the disclosure as at March 31, 2003.

 

 

F-20

----

 

 
| **(million)**                                                                                                                                                            |   | **Note** |   | **2003  US$** |       | **2003  A$** |       | **2002A$** |   | **2001A$** |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|---------------|------------|--------------|------------|------------|--------|------------|---------|
|                                                                                                                                                                     |   |     |   |          |       |         |       |       |   |       |    |
| **8              Income tax**                                                                           |   |     |   |          |       |         |       |       |   |       |    |
| **The components of income tax expense consist of the  following**                                                                                                       |   |     |   |          |       |         |       |       |   |       |    |
| Current                                                                                                                                                                  |   |     |   |          |       |         |       |       |   |       |    |
| • Australian                                                                                                                                                        |   |     |   | **49.7**      | ** ** | **82.2**     |       | (6.0       | )      | 71.3       |    |
| • US                                                                                                                                                                |   |     |   | **93.6**      | ** ** | **154.8**    |       | 134.5      |   | 118.1      |    |
| • other foreign                                                                                                                                                     |   |     |   | **1.0**       | ** ** | **1.7**      |       | 2.5        |   | 1.2        |    |
|                                                                                                                                                                     |   |     |   | **144.3**     |       | **238.7**    |       | 131.0      |   | 190.6      |    |
| Deferred                                                                                                                                                                 |   |     |   |          |       |         | ** ** |       |   |       |    |
| • Australian                                                                                                                                                        |   |     |   | **(4.3**      | **)**      | **(7.1**     | **)**      | 60.8       |   | (31.0      | )  |
| • US                                                                                                                                                                |   |     |   | **21.1**      | ** ** | **34.8**     | ** ** | 52.1       |   | 20.1       |    |
| • other foreign                                                                                                                                                     |   |     |   | **(0.1**      | **)**      | **(0.1**     | **)**      | (0.2       | )      | (0.6       | )  |
|                                                                                                                                                                     |   |     |   | **16.7**      |       | **27.6**     | ** ** | 112.7      |   | (11.5      | )  |
|                                                                                                                                                                     |   |     |   | **161.0**     |       | **266.3**    |       | 243.7      |   | 179.1      |    |
|                                                                                                                                                                     |   |     |   |          |       |         |       |       |   |       |    |
| **The significant temporary differences are as follows**                                                                                                                 |   |     |   |          |       |         |       |       |   |       |    |
| Future income tax benefit arising from                                                                                                                                   |   |     |   |          |       |         |       |       |   |       |    |
| • provisions(a)                                                                                                                                                     |   |     |   | **85.7**      | ** ** | **141.8**    |       | 162.5      |   | 173.4      |    |
| • tax losses(b) (including the valuation allowance shown below)                                                                                                     |   |     |   | **119.8**     | ** ** | **198.2**    |       | 240.9      |   | 227.8      |    |
| • other(c)                                                                                                                                                          |   |     |   | **1.1**       | ** ** | **1.9**      |       | 14.0       |   | 53.5       |    |
| Total deferred income tax assets                                                                                                                                         |   |     |   | **206.6**     | ** ** | **341.9**    |       | 417.4      |   | 454.7      |    |
| Valuation allowance not brought to account                                                                                                                               |   |     |   | **(84.1**     | **)**      | **(139.1**   | )          | (134.4     | )      | (84.6      | )       |
| Net deferred income tax assets                                                                                                                                           |   |     |   | **122.5**     | ** ** | **202.8**    |       | 283.0      |   | 370.1      |    |
|                                                                                                                                                                     |   |     |   |          |       |         |       |       |   |       |    |
| Deferred income tax liabilities                                                                                                                                          |   |     |   |          |       |         |       |       |   |       |    |
| • fixed asset depreciation(d)                                                                                                                                       |   |     |   | **(107.2**    | **)**      | **(177.3**   | )          | (443.6     | )      | (458.2     | )       |
| • spares and stores(e)                                                                                                                                              |   |     |   | **(7.0**      | **)**      | **(11.6**    | )          | (25.8      | )      | (24.3      | )       |
| • inventory and deferred stripping                                                                                                                                  |   |     |   | **—**    | ** ** | **—**   |       | (2.2       | )      | (2.3       | )       |
| • prepayments                                                                                                                                                       |   |     |   | **(1.9**      | **)**      | **(3.2**     | )          | (7.4       | )      | (11.4      | )       |
| • other(c)                                                                                                                                                          |   |     |   | **(13.0**     | **)**      | **(21.4**    | )          | (40.6      | )      | (22.7      | )       |
| Total deferred income tax liabilities                                                                                                                                    |   |     |   | **(129.1**    | **)**      | **(213.5**   | )          | (519.6     | )      | (518.9     | )       |
|                                                                                                                                                                     |   |     |   |          |       |         |       |       |   |       |    |
| **Income tax expense**                                                                                                                                                   |   |     |   |          |       |         |       |       |   |       |    |
| Reconciliation of income tax expense charged to the statement of  financial performance with income tax calculated on profit from ordinary  activities before income tax |   |     |   |          |       |         |       |       |   |       |    |
| **Profit from ordinary activities before income tax**                                                                                                                    |   |     |   | **1,416.6**   | ** ** | **2,343.5**  |       | 818.5      |   | 848.2      |    |
|                                                                                                                                                                     |   |     |   |          |       |         |       |       |   |       |    |
| **Income tax expense calculated at 30%**                                                                                                                                 |   |     |   | **425.0**     | ** ** | **703.1**    |       | 245.6      |   | 288.4      |    |
| **Increase (decrease) in income tax expense due to**                                                                                                                     |   |     |   |          |       |         |       |       |   |       |    |
| Non-tax deductible depreciation and amortisation                                                                                                                         |   |     |   | **10.5**      | ** ** | **17.4**     |       | 18.5       |   | 19.8       |    |
| Non-tax deductible other expenditure                                                                                                                                     |   |     |   | **1.9**       | ** ** | **3.2**      |       | 1.4        |   | 4.3        |    |
| Asset disposals                                                                                                                                                          |   |     |   | **(7.9**      | **)**      | **(13.1**    | )          | (6.9       | )      | (117.4     | )       |
| Asset writedowns                                                                                                                                                         |   |     |   | **—**    | ** ** | **—**   |       | —     |   | 23.7       |    |
| Asian trading (profits) losses not recognised                                                                                                                            |   |     |   | **(0.3**      | **)**      | **(0.5**     | )          | (1.3       | )      | 4.2        |    |
| Equity accounted associates’ profit/rebates on dividends received                                                                                                   |   |     |   | **(6.3**      | **)**      | **(10.4**    | )          | (11.4      | )      | (13.5      | )       |
| Research and development concessions                                                                                                                                     |   |     |   | **(0.3**      | **)**      | **(0.5**     | )          | (0.4       | )      | (0.5       | )       |
| Tax refund on settlement with insurer in prior years(f)                                                                                                                  |   |     |   | **—**    | ** ** | **—**   |       | (33.0      | )      | —     |    |
| Income tax over provided in previous years                                                                                                                               |   |     |   | **(1.3**      | **)**      | **(2.2**     | )          | (1.4       | )      | (16.8      | )       |
| Overseas tax rate differential                                                                                                                                           |   |     |   | **25.0**      | ** ** | **41.3**     |       | 35.3       |   | 3.5        |    |
| Gift of shares in Sugar Terminals Limited                                                                                                                                |   |     |   | **—**    | ** ** | **—**   |       | —     |   | (9.4       | )       |
| Significant items                                                                                                                                                        |   |     |   | **(278.2**    | **)**      | **(460.2**   | )          | —     |   | —     |    |
| Other items                                                                                                                                                              |   |     |   | **(7.1**      | **)**      | **(11.8**    | )          | (2.7       | )      | (7.2       | )       |
| **Total income tax expense on profit from ordinary  activities**                                                                                                         |   |     |   | **161.0**     | ** ** | **266.3**    |       | 243.7      |   | 179.1      |    |

 

 

F-21

----

 
| **(million)**                                                                             |                   | **2003  US$** |   | **2003  A$** |       | **2002  A$** |       | **2001  A$** |   |
|-------------------------------------------------------------------------------------------|------------------------|---------------|--------|--------------|------------|--------------|------------|--------------|--------|
|                                                                                      |                   |          |   |         |       |         |       |         |   |   |   |
| **Total income tax expense comprises**                                                    |                   |          |   |         |       |         |       |         |   |   |   |
| • additions to provision for current income tax liability                            |                   |          |   | **144.3**    | ** ** | **238.7**    |       | 131.0        |   | 190.6 |   |
| • additions to (deductions from) provision for deferred income tax  liability        |                   |          |   | **13.8**     | ** ** | **22.8**     |       | 17.8         |   | (1.8 | ) |
| • deductions from (additions to) deferred income tax assets                          |                   |          |   | **2.9**      | ** ** | **4.8**      |       | 94.9         |   | (9.7 | ) |
|                                                                                      |                   |          |   | **161.0**    |       | **266.3**    |       | 243.7        |   | 179.1 |   |
|                                                                                      |                   |          |   |         |       |         |       |         |   |   |   |
| **Analysis of total income tax expense**                                                  |                   |          |   |         |       |         |       |         |   |   |   |
| Income tax expense on operating profit                                                    |                   |          |   | **171.7**    | ** ** | **284.0**    |       | 243.7        |   | 245.4 |   |
| Income tax benefit on significant items                                                   |                   |          |   | **(10.7**    | **)**      | **(17.7**    | )          | —       |   | (66.3 | ) |
|                                                                                      |                   |          |   | **161.0**    |       | **266.3**    |       | 243.7        |   | 179.1 |   |
| **Deferred income tax assets attributable to tax  losses carried forward as an asset(g)** |                   |          |   | **35.7**     | ** ** | **59.1**     |       | 106.5        |   | 143.2 |   |
|                                                                                      |                   |          |   |         |       |         |       |         |   |   |   |
| **Deferred income tax assets not taken to account(h)**                                    |                   |          |   |         |       |         |       |         |   |   |   |
| Balance at the beginning of the financial year                                            |                   |          |   | **81.2**     | ** ** | **134.4**    |       | 84.6         |   | 97.6 |   |
| Assets now taken to account                                                               |                   |          |   | **(4.7**     | **)**      | **(7.7**     | )          | (40.4        | )      | (45.3 | ) |
| Assets not recognised                                                                     |                   |          |   | **8.9**      | ** ** | **14.7**     |       | 90.2         |   | 32.7 |   |
| Assets sold / demerged                                                                    |                   |          |   | **(1.4**     | **)**      | **(2.3**     | )          | —       |   | — |   |
| Restatement from change in income tax rates                                               |                   |          |   | **—**   | ** ** | **—**   |       | —       |   | (0.4 | ) |
| **Balance at the end of the financial year(i)**                                           |                   |          |   | **84.0**     | ** ** | **139.1**    |       | 134.4        |   | 84.6 |   |
| **Tax losses(j)**                                                                         |                   |          |   |         |       |         |       |         |   |   |   |
| The tax losses carried forward expire as summarised below(k)                              |                   |          |   |         |       |         |       |         |   |   |   |
| • US                                                                                 | expiration 2012 - 2015 |          |   | ** **   | **—** | ** **   | **—** |         | 26.6   |   | 33.7 |   |
| • US                                                                                 | unlimited expiration   |          |   | ** **   | **—** | ** **   | **—** |         | 13.7   |   | 16.7 |   |
| • Australia                                                                          | unlimited expiration   |          |   | ** **   | **112.2**  | ** **   | **185.6**  |         | 178.2  |   | 155.3 |   |
| • Other                                                                              | unlimited expiration   |          |   | ** **   | **7.6**    | ** **   | **12.6**   |         | 22.4   |   | 22.1 |   |
|                                                                                      |                   |          |   | **119.8**    |       | **198.2**    |       | 240.9        |   | 227.8 |   |

 

**Undistributedearnings**

No provision for withholding tax has beenmade on undistributed earnings of overseas controlled entities where there isno intention to distribute those earnings. The aggregate amount of suchundistributed earnings for which Australian income taxes have not been providedwas A$45.6 million as of March 31, 2003. If taxes were to be provided on theseearnings, the estimated total of such taxes at 15% (being the average dividendwithholding tax rate) would be A$6.8 million.

 

**Valuationallowance**

The net change in the valuation allowance fordeferred income tax assets was an increase of A$4.7 million in 2003, anincrease of A$49.8 million in 2002 and a decrease of A$13.0 million in 2001.The current year increase was due to capital losses recorded in relation todebts written off due to the closure of certain group operations. The valuationallowance relates primarily to capital gains tax losses, with the allowancerecorded due to the uncertainty of whether these losses may ultimately berealised.

 

**TaxConsolidation**

Australian legislation to allow groups,comprising a parent entity and its Australian wholly-owned entities, to electto consolidate and be treated as a single entity for income tax purposes wassubstantively enacted on October 21, 2002. As at the date of this report the directors have not completed anassessment of the financial effect, if any, the legislation may have on thecompany, and, accordingly, the directors have not made a decision to elect tobe taxed as a single entity.

 

----

| (a) |   | Provision for tax deduction  arising after expense is reported for accounting purposes.                                                                                                                                                                                                                                                                                                                      |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Tax losses to be offset  against future taxable income.                                                                                                                                                                                                                                                                                                                                                      |
| (c) |   | Other taxable and  deductible temporary differences.                                                                                                                                                                                                                                                                                                                                                         |
| (d) |   | Tax depreciation in excess  of accounting depreciation.                                                                                                                                                                                                                                                                                                                                                      |
| (e) |   | Spares and stores held in  inventory, deductible for tax on purchase; expensed for accounting purposes  on issue.                                                                                                                                                                                                                                                                                            |
| (f) |   | CSR was in dispute with the  Australian Taxation Office (ATO) in relation to the treatment of a lump sum  settlement with its insurers. In November 2001 the High Court of Australia  rejected the ATO’s special leave application, thereby confirming the full Federal  Court decision in favour of CSR. In January 2002 CSR received a tax refund of  A$33.0 million plus interest of A$11.4 million. |
| (g) |   | Net of the valuation  allowance A$139.1 million (2002 A$134.4 million, 2001 A$84.6 million).                                                                                                                                                                                                                                                                                                                 |
| (h) |   | Includes capital gains tax  losses A$126.5 million (2002 A$112.0 million, 2001 A$62.5 million).                                                                                                                                                                                                                                                                                                              |
| (i) |   | These benefits will only be  obtained if the CSR Group derives the necessary future assessable income and  capital gains, and there are no adverse changes in tax legislation.                                                                                                                                                                                                                               |
| (j) |   | On demerger of the Rinker  group from CSR on March 28, 2003, A$18.9 million of tax losses were  transferred to the Rinker group.                                                                                                                                                                                                                                                                             |
| (k) |   | These balances are not net  of the valuation allowance.                                                                                                                                                                                                                                                                                                                                                      |

 

F-22

----

 

 
| **(million)**                                                                                |   | **Note** |       | **2003  US$** |       | **2003****A$** |   | **2002****A$** |   |
|----------------------------------------------------------------------------------------------|--------|----------|------------|---------------|------------|----------------|--------|----------------|--------|
| **9              Net cash** |   |     |       |          |       |           |   |           |   |
| Cash at banks and on hand                                                                    |   |     |       | **22.9**      | ** ** | **37.9**       |   | 68.2           |   |
| Cash held to settle debt to Rinker group(a)                                                  |   |     |       | **190.7**     | ** ** | **315.5**      |   |           |   |
| Short-term loans and deposits                                                                |   |     |       | **11.5**      | ** ** | **19.0**       |   | 88.4           |   |
| **Total cash**                                                                               |   |     |       | **225.1**     | ** ** | **372.4**      |   | 156.6          |   |
| Bank overdraft                                                                               |   | 19       | ** ** | **(3.8**      | **)**      | **(6.3**       | )      | —         |   |
| **Net cash**                                                                                 |   |     |       | **221.3**     | ** ** | **366.1**      |   | 156.6          |   |

 

----

| (a) |   | As part of the demerger,  A$60.2 million of the CSR group’s cash balances were allocated to the Rinker  group. In addition A$255.3 million was payable to Rinker Materials  Corporation to extinguish debt. These payments were not made until after the  year ended March 31, 2003, and are recorded as liabilities (refer note 19).  The payments were made in April and May 2003. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

**10           Receivables**

 
| **Current**                                      |   |       |       |       |   |   |   |
|--------------------------------------------------|--------|------------|------------|------------|--------|--------|--------|
| Trade receivables                                |   | **156.1**  | ** ** | **258.3**  |   | 890.5  |   |
| Provision for doubtful debts(a)                  |   | **(4.1**   | **)**      | **(6.8**   | )      | (32.6  | )      |
|                                             |   | **152.0**  |       | **251.5**  |   | 857.9  |   |
| Loans to and receivables from associate entities |   | **11.8**   | ** ** | **19.5**   |   | 46.1   |   |
| Divestment debtors                               |   | **22.8**   | ** ** | **37.7**   |   | 35.8   |   |
| Other loans and receivables(b)                   |   | **10.7**   | ** ** | **17.7**   |   | 48.6   |   |
| Provision for doubtful debts                     |   | **(0.1**   | **)**      | **(0.2**   | )      | (0.4   | )      |
|                                             |   | **45.2**   |       | **74.7**   |   | 130.1  |   |
| **Total current receivables**                    |   | **197.2**  | ** ** | **326.2**  |   | 988.0  |   |
| **Bad debts written off**                        |   |       |       |       |   |   |   |
| • Trade receivables                         |   | **11.7**   | ** ** | **19.4**   |   | 12.2   |   |
|                                             |   |       |       |       |   |   |   |
| **Non-current**                                  |   |       |       |       |   |   |   |
| Loans to employees                               |   |       |       |       |   |   |   |
| • directors of controlled entities(c)(d)    |   | **0.1**    | ** ** | **0.1**    |   | 0.3    |   |
| • other staff                               |   | **6.6**    | ** ** | **11.0**   |   | 19.6   |   |
|                                             |   | **6.7**    |       | **11.1**   |   | 19.9   |   |
| Loans to associate entities                      |   | **4.5**    | ** ** | **7.4**    |   | 16.1   |   |
| Other loans(e)                                   |   | **16.8**   | ** ** | **27.8**   |   | 4.9    |   |
| Term receivables                                 |   | **—** | ** ** | **—** |   | 10.0   |   |
| **Total non-current receivables**                |   | **28.0**   | ** ** | **46.3**   |   | 50.9   |   |

 

----

| (a) |   | Provision for doubtful  debts as detailed below. |
|-----|--------|--------------------------------------------------|

 

 
| **(A$  million)  Year ending  March 31** |   | **Opening  balance** |   | **(Provided)  reversed** |   | **Net  charged** |   | **Foreign  exchange** |       | **(Acquisitions)/  disposals** |   | **Closing  balance** |   |
|------------------------------------------|--------|----------------------|--------|--------------------------|--------|------------------|--------|-----------------------|------------|--------------------------------|--------|----------------------|--------|
| 2001                                     |   | (30.8                | )      | (26.2                    | )      | 17.4             |   | (5.2                  | )          | (2.3                           | )      | (47.1                | )      |
| 2002                                     |   | (47.1                | )      | 0.8                      |   | 12.2             |   | 1.5                   | ** ** | **—**                     |   | (32.6                | )      |
| 2003                                     |   | (32.6                | )      | (15.6                    | )      | 19.4             |   | 3.3                   |       | 18.7                           |   | (6.8                 | )      |

 

In 2001, the A$26.2 million provided was made up of A$13.3 millionoperating, A$6.5 million non-operating and A$6.4 million included insignificant items.

In 2002, the A$0.8 million written back was made up of A$7.7 millionprovided as operating expense offset by A$(8.5) million written back asnon-operating items.

In 2003, the A$15.6 million provided was made up of A$18.6 millionprovided as operating expense offset by A$(3.0) million written back asnon-operating items.

The A$18.7 million disposals is mainly as a result of the demerger ofRinker Group Limited.

 
| (b)    |   | Includes net hedging gains  $nil million deferred (2002: A$5.5 million).                                            |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|
| (c)    |   | Amounts before rounding -  Consolidated A$0.115 million (2002: A$0.315 million).                                    |
| (d)    |   | Includes loans to executive  directors of CSR Limited. Amount before rounding A$nil million (2002 A$0.007 million). |
|   |   | There are no outstanding  loans to non-executive directors of CSR Limited.                                          |
| (e)    |   | Includes receivable from  Rinker group of A$22.5 million (2002: nil)                                                |

 

**11           Inventories(b)**

 
| **Current(a)**                          |   |     |       |      |   |   |   |
|-----------------------------------------|--------|----------|------------|-----------|--------|--------|--------|
| Raw and process materials and stores    |   | **40.7** | ** ** | **67.4**  |   | 176.4  |   |
| Work in progress                        |   | **4.9**  | ** ** | **8.0**   |   | 40.3   |   |
| Finished goods                          |   | **48.9** | ** ** | **80.9**  |   | 355.8  |   |
| **Total current inventories**           |   | **94.5** | ** ** | **156.3** |   | 572.5  |   |
|                                    |   |     |       |      |   |   |   |
| **Non-current**                         |   |     |       |      |   |   |   |
| Raw and process materials and stores(a) |   | **2.8**  | ** ** | **4.6**   |   | 29.4   |   |
| Land held for sale                      |   |     |       |      |   |   |   |
| • at cost                          |   | **1.4**  | ** ** | **2.4**   |   | 21.3   |   |
| • at net realisable value          |   | **7.5**  | ** ** | **12.4**  |   | 78.5   |   |
| **Total non-current inventories**       |   | **11.7** | ** ** | **19.4**  |   | 129.2  |   |

 

 

F-23

----

 

----

| (a) |   | Valued at the lower of cost  and net realisable value. |
|-----|--------|--------------------------------------------------------|
| (b) |   | Inventory valuation  allowances are immaterial.        |

 

 

F-24

----

 

**12           Investments accounted for using theequity method**

** **
| **(million)**                                               |   | **2003  US$** |       | **2003****A$** |   | **2002****A$** |   |
|-------------------------------------------------------------|--------|---------------|------------|----------------|--------|----------------|--------|
|                                                        |   |          |       |           |   |           |   |
| Shares in associate companies(a)(b)                         |   | **25.0**      | ** ** | **41.4**       |   | 191.1          |   |
| Interests in partnerships(b)                                |   | **—**    | ** ** | **—**     |   | 23.0           |   |
| Interest in other associate entity(b)                       |   | **58.7**      | ** ** | **97.0**       |   | 102.5          |   |
| **Total investment accounted for using the equity  method** |   | **83.7**      | ** ** | **138.4**      |   | 316.6          |   |

 

----

| (a) |   | Not quoted on stock  exchanges.                                     |
|-----|--------|---------------------------------------------------------------------|
| (b) |   | Details of investments in  associate entities are shown in note 34. |

 

**13****          ****Other financial assets**

 
| Other financial assets at cost(a) |   | **13.5** | ** ** | **22.4** |   | 40.2 |   |
|-----------------------------------|--------|----------|------------|----------|--------|------|--------|
| **Total other financial assets**  |   | **13.5** | ** ** | **22.4** |   | 40.2 |   |

 

----

| (a) |   | Not quoted on stock  exchanges. Mainly consists of investment in Sugar Terminals Limited (A$22.1  million, 2002:A$27.5 million) which is a strategic Sugarinvestment essential to the  Sugar mill operations. During year ended March 31, 2003 a capital return of  A$5.4 million was received. For further details, refer to note 31. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**14           Property, plant and equipment(a)**

 
| **Land and buildings**                           |   |        |       |        | ** ** |     |   |
|--------------------------------------------------|--------|-------------|------------|-------------|------------|----------|--------|
| At cost                                          |   | **205.0**   | ** ** | **339.2**   | ** ** | 1,128.3  |   |
| Accumulated depreciation                         |   | **(10.6**   | **)**      | **(17.6**   | **)**      | (39.3    | )      |
| **Total land and buildings(b)**                  |   | **194.4**   | ** ** | **321.6**   | ** ** | 1,089.0  |   |
|                                             |   |        |       |        | ** ** |     |   |
| **Plant and equipment**                          |   |        |       |        | ** ** |     |   |
| At cost                                          |   | **1,219.7** | ** ** | **2,017.8** | ** ** | 5,272.9  |   |
| Accumulated depreciation                         |   | **(593.6**  | **)**      | **(982.0**  | **)**      | (2,457.1 | )      |
| **Total plant and equipment**                    |   | **626.1**   | ** ** | **1,035.8** | ** ** | 2,815.8  |   |
|                                             |   |        |       |        | ** ** |     |   |
| **Quarry and other raw material reserves**       |   |        |       |        | ** ** |     |   |
| At cost                                          |   | **—**  | ** ** | **—**  | ** ** | 267.2    |   |
| Accumulated depletion                            |   | **—**  | ** ** | **—**  | ** ** | (34.1    | )      |
| **Total quarry and other raw material reserves** |   | **—**  | ** ** | **—**  | ** ** | 233.1    |   |
| **Total property, plant and equipment**          |   | **820.5**   | ** ** | **1,357.4** | ** ** | 4,137.9  |   |

 

----

(a)           Theeconomic life over which assets are depreciated is: Buildings - 1 to 46 years;Plant and equipment - 1 to 50 years.The weighted average life is: Buildings - 18 years; Plant and equipment - 11years.

 

(b)           Allland and buildings owned by the CSR Group except land held for sale, werevalued as at December 31, 2000. All independent valuations brought to accountin the financial statements were carried out by Jones Lang LaSalle Pty Ltd(Australia), with the exception of: Aluminium properties - Craig Miller Pty Ltdand Edward Rushtons Pty Ltd; United States and Asian properties - AmericanAppraisal Associates. The basis of the independent valuations was existing use,except for the sites that are considered to be surplus to CSR Grouprequirements where an open market value was used. The basis for directors’valuations was recoverable amount using discounted business cash flows.

 

F-25

----

 

**15           Movements in property, plant and equipment**

 
| **(A$ million)**                               |   | **Land and  buildings** |   | **Plant and  equipment** |   | **Quarry and  other raw  material reserves** |   |
|------------------------------------------------|--------|-------------------------|--------|--------------------------|--------|----------------------------------------------|--------|
|                                           |   |                    |   |                     |   |                                         |   |
| Balance at the beginning of the financial year |   | 1,089.0                 |   | 2,815.8                  |   | 233.1                                        |   |
| acquired                                       |   | 110.6                   |   | 453.2                    |   | 65.2                                         |   |
| disposed of                                    |   | (33.6                   | )      | (37.5                    | )      | —                                       |   |
| depreciation and amortisation                  |   | (34.1                   | )      | (306.8                   | )      | (12.3                                        | )      |
| demerger                                       |   | (735.8                  | )      | (1,681.4                 | )      | (258.3                                       | )      |
| foreign currency translation                   |   | (79.4                   | )      | (189.6                   | )      | (27.7                                        | )      |
| reclassifications                              |   | 4.9                     |   | (17.9                    | )      | —                                       |   |
| Balance at the end of the financial year       |   | 321.6                   |   | 1,035.8                  |   | —                                       |   |

 

**16           Intangibles**

** **
| **(million)**               |   | **2003  US$** |       | **2003  A$** |       | **2002  A$** |   |
|-----------------------------|--------|---------------|------------|--------------|------------|--------------|--------|
|                        |   |          |       |         |       |         |   |
| **Goodwill**                |   |          |       |         | ** ** |         |   |
| At cost                     |   | **17.3**      | ** ** | **28.7**     | ** ** | 1,356.2      |   |
| Accumulated amortisation    |   | **(11.9**     | **)**      | **(19.7**    | **)**      | (327.7       | )      |
| **Total goodwill**          |   | **5.4**       | ** ** | **9.0**      | ** ** | 1,028.5      |   |
|                        |   |          |       |         | ** ** |         |   |
| **Other intangibles**       |   |          |       |         | ** ** |         |   |
| At cost                     |   | **22.1**      | ** ** | **36.6**     | ** ** | 125.5        |   |
| Accumulated amortisation    |   | **(5.7**      | **)**      | **(9.5**     | **)**      | (42.4        | )      |
| **Total other intangibles** |   | **16.4**      | ** ** | **27.1**     | ** ** | 83.1         |   |
| **Total Intangibles**       |   | **21.8**      | ** ** | **36.1**     | ** ** | 1,111.6      |   |

 

**17           Other assets**

** **
| **Current**                        |   |       |       |       | ** ** |   |   |
|------------------------------------|--------|------------|------------|------------|------------|--------|--------|
| Prepayments                        |   | **1.4**    | ** ** | **2.3**    | ** ** | 21.3   |   |
| Deferred costs                     |   | **—** | ** ** | **—** | ** ** | 4.2    |   |
| **Total other current assets**     |   | **1.4**    | ** ** | **2.3**    | ** ** | 25.5   |   |
|                               |   |       |       |       | ** ** |   |   |
| **Non-current**                    |   |       |       |       | ** ** |   |   |
| Prepayments                        |   | **7.7**    | ** ** | **12.7**   | ** ** | 12.7   |   |
|                               |   |       |       |       | ** ** |   |   |
| Deferred costs                     |   | **14.0**   | ** ** | **23.2**   | ** ** | 94.5   |   |
| Accumulated amortisation           |   | **(3.0**   | **)**      | **(4.9**   | **)**      | (33.9  | )      |
|                               |   | **11.0**   |       | **18.3**   | ** ** | 60.6   |   |
|                               |   |       |       |       | ** ** |   |   |
| Software and system development    |   | **17.0**   | ** ** | **28.1**   | ** ** | 112.4  |   |
| Accumulated amortisation           |   | **(2.2**   | **)**      | **(3.6**   | **)**      | (47.0  | )      |
|                               |   | **14.8**   |       | **24.5**   | ** ** | 65.4   |   |
| **Total other non-current assets** |   | **33.5**   | ** ** | **55.5**   | ** ** | 138.7  |   |

 

 

F-26

----

 

**18           Current payables**

 
| **($ million)**      |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   |
|----------------------|--------|---------------|------------|--------------|--------|--------------|--------|
|                 |   |          |       |         |   |         |   |
| **Accounts payable** |   |          |       |         |   |         |   |
| Trade payables       |   | **114.5**     | ** ** | **189.4**    |   | 563.5        |   |
| Other payables(a)    |   | **31.2**      | ** ** | **51.7**     |   | 181.8        |   |
| **Total payables**   |   | **145.7**     | ** ** | **241.1**    |   | 745.3        |   |

 

----

| (a) |   | Includes net hedging losses  deferred 2003: A$0.5 million (2002: A$nil). |
|-----|--------|--------------------------------------------------------------------------|

 

 

**19           Interest-bearing liabilities**

 
| **Current**                                                      |   |       |       |       |   |    |   |
|------------------------------------------------------------------|--------|------------|------------|------------|--------|---------|--------|
| **Current maturities of long-term borrowings**                   |   |       |       |       |   |    |   |
| Secured                                                          |   |       |       |       |   |    |   |
| • bank loans                                                |   | **—** | ** ** | **—** |   | 1.2     |   |
| • other facilities                                          |   | **—** | ** ** | **—** |   | 2.7     |   |
| Unsecured                                                        |   |       |       |       |   |    |   |
| • bank loans                                                |   | **—** | ** ** | **—** |   | 58.0    |   |
| • other facilities                                          |   | **—** | ** ** | **—** |   | 1.9     |   |
|                                                             |   | **—** |       | **—** |   | 63.8    |   |
|                                                             |   |       |       |       |   |    |   |
| **Unsecured bank overdraft**                                     |   | **3.8**    | ** ** | **6.3**    |   | —  |   |
|                                                             |   |       |       |       |   |    |   |
| **Short-term borrowings**                                        |   |       |       |       |   |    |   |
| Unsecured                                                        |   |       |       |       |   |    |   |
| • bank loans                                                |   | **2.0**    | ** ** | **3.3**    |   | 34.9    |   |
| • Rinker group(b)                                           |   | **190.7**  | ** ** | **315.5**  |   | —  |   |
| • other facilities                                          |   | **0.3**    | ** ** | **0.5**    |   | 5.3     |   |
|                                                             |   | **193.0**  |       | **319.3**  |   | 40.2    |   |
| **Total current interest-bearing liabilities**                   |   | **196.8**  | ** ** | **325.6**  |   | 104.0   |   |
|                                                             |   |       |       |       |   |    |   |
| **Non-current**                                                  |   |       |       |       |   |    |   |
| **Long-term borrowings**                                         |   |       |       |       |   |    |   |
| Secured                                                          |   |       |       |       |   |    |   |
| • bank loans(a)                                             |   | **5.7**    | ** ** | **9.5**    |   | 11.1    |   |
| • other facilities                                          |   | **0.2**    | ** ** | **0.3**    |   | 169.5   |   |
| Unsecured                                                        |   |       |       |       |   |    |   |
| • bonds                                                     |   | **0.1**    | ** ** | **0.2**    |   | 1,124.7 |   |
| • commercial paper                                          |   | **—** | ** ** | **—** |   | 418.6   |   |
| • bank lines                                                |   | **158.7**  | ** ** | **262.5**  |   | 47.3    |   |
| • other facilities                                          |   | **0.1**    | ** ** | **0.2**    |   | 19.5    |   |
| **Total non-current interest-bearing liabilities**               |   | **164.8**  | ** ** | **272.7**  |   | 1,790.7 |   |
| **Non-current payables**                                         |   | **0.9**    | ** ** | **1.5**    |   | 43.2    |   |
| **Total non-current interest-bearing liabilities and  payables** |   | **165.7**  | ** ** | **274.2**  |   | 1,833.9 |   |

 

----

| (a) |   | Secured by charge over  property owned by CSR Insulation (Thailand) Limited with a net book value of  A$9.5 million (2002: A$10.9 million).                                                                                                                                               |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | As part of the demerger, A$60.2  million of the CSR Group’s cash balances were allocated to the Rinker group.  In addition A$255.3 million was payable to Rinker Materials Corporation to  extinguish debt. These payments were not made until after the year ended  March 31, 2003. |

 

F-27

----

 

**20           Credit facilities and maturity profile**

 
| **(million)**                                   |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   |
|-------------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|
|                                            |   |          |       |         |   |         |   |
| **Current maturities of long-term borrowings**  |   |          |       |         |   |         |   |
| United States dollar debt                       |   | **—**    | ** ** | **—**   |   | 5.8          |   |
| Australian dollar debt                          |   | **—**    | ** ** | **—**   |   | 36.3         |   |
| New Taiwanese dollar debt                       |   | **—**    | ** ** | **—**   |   | 21.7         |   |
|                                            |   | **—**    |       | **—**   |   | 63.8         |   |
|                                            |   |          |       |         |   |         |   |
| **Category of aggregate short-term borrowings** |   |          |       |         |   |         |   |
| (Australian dollar equivalents are shown)       |   |          |       |         |   |         |   |
| United States dollar debt                       |   |          |       |         |   |         |   |
| • other                                    |   | **154.3**     | ** ** | **255.3**    |   | —       |   |
| Australian dollar debt                          |   |          |       |         |   |         |   |
| • money market                             |   | **0.3**       | ** ** | **0.5**      |   | 5.3          |   |
| • other                                    |   | **36.4**      | ** ** | **60.2**     |   |         |   |
| New Zealand dollar debt                         |   |          |       |         |   |         |   |
| • money market                             |   | **0.5**       | ** ** | **0.9**      |   | —       |   |
| Malaysian ringgit debt                          |   |          |       |         |   |         |   |
| • other                                    |   | **—**    | ** ** | **—**   |   | 20.4         |   |
| Chinese yuan debt                               |   |          |       |         |   |         |   |
| • other                                    |   | **—**    | ** ** | **—**   |   | 9.9          |   |
| Singapore dollar debt                           |   |          |       |         |   |         |   |
| • other                                    |   | **1.5**       | ** ** | **2.4**      |   | 4.6          |   |
|                                            |   | **193.0**     |       | **319.3**    |   | 40.2         |   |

 
|                                                                   |   | **2003****%** |   | **2002****%** |   |
|------------------------------------------------------------------------|--------|---------------|--------|---------------|--------|
| **Weighted average interest rate of aggregate  short-term borrowings** |   |          |   |          |   |
| Australian dollar debt                                                 |   |          |   |          |   |
| • money market                                                    |   | **—**    |   | 4.9           |   |
| New Zealand dollar debt                                                |   |          |   |          |   |
| • money market                                                    |   | **5.9**       |   | —        |   |
| Malaysian ringgit debt                                                 |   |          |   |          |   |
| • other                                                           |   | **—**    |   | 8.0           |   |
| Chinese yuan debt                                                      |   |          |   |          |   |
| • other                                                           |   | **—**    |   | 5.9           |   |
| Singapore dollar debt                                                  |   |          |   |          |   |
| • other                                                           |   | **1.1**       |   | 2.4           |   |

 
| **(million)**                                                                                        |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   |
|------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|
| **Non-current interest-bearing liabilities and  payables are repayable in the following currencies** |   |          |       |         |   |         |   |
| (Australian dollar equivalents are shown)                                                            |   |          |       |         |   |         |   |
| Australian dollars                                                                                   |   | **159.9**     | ** ** | **264.5**    |   | 1.6          |   |
| United States dollars                                                                                |   | **0.1**       | ** ** | **0.2**      |   | 1,821.6      |   |
| Thai baht                                                                                            |   | **5.7**       | ** ** | **9.5**      |   | 10.7         |   |
|                                                                                                 |   | **165.7**     |       | **274.2**    |   | 1,833.9      |   |
|                                                                                                 |   |          |       |         |   |         |   |
| **Total non-current interest-bearing liabilities and  payables will mature as follows**              |   |          |       |         |   |         |   |
| Year ending March                                                                                    |   |          |       |         |   |         |   |
| • 1 to 2 years                                                                                  |   | **6.9**       | ** ** | **11.5**     |   | 417.6        |   |
| • 2 to 3 years                                                                                  |   | **—**    | ** ** | **—**   |   | 15.8         |   |
| • 3 to 4 years                                                                                  |   | **158.7**     | ** ** | **262.5**    |   | 754.8        |   |
| • 4 to 5 years                                                                                  |   | **—**    | ** ** | **—**   |   | 207.9        |   |
| • 5 to 6 years                                                                                  |   | **—**    | ** ** | **—**   |   | 0.8          |   |
| • 6 to 7 years                                                                                  |   | **—**    | ** ** | **—**   |   | 0.4          |   |
| • 7 to 8 years                                                                                  |   | **—**    | ** ** | **—**   |   | 0.4          |   |
| • 8 to 9 years                                                                                  |   | **—**    | ** ** | **—**   |   | 0.5          |   |
| • 9 to 10 years                                                                                 |   | **—**    | ** ** | **—**   |   | —       |   |
| • more than 10 years                                                                            |   | **0.1**       | ** ** | **0.2**      |   | 427.2        |   |
|                                                                                                 |   | **165.7**     |       | **274.2**    |   | 1,825.4      |   |
| Borrowings and payables without fixed maturity date                                                  |   | **—**    | ** ** | **—**   |   | 8.5          |   |
|                                                                                                 |   | **165.7**     |       | **274.2**    |   | 1,833.9      |   |

 

F-28

----

 
| **(million)**                                                             |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   |
|---------------------------------------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|
|                                                                      |   |          |       |         |   |         |   |
| **Non-current interest-bearing liabilities and  payables**                |   |          |       |         |   |         |   |
| **Short-term maturities backed by long-term credit  standby facilities**  |   |          |       |         |   |         |   |
| US dollar debt                                                            |   |          |       |         |   |         |   |
| commercial paper(b)                                                       |   |          |       |         |   |         |   |
| • (interest rate 2002: 2.89%)                                        |   | **—**    | ** ** | **—**   |   | 348.9        |   |
| eurocommercial paper(b)                                                   |   |          |       |         |   |         |   |
| • (interest rate 2002: 3.54%)                                        |   | **—**    | ** ** | **—**   |   | 69.7         |   |
| bank lines                                                                |   |          |       |         |   |         |   |
| • (interest rate 2002: 3.67%)                                        |   | **—**    | ** ** | **—**   |   | 47.3         |   |
|                                                                      |   | **—**    |       | **—**   |   | 465.9        |   |
|                                                                      |   |          |       |         |   |         |   |
| **Long-term maturities of borrowings**                                    |   |          |       |         |   |         |   |
| United States dollar debt                                                 |   |          |       |         |   |         |   |
| • US bonds(a)                                                        |   |          |       |         |   |         |   |
| • maturity March 2004 (interest rate 2002: 6.88%)(d)                 |   | **—**    | ** ** | **—**   |   | 369.0        |   |
| • maturity July 2005 (interest rate 2002: 6.88%)                     |   | **—**    | ** ** | **—**   |   | 473.0        |   |
| • maturity July 2025 interest rate 7.70% (interest rate 2002: 7.70%) |   | **0.1**       | ** ** | **0.2**      |   | 282.7        |   |
| • Promissory note                                                    |   | **—**    | ** ** | **—**   |   | 154.0        |   |
| • Private placement                                                  |   | **—**    | ** ** | **—**   |   | 13.6         |   |
| • Term payables                                                      |   | **—**    | ** ** | **—**   |   | 41.8         |   |
| • Other                                                              |   | **—**    | ** ** | **—**   |   | 21.6         |   |
| Australian dollar debt                                                    |   |          |       |         |   |         |   |
| • Bank loan  - maturity 2006  interest rate 5.1%(c)             |   | **158.7**     | ** ** | **262.5**    |   | —       |   |
| • Other                                                              |   | **1.2**       | ** ** | **2.0**      |   | 1.6          |   |
| Thai baht debt                                                            |   |          |       |         |   |         |   |
| • Bank loans                                                         |   | **5.7**       | ** ** | **9.5**      |   | 10.7         |   |
|                                                                      |   | **165.7**     |       | **274.2**    |   | 1,368.0      |   |
| **Total non-current interest-bearing liabilities and  payables**          |   | **165.7**     | ** ** | **274.2**    |   | 1,833.9      |   |

 

----

| (a) |   | Refer to note 28 for  details of fixed rate debt.                                                                                                                                                                             |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Short-term maturities are  backed by long-term credit standby facilities.                                                                                                                                                     |
| (c) |   | Part of A$500 million  credit standby facility noted below.                                                                                                                                                                   |
| (d) |   | Conditional offers to  purchase these bonds were made to bondholders. Some of these offers were not  taken up. The net cost of the offers taken up was A$3.4 million which was  recorded by the CSR group as a demerger cost. |

 

**Commercialpaper.** The CSR group has a commercial paper program based in Australia. Thisprogram which totals A$600 million (2002: A$600 million) is an evergreenfacility. Drawings on the program are backed by the standby facilities referredto above. As at March 31, 2003 no commercial paper was on issue.

 

**Creditstandby facilities.** The CSR group has a total of A$500 million (2002:US$650 million) committed standby facilities of which A$237.5 million wasundrawn as at March 31, 2003. These facilities have fixed maturity datesranging between March 2004 and April 2008. Interest on these facilities is based on the BBSY bid rate plus amargin, the average of which is 0.315%. An establishment fee of A$0.8 million was paid during the year endedMarch 31, 2003.  This fee is beingamortised over the period of the facilities. In addition, line fees are payable quarterly.

 

F-29

----

 

**21           Provisions**

 
| **(A$ million)**                              |   | **March 31  2002** |   | **Recognised** |   | **Acquired** |   | **Settled** |   | **Demerged** |   | **Foreign  Currency  Translation** |   | **Remeasured  and Other** |       | **March 31  2003** |       |
|-----------------------------------------------|--------|--------------------|--------|----------------|--------|--------------|--------|-------------|--------|--------------|--------|------------------------------------|--------|---------------------------|------------|--------------------|------------|
| **Current**                                   |   |               |   |           |   |         |   |        |   |         |   |                               |   |                      |       |               |       |
| Dividend                                      |   | 121.7              |   | —         |   | —       |   | —      |   | —       |   | —                             |   | (121.7                    | )          | **—**         | ** ** |
| Employee entitlements                         |   | 83.7               |   | 131.6          |   | 32.3         |   | (134.7      | )      | (57.7        | )      | (6.7                               | )      | —                    | ** ** | **48.5**           | ** ** |
| Fringe benefits tax                           |   | 1.1                |   | 6.8            |   | —       |   | (5.9        | )      | (0.5         | )      | —                             |   | —                    | ** ** | **1.5**            | ** ** |
| Restructure and rationalisation               |   | 41.4               |   | (11.9          | )      | —       |   | (17.2       | )      | —       |   | (0.1                               | )      | —                    | ** ** | **12.2**           | ** ** |
| Product liability                             |   | 20.6               |   | 29.5           |   | —       |   | (25.6       | )      | —       |   | —                             |   | —                    | ** ** | **24.5**           | ** ** |
| Restoration and environmental rehabilitation  |   | 11.7               |   | 0.1            |   | 4.3          |   | (3.3        | )      | (6.1         | )      | (0.9                               | )      | —                    | ** ** | **5.8**            | ** ** |
| Uninsured losses and future claims            |   | 55.4               |   | 151.6          |   | 14.8         |   | (146.8      | )      | (49.4        | )      | (6.3                               | )      | —                    | ** ** | **19.3**           | ** ** |
| Other                                         |   | 17.0               |   | 25.2           |   | 12.5         |   | (8.6        | )      | (17.6        | )      | (1.5                               | )      | —                    | ** ** | **27.0**           | ** ** |
| **Total Consolidated current provisions**     |   | 352.6              |   | 332.9          |   | 63.9         |   | (342.1      | )      | (131.3       | )      | (15.5                              | )      | (121.7                    | )          | **138.8**          | ** ** |
|                                          |   |               |   |           |   |         |   |        |   |         |   |                               |   |                      |       |               |       |
| **Non-current**                               |   |               |   |           |   |         |   |        |   |         |   |                               |   |                      |       |               |       |
| Employee entitlements                         |   | 58.7               |   | (0.4           | )      | —       |   | 0.5         |   | (20.8        | )      | (0.3                               | )      | —                    | ** ** | **37.7**           | ** ** |
| Restructure and rationalisation               |   | 2.2                |   | (2.1           | )      | —       |   | —      |   | —       |   | (0.1                               | )      | —                    | ** ** | **—**         | ** ** |
| Product liability                             |   | 113.0              |   | (10.4          | )      | —       |   | —      |   | —       |   | —                             |   | 205.2                     | ** ** | **307.8**          | ** ** |
| Restoration and environmental rehabilitation  |   | 19.9               |   | 5.1            |   | —       |   | —      |   | (23.8        | )      | (1.2                               | )      | —                    | ** ** | **—**         | ** ** |
| Uninsured losses and future claims            |   | 79.7               |   | 20.8           |   | —       |   | —      |   | (59.8        | )      | (6.0                               | )      | —                    | ** ** | **34.7**           | ** ** |
| Other                                         |   | 0.1                |   | —         |   | 1.5          |   | —      |   | (1.5         | )      | (0.1                               | )      | —                    | ** ** | **—**         | ** ** |
| **Total Consolidated non-current provisions** |   | 273.6              |   | 13.0           |   | 1.5          |   | 0.5         |   | (105.9       | )      | (7.7                               | )      | 205.2                     | ** ** | **380.2**          | ** ** |

 
| **(A$ million)**                              |   | **March 31  2001** |   | **Recognised** |   | **Acquired** |   | **Settled** |   | **Disposals /    Transfers** |   | **Foreign  Currency  Translation** |   | **Remeasured   and Other** |       | **March 31  2002** |       |
|-----------------------------------------------|--------|--------------------|--------|----------------|--------|--------------|--------|-------------|--------|------------------------------|--------|------------------------------------|--------|----------------------------|------------|--------------------|------------|
| **Current**                                   |   |               |   |           |   |         |   |        |   |                         |   |                               |   |                       |       |               |       |
| Dividend                                      |   | 114.4              |   | 223.6          |   | —       |   | (216.3      | )      | —                       |   | —                             |   | —                     |       | **121.7**          |       |
| Employee entitlements                         |   | 96.8               |   | 95.5           |   | 0.1          |   | (105.6      | )      | —                       |   | (3.1                               | )      | —                     | ** ** | **83.7**           | ** ** |
| Fringe benefits tax                           |   | 0.5                |   | 6.7            |   | —       |   | (6.1        | )      | —                       |   | —                             |   | —                     | ** ** | **1.1**            | ** ** |
| Restructure and rationalisation               |   | 55.1               |   | (6.5           | )      | —       |   | (6.7        | )      | —                       |   | (0.5                               | )      | —                     | ** ** | **41.4**           | ** ** |
| Product liability                             |   | 19.9               |   | 30.0           |   | —       |   | (29.3       | )      | —                       |   | —                             |   | —                     | ** ** | **20.6**           | ** ** |
| Restoration and environmental rehabilitation  |   | 15.1               |   | 2.1            |   | —       |   | (5.1        | )      | —                       |   | (0.4                               | )      | —                     | ** ** | **11.7**           | ** ** |
| Uninsured losses and future claims            |   | 50.8               |   | 141.8          |   | —       |   | (135.0      | )      | —                       |   | (2.2                               | )      | —                     | ** ** | **55.4**           | ** ** |
| Other                                         |   | 23.8               |   | 4.0            |   | —       |   | (10.4       | )      | —                       |   | (0.4                               | )      | —                     | ** ** | **17.0**           | ** ** |
| **Total Consolidated current provisions**     |   | 376.4              |   | 497.2          |   | 0.1          |   | (514.5      | )      | —                       |   | (6.6                               | )      | —                     | ** ** | **352.6**          | ** ** |
|                                          |   |               |   |           |   |         |   |        |   |                         |   |                               |   |                       |       |               |       |
| **Non-current**                               |   |               |   |           |   |         |   |        |   |                         |   |                               |   |                       |       |               |       |
| Employee entitlements                         |   | 61.6               |   | (2.9           | )      | —       |   | —      |   | —                       |   | —                             |   | —                     | ** ** | **58.7**           | ** ** |
| Restructure and rationalisation               |   | 3.0                |   | (0.6           | )      | —       |   | —      |   | —                       |   | (0.2                               | )      | —                     | ** ** | **2.2**            | ** ** |
| Product liability                             |   | 113.0              |   | —         |   | —       |   | —      |   | —                       |   | —                             |   | —                     | ** ** | **113.0**          | ** ** |
| Restoration and environmental rehabilitation  |   | 18.0               |   | 2.0            |   | 0.6          |   | —      |   | —                       |   | (0.7                               | )      | —                     | ** ** | **19.9**           | ** ** |
| Uninsured losses and future claims            |   | 82.3               |   | 0.7            |   | —       |   | —      |   | —                       |   | (3.3                               | )      | —                     | ** ** | **79.7**           | ** ** |
| Other                                         |   | 0.1                |   | —         |   | —       |   | —      |   | —                       |   | —                             |   | —                     | ** ** | **0.1**            | ** ** |
| **Total Consolidated non-current provisions** |   | 278.0              |   | (0.8           | )      | 0.6          |   | —      |   | —                       |   | (4.2                               | )      | —                     | ** ** | **273.6**          | ** ** |

 
| **(A$ million)**                              |   | **March 31  2000** |   | **Recognised** |   | **Acquired** |   | **Settled** |   | **Disposals /    Transfers** |   | **Foreign  Currency  Translation** |   | **Remeasured   and Other** |       | **March 31  2001** |       |
|-----------------------------------------------|--------|--------------------|--------|----------------|--------|--------------|--------|-------------|--------|------------------------------|--------|------------------------------------|--------|----------------------------|------------|--------------------|------------|
| **Current**                                   |   |               |   |           |   |         |   |        |   |                         |   |                               |   |                       |       |               |       |
| Dividend                                      |   | 124.4              |   | 221.2          |   | —       |   | (231.2)     |   | —                       |   | —                             |   | —                     |       | **114.4**          |       |
| Employee entitlements                         |   | 88.2               |   | 112.2          |   | 8.6          |   | (118.1      | )      | (3.0                         | )      | 8.9                                |   | —                     | ** ** | **96.8**           | ** ** |
| Fringe benefits tax                           |   | 2.4                |   | 7.0            |   | —       |   | (8.6        | )      | (0.3                         | )      | —                             |   | —                     | ** ** | **0.5**            | ** ** |
| Restructure and rationalisation               |   | 60.3               |   | 17.7           |   | —       |   | (19.8       | )      | (3.3                         | )      | 0.2                                |   | —                     | ** ** | **55.1**           | ** ** |
| Product liability                             |   | 12.9               |   | 24.0           |   | —       |   | (17.0       | )      | —                       |   | —                             |   | —                     | ** ** | **19.9**           | ** ** |
| Restoration and environmental rehabilitation  |   | 16.8               |   | (1.9           | )      | 2.3          |   | (4.2        | )      | (0.6                         | )      | 2.7                                |   | —                     | ** ** | **15.1**           | ** ** |
| Uninsured losses and future claims            |   | 46.3               |   | 93.0           |   | 0.3          |   | (97.7       | )      | 3.3                          |   | 5.6                                |   | —                     | ** ** | **50.8**           | ** ** |
| Other                                         |   | 28.0               |   | 5.1            |   | 3.8          |   | (13.7       | )      | —                       |   | 0.6                                |   | —                     | ** ** | **23.8**           | ** ** |
| **Total Consolidated current provisions**     |   | 379.3              |   | 478.3          |   | 15.0         |   | (510.3      | )      | (3.9                         | )      | 18.0                               |   | —                     | ** ** | **376.4**          | ** ** |
|                                          |   |               |   |           |   |         |   |        |   |                         |   |                               |   |                       |       |               |       |
| **Non-current**                               |   |               |   |           |   |         |   |        |   |                         |   |                               |   |                       |       |               |       |
| Employee entitlements                         |   | 60.9               |   | 2.7            |   | —       |   | —      |   | (2.2                         | )      | 0.2                                |   | —                     | ** ** | **61.6**           | ** ** |
| Restructure and rationalisation               |   | 1.9                |   | 1.1            |   | —       |   | —      |   | —                       |   | —                             |   | —                     | ** ** | **3.0**            | ** ** |
| Product liability                             |   | 72.0               |   | 41.0           |   | —       |   | —      |   | —                       |   | —                             |   | —                     | ** ** | **113.0**          | ** ** |
| Restoration and environmental rehabilitation  |   | 25.7               |   | 3.8            |   | —       |   | —      |   | (13.2                        | )      | 1.7                                |   | —                     | ** ** | **18.0**           | ** ** |
| Uninsured losses and future claims            |   | 60.8               |   | 14.1           |   | —       |   | —      |   | —                       |   | 7.4                                |   | —                     | ** ** | **82.3**           | ** ** |
| Other                                         |   | 0.7                |   | 0.2            |   | —       |   | —      |   | (0.8                         | )      | —                             |   | —                     | ** ** | **0.1**            | ** ** |
| **Total Consolidated non-current provisions** |   | 222.0              |   | 62.9           |   | —       |   | —      |   | (16.2                        | )      | 9.3                                |   | —                     | ** ** | **278.0**          | ** ** |

 

F-30

----

 

AASB 1044 imposes new requirements for thedetermination of uncertain liabilities, including providing significantadditional guidance on the measurement of such liabilities as well as ondiscounting provisions to their present value using a rate different than thatpreviously used by CSR. In accordance with AASB 1044, CSR has recognised as aprovision the present value of anticipated compensation payments and legalcosts arising from product liability claims by discounting at a pre-tax ratethat reflects the current market assessment of the time value of money based onnotional long-term government bond rates and risks specific to thoseliabilities. As a result of the adoption of AASB 1044, CSR’s product liabilityprovision as at April 1, 2002 increased by A$205.2 million, the correspondingdeferred income tax asset increased by A$61.5 million and retained profitsdecreased by A$143.7 million. This change in the product liability provisiondoes not reflect any material change in CSR’s underlying product liability riskprofile nor does it include any potential benefits from settlements withinsurers. An increase in the provision of A$19.1 million (A$13.4 million afterassociated income tax benefit) has been recognised as an expense in thestatement of financial performance for the year ended March 31, 2003. CSR’sdirectors are of the view that it is impracticable to restate the comparativefinancial information for the corresponding prior half year as if AASB 1044 hadalways been applied, however they do not believe that the impact on thatstatement of financial performance would have been material. A description ofthe product liability issues are provided under Contingent Liabilities in note38.

 

**Change inEstimate**

For financial years ended March 31, 2002 and2001, CSR concluded that it was not possible to estimate the costs of settlingasbestos-related personal injury claims in the United States over more than ashort period of time because of various uncertainties associated with thelitigation of those claims. During the current financial year, CSR reviewed itsasbestos product liability provision as part of CSR’s ongoing estimationprocess and gave consideration to the nature of pending claims, recentsettlement activity, the completion of a detailed review of the claims databaseand the impact of additional guidance provided by AASB 1044. CSR concluded thatit would be possible to determine an estimate of a reasonable forecast of thenet present value of estimated asbestos-related personal injury claims andassociated legal costs in the United States over the long term if certainassumptions were made. Details of the key assumptions made in the estimation ofthe Australian and United States asbestos product liability provision aredetailed below.

 

The total provision of A$332.3 million as atMarch 31, 2003 represents the net present value of the estimatedasbestos-related personal injury claims and associated legal costs in Australiaand the United States over the next 50 years. CSR has determined that theappropriate discount rate to use under AASB 1044 is a risk free discount ratebased on the notional long-term government bond rates, being 6.0% forAustralian liabilities and 5.1% for United States liabilities. Prior to theadoption of AASB 1044 CSR used a rate of 10% to discount its Australianliabilities and did not discount its United States liabilities due to the shortperiod of cash flows accrued as discussed above.

 

The culmination of the changes in estimatesnoted above was an increase in CSR’s asbestos product liability provision ofA$205.2 million on April 1, 2002.

 

**KeyAssumptions**

The projections used by CSR to determine itsasbestos product liability provision in Australia and the United States werecalculated by independant experts based largely upon CSR’s database of claimsand third party publications predicting asbestos exposure incidence in order toproject the incidence of injuries, claims, settlement amounts and settlementpatterns into the future. Key assumptions adopted in the projections are:

 

• Claims will only be received fromclasses of claimants for which CSR has historically received and settledclaims;

• there will be no legislative or othersystemic changes to the tort system in either Australia or the United States;

• CSR will continue to receive claims atrates in line with historical experience;

• Inflation rates for Australian andUnited states claims will continue to be in line with recent history; and 

• future settlement and defense costswill be similar to historical average settlement and defense costs per claim.

 

Any change in the above assumptions used orchanges in exchange rates or interest rates could affect the reliability of theestimates.  Further information relatingto the asbestos product liability exposure is provided in note 38 Contingentliabilities.

 

**Otherinformation**

On an undiscounted basis the aggregateexpected payments have been estimated to be A$565 million (the total provisionrecorded by CSR of A$332.3 million is the aggregate payments of A$565 milliondiscounted at the long-term government rate applicable in Australia and UnitedStates) over the next 50 years.  Also onthe undiscounted basis, the annual expected payments for the next fivefinancial years are: 2004 – A$20 million; 2005 - A$20 million; 2006 - A$23million; 2007 - A$24 million; and 2008 - A$24 million, with the balanceestimated to be payable over the following 45 years. Included in the provisionas at March 31, 2003 are unasserted claims.

 

**Provisionfor restructure and rationalisation**

The current restructure and rationalisationprovision of A$12.2 million as at March 31, 2003 mainly consists of:

In 2000 and 2001 CSR sold its Timberbusinesses to various purchasers.  Thereare still a number of outstanding claims and issues (two major issues for whichA$7.0 million was held in the previous year were settled in the year endedMarch 31, 2003) for which CSR holds provisions totalling A$5.0 million,including:

 

•     Provision for lease payments in excess ofsubleases receivable (A$0.7 million);

•     Provision for legal issues relating toalledged faulty products (A$2.1 million); and

•     Provision for outstanding employee claimsand costs associated with occupational health and safety prosecutions (A$1.5million).

 

As part of its ongoing project to rationaliseits holding of land and buildings in 1996 CSR sold a Sydney property fordevelopment on the basis that CSR would share in the cost of clearing the land.CSR’s provision for this is currently A$2.3 million. As a result of thedemerger there is excess floor space at Corporate headquarters. This will besublet. A provision of A$1.5 million was created for the period when the floorspace is expected to be unoccupied but not sublet.

 

Therestructure and rationalisation provision of A$43.6 million at March 31, 2002mainly consists of:

 

•  A$12.4 million in relation to Timberbusinesses sold in fiscal 2001 and 2000;

•  A$6.9 million for site remediation and othercosts attributable to the closing of CSR’s plasterboard business in Indonesiain fiscal 2001;

•  A$9.2 million for various closure costsattributable to the closure of CSR’s Building and Construction operations inTaiwan in fiscal 2003;

•  A$2.6 million attributable to land clearancecosts for property disposed in prior periods;

•  A$5.0 million for excess Very Low Colour Sugarassets deemed surplus to requirements in prior periods.

 

 

 

**22           Contributed equity(a),(l)**

 
|                                                             |   | **Ordinary Shares(a)** |       | **Issue  price  A$** |       | **Share  capital  A$ million** |       |
|------------------------------------------------------------------|--------|------------------------|------------|----------------------|------------|--------------------------------|------------|
| **Fully paid**                                                   |   | **Partly paid**        |
| **Particulars of shares issued during the year by CSR  Limited** |   |                   | ** ** |                 | ** ** |                           | ** ** |   |   |
| On issue March 31, 2002                                          |   | 935,834,472            |       | 517,000              |       |                           |       | 2,139.4 |   |
| Partly to fully paid (b)                                         |   | 517,000                |       | (517,000             | )          | 4.76                           |       | 2.4 |   |
| Executive Share Option Plan (options converted)                  |   | 8,745,834              |       | —               |       | 4.38                           |       | 38.3 |   |
| Universal Share/Option Plan(c)                                   |   | 670,800                |       | —               |       | 3.18                           |       | 2.1 |   |
| Share buyback(d)                                                 |   | (1,100,000             | )          | —               |       | 6.05                           |       | (6.7 | ) |
| Capital reduction on demerger(e)                                 |   |                   |       |                 |       |                           |       | (1,255.8 | ) |
| Total movements during the year                                  |   | 8,833,634              |       | (517,000             | )          |                           |       | (1,219.7 | ) |
| **On issue March 31, 2003**                                      |   | **944,668,106**        |       | **—**           |       |                           |       | **919.7** |   |
| Movements since year end                                         |   | —                 |       | —               |       |                           |       | — |   |
| **On issue May 19, 2003**                                        |   | **944,668,106**        |       | **—**           |       |                           |       | **919.7** |   |
|                                                             |   |                   |       |                 |       |                           |       |   |   |
| **Particulars of shares issued during the year by CSR  Limited** |   |                   | ** ** |                 | ** ** |                           | ** ** |   |   |
| On issue March 31, 2001                                          |   | 963,738,421            |       | 843,000              |       |                           |       | 2,322.4 |   |
| Partly to fully paid(b)                                          |   | 326,000                |       | (326,000             | )          | 4.82                           |       | 1.5 |   |
| Executive Share Option Plan (options converted)                  |   | 5,029,166              |       | —               |       | 3.98                           |       | 20.0 |   |
| Universal Share/Option Plan(c)                                   |   | 822,100                |       | —               |       | 4.86                           |       | 4.0 |   |
| Share buyback(d)                                                 |   | (34,081,215            | )          | —               |       | 6.12                           |       | (208.5 | ) |
| Total movements during the year                                  |   | (27,903,949            | )          | (326,000             | )          |                           |       | (183.0 | ) |
| **On issue March 31, 2002**                                      |   | **935,834,472**        | ** ** | **517,000**          | ** ** |                           |       | **2,139.4** | ** ** |
|                                                             |   |                   |       |                 |       |                           |       |   |   |
| **Particulars of shares issued during the year by CSR  Limited** |   |                   | ** ** |                 | ** ** |                           | ** ** |   |   |
| On issue March 31, 2000                                          |   | 1,037,121,025          |       | 1,099,000            |       |                           |       | 2,647.0 |   |
| Executive Share/Option Plan (partly to fully paid)(b)            |   | 256,000                |       | (256,000             | )          | 4.70                           |       | 1.1 |   |
| Executive Share Option Plan (options converted)                  |   | 3,147,500              |       | —               |       | 3.92                           |       | 12.3 |   |
| Universal Share/Option Plan(c)                                   |   | 857,200                |       | —               |       | 3.20                           |       | 2.7 |   |
| Share buyback(d)                                                 |   | (77,643,304            | )          | —               |       | 4.39                           |       | (340.7 | ) |
| Total movements during the year                                  |   | (73,382,604            | )          | (256,000             | )          |                           |       | (324.6 | ) |
| **On issue March 31, 2001**                                      |   | **963,738,421**        | ** ** | **843,000**          | ** ** |                           |       | **2,322.4** | ** ** |

 

----

(a)  Fully paid ordinary shares arelisted on the Australian stock exchange and are traded in sponsored AmericanDepositary Receipt form on the over-the-counter market in the United States.CSR’s fully paid Ordinary Shares were also listed on the London stock exchangeuntil May 31, 2003. CSR listed on the London stock exchange over a decade agobut no CSR shares have ever been traded on the exchange. Given the size of CSRfollowing the demerger and its focus on the Australian market, it is notcost-effective to maintain this listing. Fully paid ordinary shares carry onevote per share and the right to dividends.

 

(b)  Ordinary shares were issuedbetween 1986 and 1990 under the now superseded Executive Share/Option Plan. Theshares are partly paid to A$0.10, are entitled to one-thirtieth of thedividend, and have no voting rights. The issue prices ranged between A$3.00 andA$5.35 per share.

 

(c)  Fully paid ordinary shares wereissued in September 2002 under the employee Universal Share/Option Plan. Fortax reasons, shares cannot be sold by participants within three years ofallotment, unless they finish their employment with the company. Offers offully paid shares were made to all eligible employees (6,477). 3,354 acceptedthe offer, subscribing for 100 shares and receiving a further 100 shares at nocost.

 

(d)  On June 1, 2001, CSR commenceda twelve month share buyback of up to 10% of its fully paid shares. A total of23.8 million shares were repurchased under the buyback, including 1.1 millionthis year.

 

(e)  The capital reduction reflectsthe approved capital reduction of A$0.84 per fully paid ordinary share (A$793.5million) and the capital reduction relating to CSR’s existing investment inRinker Group Limited amounting to A$462.3 million.

 

F-31

----

 

**Options(f),(l)**

Under the CSR executive option plans, thefollowing options, each convertible to one ordinary CSR Limited fully paidshare, have been issued.

 
| **Calendar  year of  issue** |                | **No.  execs** |   | **Price(g)** |          | **Original  issue** |       | **On issue  March 31  2002** |   |    |   | **On issue  March 31  2003** |   |     |   | **On issue  May 19  2003(f)** |   |
|------------------------------|---------------------|----------------|--------|--------------|---------------|---------------------|------------|------------------------------|--------|---------|--------|------------------------------|--------|----------|--------|-------------------------------|--------|
| **During the  year**         | **After year  end** |           |
| **Issued**                   |                | **Converted**  |   | **Lapsed**   | **Converted** | ** **          | **Lapsed** |
| 1998(h)                      |                | 50             |   | 3.86         |          | 10,100,000          |       | 2,825,000                    |   | —  |   | (2,725,000                   | )      | (100,000 | )      | —                        |   | — |   | — |   | — |   |
| 1998(i)                      |                | 12             |   | 3.86         |          | 2,500,000           |       | 1,350,000                    |   | —  |   | (500,000                     | )      | (25,000  | )      | 825,000                       |   | — |   | — |   | 825,000 |   |
| 1999(h)                      |                | 123            |   | 4.40         |          | 2,790,000           |       | 1,335,000                    |   | —  |   | (1,330,000                   | )      | (5,000   | )      | —                        |   | — |   | — |   | — |   |
| 1999(h)                      |                | 1              |   | 4.36         |          | 400,000             |       | 400,000                      |   | —  |   | (400,000                     | )      | —   |   | —                        |   | — |   | — |   | — |   |
| 1999(h)                      |                | 16             |   | 3.75         |          | 480,000             |       | 168,334                      |   | —  |   | (163,334                     | )      | (5,000   | )      | —                        |   | — |   | — |   | — |   |
| 2000(h)                      |                | 1              |   | 4.04         |          | 200,000             |       | 150,000                      |   | —  |   | (150,000                     | )      | —   |   | —                        |   | — |   | — |   | — |   |
| 2000(j)                      |                | 145            |   | 4.47         |          | 3,080,000           |       | 2,405,000                    |   | —  |   | (2,342,500                   | )      | (62,500  | )      | —                        |   | — |   | — |   | — |   |
| 2000(j)                      |                | 3              |   | 4.65         |          | 410,000             |       | 410,000                      |   | —  |   | (410,000                     | )      | —   |   | —                        |   | — |   | — |   | — |   |
| 2001(j)                      |                | 3              |   | 6.44         |          | 215,000             |       | 215,000                      |   | —  |   | (210,000                     | )      | (5,000   | )      | —                        |   | — |   | — |   | — |   |
| 2001(j)                      |                | 147            |   | 7.03         |          | 3,180,000           |       | 3,120,000                    |   | —  |   | —                       |   | (330,000 | )      | 2,790,000                     |   | — |   | — |   | 2,790,000 |   |
| 2001(j)                      |                | 3              |   | 6.62         |          | 315,000             |       | 315,000                      |   | —  |   | —                       |   | —   |   | 315,000                       |   | — |   | — |   | 315,000 |   |
| 2002(j)(k)                   |                | 7              |   | 6.39         |          | 720,000             |       | —                       |   | 720,000 |   | (515,000                     | )      | —   |   | 205,000                       |   | — |   | — |   | 205,000 |   |
| Total                        |                |           |   |         |          |                |       | 12,693,334                   |   | 720,000 |   | (8,745,834                   | )      | (532,500 | )      | 4,135,000                     |   | — |   | — |   | 4,135,000 |   |

 

----

(f) The holders of the options do not have any right, by virtue of theoptions, to participate in any share or other interest issue of CSR or anyother body corporate, but the amount payable on exercise or number of shares issuedmay be varied as a result of pro-rata rights or bonus issues. As outlined inthe CSR demerger document the CSR board waived the time restrictions on theexercise of CSR options to allow them to be converted to shares prior to thedemerger. The 1998 options will lapse on December 3, 2003. All other remainingoptions will lapse on February 7, 2004. The weighted average exercise price ofremaining options is A$6.33.

 

(g) The excercise price is the CSR share market price at the time of eachissue, hence no cost was recognised in the statement of financial performance.

 

(h) Options issued under the Executive Share Option Plan approved at the1998 annual general meeting.  Optionshave been issued in 1998, 1999 and June 2000 and are eligible for conversion progressivelyover varying periods as from mid 2000 to mid 2005.  The conversion of each portion of options to shares isconditional on the percentage growth in the cumulative value of a notionalinvestment in CSR exceeding the growth of an equivalent investment in the ASXAll Industrials Accumulation Index, measured over defined periods. Options areissued at the CSR share market price at the time of the issue.  The obligation to pay this amount isdeferred until these options are exercised or lapse.

 

(I)  Options issued to Rinker Materials Corporation executives on thesame basis as set out in note h above, except that the options are paid toA$0.01 with the balance of the issue price payable when the options are exercised.

 

(j) Options issued under the Executive Share Option Plan approved at the1998 annual general meeting and amended at the 2000 annual general meeting.Options have been issued in August 2000, December 2000, June 2001, August 2001,December 2001 and June 2002 and are eligible for conversion progressively overvarying periods as from mid 2003 to mid 2007. The conversion of options toshares is conditional on the percentage growth in the cumulative value of anotional investment in CSR exceeding the growth of an equivalent investment inthe ASX All Industrials Accumulation Index (including manufacturing andindustrial organisations, but excluding such companies as banks, finance,insurance, investment, financial services, media, property trusts,telecommunications, leisure and tourism), measured over defined periods.Options are issued at the CSR share market price at the time of the issue. Theobligation to pay this amount is deferred until these options are exercised orlapse.

 

(k) In June 2002 720,000 options were offered to 7 executives.

 

**(l)  New Executive Option Plan**

A new executive option plan has been adoptedto enable the CSR board to issue options to executives of CSR after thedemerger. The new plan will be subject to the rules contained in Division 13Aof the Income Tax Assessment Act 1936 in respect of participants who areAustralian tax residents. No options have yet been granted under the new plan.

 

**Cash AwardShare Plan (“CASP”)**

CASP was introduced in 2002 to complementESOP and provide the CSR board with greater flexibility in the remuneration ofCSR executives. Under CASP, the CSR board may from time to time in its absolutediscretion make an offer to participate in CASP to any eligible employee of aCSR group company, including executive directors. The offers may be on whateverterms, consistent with the CASP rules, that the CSR board decides.

 

Under CASP, CSR funds the purchase of CSRshares by the CASP trustee to be held on behalf of participants. The CSR sharesare acquired in the ordinary course of trading on the ASX. The shares vestsubject to any time and corporate performance hurdles specified in the terms ofthe offer being met. Unless otherwise specified, each offer under CASP will besubject to the service duration requirement, which means shares cannot bewithdrawn from CASP unless 10 years have elapsed from the date the relevantshares were acquired or, if earlier, the participant is not an employee of anyCSR group company.

 

As at June 23, 2003 no shares have yet beenacquired under CASP.

 

F-32

----

 

**23           Reserves**

 
| **(million)**                                                             |   | **2003  US$** |       | **2003  A$** |   | **2002**A$ |   |
|---------------------------------------------------------------------------|--------|---------------|------------|--------------|--------|------------|--------|
|                                                                      |   |          |       |         |   |       |   |
| Capital                                                                   |   | **—**    | ** ** | **—**   |   | 30.0       |   |
| Foreign currency translation                                              |   | **7.6**       | ** ** | **12.6**     |   | 251.1      |   |
| **Total reserves**                                                        |   | **7.6**       | ** ** | **12.6**     |   | 281.1      |   |
| **Movements in capital reserves**                                         |   |          |       |         |   |       |   |
| Balance at the beginning of the financial year                            |   | **18.1**      | ** ** | **30.0**     |   | 30.8       |   |
| Transferred to retained earnings on demerger                              |   | **(18.1**     | **)**      | **(30.0**    | )      |       |   |
| Transfers to retained earnings                                            |   | **—**    | ** ** | **—**   |   | (0.8       | )      |
| **Balance at the end of the financial year**                              |   | **—**    | ** ** | **—**   |   | 30.0       |   |
| **Movements in foreign currency translation reserve**                     |   |          |       |         |   |       |   |
| Balance at the beginning of the financial year                            |   | **151.8**     | ** ** | **251.1**    |   | 356.0      |   |
| Exchange differences relating to overseas net assets                      |   |          |       |         |   |       |   |
| • net loss on translation                                            |   | **(146.7**    | **)**      | **(242.7**   | )      | (130.2     | )      |
| • net gain on hedge transactions                                     |   | **18.1**      | ** ** | **29.9**     |   | 25.3       |   |
|                                                                      |   | **(128.6**    | **)**      | **(212.8**   | )      | (104.9     | )      |
| Transferred to retained earnings on demerger - Rinker group               |   | **(65.2**     | **)**      | **(107.9**   | )      | —     |   |
| Transferred to retained earnings on demerger - net hedge of Rinker  group |   | **48.8**      | ** ** | **80.8**     |   | —     |   |
| Transferred to retained earnings - discontinued operations                |   | **0.8**       | ** ** | **1.4**      |   | —     |   |
| **Balance at the end of the financial year**                              |   | **7.6**       | ** ** | **12.6**     |   | 251.1      |   |

 

**24           Outside equity interests in controlledentities**

 
| Contributed equity                                         |   | **31.2** | ** ** | **51.6** |   | 73.4 |   |
|------------------------------------------------------------|--------|----------|------------|----------|--------|------|--------|
| Reserves                                                   |   | **0.5**  | ** ** | **0.8**  |   | 4.2  |   |
| Retained profits                                           |   | **10.1** | ** ** | **16.8** |   | 4.0  |   |
| **Total outside equity interests in controlled  entities** |   | **41.8** | ** ** | **69.2** |   | 81.6 |   |

 

**25           Interest in joint venture operation**

 
| **Interest  in the Tomago aluminium smelter joint venture operation (a) (b) is included  in the financial statements in the following categories** |   |       |       |       |   |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------|------------|--------|--------|--------|
|                                                                                                                                               |   |       |       |       |   |   |   |
| **Current assets**                                                                                                                                 |   |       |       |       |   |   |   |
| • cash                                                                                                                                        |   | **—** | ** ** | **—** |   | 0.8    |   |
| • receivables                                                                                                                                 |   | **0.9**    | ** ** | **1.5**    |   | 0.6    |   |
| • inventories                                                                                                                                 |   | **12.2**   | ** ** | **20.2**   |   | 23.0   |   |
| • other                                                                                                                                       |   | **0.5**    | ** ** | **0.9**    |   | 0.7    |   |
|                                                                                                                                               |   | **13.6**   |       | **22.6**   |   | 25.1   |   |
| **Non-current assets**                                                                                                                             |   |       |       |       |   |   |   |
| • receivables                                                                                                                                 |   | **0.1**    | ** ** | **0.2**    |   | 0.2    |   |
| • property, plant and equipment                                                                                                               |   | **176.6**  | ** ** | **292.2**  |   | 308.0  |   |
| • other                                                                                                                                       |   | **8.1**    | ** ** | **13.4**   |   | 13.7   |   |
|                                                                                                                                               |   | **184.8**  |       | **305.8**  |   | 321.9  |   |
| **Total assets**                                                                                                                                   |   | **198.4**  | ** ** | **328.4**  |   | 347.0  |   |
|                                                                                                                                               |   |       |       |       |   |   |   |
| **Current liabilities**                                                                                                                            |   | **(23.4**  | **)**      | **(38.7**  | )      | (27.0  | )      |
| **Non-current liabilities**                                                                                                                        |   | **(1.8**   | **)**      | **(2.9**   | )      | (2.2   | )      |
| **Total liabilities**                                                                                                                              |   | **(25.2**  | **)**      | **(41.6**  | )      | (29.2  | )      |
|                                                                                                                                               |   |       |       |       |   |   |   |
| **Net assets**                                                                                                                                     |   | **173.2**  | ** ** | **286.8**  |   | 317.8  |   |
|                                                                                                                                               |   |       |       |       |   |   |   |
| **Contracted capital expenditure**                                                                                                                 |   | **1.6**    | ** ** | **2.6**    |   | 4.8    |   |
|                                                                                                                                               |   |       |       |       |   |   |   |
| **Contingent liabilities**                                                                                                                         |   | **0.7**    | ** ** | **1.1**    |   | — |   |

 

----

| (a) |   | CSR’s joint venture  interest of 36.1% (2002: 36.1% is held through a controlled entity in which  CSR has a 70% interest. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Principal activity:  Aluminium                                                                                                 |

 

F-33

----

 

**26           Directors’ and executives’ remuneration(****a)(b)**

 
| **(thousand)**                                                                  |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   | **2001  A$** |   |
|---------------------------------------------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|--------------|--------|
| Aggregate income paid or payable, or otherwise made available, to  directors of |   |          |       |         |   |         |   |         |   |
| • CSR Limited                                                              |   | **12,132**    | ** ** | **20,069**   |   | 13,349       |   | 9,559        |   |
| • Controlled entities(c)                                                   |   | **5,036**     | ** ** | **8,331**    |   | 4,308        |   | 4,415        |   |
|                                                                            |   | **17,168**    |       | **28,400**   |   | 17,657       |   | 13,974       |   |
| Australian executives whose total income equals or exceeds  A$100 000(d)   |   | **23,742**    | ** ** | **39,275**   |   | 28,433       |   | 23,106       |   |

 

The number of CSR Limited directors andAustralian executives whose total income fell within the following bands(d)

 
|                           |       | **2003** |       | **2002** |       | **2001** |   |
|--------------------------------|------------|----------|------------|----------|------------|----------|--------|
| **Directors (A$)**             |       |     |       |     |       |     |   |
| 1 to 9,999                     |       |     |       |     |       | 2        |   |
| 60,000 to 69,999               |       |     |       |     |       | 2        |   |
| 70,000 to 79,999               |       |     |       |     |       | 2        |   |
| 80,000 to 89,999               |       |     |       |     |       |     |   |
| 90,000 to 99,999               |       | **3**    |       |     |       |     |   |
| 100,000 to 109,999             |       | **2**    |       |     | ** ** |     |   |
| 120,000 to 129,999             |       |     |       |     |       |     |   |
| 170,000 to 179,999             |       |     |       |     |       | 2        |   |
| 180,000 to 189,999             |       |     |       |     |       |     |   |
| 200,000 to 209,999             |       |     |       |     |       | 1        |   |
| 220,000 to 229,999             |       |     |       |     | ** ** | 1        |   |
| 240,000 to 249,999             |       | **1**    |       |     | ** ** |     |   |
| 540,000 to 549,999             |       |     |       |     |       |     |   |
| 990,000 to 999,999             |       |     |       |     |       |     |   |
| 1,050,000 to 1,059,999         |       |     |       |     |       | 1        |   |
| 1,310,000 to 1,319,999         |       |     |       |     |       | 1        |   |
| 1,820,000 to 1,829,999         |       |     |       |     |       |     |   |
| 2,280,000 to 2,289,999         |       | **1**    |       |     |       |     |   |
| 2,990,000 to 2,999,999         |       |     |       |     |       | 1        |   |
| 3,100,000 to 3,109,999         |       |     |       |     |       | 1        |   |
| 3,510,000 to 3,519,999         |       |     |       |     |       |     |   |
| 5,790,000 to 5,799,999         |       |     |       |     |       |     |   |
| 6,140,000 to 6,149,999         |       | **1**    |       |     |       |     |   |
| 10,900,000 to 10,909,999       |       | **1**    |       |     |       |     |   |
| **Australian executives (A$)** |       |     |       |     |       |     |   |
| 100,000 to 109,999             |       |     |       | 1        |       |     |   |
| 120,000 to 129,999             |       | **2**    |       |     |       | 1        |   |
| 140,000 to 149,999             |       | **1**    |       |     |       | 1        |   |
| 160,000 to 169,999             |       |     |       | 1        |       | 2        |   |
| 170,000 to 179,999             |       |     |       | 1        |       | 3        |   |
| 180,000 to 189,999             |       |     |       | 1        |       | 1        |   |
| 190,000 to 199,999             |       |     |       | 4        |       | 1        |   |
| 200,000 to 209,999             |       |     |       | 4        |       | 1        |   |
| 210,000 to 219,999             |       | **1**    |       | 4        |       | 1        |   |
| 220,000 to 229,999             |       |     |       | 3        |       | 3        |   |
| 230,000 to 239,999             |       | **3**    |       | 3        |       | 3        |   |
| 240,000 to 249,999             |       | **1**    |       | 1        |       | 1        |   |
| 250,000 to 259,999             |       | **2**    |       | 2        |       | 4        |   |
| 260,000 to 269,999             |       | **2**    |       | 1        |       |     |   |
| 270,000 to 279,999             |       |     |       | 2        |       | 3        |   |
| 280,000 to 289,999             |       |     |       |     |       | 3        |   |
| 290,000 to 299,999             |       | **1**    |       | 5        |       | 1        |   |
| 300,000 to 309,999             |       | **2**    |       | 2        |       | 1        |   |
| 310,000 to 319,999             |       | **1**    |       |     |       | 2        |   |
| 320,000 to 329,999             |       | **1**    |       |     |       |     |   |
| 330,000 to 339,999             |       |     |       | 1        |       |     |   |
| 340,000 to 349,999             |       | **3**    |       |     |       | 1        |   |
| 350,000 to 359,999             |       | **2**    |       |     |       | 1        |   |
| 360,000 to 369,999             |       | **2**    |       | 2        |       |     |   |
| 370,000 to 379,999             |       | **2**    |       | 2        |       | 5        |   |
| 380,000 to 389,999             |       | **2**    |       | 1        |       |     |   |
| 390,000 to 399,999             |       | **1**    |       | 1        |       | 1        |   |
| 400,000 to 409,999             |       | **2**    |       | 1        |       |     |   |
| 410,000 to 419,999             |       | **1**    |       | 4        |       | 1        |   |
| 420,000 to 429,999             |       |     |       |     | ** ** | 2        |   |
| 430,000 to 439,999             |       | **1**    |       |     |       | 1        |   |
| 440,000 to 449,999             |       | **3**    |       | 1        |       |     |   |
| 470,000 to 479,999             |       | **2**    |       |     |       | 1        |   |
| 480,000 to 489,999             |       |     |       |     |       | 1        |   |
| 490,000 to 499,999             | ** ** | **1**    |       | 1        |       |     |   |
| 500,000 to 509,999             |       |     |       | 1        |       | 3        |   |
| 510,000 to 519,999             |       |     |       | 1        |       |     |   |
| 520,000 to 529,999             | ** ** | **2**    |       |     |       |     |   |
| 530,000 to 539,999             | ** ** | **1**    |       |     |       |     |   |
| 560,000 to 569,999             | ** ** | **1**    |       |     |       | 1        |   |
| 580,000 to 589,999             | ** ** | **1**    |       |     |       |     |   |
| 610,000 to 619,999             |       | **1**    | ** ** |     |       |     |   |
| 630,000 to 639,999             | ** ** | **1**    |       |     |       |     |   |
| 650,000 to 659,999             |       | **2**    | ** ** |     |       |     |   |
| 680,000 to 689,999             |       | **2**    | ** ** |     |       |     |   |
| 690,000 to 699,999             |       | **1**    | ** ** |     |       |     |   |
| 700,000 to 709,999             |       |     |       |     |       | 1        |   |
| 760,000 to 769,999             |       |     |       | 1        |       |     |   |
| 780,000 to 789,999             |       |     |       |     |       | 1        |   |
| 830,000 to 839,999             |       |     |       | 1        |       |     |   |
| 880,000 to 889,999             |       |     |       | 1        |       |     |   |
| 900,000 to 909,999             |       |     |       | 1        |       |     |   |
| 950,000 to 959,999             |       |     |       | 1        |       |     |   |
| 990,000 to 999,999             |       |     |       | 1        |       |     |   |
| 1,050,000 to 1,059,999         |       |     |       |     |       | 1        |   |
| 1,060,000 to 1,069,999         |       |     |       | 1        |       | 1        |   |
| 1,310,000 to 1,319,999         | ** ** | **1**    |       |     |       | 1        |   |
| 1,340,000 to 1,349,999         |       | **1**    | ** ** |     |       |     |   |
| 1,530,000 to 1,539,999         | ** ** | **1**    |       |     |       |     |   |
| 1,620,000 to 1,629,999         |       | **1**    | ** ** |     |       |     |   |
| 1,820,000 to 1,829,999         |       |     |       | 1        |       |     |   |
| 1,970,000 to 1,979,999         |       |     |       | 1        |       |     |   |
| 2,280,000 to 2,289,999         |       | **1**    |       |     |       |     |   |
| 2,990,000 to 2,999,999         |       |     |       |     |       | 1        |   |
| 3,510,000 to 3,519,999         |       |     |       | 1        |       |     |   |
| 10,900,000 to 10,909,999       | ** ** | **1**    |       |     |       |     |   |

 

----

(a) Total remuneration for each director andexecutive includes salary, bonus, superannuation, retirement payments and otherbenefits, but excludes possible benefits arising from executive directors’ andexecutives’ participation in the Executive Share Option Plan as the exerciseprice of options issued is the market price at the time of issue. Refer to note22.

 

(b) Included in the statement of financialposition is a provision for the retirement allowances of CSR Limitednon-executive directors. This provision has decreased from A$0.740 million asat March 31, 2002 to A$0.498 million as at March 31, 2003.

 

(c) Includes executive directors ofpartly-owned controlled entities.

 

(d) Number of Australian executives 57 (2002:61). Average remuneration A$689,035 (2002: A$466,114). The definition ofexecutive is “Employees responsible for the strategic direction and operationalmanagement of the company”.

 

F-34

----

 

**27           Auditors’ remuneration**

 
| **(thousand)**                                                                |   | **2003  US$** |       | **2003  A$** |       | **2002  A$** |       | **2001  A$** |       |
|-------------------------------------------------------------------------------|--------|---------------|------------|--------------|------------|--------------|------------|--------------|------------|
| Auditing and reviewing the financial report of the                            |   |          |       |         |       |         |       |         |       |
| parent entity (including the consolidated entity) and each controlled  entity |   |          |       |         |       |         |       |         |       |
| Auditor of parent entity                                                      |   |          |       |         |       |         |       |         |       |
| • Deloitte Touche Tohmatsu in Australia                                  |   | **811**       | ** ** | **1,342**    |       | 1,111        |       | 912          |       |
| Other auditors                                                                |   |          |       |         |       |         |       |         |       |
| • Deloitte Touche Tohmatsu outside of Australia                          |   | **1,161**     | ** ** | **1,920**    |       | 1,211        |       | 1,328        |       |
|                                                                          |   | **1,972**     |       | **3,262**    |       | 2,322        |       | 2,240        |       |
|                                                                          |   |          |       |         |       |         |       |         |       |
| Other services                                                                |   |          |       |         |       |         |       |         |       |
| • Deloitte Touche Tohmatsu in Australia                                  |   | **298**       | ** ** | **493**      |       | 446          |       | 784          |       |
| • Deloitte Touche Tohmatsu outside of Australia                          |   | **189**       | ** ** | **312**      |       | 1,696        |       | 823          |       |
|                                                                          |   | **487**       |       | **805**      |       | 2,142        |       | 1,607        |       |
| **Total auditors’ remuneration**                                         |   | **2,458**     | ** ** | **4,067**    |       | 4,464        |       | 3,847        |       |
|                                                                          |   |          |       |         |       |         |       |         |       |
| Other services comprise:                                                      |   |          |       |         |       |         |       |         |       |
| • internal audit                                                         |   | **—**    | ** ** | **—**   |       | 25           |       | 12           |       |
| • taxation strategy and compliance(a)                                    |   | **137**       | ** ** | **227**      |       | 1,696        |       | 823          |       |
| • completion audits                                                      |   | **15**        | ** ** | **25**       |       | 45           |       | 120          |       |
| • accounting advice                                                      |   | **95**        | ** ** | **157**      |       | 46           |       | 122          |       |
| • attest services(b)                                                     |   | **101**       | ** ** | **167**      | ** ** | **—**   | ** ** | **—**   | ** ** |
| • actuarial services                                                     |   | **—**    | ** ** | **—**   |       | 301          |       | 500          |       |
| • other                                                                  |   | **139**       | ** ** | **229**      |       | 29           |       | 30           |       |
|                                                                          |   | **487**       |       | **805**      |       | 2,142        |       | 1,607        |       |

 

----

(a) During the year ended March 31, 2002,additional one-off assistance was provided in relation to the tax position ofmajor acquisitions in the prior year.

(b) Related to the demerger.

 

F-35

----

 

**28           Financial instruments**

The CSR Group use a variety ofderivative  instruments to managefinancial and commodity price risks. The CSR Group does not use or issuederivative or financial instruments for speculative or trading purposes.

**Creditexposure.**

The CSR Group is exposed to credit relatedlosses in the event of non-performance by counterparties to these derivativeand financial instruments. The counterparties are predominantly prime financialinstitutions with a Moody’s or Standard and Poor’s rating of at least A2 or Arespectively. CSR controls risk through the use of credit ratings, limits andmonitoring procedures. The CSR Group does not usually require collateral orother security to support financial instruments with credit risk. Creditexposure of interest rate, foreign currency and commodity price derivatives isrepresented by the net fair value of the contracts. The carrying amounts offinancial assets included in CSR’s financial statements represent CSR’sexposure to credit risk in relation to these assets.

 

As at March 31, 2003, CSR had no significantconcentration of credit risk for derivative instruments with any singlecounter-party or group of counterparties. Concentrations of credit risk withrespect to receivables are limited due to the large number of clients andmarkets in which CSR does business, as well as the dispersion across manygeographic areas.

 

**Net fairvalue.** Certain estimates and judgments were required to develop the fairvalue amounts. The fair value amounts shown below are not necessarilyindicative of the amounts that CSR would realise upon disposition nor do theyindicate CSR’s intent or ability to dispose of the financial instrument.  The following assumptions and methods wereused to estimate net fair value.

 

Commodityfutures. The net fair value is based on the closing price onthe applicable futures exchanges and other market prices.

 

Interestrate swaps, caps, swaptions, foreign currency contracts, foreign exchangeoptions, currency swaps and  commodityswaps. The net fair value is estimated using market accepted formulae andmarket quoted input variables.

 

Cash,short-term loans and deposits, receivables, payables and short-term borrowings. The carryingamounts of these financial instruments approximate net fair value because oftheir short maturity.

 

Long-termborrowings, receivables and other investments. The present value ofexpected cash flows have been used to determine net fair value using interestrates derived from market parameters that accurately reflect their termstructure. Certain estimates and judgements were required to develop the fairvalue amounts.

 

**Commodityprice sensitivity and risk management**

CSR has exposure to aluminium commodityprices arising from sales contracts that commit CSR to supply this commodity infuture years. Prices for product supplied under these contracts are a functionof the US dollar market price at the time of delivery. CSR also has exposure tosugar prices through its raw sugar milling activities. CSR receives its shareof Australian dollar pool price revenue derived by Queensland Sugar Ltd basedon its sugar price and foreign exchange hedging activities. CSR uses a varietyof derivative instruments to manage its commodity price exposure with theobjective of ensuring more predictable revenue cashflows. CSR has a policy ofmaintaining a minimum, but declining level of hedging over the next four yearsby the use of commodity price swaps and options. Sugar price hedging ispredominantly carried out by Queensland Sugar Ltd for a maximum term usually of18 months. Limited additional hedging for a longer term has been undertaken byCSR when an acceptable price outcome could be achieved.

 
| **Commodity  price risk exposures****(A$  million)** |   |                |       | **Principal /  maturities** |       | **Net fair value** |       |
|------------------------------------------------------|--------|---------------------|------------|-----------------------------|------------|--------------------|------------|
| **Average  price(**a)                                |   | **1 year  or less** |       | **1 to 2  years**           |       | **2 to 3  years**  |       | **3 to 4  years** |   | **4 to 5  years** |   | **over  5 years** |   | **Total** |   | **Asset** |   | **Liability** |
| **2003**                                             |   |                |       |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LME aluminium futures contracts(e)                   |   |                | ** ** |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| • Sell                                          |   | **1,431.4**         | **(b)**    | **7.1**                     | ** ** | **35.8**           | ** ** | **7.1** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **50.0** | ** ** | **2.4** | ** ** | **—** | ** ** |
| Aluminium commodity swaps(e)                         |   | **1,485.6**         | **(b)**    | **200.9**                   | ** ** | **101.9**          | ** ** | **124.2** | ** ** | **7.1** | ** ** | **—** | ** ** | **—** | ** ** | **434.1** | ** ** | **36.7** | ** ** | **—** | ** ** |
| **Raw sugar**                                        |   |                | ** ** |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity swaps(e)                                   |   |                | ** ** |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| • US$ raw sugar                                 |   | **8.31**            | **(c)**    | **1.0**                     | ** ** | **—**         | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **1.0** | ** ** | **0.1** | ** ** | **—** | ** ** |
| • A$ raw sugar                                  |   | **12.39**           | **(d)**    | **1.0**                     | ** ** | **—**         | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **1.0** | ** ** | **—** | ** ** | **—** | ** ** |
| **Total**                                            |   |                |       |                        |       |               |       |   |   |   |   |   |   |   |   |   |   | **39.2** | ** ** | **—** |   |
|                                                 |   |                | ** ** |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **2002**                                             |   |                | ** ** |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Aluminium**                                        |   |                | ** ** |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LME aluminium futures contracts(e)                   |   |                | ** ** |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| • Sell                                          |   | 1,488.7             | (b)        | —                      |       | —             |       | 12.7 |   | — |   | — |   | — |   | 12.7 |   | 0.2 |   | — |   |
| Aluminium commodity swaps(e)                         |   | 1,533.4             | (b)        | 253.2                       |       | 204.0              |       | 79.7 |   | 72.4 |   | — |   | — |   | 609.3 |   | 38.3 |   | 0.3 |   |
| **Raw sugar**                                        |   |                | ** ** |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodity swaps(e)                                   |   |                | ** ** |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| • US$ raw sugar                                 |   | 8.27c               | ** ** | 12.1                        |       | 1.2                |       | — |   | — |   | — |   | — |   | 13.3 |   | 4.4 |   | — |   |
| • A$ raw sugar                                  |   | 12.46               | (d)        | 9.5                         |       | 1.0                |       | — |   | — |   | — |   | — |   | 10.5 |   | 1.7 |   | — |   |
| **Total**                                            |   |                |       |                        |       |               |       |   |   |   |   |   |   |   |   |   |   | 44.6 |   | 0.3 |   |

 

----

(a) Average prices for the individual periods do not materially differfrom the overall average price disclosed.

(b) United States dollars per metric tonne.

(c) United States cents per pound.

(d) Australian cents per pound.

(e) A$39.2 million of commodity contractgains (2002: A$44.3 million gains) have been deferred or not recognised as theyrelate to hedges of anticipated transactions. The expected timing ofrecognition based on the fair values at March 31, 2003 are 1 year or lessA$23.9 million and 1 to 5 years A$15.3 million. 

 

F-36

----

 

**Foreignexchange sensitivity and risk management**

 

CSR is party to a variety of foreign exchangerisk management instruments, such as currency swaps, forward contracts andcurrency options. These instruments are used to hedge foreign currencydenominated receipts resulting from revenue denominated in foreign currencies(principally US dollar, in respect of aluminium sales), payments for some rawmaterials, capital equipment, liabilities and assets. CSR uses a variety of derivativeinstruments in the management of its foreign exchange exposures with theobjective of achieving more continuity in its Australian dollar equivalentrevenues.

CSR’s major foreign currencyexposure relates to its aluminium commodity price exposure and consequently ithas a currency hedging policy associated with the commodity price hedgingpolicy, that is, minimum but declining levels of hedging over the next fouryears by the use of forward exchange rate agreements and currency options. Anysugar price hedging undertaken directly by CSR (noted previously) is alsomatched with currency hedging.

Other foreign exchangerevenues are relatively small and policy only requires hedging a minimum amountof these exposures for a period of 12 to 18 months. Policy requires thatforeign currency denominated purchases of capital equipment be fully hedged tothe domestic currency to eliminate all such currency exposure. Similarly,policy also requires that foreign currency assets and liabilities are fullyhedged to the relevant entity’s domestic currency. A long term US dollar bondissue, which is used by CSR to hedge its investment in Rinker MaterialsCorporation is excluded from this policy.

The table below provides information aboutCSR’s significant exchange rate exposure.

 
| **Foreign exchange risk exposure   (A$ million)** |   | **Average  exchange  rate(a)** |   | **Principal/maturities** |       |              |       |              |       |              |       |              |       |
|---------------------------------------------------|--------|--------------------------------|--------|--------------------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|
|                                              |   | **1 year  or less**            |   | **1 to 2  years**        |       | **2 to 3  years** |       | **3 to 4  years** |       | **4 to 5  years** |       | **over 5  years** |       | **Total** |   | **Carrying  amount** |   | **Net fair  value** |   |
|                                              |   | **Asset**                      |   | **Liability**            |       | **Asset**         |       | **Liability**     |       |
| **2003**                                          |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **US dollar**                                     |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Forward exchange rate agreements(b)**           |   |                           |   |                     | ** ** |              | ** ** |              | ** ** |              | ** ** |              | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   |   |
| Receive US$                                       |   | **0.57**                       |   | **46.1**                 | ** ** | **—**        | ** ** | **—**        | ** ** | **—**        | ** ** | **—**        | ** ** | **—** | ** ** | **46.1** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **1.8** |   |
| Pay US$                                           |   | **0.53**                       |   | **418.0**                | ** ** | **207.3**         | ** ** | **199.2**         | ** ** | **51.8**          | ** ** | **—**        | ** ** | **—** | ** ** | **876.3** | ** ** | **—** | ** ** | **—** | ** ** | **72.2** | ** ** | **0.2** |   |
| **NZ dollar**                                     |   |                           |   |                     | ** ** |              | ** ** |              | ** ** |              | ** ** |              | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   |   |
| **Forward exchange rate agreements(b)**           |   |                           |   |                     | ** ** |              | ** ** |              | ** ** |              | ** ** |              | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   |   |
| Pay NZ$                                           |   | **1.09**                       |   | **7.8**                  | ** ** | **—**        | ** ** | **—**        | ** ** | **—**        | ** ** | **—**        | ** ** | **—** | ** ** | **7.8** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** |   |
| **Euro**                                          |   |                           |   |                     | ** ** |              | ** ** |              | ** ** |              | ** ** |              | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   |   |
| **Forward exchange rate agreements(b)**           |   |                           |   |                     | ** ** |              | ** ** |              | ** ** |              | ** ** |              | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   |   |
| Pay Euro                                          |   | **0.60**                       |   | **0.6**                  | ** ** | **—**        | ** ** | **—**        | ** ** | **—**        | ** ** | **—**        | ** ** | **—** | ** ** | **0.6** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** |   |
| **Total**                                         |   |                           |   |                     |       |              |       |              |       |              | ** ** |              | ** ** |   | ** ** |   | ** ** | **—** | ** ** | **—** | ** ** | **72.2** | ** ** | **2.0** |   |
|                                              |   |                           |   |                     | ** ** |              | ** ** |              | ** ** |              | ** ** |              | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   |   |
| **2002**                                          |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **US dollar**                                     |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Forward exchange rate agreements(b)**           |   |                           |   |                     | ** ** |              | ** ** |              | ** ** |              | ** ** |              | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   |   |
| Receive US$                                       |   | 0.59                           |   | 41.6                     |       | 40.6              |       | —            |       | —            |       | —            |       | — |   | 82.2 |   | — |   | — |   | 12.3 |   | 0.1 |   |
| Pay US$                                           |   | 0.54                           |   | 660.3                    |       | 333.7             |       | 100.5             |       | 70.6              |       | —            |       | — |   | 1,165.1 |   | 5.8 |   | 0.1 |   | 15.6 |   | 64.4 |   |
| **Currency options(b)**                           |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchased US$ puts against A$                     |   | 0.54                           |   | 1.9                      |       | —            |       | —            |       | —            |       | —            |       | — |   | 1.9 |   | — |   | — |   | — |   | — |   |
| Sold US$ calls against A$                         |   | 0.50                           |   | 1.9                      |       | —            |       | —            |       | —            |       | —            |       | — |   | 1.9 |   | — |   | — |   | — |   | 0.1 |   |
| **NZ dollar**                                     |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Forward exchange rate agreements(b)**           |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Pay NZ$                                           |   | 1.21                           |   | 9.1                      |       | —            |       | —            |       | —            |       | —            |       | — |   | 9.1 |   | — |   | — |   | — |   | — |   |
| **Cross currency interest rate swap**             |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Pay NZ$                                           |   | 1.14                           |   | 38.7                     |       | —            |       | —            |       | —            |       | —            |       | — |   | 38.7 |   | 0.1 |   | 0.1 |   | 2.7 |   | — |   |
| **Euro**                                          |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Forward exchange rate agreements(b)**           |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Receive Euro                                      |   | 0.61                           |   | 2.9                      |       | —            |       | —            |       | —            |       | —            |       | — |   | 2.9 |   | — |   | — |   | — |   | 0.1 |   |
| **Total**                                         |   |                           |   |                     |       |              |       |              |       |              |       |              |       |   |   |   |   | 5.9 |   | 0.2 |   | 30.7 |   | 64.6 |   |

 

----

(a) Average rates for the individual periodsdo not materially differ from the overall average rates disclosed.

 

(b) A$70.2 million of foreign exchangecontract gains (2002: A$33.9 million losses) have been deferred or notrecognised as they relate to hedges of anticipated transactions. The expectedtiming of recognition based on fair values at March 31, 2003 are 1 year or lessA$31.7 million and 1 - 5 years A$39.0 million.

 
|                   |   | **Carrying  amount** |   | **Net fair  value** |       |
|------------------------|--------|----------------------|--------|---------------------|------------|
| **Net fair  values**   |   | **Asset**            |   | **Liability**       |       | **Asset** |   | **Liability** |   |
| **(A$ million)**       |   | **2003**             |   | **2002**            |       | **2003** |   | **2002** |   | **2003** |   | **2002** |   | **2003** |   | **2002** |   |
|                   |   |                 |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Other financial assets |   | **22.4**             |   | 40.2                | ** ** |   |   |   |   | **22.4** |   | 40.2 |   |   |   |   |   |
| Current payables       |   |                 |   |                | ** ** | **241.1** |   | 745.3 |   |   |   |   |   | **241.1** |   | 745.3 |   |
| Non-current payables   |   |                 |   |                | ** ** | **1.5** |   | 43.2 |   |   |   |   |   | **1.5** |   | 43.2 |   |
| **Total**              |   | **22.4**             |   | 40.2                | ** ** | **242.6** |   | 788.5 | ** ** | **22.4** |   | 40.2 | ** ** | **242.6** |   | 788.5 |   |

 

F-37

----

 

**Interestrate sensitivity and risk management**

 

CSR enters into a variety of derivativeinstruments in the management of interest rate exposure with the objective ofobtaining lower funding costs and a more stable and predictable interest expense.CSR has a policy to maintain the percentage of fixed and variable rate debtwithin controlled limits. Interest rate swaps and options are entered into tomaintain the mix of fixed and variable rate debt. The table below providesinformation about CSR’s interest rate exposure and should be read inconjunction with note 20.

 
| **Interest rate risk exposure****(A$  million)** |               | **Weighted  average** |                   | **Principal/maturities** |                |       |              |       |              |
|--------------------------------------------------|--------------------|-----------------------|------------------------|--------------------------|---------------------|------------|-------------------|------------|-------------------|
|                                             | **Term in  years** |                  | **Rate****%****pa(a)** |                     | **1 year  or less** |       | **1 to 2  years** |       | **2 to 3  years** |   | **3 to 4  years** |   | **4 to 5  years** |   | **over  5 years** |   | **Total** |   | **Carrying  amount(c)** |   | **Net fair  value** |   |
|                                             | **Asset**          |                  | **Liability**          |                     | **Asset**           |       | **Liability**     |       |
|                                             |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **2003**                                         |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Long-term debt**                               |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed rate US$ debt                              |               | **22.3**              | ** **             | **7.7**                  | ** **          | **—** | ** **        | **—** | ** **        | **—** | ** ** | **—** | ** ** | **—** | ** ** | **0.2** | ** ** | **0.2** | ** ** | **—** | ** ** | **0.2** | ** ** | **—** |   | **0.2** |   |
| Floating rate A$ debt(b)                         |               | **3.0**               | ** **             | **5.1**                  | ** **          | **87.5**   | ** **        | **0.5**    | ** **        | **—** | ** ** | **175.0** | ** ** | **—** | ** ** | **—** | ** ** | **263.0** | ** ** | **—** | ** ** | **263.0** | ** ** | **—** |   | **262.7** |   |
| Floating rate THB debt                           |               | **1.8**               | ** **             | **—**               | ** **          | **—** | ** **        | **9.5**    | ** **        | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **9.5** | ** ** | **—** | ** ** | **9.5** | ** ** | **—** |   | **9.2** |   |
| **Short-term debt**                              |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Floating rate A$ debt                            |               | **—**            | ** **             | **—**               | ** **          | **0.5**    | ** **        | **—** | ** **        | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **0.5** | ** ** | **—** | ** ** | **0.5** | ** ** | **—** |   | **0.5** |   |
| Floating rate NZD debt                           |               | **—**            | ** **             | **—**               | ** **          | **0.9**    | ** **        | **—** | ** **        | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **0.9** | ** ** | **—** | ** ** | **0.9** | ** ** | **—** |   | **0.9** |   |
| Floating rate SGD debt                           |               | **0.1**               | ** **             | **1.1**                  | ** **          | **2.4**    | ** **        | **—** | ** **        | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **2.4** | ** ** | **—** | ** ** | **2.4** | ** ** | **—** |   | **2.4** |   |
| Owing to Rinker Group Limited                    |               | **—**            | ** **             | **—**               | ** **          | **315.5**  | ** **        | **—** | ** **        | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **315.5** | ** ** | **—** | ** ** | **315.5** | ** ** | **—** |   | **315.5** |   |
| Term payables and other                          |               | **—**            | ** **             | **—**               | ** **          | **—** | ** **        | **1.5**    | ** **        | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **1.5** | ** ** | **—** | ** ** | **1.5** | ** ** | **—** |   | **1.5** |   |
| Unsecured other A$ receivable                    |               | **26.1**              | ** **             | **—**               | ** **          | **—** | ** **        | **—** | ** **        | **—** | ** ** | **—** | ** ** | **—** | ** ** | **22.5** | ** ** | **22.5** | ** ** | **22.5** | ** ** | **—** | ** ** | **22.5** |   | **—** |   |
| Cash at bank and on deposit                      |               | **—**            | ** **             | **—**               | ** **          | **366.1**  | ** **        | **—** | ** **        | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **366.1** | ** ** | **372.4** | ** ** | **6.3** | ** ** | **372.4** |   | **6.3** |   |
| **Total**                                        |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   | **394.9** | ** ** | **599.8** | ** ** | **394.9** | ** ** | **599.2** |   |
|                                             |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest rate derivatives**                    |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Australian dollar interest rate swaps**        |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed rate receiver against A$ bank bills        |               | **0.3**               | ** **             | **5.8**                  | ** **          | **10.0**   | ** **        | **—** | ** **        | **—** | ** ** | **—** | ** ** | **—** | ** ** | **—** | ** ** | **10.0** | ** ** | **—** | ** ** | **—** | ** ** | **—** |   | **—** |   |
| **Total**                                        |               | **—**            | ** **             | **—**               | ** **          | **—** | ** **        | **—** | ** **        |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   |   |   |   |
|                                             |               |                  | ** **             |                     | ** **          |       | ** **        |       | ** **        |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   |   |   |   |
| **2002**                                         |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Long-term debt**                               |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed rate US$ debt                              |               | 8.5                   |                   | 7.3                      |                | —     |              | 369.0      |              | — |   | 473.0 |   | — |   | 437.8 |   | 1,279.8 |   | — |   | 1,296.8 |   | — |   | 1,332.9 |   |
| Floating rate US$ debt                           |               | 4.1                   |                   | 2.1                      |                | —     |              | 5.2        |              | 5.1 |   | 281.8 |   | 207.9 |   | — |   | 500.0 |   | — |   | 500.6 |   | — |   | 500.6 |   |
| Floating rate THB debt                           |               | 2.8                   |                   | —                   |                | —     |              | —     |              | 10.7 |   | — |   | — |   | — |   | 10.7 |   | — |   | 10.7 |   | — |   | 10.7 |   |
| **Short-term debt**                              |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed rate A$ debt                               |               | 0.5                   |                   | 6.1                      |                | 38.7       |              | —     |              | — |   | — |   | — |   | — |   | 38.7 |   | — |   | 38.8 |   | — |   | 39.0 |   |
| Fixed rate CNY debt                              |               | 0.9                   |                   | 5.7                      |                | 9.8        |              | —     |              | — |   | — |   | — |   | — |   | 9.8 |   | — |   | 9.9 |   | — |   | 9.9 |   |
| Fixed rate MYR debt                              |               | 0.2                   |                   | 8.0                      |                | 20.4       |              | —     |              | — |   | — |   | — |   | — |   | 20.4 |   | — |   | 20.5 |   | — |   | 20.5 |   |
| Floating rat eUS$ debt                           |               | —                |                   | —                   |                | 5.8        |              | —     |              | — |   | — |   | — |   | — |   | 5.8 |   | — |   | 5.8 |   | — |   | 5.8 |   |
| Floating rate A$ debt                            |               | —                |                   | —                   |                | 3.0        |              | —     |              | — |   | — |   | — |   | — |   | 3.0 |   | — |   | 3.0 |   | — |   | 3.0 |   |
| Floating rate NTD debt                           |               | —                |                   | 1.9                      |                | 21.7       |              | —     |              | — |   | — |   | — |   | — |   | 21.7 |   | — |   | 21.7 |   | — |   | 21.7 |   |
| Floating rate SGD debt                           |               | 0.3                   |                   | 1.6                      |                | 4.6        |              | —     |              | — |   | — |   | — |   | — |   | 4.6 |   | — |   | 4.6 |   | — |   | 4.6 |   |
| Term payables and other                          |               | —                |                   | —                   |                | —     |              | 43.4       |              | — |   | — |   | — |   | — |   | 43.4 |   | — |   | 43.4 |   | — |   | 43.4 |   |
| Cash at bank and on deposit                      |               | —                |                   | —                   |                | 156.6      |              | —     |              | — |   | — |   | — |   | — |   | 156.6 |   | 156.6 |   | — |   | 156.6 |   | — |   |
| **Total**                                        |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   | 156.6 |   | 1,955.8 |   | 156.6 |   | 1,992.1 |   |
|                                             |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest rate derivatives**                    |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **US dollar interest rate swaps**                |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed rate payer against LIBOR                   |               | 1.3                   |                   | 5.7                      |                | 94.6       |              | 141.9      |              | — |   | — |   | — |   | — |   | 236.5 |   | 0.1 |   | 0.2 |   | — |   | 6.4 |   |
| Fixed rate receiver against LIBOR                |               | 1.9                   |                   | 6.9                      |                | —     |              | 189.2      |              | — |   | — |   | — |   | — |   | 189.2 |   | 1.1 |   | 0.4 |   | 10.1 |   | — |   |
| **US dollar interest rate basis swaps**          |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Floating rate payer against US$ LIBOR            |               | 1.9                   |                   | 2.1                      |                | —     |              | 94.6       |              | — |   | — |   | — |   | — |   | 94.6 |   | 0.2 |   | 0.2 |   | — |   | 0.1 |   |
| **US dollar interest rate swaptions**            |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| US$ interest rate swaptions purchased            |               | 0.1                   |                   | 5.2                      |                | 94.6       |              | —     |              | — |   | — |   | — |   | — |   | 94.6 |   | — |   | — |   | — |   | 0.3 |   |
| US$ interest rate swaptions sold                 |               | 0.1                   |                   | 4.6                      |                | 94.6       |              | —     |              | — |   | — |   | — |   | — |   | 94.6 |   | — |   | — |   | 0.2 |   | — |   |
| **Australian dollar interest rate swaps**        |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed rate receiver against A$ bank bills        |               | 1.1                   |                   | 6.0                      |                | 10.0       |              | 10.0       |              | — |   | — |   | — |   | — |   | 20.0 |   | 0.1 |   | — |   | 0.2 |   | — |   |
| **Total**                                        |               |                  |                   |                     |                |       |              |       |              |   |   |   |   |   |   |   |   |   |   | 1.5 |   | 0.8 |   | 10.5 |   | 6.8 |   |

 

----

| (a) |   | Average rates for the  individual periods do not materially differ from the overall average rates  disclosed.                     |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Maturities based on the  maturity date, not the re-pricing date. This debt will be refinanced using  existing standby facilities. |
| (c) |   | Includes interest payable.                                                                                                        |

 

F-38

----

 
| **(million)**                                                                                                 |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   |
|---------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|
| **29           Contracted capital expenditure**             |   |          |       |         |   |         |   |
| Estimated capital expenditure contracted for at balance date but not  provided for                            |   |          |       |         |   |         |   |
| Payable within one year - CSR Limited and controlled entities                                                 |   | **8.0**       | ** ** | **13.3**     |   | 26.0         |   |
| Payable within one year - associate entities                                                                  |   | **—**    | ** ** | **—**   |   | 3.6          |   |
| **Total contracted capital expenditure**                                                                      |   | **8.0**       | ** ** | **13.3**     |   | 29.6         |   |
|                                                                                                          |   |          |       |         |   |         |   |
|                                                                                                          |   |          |       |         |   |         |   |
| **30           Contracted lease and hire  expenditure**     |   |          |       |         |   |         |   |
| **Contracted lease and hire expenditure commitments  not otherwise provided for in the financial statements** |   |          |       |         |   |         |   |
| • land and buildings                                                                                     |   | **23.0**      | ** ** | **38.1**     |   | 95.6         |   |
| • quarry and other raw material reserves                                                                 |   | **—**    | ** ** | **—**   |   | 7.9          |   |
| • plant and equipment                                                                                    |   | **6.9**       | ** ** | **11.4**     |   | 28.4         |   |
|                                                                                                          |   | **29.9**      |       | **49.5**     |   | 131.9        |   |
|                                                                                                          |   |          |       |         |   |         |   |
| **Contracted lease and hire expenditure comprises**                                                           |   |          |       |         |   |         |   |
| Operating leases                                                                                              |   |          |       |         |   |         |   |
| Non-cancellable payable                                                                                       |   |          |       |         |   |         |   |
| • within 1 year                                                                                          |   | **8.6**       | ** ** | **14.3**     |   | 33.5         |   |
| • between 1 and 2 years                                                                                  |   | **7.8**       | ** ** | **12.9**     |   | 23.3         |   |
| • between 2 and 5 years                                                                                  |   | **10.4**      | ** ** | **17.2**     |   | 44.2         |   |
| • after 5 years                                                                                          |   | **0.9**       | ** ** | **1.5**      |   | 16.1         |   |
|                                                                                                          |   | **27.7**      |       | **45.9**     |   | 117.1        |   |
| Other payable                                                                                                 |   |          |       |         |   |         |   |
| • within 1 year                                                                                          |   | **0.6**       | ** ** | **0.9**      |   | 3.8          |   |
| • between 1 and 2 years                                                                                  |   | **0.6**       | ** ** | **1.0**      |   | 3.0          |   |
| • between 2 and 5 years                                                                                  |   | **1.0**       | ** ** | **1.7**      |   | 6.9          |   |
| • after 5 years                                                                                          |   | **—**    | ** ** | **—**   |   | 1.1          |   |
|                                                                                                          |   | **2.2**       |       | **3.6**      |   | 14.8         |   |
| **Total operating lease and hire expenditure**                                                                |   | **29.9**      | ** ** | **49.5**     |   | 131.9        |   |
| **Total minimum finance lease payments**                                                                      |   | **0.2**       | ** ** | **0.3**      |   | 3.9          |   |
| Less amounts provided for in the financial statements                                                         |   |          |       |         |   |         |   |
| • current lease liabilities                                                                              |   | **0.1**       | ** ** | **0.1**      |   | 1.6          |   |
| • non-current lease liabilities                                                                          |   | **0.1**       | ** ** | **0.2**      |   | 2.3          |   |
| **Finance lease expenditure not otherwise provided for  in the financial statements**                         |   | **—**    | ** ** | **—**   |   | —       |   |
| **Total contracted lease and hire expenditure not  otherwise provided for in the financial statements**       |   | **29.9**      | ** ** | **49.5**     |   | 131.9        |   |

 

The total of minimum rentals to be receivedin the future under non-cancellable subleases as at March 31, 2003 is notmaterial.

Contingent rentals for 2003 and 2002financial years were not material.

The leases on most of the CSR Group’s rentalpremises contain renewal options. The CSR Group’s decision to exercise renewaloptions is primarily dependant upon the level of business conducted at thelocation and the profitability thereof.

CSR land and building leases primarily coverthe corporate headquater building (A$17.3 million) and Building Productsdistribution and trade centres (A$19.4 million), while the majority of plantand equipment leases (A$11.4 million) relate to forklifts and photocopiers.

 

F-39

----

 

**31           Non-cash financing and investingactivities**

 

During the year ended March 31, 2003, CSRLimited demerged its Rinker Materials and Readymix businesses through anon-cash capital return and distribution to shareholders. The demerger wasimplemented by way of a scheme of arrangement (“Scheme”) between CSR and itsshareholders, a reduction in CSR’s capital (A$0.84 per share) and a specialdividend (A$0.69 per share). Under the Scheme, instead of CSR shareholdersreceiving these entitlements in cash, CSR automatically applied these amountsas payment for Rinker Group Limited shares. Rinker Group Limited shares wereissued on April 11, 2003. Details of the assets demerged are given in notes 35and 37, and details of the profit recorded on demerger is given in note 3.

 

During the years ended March 31, 2003, 2002and 2001, CSR Limited issued shares to employees of CSR Limited and itscontrolled entities under the terms of the Universal Share Option Plan (refernote 22).

 

During the year ended March 31, 2001, CSRLimited was gifted shares in Sugar Terminals Limited which CSR valued at A$27.5million.  The bulk sugar teminals whichare owned by Sugar Terminals Limited are strategically important in thedistribution and marketing of Queensland raw sugar, with the majority of rawsugar produced in Queensland distributed, both internationally anddomestically, through these specialised regional bulk sugar terminals.  Additionally, almost all mill-produced rawsugar is sold as feedstock for sugar refineries.  As such, efficiency of bulk loading and the ability to store inlarge quantities to meet customer delivery requirements is of significantimportance in terms of competitiveness. Further, if access to the bulk sugar terminals were to be denied, CSR’sraw sugar factories, and most others in Queensland, would be unable to operateas there is no other realistic alternative for getting the product tomarket.  Investment in Sugar TerminalsLimited is restricted to cane growers and millers.

The value of these shares was determinedusing a discounted cash flow analysis of the expected future cash flows (CSR’sexpected dividends) from Sugar Terminals Limited. This analysis is undertakenannually to determine whether there has been any imparement in carrying value.The receipt of these shares was recorded as other revenue from ordinaryactivities (note 2) and recognised as other financial assets (note 13).

 

**32           Related party information**

 

**Transactionswithin the 100% owned group**

During the year, mainly to facilitate thedemerger, the CSR group sold certain businesses to other entities within the100% owned group. A number of contractual arrangements were entered into withRinker Group Limited and its controlled entities (“Rinker group”) to facilitatethe demerger. These arrangements were not necessarily on commercial terms andconditions. Amounts receivable from and payable to Rinker group as at March 31,2003 are detailed in notes 10 and 19.

During the year the CSR group advanced andrepaid loans, sold and purchased goods and services and provided accounting andadministrative assistance to its 100% owned controlled entities.

All non-demerger transactions with relatedparties are on commercial terms and conditions.

 

**Otherrelated parties**

Other than transactions with Rinker groupdiscussed above and associate entities disclosed in note 34, no materialamounts were receivable from, or payable to, related parties as at March 31,2003,  2002 and 2001, and no materialtransactions with related parties occurred during these years.

 

**Directorsand director-related entities**

The directors who held office during the yearand their holdings of CSR securities are detailed in the table below. Thedirectors increased their holdings of CSR ordinary shares on terms andconditions no more favourable than those available to other employees orshareholders.

Non-executive directors have agreements withCSR Limited which conform to the provisions of the company’s constitution inrespect of entitlements to retirement and termination payments.

 

F-40

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**Directors’ holdings of CSR Securities**

Thedirectors’ holdings of CSR securities are detailed in the table below.  The directors increased their shareholdingsof CSR ordinary shares on terms no more favourable than those available toother employees or shareholders.

 

**Shareholdings of directors and director-related entities**

 
|              |   | **Number of shares** |   | **Number of options** |   |
|-------------------|--------|----------------------|--------|-----------------------|--------|
|              |   | **March 31  2002**   |   | **Acquired**          |   | **Sold** |   | **March 31  2003** |   | **March 31  2002** |   | **Issued** |   | **Lapsed** |   | **Exercised** |   | **March 31  2003** |   |
| John Arthur(a)    |   | 8,412                |   | 9,251                 |   | — |   | **17,663** |   |   |   |   |   |   |   |   |   |   |   |
| John Ballard(a)   |   | 10,000               |   | 10,000                |   | — |   | **20,000** |   |   |   |   |   |   |   |   |   |   |   |
| Ian Blackburne    |   | 22,000               |   | 2,000                 |   | — |   | **24,000** |   |   |   |   |   |   |   |   |   |   |   |
| Alec Brennan      |   | 568,220              |   | 470,561               |   | (241,059 | ) | **797,722** |   | 400,000 |   | — |   | — |   | (300,000 | ) | **100,000** | ** ** |
| David Clarke(a)   |   | 88,294               |   | 100,000               |   | — |   | **188,294** |   | 400,000 |   | — |   | — |   | (100,000 | ) | **300,000** | ** ** |
| Carolyn Hewson(b) |   | 19,776               |   | 3,828                 |   | — |   | **23,604** |   |   |   |   |   |   |   |   |   |   |   |
| Peter Kirby(c)    |   | 1,085,216            |   | 945,049               |   | (250,000 | ) | **1,780,265** |   | 675,000 |   | — |   | — |   | (450,000 | ) | **225,000** | ** ** |
| John Morschel(a)  |   | 29,111               |   | 10,529                |   | — |   | **39,640** |   |   |   |   |   |   |   |   |   |   |   |
| John Wylie(b)     |   | 21,088               |   | 13,553                |   | — |   | **34,641** |   |   |   |   |   |   |   |   |   |   |   |

 

----

| (a) | Balance at date of  retirement, April 11, 2003.                                                                                                |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | In April 2003, under the  Employee Share Acquisition Plan, the following shares were acquired; Carolyn  Hewson (2,200) and John Wylie (7,789). |
| (c) | Balance at date of  retirement, March 31, 2003.                                                                                                |

 

**Loans to Directors**

Aggregaterepayments of A$nil million (2002: A$0.004 million; 2001: A$0.006 million) werereceived from the following directors of CSR Limited and its controlledentities during the year:  B M Mann.

 

**Employee share plan interest free loans to directors.**

Aggregateloans of A$0.031 million (2002: A$0.040 million, 2001: A$0.029 million) weremade to, and aggregate repayments of A$0.222 million (2002: A$0.058 million,2001 A$0.048 million) were received from, the following directors of CSRLimited and its controlled entities during the year:

MO Bateman, P J Bremner, A N Brennan, M B Buckland, J E Burman, M J Canny, K RCarew, A B Carlton, D J Collins, K N Commins, J H Crossley, J L Davies, M RDay, F T Dooley, G R Doyle, A P Driver, R E Elliott, D J Ellis, J W Ellis, I DForrest, R G Gellweiler, F N Gosling, C J Grubb, R J Halbert, A P Hoskins, E K Ip,P G James, D C Lane, H F Leong, G Livingstone, N H Lowndes, B M Mann,  R J McGregor, P M McGuigan, J V McKay, D JMcKenzie, I M McMaster, K R Merton, R Michel, N F Miller, P R Nettheim, W COng, G F Pettigrew, C W Power, J C Prior, S A Quay, M J Ring, D E Ryerson, I RSampson, P A Simpson, E A Smith, M Sneddon, C T Soh, P D Stone, V C Thomas, D JTimms, P W Trimble, J F Vear, A R Vivian, S P Vlam, P G Wakeham, W H Webb, J BWilcox.

 

F-41

----

 

**Transactions with directors and director-related entities**

Relatedentities of A Codina, a non-executive director of Rinker Materials Corporationreceived fees and commissions to jointly develop land that was held by acontrolled entity of Rinker Materials Corporation (2003: nil, 2002: nil, 2001:US$17,887). Related entities of A Codina entered into a contract in August1999, for the purchase of land from a controlled entity of Rinker MaterialsCorporation at a price of A$8,930,254 (US$5,685,000), which was based upon twoindependent valuations and which was secured by a mortgage of A$6,200,145(US$3,947,000) at an interest rate of 10% per annum. For the year ended March31, 2002 mortgage repayments of A$5,303,604 (US$2,819,926) were received (2001:US$1,127,074). The mortgage was fully discharged on August 31, 2001. For theyear ended March 31, 2002 interest of A$277,222 (US$141,383) was received(2001: US$318,447) on the mortgage and at March 31, 2002 there were nooutstanding interest obligations (2001: US$23,950). All interest and principalwere received when due.  For the yearending March 31, 2003 related entities of A Codina entered into a contract witha controlled entity of Rinker Materials Corporation to erect a building in theamount of A$778,210 (US$440,000). There were additions to the contract bringingthe total amount to A$972,762(US$550,000). The building is complete and paymentwas made in full as of March 31, 2003.

AIreland, a former non-executive director with Rinker Materials Corporation,received A$159,179 (US$90,000) for consulting services to Rinker MaterialsCorporation (2002: US$90,000, 2001: US$90,000).

 

Arelated entity of M Lai, an executive director of CSR controlled entities,purchased goods valued at A$nil (2002: A$93,277, 2001 A$112,755) from, and soldgoods valued at A$nil (2002: A$114,108, 2001: A$458,983) to, a CSR controlledentity.

 

Inaddition, transactions entered into during the year with directors of CSRLimited and its controlled entities and with their director-related entitieswhich are within normal customer or employee relationships on terms andconditions no more favourable than those available to other customers,employees or shareholders include:

•acquisition of shares in CSR Limited under the employee share plans;

•acquisition of options in CSR Limited under the Executive Share Option Plan;

•dividends from shares in CSR Limited;

•sale of goods and services;

•contracts of employment and reimbursement of expenses; and

•contracts of employment with relatives of directors on either a full-time orwork experience basis.

 

**Relationship between CSR Limited and Rinker Group Limited**

 

OnMarch 28, 2003, the Federal Court of Australia approved the demerger of RinkerGroup Limited from CSR Limited. Rinker Group Limited was admitted to the officiallist of the ASX and its shares were quoted on the stock market conducted by theASX effective March 31, 2003 (on a deferred settlement basis).

 

Priorto the demerger, Rinker Group Limited was a wholly owned subsidiary ofCSR.  As a result of the demerger,Rinker Group Limited became a separately listed company and the CSR group andthe Rinker group now operate independently of each other.

 

Aspart of the demerger transition process, the CSR group and the Rinker grouphave entered into various contractual arrangements dealing with the separationand the ongoing business relationships and operations between CSR Limited andRinker Group Limited as independent companies as detailed below:

 

Property

Readymixhas agreed to share future property profits from certain land sales with CSRLimited.

 

Indemnityand claims management

CSRLimited has granted Rinker Group Limited, its subsidiaries, directors, officersand employees and the directors, officers and employees of its subsidiaries anindemnity against liability (to the extent it is not covered by Rinker GroupLimited’s insurance) arising from any claim made against any of them arisingfrom any actions or omissions done in relation to any of the businesses whichare conducted by the CSR group after the demerger (or businesses that wouldhave been conducted by the CSR group after the demerger except that thosebusinesses have been closed before the demerger) regardless of when theliability or loss to which the claim relates arises. In addition, CSR Limited wouldbe required to indemnify Rinker group companies in the event of any asbestosrelated liabilities imposed on them on account of CSR Limited’s legal torts.

 

RinkerGroup Limited has granted CSR Limited, its subsidiaries, directors, officersand employees and the directors, officers and employees of its subsidiaries anindemnity against liability (to the extent it is not covered by CSR Limited’sinsurance) arising from any claim made against any of them arising from anyactions or omissions done in relation to any of the businesses which areconducted by the Rinker group after the demerger (or businesses that would havebeen conducted by the Rinker group after the demerger except those businessesthat have been closed before the demerger), regardless of when the liability orloss to which the claim relates arises.

 

F-42

----

 

Insurance

RinkerGroup Limited is responsible for its own insurance arrangements, includingdirectors’ and officers’ insurance following the demerger. However, thedirectors and officers of Rinker Group Limited and CSR Limited at March 28,2003 will continue to have the benefit of the directors and officers run offinsurance held by CSR Limited in respect of matters which occurred before the demergertook effect.

 

Tax Liability

TheRinker group is responsible for, and has indemnified CSR Limited in respect of,tax liabilities relating to the businesses to be conducted by Rinker groupcompanies after the demerger as though the relevant Rinker group companies hadalways owned and operated those businesses, and the CSR group is responsiblefor, and has indemnified Rinker Group Limited in respect of, tax liabilitiesrelating to the businesses conducted by the CSR group after the demerger.

 

Transition and shared services arrangements

RinkerGroup Limited and CSR Limited have entered into an agreement pursuant to whichthe CSR group will supply, or procure the supply of, a variety of services tothe Rinker group during a transitional period. It is expected that thetransitional period will be no more than 18 months and with respect to someservices a shorter period.

 

Bond guarantee

AtMarch 31, 2003, CSR Limited has outstanding pre demerger guarantees on 2004 and2005 amounting to A$499.1 million taken over by Rinker Group Limited as part ofthe demerger transaction. Rinker Group Limited has provided CSR Limited bankguarantees to provide indemnity against any liability arising to CSR Limited inrespect of these bonds.

 

Workers’ compensation arrangements

CSRLimited and Rinker Group Limited have entered into deeds of indemnity andmanagement agreements relating to workers’ compensation claims relating toincidents prior to the demerger. The deeds of indemnity provides forindemnities in respect of common law and statutory workers’ compensationliabilities after the demerger.

 

Superannuation arrangements

Detailsare provided in note 33.

 

Guarantees and financial support

Rinkerhas agreed to use its best endeavours to procure the release of all guaranteesand financial support given by CSR group in respect of the businesses to beconducted by the Rinker group after the demerger except as otherwise agreed.CSR will have reciprocal obligations.

 

Eachof CSR and Rinker indemnify the other against liabilities in relation to suchguarantees and financial support until they are released.

 

Statutory licences

CSRand Rinker have agreed to co-operate and to act reasonably in relation to thetransfer of statutory licenses from members of CSR group to members of the Rinkergroup.

 

Financial and tax assistance

Rinkerand CSR have agreed to assist each other in relation to past and futurefinancial and tax matters and each will allow the other access to records inconnection with the preparation of tax returns or tax audits by the AustralianTaxation Office or State Revenue authorities.

 

Business records

Rinkerhas agreed to maintain the business records transferred to it as part of theinternal restructuring prior to the demerger for a period of seven years afterthe demerger and allow CSR to access and make copies of those records.  CSR has agreed to maintain any businessrecords that relate to the Rinker group’s businesses and which were nottransferred to the Rinker group as part of the internal restructuring for aperiod of seven years after the demerger and allow Rinker to access and makecopies of those records.

 

F-43

----

 

**33           Superannuation commitments**

 

TheCSR Group participates in a number of superannuation funds in Australia, NewZealand and other countries where they operate. The funds provide benefitseither on a defined benefit or cash accumulation basis, for employees onretirement, 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 thetrustees. However, CSR Limited and its Australian controlled entities arerequired to provide a minimum level of superannuation support for employeesunder the Australian Superannuation Guarantee legislation.

 

**Asset backing**

Theassets of the funds were sufficient to satisfy all benefits which would havebeen vested in the event of termination of the funds, or in the event of thevoluntary or compulsory termination of the employment of each employee.

 

**Accumulation funds**

Thebenefits provided by accumulation funds are based on the contributions andincome thereon held by the fund on behalf of the member. Contributions are madeby the member and the company based on a percentage of the member’s salary, asspecified by the rules of the fund. These contributions are expensed in theperiod they are incurred.

 

**Defined benefit funds**

Thebenefits provided by defined benefit funds are based on length of service ormembership and salary of the member at or near retirement. Membercontributions, based on a percentage of salary, are specified by the rules ofthe fund. Employer contributions generally vary based on actuarial advice andmay be reduced or even cease when a fund is in actuarial surplus. Thesecontributions are expensed in the period they are incurred.

 

**Harwood Superannuation Fund**

InAustralia, CSR Group entities will participate in the Harwood SuperannuationFund (formerly CSR Australian Superannuation Fund) for those CSR Groupemployees who are currently members of that fund and any new employees whobecome members of that fund. CSR Limited and Rinker Group Limited will eachseparately cover, in effect, 50% of the funding of the accrued defined benefitliabilities of the Harwood Superannuation Fund as at the demerger date, whichwill be revalued by the actuary at least annually. CSR Limited will beresponsible for obligations with respect to benefits accrued after the demergerrelating to individuals who are employed post demerger by their respectivegroup companies.

 
| **Defined benefit funds sponsored  by CSR** |   | **Accrued**  |   | **Market  value** |   |        |   | **Vested**   |   | **Employer  contributions  for the year** |   |
|---------------------------------------------|--------|--------------|--------|-------------------|--------|-------------|--------|--------------|--------|-------------------------------------------|--------|
| **(A$ million)**                            |   | **benefits** |   | **of assets**     |   | **Surplus** |   | **benefits** |   | **Paid**                                  |   | **Payable** |   |
| Harwood Superannuation Fund - Defined       |   |         |   |              |   |        |   |         |   |                                      |   |   |   |
| Benefit Division(a)(b)                      |   | 165.6        |   | 167.9             |   | 2.3         |   | 164.8        |   | 38.5                                      |   | — |   |
| Monier PGH Superannuation Fund              |   |         |   |              |   |        |   |         |   |                                      |   |   |   |
| Defined Benefit Division(c)                 |   | 47.9         |   | 54.0              |   | 6.1         |   | 47.6         |   | 3.0                                       |   | 0.3 |   |

 

----

(a)     These amounts are calculated at March 31,2003 based on the assumptions used for the last actuarial review which wasperformed on June 30, 2001 by R Paton FIA FIAA. These amounts represent theliabilities of the fund as at March 31, 2003. The fund is being split into twoseparate plans from the date of demerger.

 

(b)     Actuarial Liabilities are determined to bepast service liabilities based on membership accrued up to March 31, 2003. Asat March 31, 2003, the assets of the Harwood Superannuation Fund attributableto the Defined Benefit Division (DBD) were 101% of the corresponding actuarialliabilities.  There is an enforceableobligation for CSR Limited and Rinker Group Limited to contribute such amountsas to ensure that the assets attributable to the DBD are not less than 120% ofthe amount required to meet the actuarial liabilites of the DBD. CSR Limitedhas made available to the Trustee of the Fund a bank guarantee to satisfy thatcommitment. Rinker Group Limited is required to cover, in effect, 50% of suchobligations.

 

(c)     Last actuarial reviewperformed on July 1, 2002.

 

F-44

----

 

**34                           Equity accounting information**

 
| **(million)**                                                |   |                   |   | **Ownership interest** |   |          |       | **Carrying amount** |       |
|--------------------------------------------------------------|--------|------------------------|--------|------------------------|--------|---------------|------------|---------------------|------------|
| **Name of entity**                                           |   | **Principal activity** |   | **2003****%**          |   | **2002****%** |       | **2003  US$**       |       | **2003  A$** |   | **2002  A$** |   |
|                                                         |   |                   |   |                   |   |          |       |                |       |   |   |   |   |
| Australian Cement Holdings Pty Ltd(a)(b)                     |   | cement  manufacture    |   | —                 |   | 50            | ** ** | **—**          | ** ** | **—** |   | 136.9 |   |
| Metromix Pty Ltd(a)                                          |   | pre-mixed  concrete    |   | —                 |   | 50            | ** ** | **—**          | ** ** | **—** |   | 13.4 |   |
| Rondo Pty Ltd                                                |   | building  products     |   | 50                     |   | 50            | ** ** | **2.7**             | ** ** | **4.5** |   | 4.4 |   |
| Enviroguard Pty Ltd                                          |   | waste  management      |   | 50                     |   | 50            | ** ** | **3.1**             | ** ** | **5.1** |   | 5.1 |   |
| New Zealand Sugar Company Limited                            |   | sugar  refining        |   | 50                     |   | 50            | ** ** | **12.0**            | ** ** | **19.8** |   | 19.8 |   |
| C.Czarnikow Limited(c)                                       |   | sugar  brokering       |   | 43                     |   | 43            | ** ** | **7.3**             | ** ** | **12.0** |   | 10.7 |   |
| Other immaterial associates(a)                               |   |                   |   |                   |   |          |       | **—**          | ** ** | **—** |   | 0.8 |   |
| **Associate companies**                                      |   |                   |   |                   |   |          |       | **25.1**            | ** ** | **41.4** |   | 191.1 |   |
|                                                         |   |                   |   |                   |   |          |       |                |       |   |   |   |   |
| Sugar Australia joint venture(b)                             |   | sugar  refining        |   | 50                     |   | 50            | ** ** | **58.6**            | ** ** | **97.0** |   | 102.5 |   |
|                                                         |   |                   |   |                   |   |          |       |                |       |   |   |   |   |
| CSR Emoleum(a)(c)                                            |   | road  resurfacing      |   | —                 |   | 50            | ** ** | **—**          | ** ** | **—** |   | 19.2 |   |
| Other immaterial partnerships                                |   |                   |   |                   |   |          |       | **—**          | ** ** | **—** |   | 3.8 |   |
| **Partnerships**                                             |   |                   |   |                   |   |          |       | **—**          | ** ** | **—** |   | 23.0 |   |
|                                                         |   |                   |   |                   |   |          |       |                |       |   |   |   |   |
| **Total investments accounted for  using the equity method** |   |                   |   |                   |   |          |       | **83.7**            | ** ** | **138.4** |   | 316.6 |   |

 

----

| (a) |   | Demerged  on March 28, 2003                                                                                                                                                                                                                                                                                                                    |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | CSR’s  share of revenue from Australian Cement Holdings was A$200.6 million (2002:  A$182.0 million) and share of expenses was A$180.4 million (2002: A$161.1  million) CSR’s share of revenue from Sugar Australia was A$197.1 million  (2002: A$212.8 million) and share of expenses was A$185.1 million (2002:  A$203.6 million). |
| (c) |   | The  year end is December 31.                                                                                                                                                                                                                                                                                                                  |

 

 
| **(million)**                                                                        |   | **2003  US$** |       | **2003  A$** |       | **2002  A$** |   |
|--------------------------------------------------------------------------------------|--------|---------------|------------|--------------|------------|--------------|--------|
| **Equity accounted amount of  investments at the beginning of the financial year**   |   | **191.4**     | ** ** | **316.6**    |       | 334.8        |   |
| Share of associate entities’ profit from ordinary  activities before income tax |   | **43.7**      | ** ** | **72.3**     |       | 61.5         |   |
| Share of income tax                                                                  |   | **(11.5**     | **)**      | **(19.0**    | **)**      | (16.1        | )      |
| Dividends and distributions received                                                 |   | **(40.4**     | **)**      | **(66.9**    | **)**      | (51.8        | )      |
| Additional capital investment                                                        |   | **0.3**       | ** ** | **0.5**      | ** ** | —       |   |
| Acquisitions                                                                         |   | **5.6**       | ** ** | **9.2**      | ** ** | —       |   |
| Acquisitions by CSR group of a controlling  interest                                 |   | **—**    | ** ** | **—**   | ** ** | (11.8        | )      |
| Demerged associate entities                                                          |   | **(104.3**    | **)**      | **(172.5**   | **)**      | —       |   |
| Foreign currency translation and other                                               |   | **(1.1**      | **)**      | **(1.8**     | **)**      | —       |   |
| **Equity accounted amount of investments  at the end of the financial year**         |   | **83.7**      | ** ** | **138.4**    | ** ** | 316.6        |   |

 

F-45

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| **(million)**                                             |   | **2003  US$** |       | **2003  A$** |       | **2002  A$** |   |
|-----------------------------------------------------------|--------|---------------|------------|--------------|------------|--------------|--------|
| **Share of reserves attributable to  associate entities** |   |          |       |         |       |         |   |
| Retained profits(d)                                       |   | **22.8**      | ** ** | **37.7**     | ** ** | 49.1         |   |
| Asset revaluation reserves(d)                             |   | **0.3**       | ** ** | **0.5**      | ** ** | 0.5          |   |
|                                                      |   |          |       |         | ** ** |         |   |
| **Summarised financial position of  associate entities**  |   |          |       |         | ** ** |         |   |
| Assets                                                    |   |          |       |         | ** ** |         |   |
| • cash                                               |   | **35.1**      | ** ** | **58.1**     | ** ** | 61.2         |   |
| • other current assets                               |   | **147.0**     | ** ** | **243.2**    | ** ** | 468.7        |   |
| • property, plant and equipment                      |   | **114.7**     | ** ** | **189.7**    | ** ** | 599.1        |   |
| • other non-current assets                           |   | **10.2**      | ** ** | **16.8**     | ** ** | 27.6         |   |
| Liabilities                                               |   |          |       |         | ** ** |         |   |
| • current accounts payable                           |   | **(50.7**     | **)**      | **(83.9**    | **)**      | (171.5       | )      |
| • current borrowings and other liabilities           |   | **(57.0**     | **)**      | **(94.3**    | **)**      | (149.1       | )      |
| • non-current liabilities                            |   | **(23.4**     | **)**      | **(38.7**    | **)**      | (197.2       | )      |
| Net assets                                                |   | **175.8**     | ** ** | **290.9**    | ** ** | 638.8        |   |

 

----

(d) - Opening balances as at April 1, 2001were: retained profits A$50.6 million and asset revaluation reserves A$0.5million.

 
| **Balances and transactions with  associate entities** |   |     |       |      |   |   |   |
|--------------------------------------------------------|--------|----------|------------|-----------|--------|--------|--------|
| Current loans and receivables                          |   | **11.8** | ** ** | **19.5**  |   | 46.1   |   |
| Non-current loans and receivables                      |   | **4.5**  | ** ** | **7.4**   |   | 16.1   |   |
| New loans and receivables                              |   | **14.6** | ** ** | **24.1**  |   | 77.9   |   |
| Loans and receivables repaid                           |   | **12.9** | ** ** | **21.4**  |   | 46.8   |   |
| Current payables                                       |   | **0.3**  | ** ** | **0.5**   |   | 32.7   |   |
| Purchases of goods and services                        |   | **96.1** | ** ** | **159.0** |   | 134.6  |   |
| Sales of goods and services                            |   | **30.0** | ** ** | **49.7**  |   | 43.3   |   |
| Capital repaid                                         |   | **0.5**  | ** ** | **0.8**   |   | — |   |
| Dividends and distributions received and  receivable   |   | **40.4** | ** ** | **66.9**  |   | 51.8   |   |

 

F-46

----

 

**35           Acquisitions and disposals ofcontrolled entities and businesses**

 
|                                        |   | **Date  acquired** |   | **Interest****%** |   | **Consideration** |   | **Net  tangible assets** |   |
|---------------------------------------------|--------|--------------------|--------|-------------------|--------|-------------------|--------|--------------------------|--------|
| **(million)**                               |   |               |   | **US$**           |   | **A$**            |   | **US$**                  |   | **A$** |   |
| **Controlled entities acquired(a)**         |   |               |   |              |   |              |   |                     |   |   |   |   |   |
| Kiewit Materials Company(b)                 |   | 26-Sep-02          |   | 100               |   | 602.6             |   | 996.9                    |   | 183.3 |   | 303.2 |   |
| Premier Ceilings (WA) Pty Ltd               |   | 01-Apr-02          |   | 67                |   | —            |   | —                   |   | 0.1 |   | 0.2 |   |
| **Businesses acquired during the  year(c)** |   |               |   |              |   | 2.4               |   | 3.9                      |   | 0.8 |   | 1.3 |   |
|                                        |   |               |   |              |   | 605.0             |   | 1,000.8                  |   | 184.2 |   | 304.7 |   |

 
|                                                                    |   | **2003**  |       | **2003**    | ** ** | **2002** | ** ** | **2001** |   |
|-------------------------------------------------------------------------|--------|-----------|------------|-------------|------------|----------|------------|----------|--------|
| **Value of net assets of controlled entities and businesses  acquired** |   | **US$**   |       | **A$**      |       | **A$**   |       | **A$**   |   |
| Cash                                                                    |   | **20.8**  | ** ** | **34.4**    | ** ** | —   |       | 0.4      |   |
| Receivables                                                             |   | **75.0**  | ** ** | **124.1**   | ** ** | 6.2      |       | 83.2     |   |
| Inventories                                                             |   | **16.4**  | ** ** | **27.1**    | ** ** | 10.3     |       | 62.0     |   |
| Other  current assets                                                   |   | **3.3**   | ** ** | **5.4**     | ** ** | 0.2      |       | 2.4      |   |
| Investments                                                             |   | **5.6**   | ** ** | **9.2**     | ** ** | —   |       | —   |   |
| Property,  plant and equipment                                          |   | **183.5** | ** ** | **303.6**   | ** ** | 86.6     |       | 426.2    |   |
| Intangibles                                                             |   | **0.3**   | ** ** | **0.5**     | ** ** | —   |       | 37.5     |   |
| Other  non-current assets                                               |   | **10.7**  | ** ** | **17.7**    | ** ** | —   |       | 61.8     |   |
| Interest-bearing  liabilities and payables                              |   | **(64.3** | **)**      | **(106.4**  | **)**      | (8.1     | )          | (213.2   | )      |
| Provisions                                                              |   | **(65.3** | **)**      | **(108.0**  | **)**      | (0.7     | )          | (39.8    | )      |
| Outside  equity interests                                               |   | **(1.5**  | **)**      | **(2.4**    | **)**      | —   |       | —   |   |
|                                                                    |   | **184.5** |       | **305.2**   | ** ** | 94.5     |       | 420.5    |   |
| Goodwill  acquired                                                      |   | **421.0** | ** ** | **696.4**   | ** ** | 64.0     |       | 673.0    |   |
| Acquisition  expenses/provisions                                        |   | **(0.5**  | **)**      | **(0.8**    | **)**      |     |       |     |   |
| **Total consideration**                                                 |   | **605.0** | ** ** | **1,000.8** | ** ** | 158.5    |       | 1,093.5  |   |
| Cash  balances acquired                                                 |   | **(20.8** | **)**      | **(34.4**   | **)**      |     |       | (0.4     | )      |
| Change  in capital receivables and payables                             |   | **3.3**   | ** ** | **5.4**     | ** ** | —   |       |     |   |
| **Total flow of cash**                                                  |   | **587.5** | ** ** | **971.8**   | ** ** | 158.5    |       | 1,093.1  |   |

 

**Material Acquisitions**

 

OnSeptember 26, 2002, the CSR group acquired Kiewit Materials Company for A$996.9million. Kiewit has significant operations in aggregates, concrete and asphalt,primarily in Arizona, however also in Oregon and northern California. Kiewitmarkets to a wide variety of customers including highway contractors,commercial, industrial and residential contractors, public works contractors,wholesalers and retailers of decorative rock products, interstate railroads andmanufacturers of concrete block products. The acquisition was incorporated intothe CSR group using the purchase method of accounting.

CSR’sstrategy has been to grow in heavy building materials by developing strongpositions in high population and economic growth regions.  The Kiewit acquisition expanded RinkerMaterials’ operations in the western United States, especially in Arizona,which is one of the states with greatest population growth in the country.  Kiewit was judged to have a strong financialperformance, with a good management team and the number one or number twomarket share in aggregates, concrete, and/or asphalt in most of itsmarkets.  Management conducted astructured due diligence program using both internal and external experts toassess the company’s value as an acquisition prospect.  The acquisition price was based oncommercial arms length negotiations. The amount of Kiewit goodwill onacquisition expected to be deductible for tax purposes is immaterial.

 

Thefollowing unaudited pro forma financial information presents results ofoperations on an Australian GAAP basis as if Kiewit had been acquired at thebeginning of each year presented.  Proforma adjustments have been made to include the effect of amortisation ofgoodwill from that date and the related tax benefit.  The unaudited pro forma financial information is provided forinformational purposes only and is not necessarily indicative of the CSRgroup’s operating results that would have occurred had the acquisition beenconsummated on the dates for which the consummation of the acquisition is beinggiven effect, nor is it necessarily indicative of the CSR group’s futureoperating results. The pro forma amounts do not reflect any operatingefficiencies and cost savings that the CSR group believes are achievable.

 
| **(A$ million except per share data)**                         |   | **2003** |       | **2002** |   |
|----------------------------------------------------------------|--------|----------|------------|----------|--------|
| Trading revenue                                                |   | 7,741.9  |       | 7,980.3  |   |
|                                                           |   |     |       |     |   |
| Profit from ordinary activities before finance and  income tax |   | 2,489.6  |       | 997.3    |   |
| Interest income                                                |   | 8.9      |       | 32.4     |   |
| Borrowing costs                                                |   | (114.2   | )          | (134.5   | )      |
| Profit from ordinary activities before income tax              |   | 2,384.3  |       | 895.2    |   |
| Income tax expense                                             |   | (286.8   | )          | (283.8   | )      |
| Outside equity interest                                        |   | (23.7    | )          | (22.5    | )      |
| Net profit attributable to members of CSR Limited              |   | 2,073.8  |       | 588.9    |   |
|                                                           |   |     |       |     |   |
| **(A$ per share)**                                             |   | **2003** | ** ** | **2002** |   |
| Basic earnings per share                                       |   | 2.21     |       | 0.62     |   |
| Diluted earnings per share                                     |   | 2.21     |       | 0.62     |   |

 

F-47

----

 

Therewere no material acquisitions during the year ended March 31, 2002.

 

Theonly material acquisition made by the CSR group during the year ended March 31,2001 was Florida Crushed Stone Company, Inc. This aggregates and cement companywas acquired on July 21, 2000 for A$597.2 million (including the assumption ofA$158.4 million of debt).  The FloridaCrushed Stone Company, Inc. acquisition included an aggregates quarry, threelimerock quarries, a dry process cement mill and various other assets.  The acquisition was incorporated into theCSR group using the purchase method of accounting.

 
|                                                             |   | **Date  Acquired** |       |   |    | **Profit  on disposal** |       | **Net  tangible assets** |       |
|------------------------------------------------------------------|--------|--------------------|------------|--------|---------|-------------------------|------------|--------------------------|------------|
| **(million)**                                                    |   |               | **%**      |   | **US$** |                    | **A$**     |                     | **US$**    |   | **A$** |   |
|                                                             |   |               |       |   |    |                    |       |                     |       |   |   |   |   |
| **Controlled entities disposed  excluding demerged entities(a)** |   |               | ** ** |   |    |                    | ** ** |                     | ** ** |   | ** ** |   | ** ** |
| U-Liner Mid-America, Inc.                                        |   | August 1, 2002     |       | 100    |    | 0.4                     |       | 0.7                      |       | 5.1 |   | 8.4 |   |
| **Businesses disposed during the  year(c)**                      |   |               |       |   |    | 0.2                     |       | 0.4                      |       | 14.2 |   | 23.6 |   |
|                                                             |   |               |       |   |    | 0.6                     |       | 1.1                      |       | 19.3 |   | 32.0 |   |
| **Controlled entities demerged  (refer note 37)**                |   |               |       |   |    | 891.6                   |       | 1,475.0                  |       | 925.0 |   | 1,530.2 |   |

 
|                                                     |   | **Demerged** |       | **Disposals** |       |       |       |       |       |
|----------------------------------------------------------|--------|--------------|------------|---------------|------------|------------|------------|------------|------------|
|                                                     |   | **2003**     |       | **2003**      |       | **2003**   |       | **2003**   |       | **2002** |   | **2001** |   |
| **Value of net assets of controlled  entities disposed** |   | **US$**      |       | **A$**        |       | **US$**    |       | **A$**     |       | **US$** |   | **A$** |   |
| Cash                                                     |   | **111.7**    | ** ** | **184.8**     | ** ** | **—** | ** ** | **—** | ** ** | — |   | 10.7 |   |
| Cash available from CSR Limited                          |   | **154.3**    | ** ** | **255.3**     | ** ** | **—** | ** ** | **—** | ** ** | — |   | — |   |
| Receivables                                              |   | **474.9**    | ** ** | **785.6**     | ** ** | **2.4**    | ** ** | **4.0**    | ** ** | — |   | 117.4 |   |
| Inventories                                              |   | **234.7**    | ** ** | **388.2**     | ** ** | **5.8**    | ** ** | **9.6**    | ** ** | 1.1 |   | 29.8 |   |
| Other current assets                                     |   | **22.7**     | ** ** | **37.6**      | ** ** | **—** | ** ** | **—** | ** ** | — |   | — |   |
| Investments                                              |   | **104.3**    | ** ** | **172.5**     | ** ** | **—** | ** ** | **—** | ** ** | — |   | 1.0 |   |
| Property, plant and equipment                            |   | **1,617.3**  | ** ** | **2,675.5**   | ** ** | **12.3**   | ** ** | **20.3**   | ** ** | 28.2 |   | 209.7 |   |
| Intangibles                                              |   | **23.0**     | ** ** | **38.0**      | ** ** | **0.7**    | ** ** | **1.1**    | ** ** | — |   | 0.2 |   |
| Other non-current assets                                 |   | **184.6**    | ** ** | **305.3**     | ** ** | **0.2**    | ** ** | **0.3**    | ** ** | — |   | 19.8 |   |
| Payables                                                 |   | **(390.6**   | **)**      | **(646.2**    | **)**      | **(1.3**   | **)**      | **(2.2**   | **)**      | — |   | — |   |
| Interest-bearing liabilities                             |   | **(1,221.0** | **)**      | **(2,019.9**  | **)**      | **—** | ** ** | **—** | ** ** | — |   | (119.4 | ) |
| Provisions                                               |   | **(357.6**   | **)**      | **(591.6**    | **)**      | **—** | ** ** | **—** | ** ** | — |   | (52.7 | ) |
| Outside equity interests                                 |   | **(10.2**    | **)**      | **(16.9**     | **)**      | **—** | ** ** | **—** | ** ** | — |   | (36.4 | ) |
|                                                     |   | **948.0**    |       | **1,568.2**   | ** ** | **20.0**   | ** ** | **33.1**   | ** ** | 29.3 |   | 180.1 |   |
| Goodwill disposed                                        |   | **879.9**    | ** ** | **1,455.6**   | ** ** | **0.9**    | ** ** | **1.5**    | ** ** | — |   | 12.8 |   |
| Divestment expenses/provisions                           |   | **44.9**     | ** ** | **74.2**      | ** ** | **—** | ** ** | **—** | ** ** | — |   | 55.3 |   |
| Profit on disposal                                       |   | **891.6**    | ** ** | **1,475.0**   | ** ** | **0.7**    | ** ** | **1.1**    | ** ** | — |   | 233.1 |   |
| **Total consideration**                                  |   | **2,764.4**  | ** ** | **4,573.0**   | ** ** | **21.6**   | ** ** | **35.7**   | ** ** | 29.3 |   | 481.3 |   |
| Cash balances disposed                                   |   |         |       |          |       | **—** | ** ** | **—** | ** ** | — |   | (10.7 | ) |
| Gove Aluminium Ltd sale hedge costs                      |   |         |       |          |       | **—** | ** ** | **—** | ** ** | (27.2 | ) | — |   |
| Change in divestment receivables and payables            |   |         |       |          |       | **21.8**   | ** ** | **36.1**   | ** ** | 13.4 |   | 313.1 |   |
| **Total flow of cash**                                   |   |         |       |          |       | **43.4**   | ** ** | **71.8**   | ** ** | 15.5 |   | 783.7 |   |

 

----

(a)Operating results of the entities acquired (disposed) are included in thestatement of financial performance from the date acquired (up to the datedisposed).

(b)Acquired 100% of the holding company Kiewit Materials Company, which owns somenon wholly owned controlled entities with outside equity interests.

 

(c)Businesses acquired (disposed) during the year, which were mainly in RinkerMaterials Corporation, have been absorbed into (deducted from) the existingRinker group company structure.

 

F-48

----

 

**36           Particulars relating to controlledentities**

 
|                                                                                |   | **Country of  incorporation** |       | **%****CSR  ownership** |     |
|-------------------------------------------------------------------------------------|--------|-------------------------------|------------|-------------------------|----------|
|                                                                                |
| **Parent  entity**                                                             |   |                          | **2003**   |                    | **2002** |   |
| CSR Limited                                                                         |   | Australia                     |       |                    |     |   |   |
| ALC Las Vegas Mining Claims, LLC (d) (e)                                            |   | USA                           | ** ** | **—**              |     | — |   |
| Amalgamated Sugar Mills Pty Ltd                                                     |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| American Limestone West, LLC (e)                                                    |   | USA                           | ** ** | **—**              |     | 100 |   |
| ARC Management Company, Inc (e)                                                     |   | USA                           | ** ** | **—**              |     | 100 |   |
| ARC Materials Corporation (e)                                                       |   | USA                           | ** ** | **—**              |     | 100 |   |
| Austocean Pty Ltd (c)                                                               |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Australian Blue Metal Ltd (b)                                                       |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Ballestrin Concrete Constructions Pty Ltd (e)                                       |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Bettaform Constructions Pty Ltd (e)                                                 |   | Australia                     | ** ** | **—**              |     | 100 |   |
| BI (Australia) Pty Ltd                                                              |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| BI (Contracting) Pty Ltd                                                            |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| BI Holdings Australia Pty Ltd                                                       |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Bradford Holdings, Inc                                                              |   | Canada                        | ** ** | **100**                 |     | 100 |   |
| Bradford Insulation (M) Sdn Bhd                                                     |   | Malaysia                      | ** ** | **100**                 |     | 100 |   |
| Bradford Insulation Industries Pty Ltd                                              |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Brimik Pty Ltd (b)                                                                  |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Buchanan Borehole Collieries Pty Ltd                                                |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Chang Chien Engineering Co., Ltd                                                    |   | Taiwan                        | ** ** | **100**                 |     | 100 |   |
| Chang Yuan Enterprises Ltd (b)                                                      |   | Taiwan                        | ** ** | **100**                 |     | 100 |   |
| Chelsea Estates NZ Pty Ltd (formerly Chelsea  Estates Ltd)                          |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Chelsea Nominees Ltd                                                                |   | New  Zealand                  | ** ** | **100**                 |     | 100 |   |
| CSR-SYC Hebel Taiwan Co, Ltd                                                        |   | Taiwan                        | ** ** | **100**                 |     | 100 |   |
| CSR Bradford Air (M) Sdn Bhd                                                        |   | Malaysia                      | ** ** | **100**                 |     | 100 |   |
| CSR Building Materials (HK) Ltd                                                     |   | Hong  Kong                    | ** ** | **100**                 |     | 100 |   |
| CSR Building Materials (M) Sdn Bhd                                                  |   | Malaysia                      | ** ** | **70**                  |     | 70 |   |
| CSR Building Materials (NZ) Ltd                                                     |   | New  Zealand                  | ** ** | **100**                 |     | 100 |   |
| CSR Building Materials Trading (Shanghai) Co., Ltd  (d)                             |   | China                         | ** ** | **100**                 |     |   |   |
| CSR Building Systems (M) Sdn Bhd                                                    |   | Malaysia                      | ** ** | **70**                  |     | 70 |   |
| CSR Climate Control (M) Sdn Bhd                                                     |   | Malaysia                      | ** ** | **70**                  |     | 70 |   |
| CSR Concrete Products Co., Ltd (b)                                                  |   | Taiwan                        | ** ** | **85**                  |     | 85 |   |
| CSR  Developments Pty Ltd (formerly CSR Investments PNG Pty Ltd)                    |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Distilleries Operations Pty Limited                                             |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Emoleum Services Pty Ltd (e)                                                    |   | Australia                     | ** ** | **—**              |     | 100 |   |
| CSR Ethanol Pty Ltd                                                                 |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Finance Limited                                                                 |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Guangdong Glasswool Co., Ltd                                                    |   | China                         | ** ** | **79**                  |     | 79 |   |
| CSR Gypsum Products (UK) Ltd                                                        |   | UK                            | ** ** | **100**                 |     | 100 |   |
| CSR Hebel Australia Pty Ltd                                                         |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Humes Pty Ltd (b)                                                               |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Humes (UK) Limited                                                              |   | UK                            | ** ** | **100**                 |     | 100 |   |
| CSR Insulation (Thailand) Limited                                                   |   | Thailand                      | ** ** | **100**                 |     | 100 |   |
| CSR Insurance Pte Limited                                                           |   | Singapore                     | ** ** | **100**                 |     | 100 |   |
| CSR International Pty Ltd                                                           |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Investments Pty Ltd                                                             |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Investments (Asia) Pty Ltd                                                      |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Investments (Indonesia) Pty Ltd                                                 |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Investments (Taiwan) Pty Ltd                                                    |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Investments (Thailand) Pty Ltd                                                  |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Plane Creek Pty Ltd                                                             |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Readymix (Australia) Pty Ltd (b)                                                |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Readymix (Qld) Pty Ltd                                                          |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR South East Asia Pte Ltd                                                         |   | Singapore                     | ** ** | **100**                 |     | 100 |   |
| CSR Sugar Investments Pty Ltd                                                       |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Sugar Pty Ltd                                                                   |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Sugar (Herbert) Pty Ltd                                                         |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Sugar (Invicta) Pty Ltd                                                         |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Sugar (Kalamia) Pty Ltd                                                         |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR Taiwan Co, Ltd                                                                  |   | Taiwan                        | ** ** | **100**                 |     | 100 |   |
| CSR Travel Pty Ltd (b)                                                              |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR (Guangdong) Rockwool Co., Ltd                                                   |   | China                         | ** ** | **70**                  |     | 70 |   |
| CSR (Pioneer Sugar) Pty Ltd                                                         |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| CSR (Tianjin) Readymix Co., Ltd (e)                                                 |   | China                         | ** ** | **—**              |     | 70 |   |
| CSR (UK) Holdings (c)                                                               |   | UK                            | ** ** | **—**              |     | 100 |   |
| F & L (Qld) Pty Ltd                                                             |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Farley & Lewers Ltd                                                             |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| FCS Las Vegas Mining Claims, LLC (d) (e)                                            |   | USA                           | ** ** | **—**              |     | — |   |
| FEP Bricks Pty Ltd (formerly CSR Bricks Pty Ltd)  (c)                               |   | Australia                     | ** ** | **—**              |     | 100 |   |
| FEP Colourtile Pty Ltd                                                              |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| FEP Construction Holdings Pty Ltd                                                   |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| FEP SE Asia Pty Ltd (formerly CSR SE Asia Pty Ltd)  (c)                             |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Florida Crushed Stone Company (e)                                                   |   | USA                           | ** ** | **—**              |     | 100 |   |
| Fort Calhoun Stone Company (e) (f)                                                  |   | USA                           | ** ** | **—**              |     | — |   |
| Gove Aluminium Finance Ltd                                                          |   | Australia                     | ** ** | **70**                  |     | 70 |   |
| Guernsey Stone Company (e) (f)                                                      |   | USA                           | ** ** | **—**              |     | — |   |
| Gyprock Holdings Pty Ltd                                                            |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Havelock Food Products Pty Ltd                                                      |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| HCC Las Vegas Mining Claims, LLC (d) (e)                                            |   | USA                           | ** ** | **—**              |     | — |   |
| Hydro Conduit Corporation (e)                                                       |   | USA                           | ** ** | **—**              |     | 100 |   |
| Hydro Conduit Management Company, Inc. (e)                                          |   | USA                           | ** ** | **—**              |     | 100 |   |
| Hydro Conduit of Texas, LP (e)                                                      |   | USA                           | ** ** | **—**              |     | 100 |   |
| Hydro Investments, Inc. (e)                                                         |   | USA                           | ** ** | **—**              |     | 100 |   |
| KMC Las Vegas Mining Claims, LLC (d) (e)                                            |   | USA                           | ** ** | **—**              |     | — |   |
| LV Western Mining Claims, LLC (d) (e)                                               |   | USA                           | ** ** | **—**              |     | — |   |
| Marana Golf, Inc. (e) (f)                                                           |   | USA                           | ** ** | **—**              |     | — |   |
| Midalco Pty Ltd                                                                     |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Mili, LLC (e)                                                                       |   | USA                           | ** ** | **—**              |     | 100 |   |
| Monier PGH Holdings Limited                                                         |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Northwest Materials Holding Company (e) (f)                                         |   | USA                           | ** ** | **—**              |     | — |   |
| Oxi, LLC (e)                                                                        |   | USA                           | ** ** | **—**              |     | 100 |   |
| Oxi Golf, LLC (e)                                                                   |   | USA                           | ** ** | **—**              |     | 50 |   |
| Ozsands International Pty Ltd                                                       |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Pacific Rock Products, LLC (e) (f)                                                  |   | USA                           | ** ** | **—**              |     | — |   |
| Pacific Rock Products Trucking, LLC (e) (f)                                         |   | USA                           | ** ** | **—**              |     | — |   |
| Pioneer Sugar Mills Pty Ltd                                                         |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Pipe Liners, Inc (e)                                                                |   | USA                           | ** ** | **—**              |     | 100 |   |
| Plaster Castings Pty Ltd (c)                                                        |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Premier Ceilings (WA) Pty Ltd                                                       |   | Australia                     | ** ** | **67**                  |     | 50 |   |
| PT Prima Karya Plasterboard                                                         |   | Indonesia                     | ** ** | **100**                 |     | 100 |   |
| Pyneboard Pty Ltd                                                                   |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Quality Ready Mix, Inc. (e) (f)                                                     |   | USA                           | ** ** | **—**              |     | — |   |
| Queensland Sugar Power Pool Pty Ltd                                                 |   | Australia                     | ** ** | **82**                  |     | 82 |   |
| Ready Mixed Concrete Ltd                                                            |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Readymix Holdings Pty Ltd (e)                                                       |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Readymix  Properties Pty Ltd (formerly Humes Australia Pty Ltd) (e)                 |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Readymix  Roads Group Pty Ltd (formerly Readymix Australia Pty Ltd) (e)             |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Refined Sugar Services Pty Limited                                                  |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Richter Drilling Pty Ltd (c)                                                        |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Rinker  Group Limited (formerly CSR Investments Overseas Ltd) (e)                   |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Rinker  Group Share Plan Pty Ltd (formerly Roads Holdings Pty Ltd) (e)              |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Rinker Management Company, Inc (e)                                                  |   | USA                           | ** ** | **—**              |     | 100 |   |
| Rinker Materials Corporation (e)                                                    |   | USA                           | ** ** | **—**              |     | 100 |   |
| Rinker Materials Foreign Sales Corporation (e)                                      |   | US  Virgin Is.                | ** ** | **—**              |     | 100 |   |
| Rinker  Materials Leasing LLC (formerly Kiewit Materials Leasing LLC) (e) (f)       |   | USA                           | ** ** | **—**              |     | — |   |
| Rinker Materials Nevada, Inc. (e)                                                   |   | USA                           | ** ** | **—**              |     | 100 |   |
| Rinker Materials of Florida, Inc. (e)                                               |   | USA                           | ** ** | **—**              |     | 100 |   |
| Rinker Materials Polypipe, Inc. (e)                                                 |   | USA                           | ** ** | **—**              |     | 100 |   |
| Rinker  Materials South Central, Inc (formerly American Limestone Company, Inc) (e) |   | USA                           | ** ** | **—**              |     | 100 |   |
| Rinker Materials Steel Framing, Inc. (e)                                            |   | USA                           | ** ** | **—**              |     | 100 |   |
| Rinker Materials West, LLC (e)                                                      |   | USA                           | ** ** | **—**              |     | 100 |   |
| Rinker  Materials Western, Inc. (formerly Kiewit Materials Company) (e) (f)         |   | USA                           | ** ** | **—**              |     | — |   |
| Rinker Modular Systems, LLC (e)                                                     |   | USA                           | ** ** | **—**              |     | 50 |   |
| Rivarol Pty Ltd                                                                     |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| RMF Las Vegas Mining Claims, LLC (d) (e)                                            |   | USA                           | ** ** | **—**              |     | — |   |
| Sellars Holdings Ltd (b)                                                            |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Seltsam Pty Ltd                                                                     |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Shelf Drilling Pty Ltd                                                              |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| SKCOR, L.L.C. (e)                                                                   |   | USA                           | ** ** | **—**              |     | 100 |   |
| Solano Concrete Co., Inc. (e) (f)                                                   |   | USA                           | ** ** | **—**              |     | — |   |
| Spuncon Pty Ltd (c)                                                                 |   | Australia                     | ** ** | **—**              |     | 100 |   |
| Steel Construction Systems (e)                                                      |   | USA                           | ** ** | **—**              |     | 55 |   |
| Stonelea, LLC (e)                                                                   |   | USA                           | ** ** | **—**              |     | 100 |   |
| Sunrock Quarries Pty Ltd (b)                                                        |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Superior Drainage, LLC (e)                                                          |   | USA                           | ** ** | **—**              |     | 100 |   |
| Tanner Companies (Yuma), Inc. (e) (f)                                               |   | USA                           | ** ** | **—**              |     | — |   |
| The Forestry Pulp & Paper Company of Australia                                  |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| The Haughton Sugar Co Pty Limited                                                   |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| The Readymix Group (Australia) Ltd (b)                                              |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Thiess Bros Pty Ltd                                                                 |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Thiess Holdings Pty Ltd                                                             |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Twin Mountain Rock Company (e) (f)                                                  |   | USA                           | ** ** | **—**              |     | — |   |
| Twin Mountain Rock Venture (e) (f)                                                  |   | USA                           | ** ** | **—**              |     | — |   |
| U-Liner Mid-America, Inc (a)                                                        |   | USA                           | ** ** | **—**              |     | 100 |   |
| United Metro Materials, Inc. (e) (f)                                                |   | USA                           | ** ** | **—**              |     | — |   |
| Upline Holdings Pty Ltd                                                             |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Waterford Sands Pty Ltd (b)                                                         |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| West Moreton Industries Pty Ltd (b)                                                 |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| Western Equipment Co. (e) (f)                                                       |   | USA                           | ** ** | **—**              |     | — |   |
| Wilson Concrete Company (e)                                                         |   | USA                           | ** ** | **—**              |     | 100 |   |
| Woodland Pty Ltd                                                                    |   | Australia                     | ** ** | **100**                 |     | 100 |   |
| WPB Las Vegas Mining Claims, LLC (d) (e)                                            |   | USA                           | ** ** | **—**              |     | — |   |

 

----

| *(a)* |   | *Controlled entity disposed during the year.*     |
|-------|--------|---------------------------------------------------|
| *(b)* |   | *In voluntary liquidation.*                       |
| *(c)* |   | *Controlled entity liquidated during the year.*   |
| *(d)* |   | *Controlled entity incorporated during the year.* |
| *(e)* |   | *Controlled entity demerged on March 28, 2003.*   |
| *(f)* |   | *Controlled entity acquired during the year.*     |

 

F-49

----

 

**37**           **Discontinued Operations**

 

OnNovember 19, 2002 the directors announced a demerger of Rinker Group Limitedfrom the CSR Group.  The demerger ofRinker group from CSR was approved by shareholders in an Extraordinary GeneralMeeting on March 25, 2003, and court approval was obtained on March 28, 2003.The effective date of the demerger was March 28, 2003 when CSR ceased tocontrol Rinker Group Limited. The businesses demerged were essentially RinkerMaterials Corporation (operating in the United States) and Readymix (operatingin Australia and Asia) segments (refer to note 1). This has resulted in theformation of two strong groups:

•Rinker group: an international heavy building materials group of companieswhich is better able to participate in the ongoing consolidation of theinternational heavy building materials industry; and

•CSR group: an Australian diversified industrial group of companies with astrong portfolio of businesses which is better able to capitalise on its growthopportunities while distributing a higher proportion of its profits asdividends than it does currently.

Thedemerger is expected to help Rinker group and CSR pursue their respectivestrategies more effectively, focus on their strengths and, over time, deliveradditional value to shareholders.

 

Thefinancial information for the business that comprise the Rinker group fromMarch 28, 2003 (and the March 31, 2002 comparative) is as follows:

 
| **(A$ million)**                                                |   | **2003**     |       | **2002** |       |
|-----------------------------------------------------------------|--------|--------------|------------|----------|------------|
| Trading revenue – sale of goods                            |   | **5,231.7**  | ** ** | 5,041.0  |       |
| Cost of sales                                                   |   | **(3,125.5** | **)**      | (3,017.1 | )          |
| Warehouse and distribution costs                                |   | **(932.2**   | **)**      | (887.2   | )          |
| Selling costs                                                   |   | **(98.2**    | **)**      | (93.4    | )          |
| Administration and other operating costs(a)                     |   | **(439.2**   | **)**      | (437.4   | )          |
| Share of partnership net income                                 |   | **(0.3**     | **)**      | (0.3     | )          |
| Share of associate entities’ net profit                    |   | **24.6**     | ** ** | 23.5     |       |
| Operating profit                                                |   | **660.9**    | ** ** | 629.1    |       |
| Other revenue from ordinary activities                          |   | **129.7**    | ** ** | 84.2     |       |
| Other expenses from ordinary activities                         |   | **(92.7**    | **)**      | (67.9    | )          |
| Dividend income from controlled entities                        |   | **0.2**      | ** ** | 0.3      |       |
| Profit from ordinary activities before finance and  income tax  |   | **698.1**    | ** ** | 645.7    |       |
| Interest income                                                 |   | **0.6**      | ** ** | 1.4      |       |
| Borrowing costs(b)                                              |   | **(86.7**    | **)**      | (89.5    | )          |
| **Profit from ordinary activities  before income tax**          |   | **612.0**    | ** ** | 557.6    |       |
| Income tax expense relating to ordinary activities              |   | **(220.5**   | **)**      | (202.4   | )          |
| **Net profit**                                                  |   | **391.5**    | ** ** | 355.2    |       |
| Net profit attributable to outside equity interests             |   | **(2.4**     | **)**      | (0.7     | )          |
| **Net profit attributable to  members of Rinker Group Limited** |   | **389.1**    | ** ** | 354.5    |       |
|                                                            |   |         | ** ** |     | ** ** |
| **Cash Flow Information for the  year ended March 31**          |   |         | ** ** |     | ** ** |
| Cash inflow from operating activities                           |   | **912.7**    | ** ** | 868.4    |       |
| Cash outflow from investing activities                          |   | **(1,083.6** | **)**      | (394.1   | )          |
| Cash inflow (outflow) from financing activities                 |   | **332.6**    | ** ** | (502.8   | )          |
| Total cash inflow (outflow)                                     |   | **161.7**    | ** ** | (28.5    | )          |

 

----

(a) Includes an allocation of corporate costs of A$13.4 million beforetax.

(b) Group borrowing costs for the year less amount allocated to CSR(based on a net debt of A$225 million each year).

 

F-50

----

 
| **(A$ million)**                                                                                 |   | **United  States** |       | **Australia** |       | **Asia**  |       | **Total**    |       |
|--------------------------------------------------------------------------------------------------|--------|--------------------|------------|---------------|------------|-----------|------------|--------------|------------|
| **Geographical Segment Financial  Performance Information for the year ended March 31, 2003(a)** |   |               | ** ** |          | ** ** |      | ** ** |         | ** ** |
| Revenue from ordinary activities                                                                 |   | **4,311.1**        | ** ** | **980.3**     | ** ** | **70.8**  | ** ** | **5,362.2**  | ** ** |
| Expenses from ordinary activities                                                                |   | **(3,822.6**       | **)**      | **(862.5**    | **)**      | **(65.1** | **)**      | **(4,750.2** | **)**      |
| Profit before income tax                                                                         |   | **488.5**          | ** ** | **117.8**     | ** ** | **5.7**   | ** ** | **612.0**    | ** ** |
| Income tax expense                                                                               |   | **(192.8**         | **)**      | **(27.1**     | **)**      | **(0.6**  | **)**      | **(220.5**   | **)**      |
| Outside equity interests                                                                         |   | **(0.6**           | **)**      | **—**    | ** ** | **(1.8**  | **)**      | **(2.4**     | **)**      |
| Net profit attributable to members of Rinker Group  Limited                                      |   | **295.1**          | ** ** | **90.7**      | ** ** | **3.3**   | ** ** | **389.1**    | ** ** |
|                                                                                             |   |               | ** ** |          | ** ** |      | ** ** |         | ** ** |
| **Geographical Segment Financial  Performance Information for the year ended March 31, 2002(a)** |   |               | ** ** |          | ** ** |      | ** ** |         | ** ** |
| Revenue from ordinary activities                                                                 |   | 4,181.7            |       | 893.1         |       | 52.1      |       | 5,126.9      |       |
| Expenses from ordinary activities                                                                |   | (3,704.3           | )          | (815.1        | )          | (49.9     | )          | (4,569.3     | )          |
| Profit before income tax                                                                         |   | 477.4              |       | 78.0          |       | 2.2       |       | 557.6        |       |
| Income tax expense                                                                               |   | (185.7             | )          | (16.2         | )          | (0.5      | )          | (202.4       | )          |
| Outside equity interests                                                                         |   | (0.7               | )          | 0.6           |       | (0.6      | )          | (0.7         | )          |
| Net profit attributable to members of Rinker Group  Limited                                      |   | 291.0              |       | 62.4          |       | 1.1       |       | 354.5        |       |

 
|                                                                     |   | **United  States** |       | **Australia** |       | **Asia**  |       | **Total**    | ** ** |
|--------------------------------------------------------------------------|--------|--------------------|------------|---------------|------------|-----------|------------|--------------|------------|
| **Geographical Financial Position  Information as at March 31, 2003(b)** |   |               | ** ** |          | ** ** |      | ** ** |         | ** ** |
| Assets                                                                   |   | **5,099.7**        | ** ** | **1,168.0**   | ** ** | **30.7**  | ** ** | **6,298.4**  | ** ** |
| Liabilities                                                              |   | **(2,967.1**       | **)**      | **(275.6**    | **)**      | **(15.0** | **)**      | **(3,257.7** | **)**      |
| Net Assets                                                               |   | **2,132.6**        | ** ** | **892.4**     | ** ** | **15.7**  | ** ** | **3,040.7**  | ** ** |
|                                                                     |   |               |       |          |       |      |       |         |       |
| **Geographical Financial Position  Information as at March 31, 2002(b)** |   |               |       |          |       |      |       |         |       |
| Assets                                                                   |   | 4,452.8            |       | 949.6         |       | 49.6      |       | 5,452.0      |       |
| Liabilities                                                              |   | (2,366.5           | )          | (223.0        | )          | (58.4     | )          | (2,647.9     | )          |
| Net Assets (Liabilities)                                                 |   | 2,086.3            |       | 726.6         |       | (8.8      | )          | 2,804.1      |       |

 

----

 
| (a) | Refer to note 1 for  business segment information for Rinker Group Limited, being the Rinker  Materials Corporation and Readymix segments. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Refer to note 35 for  detailed Financial Position information                                                                              |

 

F-51

----

 

**38           Contingent liabilities**

 
| **(million)**                                                                                                     |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|
| **Contingent liabilities, capable  of estimation, arise in respect of the following categories**                  |   |          |       |         |   |         |   |
| Performance guarantees provided to third parties  and other contingent liabilities                                |   | **2.3**       | ** ** | **3.8**      |   | 47.4         |   |
| Guarantees given by CSR in respect of amounts  borrowed by 

• Rinker Materials Corporation external debt(a) |   | **301.7**     | ** ** | **499.1**    |   | —       |   |
| **Total contingent liabilities**                                                                                  |   | **304.0**     | ** ** | **502.9**    |   | 47.4         |   |

 

----

| (a) | Outstanding  pre demerger guarantees on 2004 and 2005 Rinker Materials bonds. Rinker Materials  Corporation has obtained bank guarantees for the CSR Group’s benefit for any  payment obligations that are due under CSR Group guarantees. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

CSRLimited and/or certain subsidiaries (CSR) were involved in mining asbestos andmanufacturing and marketing products containing asbestos in Australia, andexporting asbestos to the United States. As a result of these activities, CSR has been named as a defendant inlitigation in Australia and the United States.

 

InAustralia, claims for asbestos induced injury have been made by employees andex-employees of CSR, by others such as contractors and transporters and byusers of products containing asbestos. As at March 31, 2003, there were 578 such claims pending.  In the United States, claims for damages arebeing made by people who allege exposure to asbestos fibre liberated eitherduring the manufacture of products containing asbestos or in the installationor use of those products.  As at March31, 2003, there were 3,115 such claims pending. CSR has been settling claimssince 1989.  At March 31, 2003, CSR hadresolved approximately 124,000 claims in the United States, includingresolution of approximately 80,000 claims in mass settlements in West Virginia,Texas and Mississippi, and approximately 1,332 claims in Australia.

 

Thereare uncertainties surrounding litigation in each of the United States andAustralia. The incidence of asbestos related disease, the propensity ofclaimants to make formal demands on CSR, the amount of those demands and thepresence of other defendants in litigation involving CSR impact the number andvalue of claims made against CSR.

 

CSRhas recognised as a provision for product liability the best estimate of theconsideration required to settle the present obligation for anticipated compensationpayments and legal costs as at the reporting date. In determining theprovision, CSR has obtained independent expert advice in relation to the futureincidence of asbestos related claims in each of the United States andAustralia. Those assessments have projected CSR’s claims experience into thefuture using various modelling techniques that take into account a range ofpossible outcomes. The present value of the liabilities is estimated bydiscounting the estimated cash flows using the pre-tax rate that reflects thecurrent market assessment of the time value of money based on notionallong-term government bond rates and risks specific to those liabilities.

 

CSRhas commenced proceedings in New Jersey against a number of insurers who issuedpolicies to CSR during the years 1978 to 1989. In those proceedings CSR seeksindemnity for US asbestos claims and certain other relief.  Those proceedings are being pursued by CSRas speedily as possible.  No potentialbenefit from this litigation is included in the financial statements.

 

AtMarch 31, 2003 a provision of A$332.3 million has been made for all knownclaims and probable future claims but not for such claims as cannot presentlybe reliably measured.  In light of thedifficulty of predicting the number of further claims, the severity and mix ofdiseases involved, the costs of defense and indemnity associated with suchclaims, and other changes in the litigation environment that might affect CSR’sposition or that of its subsidiaries, CSR cannot determine with certainty theamount of its ultimate liability with respect to asbestos claims nor theireffect on net profit or loss or cashflows in future reporting periods.

 

CSRacknowledges there is a reasonable possibility that a loss exceeding theamounts already provided may be incurred, however due to the uncertaintiespreviously outlined a determination of the amount of such losses cannot bemade. However, CSR believes the asbestos litigation in the United States andAustralia will not have a material adverse impact on the CSR group’s financialcondition, results of operations or cash flows. This view is based upon theexperience of CSR group entities in the asbestos litigation to date; theresolution of a large number of matters on commercially acceptable terms; theprovisions already included in the CSR group’s financial statements; CSR’sbelief that it has evidence to support CSR’s position that the fibre containedin Johns Manville gasket materials was not supplied by CSR; CSR’s expectationsconcerning probable settlements in pending as well as future claims; CSR’sexpectations concerning the number of claims likely to be brought against itand/or its subsidiaries in the future; and the possibility of an insurancerecovery as a result of the New Jersey litigation. There can, however, be noassurance that the asbestos related personal injury litigation will not have amaterial adverse impact on CSR’s financial condition, results of operations orcash flows.

 

**Other Contingent Liabilities**

CSRLimited acts as an authorised self-insurer in New South Wales, Queensland,Victoria, Western Australia and Australian Capital Territory for workers’compensation insurance. Adequate provision has been made for all known claimsand potential future claims that can be reliably measured. CSR sold itsinterest in Gove Aluminium Limited to Alcan Northern Territory Alumina PtyLimited (“Alcan”) on January 31, 2001. On January 31, 2003 CSR received notice from Alcan of claims totaling aroundA$22.5 million in respect of that sale. CSR disputes those claims and will defend them.  CSR has raised claims against Alcan inrespect of an adjustment for diesel fuel rebates totaling US$21.9 million(A$36.2 million) pursuant to adjustment provisions under the sale agreement andregulations which we believe became effective on May 15, 2003.  CSR has notified Alcan of the claim but isyet to receive a response, however, CSR believes it is likely that Alcan willdispute the claim.

 

F-52

----

 

**39           United States generally acceptedaccounting principles (US GAAP) information**

 

Providedbelow is a summary and explanation of the differences between net profit andshareholders’ equity disclosed in these financial statements and that whichwould be reported if the financial statements were prepared in accordance withUS GAAP. This summary and explanation is not intended to be a comprehensive USGAAP report.

 
| **(million)**                                                                                                            |   | **Note** |       | **2003  US****$** |       | **2003****A$** |   | **2002  A$** |   | **2001  A$** |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|----------|------------|-------------------|------------|----------------|--------|--------------|--------|--------------|--------|
| **Reconciliation of net profit**                                                                                         |   |     |       |              |       |           |   |         |   |         |   |
| Profit from ordinary activities after income tax  attributable to members of CSR Limited                                 |   |     |       | **1,241.3**       | ** ** | **2,053.5**    |   | 552.6        |   | 634.1        |   |
| Revaluation of non-current assets                                                                                        |   | A        | ** ** | **7.0**           | ** ** | **11.5**       |   | 8.2          |   | 31.7         |   |
| Divestment of assets to joint venture entities                                                                           |   | B        | ** ** | **1.7**           | ** ** | **2.8**        |   | 2.8          |   | 2.8          |   |
| Restructure and rationalisation                                                                                          |   | C        | ** ** | **—**        | ** ** | **—**     |   | (11.0        | )      | 11.0         |   |
| Acquisition accounting                                                                                                   |   | D        | ** ** | **—**        | ** ** | **—**     |   | (3.8         | )      | (5.1         | )      |
| Employee shares and share loans (Universal  share/option plan)                                                           |   | F        | ** ** | **(2.1**          | **)**      | **(3.5**       | )      | (2.8         | )      | (2.4         | )      |
| Other                                                                                                                    |   | H        | ** ** | **(1.3**          | **)**      | **(2.2**       | )      | (0.1         | )      | (0.6         | )      |
| Executive Share Option Plan                                                                                              |   | I        | ** ** | **(10.3**         | **)**      | **(17.0**      | )      | (10.4        | )      | —       |   |
| Amortisation of goodwill                                                                                                 |   | L        | ** ** | **51.1**          | ** ** | **84.6**       |   | 0.5          |   | —       |   |
| Unrecognised real estate profit                                                                                          |   | M        | ** ** | **(12.9**         | **)**      | **(21.4**      | )      | —       |   | —       |   |
| Adoption of AASB 1044                                                                                                    |   | N        | ** ** | **(124.0**        | **)**      | **(205.2**     | )      | —       |   | —       |   |
| Superannuation (pension) fund                                                                                            |   | S        | ** ** | **18.6**          | ** ** | **30.7**       |   | (8.0         | )      | 5.0          |   |
| Accounting for derivative instruments and hedging                                                                        |   | T        | ** ** | **(0.8**          | **)**      | **(1.3**       | )      | (0.1         | )      |         |   |
| Fair value adjustment for Rinker Group Limited  demerger                                                                 |   | U        | ** ** | **(936.5**        | **)**      | **(1,549.2**   | )      | —       |   | —       |   |
| Unrecognised insurance debtors                                                                                           |   | V        | ** ** | **(3.8**          | **)**      | **(6.2**       | )      | —       |   | —       |   |
| Deferred litigation costs not recognised                                                                                 |   | W        | ** ** | **(6.1**          | **)**      | **(10.0**      | )      | —       |   | —       |   |
| Deferred tax effect of US GAAP adjustments                                                                               |   |     |       | **30.3**          | ** ** | **50.1**       |   | 2.3          |   | (3.2         | )      |
|                                                                                                                     |   |     |       | **(989.1**        | **)**      | **(1,636.3**   | )      | (22.4        | )      | 39.2         |   |
| **US GAAP net profit attributable  to members of CSR Limited**                                                           |   |     |       | **252.2**         | ** ** | **417.2**      |   | 530.2        |   | 673.3        |   |
|                                                                                                                     |   |     |       |              |       |           |   |         |   |         |   |
| Income from continuing operations (net of tax  (expense) 2003: A$(19.4)m, 2002: A$(48.9)m, 2001: A$(43.0)m)              |   |     |       | **9.2**           | ** ** | **15.2**       |   | 201.8        |   | 463.9        |   |
| Income from discontinued operations (net of tax  (expense)/benefit 2003: A$(214.5)m, 2002: A$(184.0)m, 2001: A$(132.1)m) |   |     |       | **277.2**         | ** ** | **458.5**      |   | 328.4        |   | 209.4        |   |
| Loss on disposal of discontinued operations (net  of tax benefit 2003: A$17.7m)                                          |   |     |       | **(34.2**         | **)**      | **(56.5**      | )      | —       |   | —       |   |
| **US GAAP net profit attributable  to members of CSR Limited**                                                           |   |     |       | **252.2**         | ** ** | **417.2**      |   | 530.2        |   | 673.3        |   |

 
| **(Dollars per share)**                     |   |   |   |       |       |      |   |   |   |   |   |
|---------------------------------------------|--------|--------|--------|------------|------------|-----------|--------|--------|--------|--------|--------|
| **Basic earnings per share**                |   |   |   |       |       |      |   |   |   |   |   |
| Continuing operations                       |   |   |   | **—** | ** ** | **0.02**  |   | 0.21   |   | 0.46   |   |
| Discontinued operations                     |   |   |   | **0.30**   | ** ** | **0.49**  |   | 0.35   |   | 0.21   |   |
| Loss on disposal of discontinued operations |   |   |   | **(0.04**  | **)**      | **(0.06** | )      | — |   | — |   |
|                                        |   | O      |   | **0.26**   | ** ** | **0.45**  |   | 0.56   |   | 0.67   |   |
| **Diluted earnings per share**              |   |   |   |       |       |      |   |   |   |   |   |
| Continuing operations                       |   |   |   | **—** | ** ** | **0.01**  |   | 0.21   |   | 0.46   |   |
| Discontinued operations                     |   |   |   | **0.30**   | ** ** | **0.49**  |   | 0.35   |   | 0.21   |   |
| Loss on disposal of discontinued operations |   |   |   | **(0.04**  | **)**      | **(0.06** | )      | — |   | — |   |
|                                        |   | O      |   | **0.26**   | ** ** | **0.44**  |   | 0.56   |   | 0.67   |   |

 

**Consolidated statement of financial performance -classification differences**

UnderAustralian GAAP, the proceeds on sale of investments are reported as revenuefrom ordinary activities and the book value of investments sold is reported asan expense from ordinary activities. Under US GAAP, only the net gain/(loss) onsale of investments is reported in non-operating income/(expense). UnderAustralian GAAP, the proceeds on sale of property, plant and equipment arereported as revenue from ordinary activities and the book value of assets soldis reported as an expense from ordinary activities (below Operating Profit).Under US GAAP, only the net gain/(loss) on sale of property, plant andequipment is reported in operating income/(expense). Under Australian GAAP, theshare of net profit/(loss) of associates, joint ventures and partnershipsaccounted for using the equity method is reported as a component ofprofit/(loss) from ordinary activities. Under US GAAP, the share of netprofit/(loss) of associates, joint ventures and partnerships accounted forusing the equity method is generally reported net of tax below non-operatingincome/(expense) following income tax expense/(benefit).

 

**Outside equity interests**

Theimpact of the US GAAP adjustments on the outside equity interest (minorityinterest) is immaterial and therefore has not been reflected in the US GAAPreconciliation.

 

F-53

----

 
| **(million)**                                                                          |   | **Note** |       | **2003  US****$** |       | **2003****A$** |       | **2002  A$** |       | **2001  A$** |   |
|----------------------------------------------------------------------------------------|--------|----------|------------|-------------------|------------|----------------|------------|--------------|------------|--------------|--------|
| **Reconciliation of equity**                                                           |   |     |       |              |       |           | ** ** |         |       |         |   |
| Equity attributable to members of CSR Limited                                          |   |     |       | **652.7**         | ** ** | **1,079.6**    | ** ** | 4,022.8      |       |         |   |
| Net effect of US GAAP adjustments on items within  the statement of financial position |   |     |       |              |       |           | ** ** |         |       |         |   |
| **Current assets**                                                                     |   |     |       |              |       |           | ** ** |         |       |         |   |
| • receivables (reclassify loans and receivables to  associate entities)           |   | R        | ** ** | **(11.8**         | **)**      | **(19.5**      | **)**      | (46.1        | )          |         |   |
| • receivables (real estate debtors)                                               |   | M        | ** ** | **(12.9**         | **)**      | **(21.4**      | **)**      | —       |       |         |   |
| • deferred income tax assets (reclassification  from non-current)                 |   | G        | ** ** | **56.9**          | ** ** | **94.2**       | ** ** | 174.9        |       |         |   |
| • deferred income tax assets (derivative  instruments and hedging)                |   | T        | ** ** | **(6.0**          | **)**      | **(10.0**      | **)**      | 4.1          |       |         |   |
| • other financial assets (derivative instruments  and hedging)                    |   | T        | ** ** | **42.7**          | ** ** | **70.7**       | ** ** | 26.3         |       |         |   |
| **Non-current assets**                                                                 |   |     |       |              |       |           | ** ** |         |       |         |   |
| • property, plant and equipment (revaluation and  impairment)                     |   | A        | ** ** | **(76.4**         | **)**      | **(126.4**     | **)**      | (252.0       | )          |         |   |
| • property, plant and equipment (other)                                           |   | H        | ** ** | **2.9**           | ** ** | **4.8**        | ** ** | 6.0          |       |         |   |
| • intangibles (acquisition accounting goodwill)                                   |   | D        | ** ** | **—**        | ** ** | **—**     | ** ** | 104.5        |       |         |   |
| • intangibles (reverse capitalisation of  trademarks)                             |   | H        | ** ** | **(6.3**          | **)**      | **(10.4**      | **)**      | (14.4        | )          |         |   |
| • intangibles (reverse SFAS 142 goodwill  amortisation)                           |   | L        | ** ** | **1.0**           | ** ** | **1.6**        | ** ** | 0.5          |       |         |   |
| • intangibles (superannuation (pension) fund)                                     |   | S        | ** ** | **—**        | ** ** | **—**     | ** ** | 2.5          |       |         |   |
| • receivables (reclassify loans to associate  entities)                           |   | R        | ** ** | **(4.5**          | **)**      | **(7.4**       | **)**      | (16.1        | )          |         |   |
| • deferred income tax assets (reclassification to  current)                       |   | G        | ** ** | **(119.6**        | **)**      | **(197.9**     | **)**      | (243.0       | )          |         |   |
| • deferred income tax assets (derivative  instruments and hedging)                |   | T        | ** ** | **(12.1**         | **)**      | **(20.0**      | **)**      | —       |       |         |   |
| • other financial assets (derivative instruments  and hedging)                    |   | T        | ** ** | **37.8**          | ** ** | **62.6**       | ** ** | 22.9         |       |         |   |
| • investments accounted for using the equity  method (divestment of assets)       |   | B        | ** ** | **(12.5**         | **)**      | **(20.6**      | **)**      | (23.4        | )          |         |   |
| • investments accounted for using the equity  method (SFAS 133)                   |   | T        | ** ** | **2.9**           | ** ** | **4.8**        | ** ** | (6.5         | )          |         |   |
| • investments accounted for using the equity  method (reclassify loans)           |   | R        | ** ** | **16.3**          | ** ** | **26.9**       | ** ** | 62.2         |       |         |   |
| • receivables (employee share loans)                                              |   | F        | ** ** | **(8.3**          | **)**      | **(13.8**      | **)**      | (24.8        | )          |         |   |
| • other (superannuation (pension) fund)                                           |   | S        | ** ** | **40.4**          | ** ** | **66.8**       | ** ** | 26.8         |       |         |   |
| • other                                                                           |   | H        | ** ** | **(1.0**          | **)**      | **(1.6**       | **)**      | 4.3          |       |         |   |
| **Current liabilities**                                                                |   |     |       |              |       |           | ** ** |         |       |         |   |
| • deferred income tax liabilities  (reclassification from non-current)            |   | G        | ** ** | **2.8**           | ** ** | **4.6**        | ** ** | (22.1        | )          |         |   |
| • provision for dividend                                                          |   | E        | ** ** | **—**        | ** ** | **—**     | ** ** | 121.7        |       |         |   |
| • other financial liabilities (derivative  instruments and hedging)               |   | T        | ** ** | **(19.1**         | **)**      | **(31.6**      | **)**      | (33.2        | )          |         |   |
| • other (minimum pension liability)                                               |   | S        | ** ** | **(34.9**         | **)**      | **(57.8**      | **)**      | (9.9         | )          |         |   |
| **Non-current liabilities**                                                            |   |     |       |              |       |           | ** ** |         |       |         |   |
| • deferred income tax liabilities (acquisition accounting)                        |   | D        | ** ** | **—**        | ** ** | **—**     | ** ** | (119.4       | )          |         |   |
| • deferred income tax liabilities  (reclassification to current)                  |   | G        | ** ** | **64.5**          | ** ** | **106.7**      | ** ** | 97.1         |       |         |   |
| • deferred income tax liabilities (US GAAP profit  adjustments)                   |   |     |       | **(4.8**          | **)**      | **(8.0**       | **)**      | 30.2         |       |         |   |
| • other financial liabilities (derivative  instruments and hedging)               |   | T        | ** ** | **(4.1**          | **)**      | **(6.9**       | **)**      | (22.2        | )          |         |   |
|                                                                                   |   |     |       | **(66.1**         | **)**      | **(109.6**     | **)**      | (149.1       | )          |         |   |
| **US GAAP equity attributable to  members of CSR Limited**                             |   |     |       | **586.6**         | ** ** | **970.0**      |       | 3,873.7      | ** ** |         |   |
|                                                                                   |   |     |       |              |       |           | ** ** |         |       |         |   |
| **Statement of comprehensive income**                                                  |   |     |       |              |       |           | ** ** |         |       |         |   |
| US GAAP net profit attributable to members of CSR  Limited                             |   |     |       | **252.2**         | ** ** | **417.2**      |       | 530.2        | ** ** | 673.3        |   |
| Other comprehensive (loss) income                                                      |   |     |       |              |       |           | ** ** |         |       |         |   |
| • foreign currency translation                                                    |   |     |       | **(140.4**        | **)**      | **(232.3**     | **)**      | (123.8       | )          | 313.2        |   |
| • hedging of US assets                                                            |   |     |       | **25.8**          | ** ** | **42.7**       |       | 36.1         | ** ** | (134.7       | )      |
| • minimum pension liability                                                       |   | S        | ** ** | **(47.6**         | **)**      | **(78.7**      | **)**      | (7.4         | )          | —       |   |
| • derivative instruments and hedging                                              |   | T        | ** ** | **57.2**          | ** ** | **94.6**       | ** ** | 136.5        |       | —       |   |
|                                                                                   |   |     |       | **(105.0**        | **)**      | **(173.7**     | **)**      | 41.4         |       | 178.5        |   |
| • tax (expense)/benefit on hedging                                                |   |     |       | **(7.7**          | **)**      | **(12.8**      | **)**      | (10.8        | )          | 45.8         |   |
| • tax expense on derivative instruments and  hedging                              |   | T        | ** ** | **(16.6**         | **)**      | **(27.4**      | **)**      | (40.9        | )          | —       |   |
| Total other comprehensive (loss) income                                                |   |     |       | **(129.3**        | **)**      | **(213.9**     | **)**      | (10.3        | )          | 224.3        |   |
| **Comprehensive income**                                                               |   |     |       | **122.9**         | ** ** | **203.3**      |       | 519.9        | ** ** | 897.6        |   |
|                                                                                   |   |     |       |              |       |           |       |         | ** ** |         |   |
| **Accumulated other comprehensive  (loss) income**                                     |   |     |       |              |       |           |       |         | ** ** |         |   |
| Balance at the end of the financial year(a)                                            |   |     |       | **(42.7**         | **)**      | **(70.6**      | **)**      | 228.7        | ** ** | 343.1        |   |

 

----

| (a) | Fiscal  year 2002 includes opening balance adjustment on April 1, 2001 on adoption of  SFAS No. 133 of A$104.1 million debit. On demerger of the Rinker group from  the CSR group as at March 28, 2003 A$85.4 million was transferred to Rinker  Group Limited. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

F-54

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| **(million)**                                                                   |   | **US$**   |       | **A$**      |       |
|---------------------------------------------------------------------------------|--------|-----------|------------|-------------|------------|
|                                                                            |   |      |       |        |       |
| **Equity  rollforward**                                                         |   |      |       |        |       |
|                                                                            |   |      | ** ** |        | ** ** |
| **Balance as at April 1, 2000**                                                 |   |      |       | 3,520.3     |       |
| Net profit attributable to members of CSR Limited                               |   |      |       | 673.3       |       |
| Other comprehensive income                                                      |   |      |       | 224.3       |       |
| Decrease in share capital (due to buyback)                                      |   |      |       | (324.6      | )          |
| Movement in shareholders loans                                                  |   |      |       | 5.8         |       |
| Dividends declared                                                              |   |      |       | (232.6      | )          |
| Other movements in reserves                                                     |   |      |       | (23.5       | )     |
| **Balance as at March 31, 2001**                                                |   |      | ** ** | **3,843.0** | ** ** |
|                                                                            |   |      |       |        |       |
| **Balance as at April 1, 2001**                                                 |   |      |       | 3,843.0     |       |
| Net profit attributable to members of CSR Limited                               |   |      |       | 530.2       |       |
| Other comprehensive loss                                                        |   |      |       | (10.3       | )     |
| Adjustment on adoption of SFAS 133                                              |   |      |       | (104.1      | )     |
| Decrease in share capital (due to buyback)                                      |   |      |       | (183.0      | )     |
| Movement in shareholders loans                                                  |   |      |       | 2.4         |       |
| Equity movement from executive and employee shares/options                      |   |      |       | 13.2        |       |
| Dividends declared                                                              |   |      |       | (217.7      | )     |
| **Balance as at March 31, 2002**                                                |   |      | ** ** | **3,873.7** | ** ** |
|                                                                            |   |      |       |        |       |
| **Balance as at April 1, 2002**                                                 |   | 2,341.8   |       | 3,873.7     |       |
| Net profit attributable to members of CSR Limited                               |   | 252.2     |       | 417.2       |       |
| Other comprehensive loss                                                        |   | (129.3    | )          | (213.9      | )          |
| Increase in share capital                                                       |   | 21.8      |       | 36.1        |       |
| Movement in shareholders loans                                                  |   | 4.5       |       | 7.4         |       |
| Equity movement from executive and employee shares/options                      |   | 12.4      |       | 20.5        |       |
| Demerger distribution and capital reduction on demerger                         |   | (1,729.2  | )          | (2,860.6    | )          |
| Accumulated other comprehensive income transferred to Rinker group on  demerger |   | (51.6     | )          | (85.4       | )          |
| Dividends declared                                                              |   | (136.0    | )          | (225.0      | )          |
| **Balance as at March 31, 2003**                                                |   | **586.6** | ** ** | **970.0**   | ** ** |

 

F-55

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**Explanatorynotes**

 

The differences between US GAAP andAustralian GAAP are set out below. The matters discussed relate to thesignificant differences between US GAAP and Australian GAAP.

** **

**A. Revaluation and impairment of non-current assets.**  Prior to adoption of Australian AccountingStandard AASB 1041 “Revaluation of Non-Current Assets” (“AASB 1041”) by the CSRgroup from April 1, 2001, Australian GAAP allowed non-current assets to berevalued upwards via an asset revaluation reserve. Such revaluations of assetswere not allowed under US GAAP and so were reversed.

The depreciation charge onthe revaluation increment of revalued assets was also reversed. Since adoptionof AASB 1041 on April 1, 2001, the CSR group has elected to apply the costbasis of recording property, plant and equipment, discontinue our practice ofrevaluing property, plant and equipment upwards and deemed all our revaluedproperty, plant and equipment carrying amounts as at March 31, 2001 to be theircost going forward. This means that writedowns of assets may no longer be madethrough the asset revaluation reserve. Assets which had previously beenrevalued upwards will still require a US GAAP adjustment for depreciation andprofit on disposal.

 

Under Australian GAAP, therecoverable amount of noncurrent assets is assessed each reporting period. Animpairment loss is recorded when the future discounted net cash flows expectedto be generated by the asset are less than the carrying amount of the asset.Under US GAAP, property, plant and equipment and intangible assets with finiteuseful lives are tested for impairment when events or changes in circumstancesindicate that the carrying amount of the asset may not be recoverable.Recoverability of such assets is measured by a comparison of the carryingamount of the asset (as adjusted from Australian GAAP to US GAAP) to future undiscountednet cash flows expected to be generated from the assets’ use at the lowestlevel at which identifiable cash flows are generated. When the cash flowanalysis indicates an asset is impaired, the impairment loss to be recognisedis measured by the amount by which the carrying amount of the asset exceeds thefair value of the asset. Fair value is determined by quoted market prices,discounted cash flows or other valuation techniques.

** **

**B. Divestment of assets to joint venture entities**.  US GAAP requires certain conditions be metbefore asset exchanges and disposals are considered as sales. This adjustmentreverses a gain recognised on a transaction which was recorded as a sale forAustralian GAAP purposes but did not meet the US GAAP criteria for a sale. TheCSR group transferred refined sugar assets into the Sugar Australia jointventure in 1998. The CSR group’s contribution represented 50% of the assets ofthe joint venture. Under Australian GAAP, the CSR group recognised a profit onsale of A$28.3 million, however this profit was not recognised under US GAAPbecause there was no cash component in the sale. The US GAAP profit adjustmentrelates to the reversal of increased depreciation included in the equityaccounted results of the Sugar Australia joint venture, because the CSR group’sshare of the joint venture asset carrying values are greater than its equityaccounted carrying value under US GAAP.

 

**C. Restructure and rationalisation.**  Under Australian GAAP, certain provisionswere made for costs relating to the restructuring of manufacturing processes,plant closure and reorganisation. At the time they were raised, theseprovisions did not meet US GAAP recognition requirements and so were reversed.The provisions were expensed when they met US GAAP requirements.

** **

**D. Acquisition accounting (deferred taxes).**  US GAAP requires that a deferred income taxliability be raised to reflect the difference between the tax basis of assetsacquired and liabilities assumed, and their fair values determined in businesscombinations accounted for as a purchase. The creation of this deferred incometax credit gives rise to additional goodwill on acquisition which had beenamortised over the estimated period of future benefits (not exceeding 20 years)prior to adoption of Statement of Financial Accounting Standards (“SFAS”) No.142 “Goodwill and Other Intangible Assets” (“SFAS 142”) by the CSR group onApril 1, 2002. Since adoption of SFAS 142, the balance of this goodwill willnot be amortised but will be tested for impairment on an annual basis or when atrigger event occurs. No such deferred income tax liability is required forAustralian GAAP.

** **

**E. Dividends.****** Prior to adoption of Australian AccountingStandard AASB 1044 “Provisions, Contingent Liabilities and Contingent Assets”by the CSR group from April 1, 2002, dividends were provided for in the year in respect of which they wererecommended by directors. Since the adoption of AASB 1044 by the CSR group, aprovision for dividends is only recognised if they are declared prior tobalance date, which is in accordance with US GAAP. Dividends per share arecalculated under Australian GAAP as A$0.24 (2002: A$0.24, 2001: A$0.23). Usingthe US GAAP method of dividend recognition, dividends per share are A$0.24(2002: A$0.23, 2001: A$0.23).

 

F-56

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**F. Employee shares and share loans. **(Universal share/option plan).  Under US GAAP, interest free non-recourseloans granted in respect of employee shares issued are treated as stock optionsand are classified as a reduction in shareholders’ equity.

Under Australian GAAP, theseamounts are disclosed as noncurrent receivables.  The dividendsapplied against the employee share plan loans repaid are recognised ascompensation expense for US GAAP. No compensation expense is recognised forAustralian GAAP.

Commencing in 2001, theemployee share plan added a choice of one free share for each share paid for incash up to a maximum of 100 shares. For US GAAP the fair value of the freeshares is recognised as compensation expense. No compensation expense isrecognised for Australian GAAP.

** **

**G. Deferred income tax balances.**  Under Australian GAAP all deferred taxbalances are classified as non-current. Under US GAAP, deferred tax assets andliabilities are classified as current or non-current based on theclassification of assets and liabilities to which timing differences relate, oranticipated timing of reversal if they are not associated with any balancesheet items. Under Australian GAAP, deferred tax assets arising from timingdifferences are not carried forward as assets unless realisation is assuredbeyond reasonable doubt. Deferred tax assets arising from tax losses are notcarried forward as assets unless the losses can be regarded as being virtuallycertain of realisation. Under US GAAP, deferred tax assets arising from timingdifferences and tax losses are carried forward as assets and then reduced by avaluation allowance if, in the opinion of management, it is more likely thannot that some or all of the deferred tax assets will not be realised. This doesnot result in any difference to the net deferred income tax assets recognisedby the CSR group as disclosed in note 8.

** **

**H. Other.**  Includes immaterial adjustments to account for reversingcapitalisation of trademarks; the foreign exchange effect of US GAAPadjustments; reversal of start up costs and research and development costscapitalised.

** **

**I. Executive Share Option Plan.**  As discussed in Note 22, the CSR groupissues options to its executives under the Executive Share Option Plan (the“plan”). Under Australian GAAP, no cost attributable to share options issuedunder the plan has been recognised in the statement of financial performance.Under US GAAP, the CSR group accounts for the plan under the recognition andmeasurement principles of Accounting Principles Board (“APB”) Opinion No. 25,“Accounting for Stock Issued to Employees” and related interpretations (“APB25”). The plan is considered a variable plan as the number of shares theexecutives are entitled to receive are not known at the date of grant. Thevesting of the share options is conditional on a share performance measure thatis beyond the control of the CSR group; as such, compensation expense is onlyrecognised under APB 25 when the target is achieved.

 

During the years ended March31, 2003 and 2002, certain options vested as the share performance targets weremet, and accordingly, the CSR group recognised compensation expense under APB25 based on the excess of the market price on the measurement date over theexercise price of the share options. In addition, as a consequence of thedemerger, CSR declared a special circumstance in February 2003, which allowedall eligible options to be exercised prior to the demerger taking effect. Alloptions satisfied the performance hurdle and could be exercised during thetrading window from late February to April 4, 2003. Accordingly the CSR grouprecognised additional compensation expense under APB 25 during the year endedMarch 31, 2003 for the remaining options that vested as a result of thedemerger.

 

SFAS No.123 “Accounting forStock-Based Compensation (“SFAS 123”) requires recognition of compensationexpense for options over the vesting period based on the estimated grant datefair value of those options. The CSR group has determined the pro formainformation (below) under the fair value method of SFAS 123. The Black-Scholesoption pricing model was used with the following weighted-average assumptionsfor options issued in each year:

 
|                                  |   | **2003** |   | **2002** |   | **2001** |   |
|---------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Risk-free interest rate               |   | 5.89     | %      | 5.41     | %      | 6.29     | %      |
| Dividend yield                        |   | 3.65     | %      | 3.20     | %      | 5.00     | %      |
| Volatility factor                     |   | 23.6     | %      | 20.7     | %      | 20.4     | %      |
| Weighted-average  expected life (yrs) |   | 4.21     |   | 4.44     |   | 3.28     |   |

 

The weighted-average fair values of options grantedin 2003, 2002 and 2001 were A$1.30, A$1.33 and A$0.79 per option, respectively.

 

In accordance with SFAS No. 148 “Accountingfor Stock-Based Compensation - Transition and Disclosure” (“SFAS 148”) thefollowing table illustrates the effect on US GAAP net income and earnings pershare if the CSR group had applied the fair value recognition provisions ofSFAS 123 to stock-based employee compensation.

 
|                                                                                                                                       |   | **$ A  million** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
| **Year ended March 31**                                                                                                                    |   | **2003**         |   | **2002** |   | **2001** |   |
| Net income, as reported                                                                                                                    |   | 417.2            |   | 530.2 |   | 673.3 |   |
| Add (deduct): Total stock-based employee compensation determined  under fair value based method for all awards, net of related tax effects |   | 13.3             |   | 7.2 |   | (2.4 | ) |
|                                                                                                                                       |   |             |   |   |   |   |   |
| Pro forma net income                                                                                                                       |   | 430.5            |   | 537.4 |   | 670.9 |   |
|                                                                                                                                       |   |             |   |   |   |   |   |
| Earnings per share: (A$ per share)                                                                                                         |   |             |   |   |   |   |   |
|                                                                                                                                       |   |             |   |   |   |   |   |
| Basic - as reported                                                                                                                        |   | 0.45             |   | 0.56 |   | 0.67 |   |
| Basic - proforma                                                                                                                           |   | 0.46             |   | 0.57 |   | 0.67 |   |
|                                                                                                                                       |   |             |   |   |   |   |   |
| Diluted - as reported                                                                                                                      |   | 0.44             |   | 0.56 |   | 0.67 |   |
| Diluted - proforma                                                                                                                         |   | 0.45             |   | 0.57 |   | 0.67 |   |

 

F-57

----

 

**J. Asset Impairment. **The US GAAP andAustralian GAAP treatment of the Fiscal Year 2001 and 2003 asset impairmentswas identical. There were no asset impairments in Fiscal Year 2002. All assetimpairments were recorded as other expenses from ordinary activities.

 

**Fiscal Year 2001**

During this fiscal year theCSR group undertook a strategic review of their businesses because of markedlydifferent economic conditions and competitive positions in some markets,particularly in Asia, bricks in Australia and pipe rehabilitation in the US.This review identified certain assets that were not supported by future cashflows and this resulted in a write down of these assets and the raising ofcertain restructuring provisions as detailed below.

 

Construction - Readymix -Tianjin:  The detailed strategic reviewindicated the Tianjin assets were significantly over valued. Profit fromordinary activities before tax was at break-even but the business had no realupside except for the then possibility of the 2008 Olympics in Beijing. Giventhe low barriers to entry of this business in China, a writedown of A$37.8million was made to the following assets.

 
|                            |   | **A$ million  Original Value** |   | **A$ million  Writedown** |   |
|---------------------------------|--------|--------------------------------|--------|---------------------------|--------|
| Property, plant & equipment |   | 42.8                           |   | 31.5                      |   |
| Working capital                 |   | 3.2                            |   | 1.3                       |   |
| Increase in bad debt provision  |   |                           |   | 5.0                       |   |

 

Construction - Pipes:  A decision was made to exit this business. Awritedown of property, plant and equipment of A$1.0 million to estimatedrecoverable amount through sale was made (original book value of A$15.9million). Working capital of A$2.1 million was written off and provisions foradditional closure costs of A$4.5 million were raised.

 

Building - Insulation -Malaysia:  Increased competition in theAsian region resulted in lower returns to the businesses.  Consequently property, plant and equipmentwas written down by A$8.4 million (original book value A$15.2 million).

 

Building - Insulation -Thailand:  Increased competition in theAsian region resulted in lower returns to the businesses which necessitated awritedown in plant and equipment of A$7.4 million (original book value A$14.7million) and a writedown in deferred costs of A$1.0 million (original bookvalue A$1.6 million).

 

Building - Plasterboard -Indonesia:  The CSR group have exitedthe Indonesian plasterboard business. Excessive competition in this product inthe Asian region made the business unprofitable. The CSR group provided A$6.9million for site remediation and other exit costs. 

 

Other Asian businesses:  A$1.0 million was provided for other costsassociated with exiting a number of Asian businesses.

 

Building - Bricks -Schofields:  Schofields was constructedas a paver specific plant. This was justified on expected significant growth inthe Australian clay paver market that did not eventuate, principally due to thedevelopment of alternate paver types and the popularity of stamped concrete.

 

As a consequence property,plant and equipment was written down by A$23.9 million (original book valueA$50.3 million).

 

Rinker - Piperehabilitation:  This business isengaged in the rehabilitation of concrete pipes. Losses resulted in each offiscal year 1999 and 2000 and, despite plans for a turnaround in fiscal year2001, losses increased. This necessitated a writedown in property, plant andequipment of A$2.6 million (original book value A$11.4 million). License feesof A$6.7 million and goodwill of A$6.8 million were completely written off, anda redundancy provision of A$3.0 million was raised for the termination ofeleven people. The eleven people were terminated in fiscal year 2002 at a totalcost of A$3.3 million.

** **

**Fiscal Year 2003**

Very Low Colour Sugar (VLC)was originally introduced to service the feedstock requirements of Australianand New Zealand refineries.

 

The intention of the VLCinvestment was to enable radical changes and cost savings to be made at therefineries through undertaking more of the refining process at the mill.

 

The refineries progressivelymoved away from VLC as a feedstock. The labour and other changes at therefineries had been made and were able to be sustained without the expense ofthe VLC feedstock.

 

Small quantities of VLC arenow supplied to Sugar Australia for use at its WA liquid sugar facility, withthe balance being supplied to QSL as a marketing trial. QSL has been seekingexport opportunities for the product either directly or in a blended form. Thetrial was extended for a further year (2003 season), beyond that thelonger-term outlook is uncertain.

 

CSR Sugar received advicefrom QSL on April 29, 2003 that it would not accept VLC product beyond the 2003season. On this basis, we have reviewed the value of VLC assets.

 

The total written down valueof VLC assets at March 2003 was A$19.9 million. Of this A$2.0 million wasidentified as being of use within the other operations of the mill andconsequently a writedown of A$17.9 million was made against these assets. Afterreversing a provision of A$5.0 million created in prior years the net effect onbefore tax profit was A$12.9 million as reported in note 2 (A$9.0 million aftertax).

 

F-58

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**K. Recently issued United States accounting standards.**

Adoptedin the current period

During the year ended March31, 2003, the CSR group adopted SFAS No. 146, “Accounting for Costs Associatedwith Exit or Disposal Activities” (“SFAS 146”). SFAS 146 requires costsassociated with exit or disposal activities initiated after December 31, 2002to be recognised when the costs are incurred, rather than at a date of commitmentto an exit or disposal plan.  SFAS 146also establishes that the liability should initially be measured and recordedat the fair value. The pronouncement will impact the timing of recognition andthe initial measurement of liabilities for future costs associated with exit ordisposal activities. The adoption of SFAS 146 did not have a material impact onthe CSR group financial position or results of operations during the fourthquarter of the year ended March 31, 2003 as there were no significant one-timeseverance actions or other exit costs initiated after December 31, 2002 (as thedemerger of Rinker Group Limited was initiated on November 19, 2002).

 

During the year ended March31, 2003, CSR group adopted FASB Interpretation (“FIN”) No. 45, “Guarantor’sAccounting and Disclosure Requirements for Guarantees, Including IndirectGuarantees of Indebtedness of Others” (“FIN 45”). FIN 45 requires that at theinception of a guarantee (issued or modified after December 31, 2002), theguarantor must recognise a liability for the fair value of the obligation itassumes under that guarantee. In addition, FIN 45 requires disclosures aboutthe guarantees that an entity has issued. The adoption of FIN 45 did not have a material impact on the CSR groupfinancial position or results of operations. See “Note 38. Contingent liabilities” for disclosures of guarantees.

 

Effective for the year endedMarch 31, 2003, CSR group adopted SFAS 148, which amends SFAS 123. SFAS 148provides alternative methods of transition for a voluntary change to the fairvalue based method of accounting for stock-based employee compensation.  Additionally, SFAS 148 requires thatdisclosures of the pro forma effect of using the fair value method of accountingfor stock-based employee compensation be displayed more prominently and in atabular format.  See “I. Executive ShareOption Plan” within this Note for the additional disclosures made to complywith SFAS 148.  Rinker currentlyaccounts for stock-based compensation in accordance with APB 25 and does notintend to adopt the provisions of SFAS 123. As such, the adoption of SFAS 148did not have an impact on the CSR group financial position or results ofoperations.

 

Tobe fully adopted in future periods

On August 16, 2001, theFinancial Accounting Standards Board (“FASB”) issued SFAS No. 143, “Accountingfor Asset Retirement Obligations” (“SFAS 143”) which is effective for financialstatements issued for fiscal years beginning after June 15, 2002 (fiscal year2004 for the CSR group). The pronouncement addresses the recognition andre-measurement of obligations associated with the retirement of a tangiblelong-lived asset. Management is currently reviewing SFAS 143 and has not yetdetermined its likely impact on the CSR group financial position or results ofoperations.

 

On April 30, 2002, the FASBissued SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendmentof FASB Statement No. 13, and Technical Corrections” (“SFAS 145”). Thepronouncement rescinds SFAS No. 4, “Reporting Gains and Losses fromExtinguishment of Debt” (“SFAS 4”) and an amendment to that statement, SFAS No.64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements” (“SFAS64”) so that all gains and losses from the extinguishment of debt are aggregatedand will now be classified as extraordinary only if they meet the criteria setforth in APB Opinion No. 30, “Reporting the Results of Operations - Reportingthe Effects of Disposal of a Segment of a Business, and Extraordinary, Unusualand Infrequently Occurring Events and Transactions”; rescinds SFAS No. 44,“Accounting for Intangible Assets of Motor Carriers”; and amends SFAS No. 13,“Accounting for Leases” to require that certain lease modifications that haveeconomic effects similar to sale-leaseback transactions be accounted for in thesame manner. The provisions relating to the rescission of SFAS 4 and SFAS 64are effective for fiscal years beginning after May 15, 2002 (fiscal year 2004for the CSR group).****The provisionsrelating to the amendment of SFAS 13 are effective for transactions occurringafter May 15, 2002. All other provisions of SFAS 145 are effective forfinancial statements issued on or after May 15, 2002. SFAS 145 will not have amaterial impact on the CSR group financial position or results of operations.

 

On January 17, 2003, the FASBissued FIN No. 46, “Consolidation of Variable Interest Entities - aninterpretation of ARB No. 51” (“FIN 46”). The interpretation addresses consolidation by business enterprises ofVariable Interest Entities (“VIEs”) that either: (1) do not have sufficientequity investment at risk to permit the entity to finance its activitieswithout additional subordinated financial support, or (2) the equity investorslack an essential characteristic of a controlling financial interest. FIN 46requires disclosure of VIEs in financial statements issued after January 31,2003, if it is reasonably possible that as of the transition date: (1) theenterprise will be the primary beneficiary of an existing VIE that will requireconsolidation or, (2) the enterprise will hold a significant variable interestin, or have significant involvement with, an existing VIE. Pursuant to thetransitional requirements of FIN 46, CSR group will adopt the consolidationguidance applicable to any existing VIEs on April 1, 2004. Any VIEs createdafter January 31, 2003 are immediately subject to the consolidation guidance inFIN 46. Management is currently reviewing FIN 46 and has not yet determined theimpact of the adoption of FIN 46.

 

On April 30, 2003, the FASBissued SFAS No. 149, “Amendment of SFAS No. 133 on Derivative Instruments andHedging Activities” (“SFAS 149”). The pronouncement amends and clarifiesaccounting for derivative instruments, including certain derivative instrumentsembedded in other contracts, and for hedging activities under SFAS No. 133,“Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”).

 

F-59

----

 

SFAS 149 is effective for contracts enteredinto or modified after June 30, 2003, with certain exceptions, and for hedgingrelationships designated after June 30, 2003. Management is currently reviewingSFAS 149 has not yet determined the impact of the adoption of SFAS 149 on theCSR group financial position or results of operations.

 

On May 15, 2003, the FASB issued SFAS No.150, “Accounting for Certain Financial Instruments with

Characteristics of both Liabilities andEquity” (“SFAS 150”).  The pronouncementmodifies the accounting for certain financial instruments that, under previousguidance, issuers could account for as equity and requires that thoseinstruments be classified as liabilities in statements of financial position.SFAS 150 is effective for financial instruments issued or modified after May31, 2003. Management is currently reviewing SFAS 150 and has not yet determinedthe impact of the adoption of SFAS 150 on the CSR group financial position orresults of operations.

** **

**L.Amortisation of goodwill**. Goodwill is subject to amortisation under AustralianGAAP as described in Significant accounting policies. Under US GAAP, goodwillacquired in business combinations is not amortised in accordance with SFAS 142.Rather, goodwill is reviewed for impairment on an annual basis and on aninterim basis when impairment factors indicate. Goodwill acquired on or priorto June 30, 2001 was amortised under US GAAP until the CSR group adopted SFAS142 on April 1, 2002. This adjustment reverses the amortisation of goodwill.

 

Under the transitional guidance of SFAS 142,the CSR group was required to perform two steps - step one to test for apotential impairment of goodwill and, if potential losses were identified, steptwo to measure the impairment loss. The CSR group completed step one during thefirst half of fiscal year 2003 and determined that there were no suchimpairments. Accordingly, the performance of step two was not required.  Amortisation expense under US GAAP for theyears ended March 31, 2003, 2002 and 2001 totaled A$10.1 million, A$95.5million and A$79.0 million respectively. For each of the next five years,estimated amortisation expense relating to identified intangibles is expectedto be A$1.1 million per year.

 

Movements in goodwill during the financialyear ended March 31, 2003 and 2002 relate to acquisitions in Rinker MaterialsCorporation (as per note 35), foreign currency and amortisation (as per note6). There were no re-allocations of goodwill between US GAAP reportablesegments and no goodwill impairments during the years ended March 31, 2003 or2002.  Goodwill and intangible assetswith finite lives as of March 31, 2003 and 2002 are summarised in the followingtable which is prepared on a US GAAP basis. There are no intangible assets withindefinite lives.

 
|                                 |   | **A$ million**              |   |
|--------------------------------------|--------|-----------------------------|--------|
|                                 |   | **Gross  carrying  amount** |   | **Accumulated  amortisation** |   |
| 2003                                 |   |                        |   |   |   |   |
| Goodwill                             |   | 28.7                        |   | (18.2 | ) |
|                                 |   |                        |   |   |   |
| Intangible assets with finite lives: |   |                        |   |   |   |
| Trademarks & tradenames          |   | 26.2                        |   | (9.5 | ) |
| Total                                |   | 26.2                        |   | (9.5 | ) |
|                                 |   |                        |   |   |   |
| 2002                                 |   |                        |   |   |   |   |
| Goodwill                             |   | 1,559.5                     |   | (426.5 | ) |
|                                 |   |                        |   |   |   |
| Intangible assets with finite lives: |   |                        |   |   |   |
| Trademarks & tradenames          |   | 52.5                        |   | (17.9 | ) |
| Patents, copyrights                  |   | 1.8                         |   | (1.4 | ) |
| Other                                |   | 56.9                        |   | (23.1 | ) |
| Total                                |   | 111.2                       |   | (42.4 | ) |

 

As required by SFAS 142, the results for theprevious fiscal years 2002 and 2001 have not been restated. A reconciliation ofpreviously reported US GAAP net profit and earnings per share (“EPS”) to theamounts adjusted for the exclusion of goodwill amortisation net of the relatedincome tax effect is presented below:

 
|                                    |   | **A$ m**         |   |
|-----------------------------------------|--------|------------------|--------|
|                                    |   | **2002**         |   | **2001** |   |
| Reported US GAAP net profit             |   | 530.2            |   | 673.3 |   |
| Add: Goodwill amortisation (net of tax) |   | 75.2             |   | 62.8 |   |
| Adjusted US GAAP net profit             |   | 605.4            |   | 736.1 |   |
|                                    |   |             |   |   |   |
|                                    |   | **A$ per share** |   |
| Reported basic EPS                      |   | 0.56             |   | 0.67 |   |
| Add: Goodwill amortisation (net of tax) |   | 0.08             |   | 0.06 |   |
| Adjusted basic EPS                      |   | 0.64             |   | 0.73 |   |
|                                    |   |             |   |   |   |
| Reported diluted EPS                    |   | 0.56             |   | 0.67 |   |
| Add: Goodwill amortisation (net of tax) |   | 0.08             |   | 0.06 |   |
| Adjusted diluted EPS                    |   | 0.64             |   | 0.73 |   |

 

F-60

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**M.Unrecognised real estate profit.**  Under Australian GAAP profits on deferred settlement real estatesales are able to be recognised if the eventual receipt of payment is likely.Under US GAAP the profit is only recognised under SFAS No. 66 “Accounting forSales of Real Estate” (“SFAS 66”) when specific criteria are met. Thisadjustment represents the reversal of real estate sales recognised underAustralian GAAP which have not satisfied the SFAS 66 criteria.

** **

**N. Asbestosproduct liability provision.**

** **

**Measurementof provision**

 

Under AASB 1044 a provision must berecognised when (a) it is probable that a future sacrifice of economic benefitswill be required; and (b) the amount of the provision can be measuredreliably.  The term “probable” isdefined as “more likely than not,” which generally denotes any statisticalchance greater than 50 percent.

 

Under AASB 1044 the asbestos productliability provision is calculated as the net present value of anticipatedcompensation payments and legal costs arising from asbestos product liabilityclaims projected until the 2050s (when the potentially exposed population is nolonger living), as determined by an independent actuary and projections expert.See note 21.

 

Consistent with Australian GAAP, a provisionmust also be recognized under SFAS No. 5, “Accounting for Contingencies” (“SFAS 5”) when it is probable that a liability has been incurred and theamount of the loss can be reasonably estimated. However, the term “probable”under US GAAP differs from the Australian GAAP interpretation of a greater than50 percent chance of occurring. If expressed as a statistical assessment, theterm “probable” as used in US GAAP generally denotes a 70 percent to 90 percentchance of occurring.

 

In computing the asbestos product liabilityprovision of the CSR group under SFAS 5, CSR considered actuarial andprojection methodologies and industry practice. Although the actuary andprojections expert provided estimates of projected future cash flows until the2050s, based on the experts’ advice forecasts for shorter periods of time (suchas 10 to 15 years) are more accurate than estimates for longer periods, andthat any forecast beyond this period is subject to greater uncertainties, CSRadopted the upper end of the range, being a 15 year period, as a reasonabletime period for projecting the cost of future asbestos-related claims againstCSR group companies in Australia and the United States under SFAS 5.

 

CSR believes that the discounting of the SFAS5 asbestos product liability provision is not appropriate under US GAAP as thetiming of the settlement payments is not reliably determinable based on theguidance in Emerging Issues Task Force Issue No. 93-5, “Accounting forEnvironmental Liabilities.”

 

Based on the above, CSR concluded that it isprobable that the undiscounted cost of its asbestos-related pending and futureclaims and legal costs against CSR group companies in Australia and the UnitedStates, determined in accordance with SFAS 5, was approximately A$326.2 millionas of March 31, 2003 (A$151.7 million as of March 31, 2002, based on aprojection of cash flows for 12 years in Australia and three years in theUnited States – see Increase in provision – year ended March 31, 2003).  Such provision is not materially differentfrom the Australian GAAP asbestos product liability provision of A$332.3million as of the same date (A$133.6 million as of March 31, 2002), andtherefore, no adjustment has been recognised for this difference in accounting.

** **

**Increase inprovision – year ended March 31, 2003**

 

On April 1, 2002, CSR increased its asbestosproduct liability provision by A$205.2 million. As discussed in note 21, theincrease in the provision under Australian GAAP was recorded as an adjustmentto retained earnings as of April 1, 2002, as required by AASB 1044.

 

Under US GAAP the increase in the asbestosproduct liability provision is attributable to a change in estimate in theprojected asbestos claims. In prior years, CSR only provided for 12 years ofprobable settlement and legal costs for pending and reasonably anticipatedfuture asbestos claims in Australia and three years of probable settlement andlegal costs for pending and reasonably anticipated future asbestos claims inthe United States. As part of CSR’s ongoing estimation process, during the yearended March 31, 2003 CSR reviewed its asbestos product liability inconsultation with independent experts and gave consideration to the nature ofpending claims, recent settlement activity and the completion of a detailedreview of the claims database. As a result, CSR now considers it appropriate toadopt a 15 year period as a reasonable time period for projecting the cost offuture United States and Australian asbestos-related claims and legal costsagainst CSR group companies for US GAAP purposes as of March 31, 2003 (seeMeasurement of provision above). This change in estimate is accounted for incurrent year US GAAP net profit in accordance with APB Opinion No. 20,“Accounting Changes.”  The effect on USGAAP net profit after tax, basic earnings per share and diluted earnings pershare for the year ended March 31, 2003 is A$(143.7) million, A$(0.15) andA$(0.15), respectively.

 

F-61

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**O. Earnings per share.** The CSR group adopted revised Australian Accounting Standard AASB1027 “Earnings per share” (“AASB 1027”) on April 1, 2002. There is now nodifference for the CSR group in earnings per share calculations underAustralian and US GAAP. Prior to adoption of revised AASB 1027, Australian GAAPdiluted earnings per share were calculated by adjusting income for the nominalearnings if all the options were converted to shares and by adjusting thenumber of shares for the conversion. Under US GAAP diluted earnings per shareare adjusted after deducting the number of shares that could be purchased (ataverage share price for the year) from the proceeds if all the options wereconverted as follows;

 
| **2003**                           |   |          |   |
|------------------------------------|--------|---------------|--------|
| Weighted number of shares          |   | 937,706,109   |   |
| Conversion options                 |   | 8,745,834     |   |
| Redemption of shares from proceeds |   | (6,637,443    | )      |
| Diluted number of shares           |   | 939,814,500   |   |
| **2002**                           |   |          |   |
| Weighted number of shares          |   | 944,837,585   |   |
| Conversion options                 |   | 13,459,793    |   |
| Redemption of shares from proceeds |   | (7,498,421    | )      |
| Diluted number of shares           |   | 950,798,957   |   |
| **2001**                           |   |          |   |
| Weighted number of shares          |   | 1,003,324,299 |   |
| Conversion options                 |   | 15,469,034    |   |
| Redemption of shares from proceeds |   | (14,066,713   | )      |
| Diluted number of shares           |   | 1,004,726,620 |   |

 

**P. Employee entitlements.**  Employee entitlement provisions include a liability for long serviceleave. The assumptions used to calculate this liability are consistent withthose used under SFAS 87 “Employers’ Accounting for Pensions” for US GAAP.

** **

**Q. Adoption of SAB 101. **Adoption of Staff Accounting Bulletin 101 “Revenue Recognition inFinancial Statements” in 2001 has had no impact on the CSR group’s revenuerecognition policy.

** **

**R. Consolidated statement of financial position -classification differences.** Under Australian GAAP, advances and loans made to associatedentities are classified as receivables. Under US GAAP, such advances and loansmade to associated entities are classified in the “investments accounted forusing the equity method” account.

** **

**S. Superannuation (pension) fund.**  In accounting for defined benefitsuperannuation funds, Australian GAAP requires the recognition of an expense tothe CSR group only when contributions are paid or payable to the superannuationfunds. Under US GAAP, the amount charged to the income statement in eachaccounting period is the net retirement benefit expense (net periodic pensionincome) which comprises actual service cost of the plan to the CSR group andthe interest cost of the projected benefit obligations of the fund, less theactual return achieved by the assets invested in the plan and net amortisationand deferral of costs.

 

Commencing April 1, 2001 theHarwood Superannuation Fund (formerly CSR Australian superannuation fund)changed the way gains and losses are recognised for US GAAP purposes. Theamount of gains and losses recognised exceeds the minimum amount required to berecognised under SFAS 87 and no corridor has been used in determining theamount recognised. The accumulated experience gains and losses are amortisedover the expected future working lifetime of active defined benefit divisionmembers.

 

For 1998 to September 2001,the CSR group’s annual contribution to the Accumulation Division of the HarwoodSuperannuation Fund (essentially a defined contribution plan) was funded by atransfer from the surplus of the Defined Benefit Division, resulting in noexpense recognition by the CSR group. Under US GAAP, this is accounted for asan asset reversion to the CSR group and subsequent expense.

 

If the accumulated benefitobligation exceeds the fair value of plan assets, the CSR group must recognisea liability (including unfunded accrued pension cost) that is at least equal tothe unfunded accumulated benefit obligation. Recognition of an additionalminimum liability is required if an unfunded accumulated benefit obligationexists and (a) an asset has been recognised as prepaid pension cost, (b) theliability already recognised as unfunded accrued pension cost is less than theunfunded accumulated benefit obligation, or (c) no accrued or prepaid pensioncost has been recognised.

 

Under US GAAP if anadditional minimum pension liability is recognised, an equal amount shall berecognised as an intangible asset, provided that the asset recognised shall notexceed the amount of unrecognised prior service cost. If an additional minimumpension liability required to be recognised exceeds unrecognised prior servicecost, the excess (which represents a net loss not yet recognised as netperiodic pension cost) shall be reported as a separate component of equity. Nosuch adjustment is required for Australian GAAP. The net impact in fiscal year2003 was a reduction in US GAAP shareholders’ equity of A$57.9 million (fiscalyear 2002 A$7.4 million).

 

In making the calculationsin the following table, the rates below (weighted by total fund assets) havebeen used : discount 6.2% (2002: 6.1%, 2001: 6.7%), compensation increase 4.5%(2002: 4.8%, 2001: 4.8%) and return on assets 7.2% (2002: 7.3%, 2001: 7.7%).

 

Total expenses relating todefined benefit and defined contribution plans is disclosed in the statement offinancial performance footnotes.

 

F-62

----

** **

 
|                                                                      |   | **2003  US$** |       | **2003  A$** |   | **2002  A$** |   | **2001  A$** |   |
|---------------------------------------------------------------------------|--------|---------------|------------|--------------|--------|--------------|--------|--------------|--------|
| **(million)**                                                             |   |          |       |         |   |
|                                                                      |   |          |       |         |   |         |   |         |   |
| **Change in benefit obligation**                                          |   |          |       |         |   |         |   |         |   |
| Benefit obligation at the beginning of the financial year                 |   | **162.4**     | ** ** | **268.7**    |   | 269.0        |   | 224.0        |   |
| Service cost (excluding expenses)                                         |   | **5.7**       | ** ** | **9.4**      |   | 7.6          |   | 8.0          |   |
| Interest cost                                                             |   | **10.6**      | ** ** | **17.6**     |   | 16.2         |   | 16.3         |   |
| Employee contributions                                                    |   | **0.4**       | ** ** | **0.6**      |   | 0.6          |   | 0.6          |   |
| Amendments                                                                |   | **0.4**       | ** ** | **0.6**      |   | (0.1         | )      | 0.2          |   |
| Actuarial loss                                                            |   | **11.9**      | ** ** | **19.7**     |   | 2.0          |   | 30.1         |   |
| Acquisition                                                               |   | **8.4**       | ** ** | **13.9**     |   | —       |   | —       |   |
| Demerger                                                                  |   | **(51.6**     | **)**      | **(85.3**    | **)**  | —       |   | —       |   |
| Settlement                                                                |   | **(4.1**      | **)**      | **(6.8**     | **)**  | —       |   | —       |   |
| Benefits paid                                                             |   | **(10.5**     | **)**      | **(17.3**    | **)**  | (21.8        | )      | (21.9        | )      |
| Foreign exchange adjustment                                               |   | **(4.7**      | **)**      | **(7.8**     | **)**  | (4.8         | )      | 11.7         |   |
| **Benefit obligation at the end of the financial year**                   |   | **128.9**     | ** ** | **213.3**    |   | 268.7        |   | 269.0        |   |
|                                                                      |   |          |       |         |   |         |   |         |   |
| **Change in plan assets**                                                 |   |          |       |         |   |         |   |         |   |
| Fair value of plan assets at the beginning of the financial year          |   | **156.9**     | ** ** | **259.6**    |   | 278.3        |   | 308.2        |   |
| Actual return on plan assets                                              |   | **(21.1**     | **)**      | **(34.9**    | **)**  | 9.0          |   | (8.3         | )      |
| Acquisition                                                               |   | **8.0**       | ** ** | **13.2**     |   | —       |   | —       |   |
| Employer contribution                                                     |   | **22.9**      | ** ** | **37.9**     |   | 4.0          |   | 3.1          |   |
| Employee contributions                                                    |   | **0.4**       | ** ** | **0.6**      |   | 0.6          |   | 0.6          |   |
| Transfer to accumulation division                                         |   | **—**    | ** ** | **—**   |   | (6.8         | )      | (12.8        | )      |
| Demerger                                                                  |   | **(28.5**     | **)**      | **(47.1**    | **)**  | —       |   | —       |   |
| Settlement                                                                |   | **(4.2**      | **)**      | **(6.9**     | **)**  | —       |   | —       |   |
| Benefits paid and expenses incurred                                       |   | **(10.5**     | **)**      | **(17.3**    | **)**  | (21.8        | )      | (22.7        | )      |
| Foreign exchange adjustment                                               |   | **(3.0**      | **)**      | **(4.9**     | **)**  | (3.7         | )      | 10.2         |   |
| **Fair value of plan assets at the end of the  financial year**           |   | **120.9**     | ** ** | **200.2**    |   | 259.6        |   | 278.3        |   |
| Total funded status                                                       |   | **(8.0**      | **)**      | **(13.1**    | **)**  | (9.1         | )      | 9.3          |   |
| Rinker Materials Corporation superannuation funds                         |   | **—**    | ** ** | **—**   |   | (24.6        | )      | (14.4        | )      |
| Monier PGH and Harwood Superannuation Fund                                |   | **(8.0**      | **)**      | **(13.1**    | **)**  | 15.5         |   | 23.7         |   |
| Transitional assets                                                       |   | **(23.0**     | **)**      | **(38.0**    | **)**  | (58.6        | )      | (78.3        | )      |
| Unrecognised net actuarial loss                                           |   | **67.0**      | ** ** | **110.9**    |   | 89.4         |   | 94.7         |   |
| Unrecognised prior service cost                                           |   | **—**    | ** ** | **—**   |   | 3.6          |   | 7.1          |   |
| Intangible asset                                                          |   | **—**    | ** ** | **—**   |   | (2.5         | )      | (3.1         | )      |
|                                                                      |   |          |       |         |   |         |   |         |   |
| Accumulated other comprehensive income(a)                                 |   | **(35.0**     | **)**      | **(57.9**    | **)**  | (7.4         | )      | (3.2         | )      |
| **Total net prepaid benefit cost**                                        |   | **1.0**       | ** ** | **1.9**      |   | 15.4         |   | 26.5         |   |
| Rinker Materials Corporation superannuation funds - accrued benefit  cost |   | **—**    | ** ** | **—**   |   | (17.2        | )      | (13.0        | )      |
| Monier PGH and Harwood Superannuation Fund - prepaid benefit cost         |   | **1.0**       | ** ** | **1.9**      |   | 32.6         |   | 39.5         |   |
| **Components of net periodic benefit cost**                               |   |          |       |         |   |         |   |         |   |
| Service cost (including expenses)                                         |   | **6.3**       | ** ** | **10.5**     |   | 8.6          |   | 9.1          |   |
| Interest cost                                                             |   | **10.6**      | ** ** | **17.6**     |   | 16.2         |   | 16.3         |   |
| Expected return on plan assets                                            |   | **(12.9**     | **)**      | **(21.4**    | **)**  | (20.1        | )      | (23.9        | )      |
| Amortisation of transitional assets                                       |   | **(11.8**     | **)**      | **(19.6**    | **)**  | (19.6        | )      | (19.6        | )      |
| Amortisation of prior service cost                                        |   | **0.8**       | ** ** | **1.4**      |   | 3.1          |   | 3.1          |   |
| Settlement loss                                                           |   | **2.5**       | ** ** | **4.2**      |   | —       |   | —       |   |
| Recognised net actuarial loss                                             |   | **8.7**       | ** ** | **14.4**     |   | 16.9         |   | 0.3          |   |
| Net periodic pension expense (income)                                     |   | **4.2**       | ** ** | **7.1**      |   | 5.1          |   | (14.7        | )      |

 

----

(a) Relates only to Harwood SuperannuationFund as Rinker group superannuation funds were demerged on March 28, 2003.

 

F-63

----

 

**T.Derivatives and hedging.** Australian GAAP treatment of derivatives and hedging is disclosed in significantaccounting policies. Effective April 1, 2001, the CSR group adopted SFAS 133.The standard requires an entity to recognise derivatives as assets or 

liabilities in the statement of financialposition and measure them at fair value. The transition adjustment on April 1,2001 resulted in a net charge after tax of A$104.1 million which was recordedin Other Comprehensive Income (“OCI”). Derivatives and hedging activities aremanaged as part of a formally documented risk management process outlined inthe CSR group’s Financial and Commodity Price Risk Management Policy and indetailed Operational Guidelines. The risk management process detailed in theguidelines specifies what is an exposure, when it is recognised, the objectivesof the risk management process, the need for a risk management plan, theapproved hedging instruments and detailed reporting requirements. The CSRgroup’s hedging activities are under the direct control and review of the CSRgroup’s Finance Committee consisting of the Deputy Managing Director, the ChiefFinancial Officer, General Manager of Corporate Strategy and the Treasurer. Thegeneral objective of the CSR group’s risk management activities is to reducethe potential variability in financial returns thus contributing to morecertainty and stability in profit outcomes.

 

Hedge effectiveness.  The CSR group measures hedge effectivenessthrough quarterly review of the retrospective and prospective relationshipbetween changes in the value of a hedge and its underlying transaction. Themethods used to assess effectiveness are the shortcut method based on criteriaas stated in SFAS 133, matched terms method, dollar offset method andregression analysis. To the extent that option contracts are used as hedges,the intrinsic value of the option will be effective if all terms of thecontract are matched with the underlying transaction. The time value of options(amounts excluded from the measurement of effectiveness) and any otherineffectiveness is reported through earnings in the current period.

 

For the year ended March 31, 2003, theearnings effect after tax of ineffectiveness was A$nil (2002: loss of A$0.1million), and of items excluded from the measurement of effectiveness was aloss of A$0.1 million (2002: A$nil).

 

Fair value hedges.  Under SFAS 133, a fair value hedge mitigatesexposure to changes in the fair value of an asset, liability or firmcommitment. A fair value hedge protects against changes in value caused byvariability in prices, costs or rates. The hedged item and the hedginginstrument are marked-to-market in the statement of financial position. Theresulting gains/losses on the effective portion of both the hedged item and thehedging instrument are recognised currently in earnings and will offset eachother. Any movements in ineffectiveness are recorded in earnings in the currentperiod. Hedged items include fixed rate debt and firm commitments for capitalexpenditure.

 

Cash flow hedges.  Under SFAS 133, a cash flow hedge mitigatesexposure to variable cash flows of a forecasted transaction, asset orliability. A cash flow hedge protects against the risk caused by variableprices, costs or rates. The hedging instrument is marked-to-market in thestatement of financial position.

 

The resulting gains/losses on the effectiveportion of a hedging instrument are recorded in OCI. Gains/losses on theineffective portion of a hedging instrument are recognised currently inearnings. Amounts in OCI are reclassified to earnings when the hedged item issettled and/or otherwise recognized in earnings. Variable cash flows includevariable rate debt and forecasted purchases and sales.

 

Net investment hedges.  Under SFAS 133, a net investment hedgemitigates foreign currency exposure of a net investment in a foreign operation.The accounting treatment of net investment hedges under US GAAP is consistentwith Australian GAAP.

 

Other Derivatives.  Any other derivative transaction that cannotmeet the designation requirement as a fair value, cash flow or net investmenthedge, will be marked-to-market in earnings in the current period.

 

Other information.  The maximum time that the CSR group hedgesanticipated transactions is four years in relation to aluminium commodity pricehedges and the associated foreign exchange hedges.

 

The following table provides a reconciliationof OCI after tax for the years ended March 31, 2003 and 2002.

 
| **$****A million**                   |   | **2003** |   | **2002** |   |
|--------------------------------------|--------|----------|--------|----------|--------|
| Opening balance as at April 1        |   | 8.5      |   | 104.1    |   |
| Net loss reclassified to earnings    |   | 8.1      |   | (58.9    | )      |
| Changes in fair value of derivatives |   | (75.3    | )      | (36.7    | )      |
| Demerger of Rinker group             |   | (10.9    | )      | —   |   |
| Closing balance March 31             |   | (69.6    | )      | 8.5      |   |

 

Based on SFAS 133 revaluations as at March31, 2003, CSR is expected to recognise a gain after tax through earnings ofA$38.6 million on expiring hedging contracts in the next 12 months.

 

**U. Fairvalue adjustment for Rinker Group Limited demerger.** Included insignificant items in the fiscal year 2003 is a A$1,429.7 million net gainattributable to the demerger of Rinker Group Limited at fair value. This gainis required to be recognised under Australian GAAP.  Under US GAAP, the demerger of Rinker Group Limited is accountedfor at book value, and accordingly, no gain recognised.  As such, the net gain on demerger (excludingdemerger transaction costs and related income tax benefit) has been reversedfor US GAAP purposes.

 

**V.Unrecognised insurance debtors.**  Under Australian GAAP recognition of the insurance recovery isappropriate when management considers it is both probable and measurable. UnderUS GAAP, recognition of insurance proceeds are appropriate only when a companyeither receives proceeds or an irrevocable confirmation from the insurer ofcoverage of the related amount. These conditions have not been met thereforethe insurance debtors are reversed for US GAAP.

 

**W. Deferredlitigation costs.**  Under USGAAP Statement of Position No. 96-1 “Environmental Remediation Liabilities”paragraph 126, litigation costs involved with potential refunds cannot bedeferred until realisation of the claim for recovery is considered probable andan asset relating to the recovery is recognised. This adjustment expenseslitigation costs that have been deferred under Australian GAAP as the US GAAPcriteria for recognition has not been met.

 

F-64

----

 

**40  Consolidating financial information**

** **

**Rinker Materials Corporation and its controlled entities**

 

CSR Finance Limited, a 100%owned subsidiary of CSR Limited, is able to offer and sell certain securitiesfrom time to time pursuant to a registration statement on Form F-3 filed withthe U.S. Securities and Exchange Commission. CSR Limited will fully andunconditionally guarantee all securities issued by CSR Finance Limited pursuantto that registration statement.

 

No separate financial informationhas been provided for CSR Finance Limited. This is because CSR Finance Limitedis a financing subsidiary of CSR Limited and CSR Limited does not believe thatsuch information would be material to investors investing in any securitiesthat may be issued by CSR Finance Limited pursuant to this registrationstatement on Form F-3, all of which will also be fully and unconditionallyguaranteed by CSR Limited. CSR Finance Limited was 100% owned by CSR Limitedduring the periods reported and remains 100% owned subsequent to year end.

 

CSR Finance Limited is acorporation duly incorporated and in good standing in the Commonwealth ofAustralia, and is entitled to declare dividends and make loans to the extentlegally permissible in the Commonwealth of Australia. In the event that CSRFinance Limited fails to pay the holders of the securities being offered andsold pursuant to a registration statement on Form F-3 directly, therebyrequiring CSR Limited to make payment pursuant to the terms of its full and unconditionalguarantee of those securities, there is no impediment to CSR Limited obtainingreimbursement for any such payments through dividends or loans from CSR FinanceLimited to the full extent that such dividends or loans are permitted underapplicable law.

 

Rinker Materials Corporationwas a 100% owned subsidiary of CSR Limited prior to demerger from the CSR Groupon March 28, 2003. As part of the financial restructuring to accommodate thedemerger, certain outstanding US$ bonds were restructured. In particular, theindenture governing the US$250 million bonds due on July 21, 2005 payinginterest of 6.875% per annum issued by Rinker Materials Corporation andguaranteed by CSR Limited was amended to add Rinker Group Limited as guarantorof Rinker Materials Corporation’s obligations under that indenture on the sameterms and conditions as the existing guarantee from CSR Limited. Rinker GroupLimited and Rinker Materials Corporation agreed to indemnify CSR Limited forany obligations that come due under the guarantee of CSR Limited in respect ofthese bonds. To support its indemnity, Rinker Materials Corporation hasprocured, under its US$1,077.5 million credit facilities, bank letters ofcredit for the benefit of CSR Limited, for any obligations that come due underCSR Limited’s guarantee obligations in respect of these bonds.

 

CSR Limited is providing inits consolidated financial statements included in this annual report on Form20-F certain financial information regarding Rinker Materials Corporation. CSR Limitedunderstands that Rinker Group Limited will also be providing in itsconsolidated financial statements to be included in its registration statementon Form 20-F certain financial information regarding Rinker MaterialsCorporation. In light of this financial information provided by CSR Limited andRinker Group Limited and because the bonds issued by Rinker MaterialsCorporation and due on July 21, 2005 are fully and unconditionally guaranteedby CSR Limited and Rinker Group Limited, as well as the fact that bank lettersof credit have been obtained for the benefit of CSR Limited to support theindemnity of Rinker Materials Corporation and Rinker Group Limited to CSRLimited for any obligations that come due under CSR Limited’s guaranteeobligations in respect of these bonds, CSR Limited does not believe thatseparate, more formal financial statements of Rinker Materials Corporationwould be material to investors investing in these bonds.

 
| **Year ended  March 31, 2003(a)**                                                                                          |   | **A$ million**   |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
|                                                                                                                       |   | **CSR  Limited** |   | **Rinker Materials  Corporation and its  controlled entities** |   | **Non-  guarantor  subsidiaries** |   | **Consolidation  adjustments** |   | **CSR  Consolidated** |   |
|                                                                                                                       |   |             |   |   |   |   |
| **Statement  of financial performance**                                                                                    |   |             |   |   |   |   |
| Trading revenue - sale of goods                                                                                            |   | 1,632.8          |   | 4,217.6 |   | 1,481.3 |   | (48.8 | ) | 7,282.9 |   |
| Cost of sales                                                                                                              |   | (1,041.4         | )      | (2,424.2 | ) | (1,157.8 | ) | 29.3 |   | (4,594.1 | ) |
| Warehouse and distribution costs                                                                                           |   | (151.5           | )      | (812.6 | ) | (98.9 | ) | **—** |   | (1,063.0 | ) |
| Selling costs                                                                                                              |   | (110.7           | )      | (77.7 | ) | (29.2 | ) | **—** |   | (217.6 | ) |
| Administration and other operating costs                                                                                   |   | (180.7           | )      | (341.0 | ) | (13.0 | ) | **—** |   | (534.7 | ) |
| Equity accounted result of subsidiaries (less dividends received)                                                          |   | (954.3           | )      |   | ** ** |   | ** ** | 954.3 | ** ** |   | ** ** |
| Share of partnership net (loss) income                                                                                     |   | (1.2             | )      | — |   | 14.4 |   | (13.5 | ) | (0.3 | ) |
| Share of associate entities’ net profit                                                                               |   | 13.4             |   | (0.4 | ) | 24.9 |   | 15.7 |   | 53.6 |   |
| Operating profit                                                                                                           |   | (793.6           | )      | 561.7 |   | 221.7 |   | 937.0 |   | 926.8 |   |
| Other revenue from ordinary activities                                                                                     |   | 5,458.2          |   | 93.5 |   | 934.8 |   | (1,712.7 | ) | 4,773.8 |   |
| Other expenses from ordinary activities                                                                                    |   | (3,307.1         | )      | (76.2 | ) | (1,379.1 | ) | 1,508.3 |   | (3,254.1 | ) |
| Dividend income from controlled entities                                                                                   |   | 678.5            |   | — |   | 111.4 |   | (789.9 | ) |   | ** ** |
| Dividend income from others                                                                                                |   | 2.0              |   | 0.2 |   | 0.1 |   | — |   | 2.3 |   |
| Profit from ordinary activities before finance and income tax                                                              |   | 2,038.0          |   | 579.2 |   | (111.1 | ) | (57.3 | ) | 2,448.8 |   |
| Interest income                                                                                                            |   | 49.2             |   | 0.3 |   | 46.4 |   | (87.0 | ) | 8.9 |   |
| Borrowing income (costs)                                                                                                   |   | 14.9             |   | (103.7 | ) | (84.4 | ) | 59.0 |   | (114.2 | ) |
| **Profit from ordinary activities before income tax**                                                                      |   | 2,102.1          |   | 475.8 |   | (149.1 | ) | (85.3 | ) | 2,343.5 |   |
| Income tax (expense) benefit relating to ordinary activities                                                               |   | (48.6            | )      | (188.0 | ) | (32.4 | ) | 2.7 |   | (266.3 | ) |
| **Net profit before outside equity interests**                                                                             |   | 2,053.5          |   | 287.8 |   | (181.5 | ) | (82.6 | ) | 2,077.2 |   |
| Net profit attributable to outside equity interests                                                                        |   |             |   | 2.3 |   | 21.4 |   | — | ** ** | 23.7 | ** ** |
| **Net profit attributable to members of CSR Limited**                                                                      |   | 2,053.5          |   | 285.5 |   | (202.9 | ) | (82.6 | ) | 2,053.5 |   |
| Adjustment to opening retained profits on adoption of AASB 1044 -  asbestos                                                |   | (143.7           | )      | — |   | — |   | (143.7 | ) |   | ** ** |
| (Decrease)/increase in foreign currency translation reserve arising  on translation of self-sustaining foreign operations  |   | —           |   | (235.1 | ) | (15.8 | ) | 38.1 |   | (212.8 | ) |
| **Total revenue, expense and valuation adjustments  attributable to members of CSR Limited recognised directly in equity** |   | (143.7           | )      | (235.1 | ) | (15.8 | ) | 38.1 |   | (356.5 | ) |
| **Total changes in equity not resulting from  transactions with owners as owners**                                         |   | 1,909.8          |   | 50.4 |   | (218.7 | ) | (44.5 | ) | 1,697.0 |   |

 

----

(a) The demerger of Rinker Group Limited from CSR Limited occurred on March28, 2003. The entire fiscal year has been presented because the period fromMarch 28, 2003 to March 31, 2003 is de minimis.

 

F-65

----

 
| **Year ended  March 31, 2002**                                                                                             |   | **A$ million**   |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
|                                                                                                                       |   | **CSR  Limited** |   | **Rinker  Materials  Corporation and its  controlled entities** |   | **Non-  guarantor  subsidiaries** |   | **Consolidation  adjustments** |   | **CSR  Consolidated** |   |
|                                                                                                                       |   |             |   |   |   |   |
| **Statement  of financial performance**                                                                                    |   |             |   |   |   |   |
| Trading revenue - sale of goods                                                                                            |   | 1,818.2          |   | 4,115.5 |   | 1,110.2 |   | (59.2 | ) | 6,984.7 |   |
| Cost of sales                                                                                                              |   | (1,273.0         | )      | (2,335.3 | ) | (870.7 | ) | 34.2 |   | (4,444.8 | ) |
| Warehouse and distribution costs                                                                                           |   | (184.3           | )      | (765.5 | ) | (41.3 | ) | — |   | (991.1 | ) |
| Selling costs                                                                                                              |   | (90.9            | )      | (75.0 | ) | (16.5 | ) | — |   | (182.4 | ) |
| Administration and other operating costs                                                                                   |   | (148.4           | )      | (352.6 | ) | (32.2 | ) | 20.7 |   | (512.5 | ) |
| Equity accounted result of subsidiaries (less dividends received)                                                          |   | 86.1             |   |   |   |   | ** ** | (86.1 | ) |   | ** ** |
| Share of partnership net (loss) income                                                                                     |   | (0.3             | )      | — |   | 9.2 |   | (9.2 | ) | (0.3 | ) |
| Share of associate entities’ net profit                                                                               |   | 9.2              |   | — |   | 27.3 |   | 9.2 |   | 45.7 |   |
| Operating profit                                                                                                           |   | 216.6            |   | 587.1 |   | 186.0 |   | (90.4 | ) | 899.3 |   |
| Other revenue from ordinary activities                                                                                     |   | 266.2            |   | 66.3 |   | 594.5 |   | (744.0 | ) | 183.0 |   |
| Other expenses from ordinary activities                                                                                    |   | (183.3           | )      | (56.6 | ) | (760.7 | ) | 841.8 |   | (158.8 | ) |
| Dividend income from controlled entities                                                                                   |   | 210.5            |   | — |   | 187.8 |   | (398.3 | ) |   |   |
| Dividend income from others                                                                                                |   | 1.3              |   | 0.3 |   | 0.7 |   | — |   | 2.3 |   |
| Profit from ordinary activities before finance and income tax                                                              |   | 511.3            |   | 597.1 |   | 208.3 |   | (390.9 | ) | 925.8 |   |
| Interest income                                                                                                            |   | 53.3             |   | 1.0 |   | 31.1 |   | (60.6 | ) | 24.8 |   |
| Borrowing income (costs)                                                                                                   |   | 11.3             |   | (122.1 | ) | (56.8 | ) | 35.5 |   | (132.1 | ) |
| **Profit from ordinary activities before income tax**                                                                      |   | 575.9            |   | 476.0 |   | 182.6 |   | (416.0 | ) | 818.5 |   |
| Income tax (expense) benefit relating to ordinary activities                                                               |   | (23.3            | )      | (185.2 | ) | (49.3 | ) | 14.1 |   | (243.7 | ) |
| **Net profit before outside equity interests**                                                                             |   | 552.6            |   | 290.8 |   | 133.3 |   | (401.9 | ) | 574.8 |   |
| Net profit attributable to outside equity interests                                                                        |   |             |   | 0.7 |   | 21.5 |   | — |   | 22.2 |   |
| **Net profit attributable to members of CSR Limited**                                                                      |   | 552.6            |   | 290.1 |   | 111.8 |   | (401.9 | ) | 552.6 |   |
| Increase/(decrease) in asset revaluation reserve arising on  revaluation of property, plant and equipment                  |   | —           |   | — |   | 5.9 |   | (5.9 | ) | — |   |
| (Decrease)/increase in foreign currency translation reserve arising  on translation of self-sustaining foreign operations  |   | —           |   | (125.2 | ) | 6.0 |   | 14.3 |   | (104.9 | ) |
| **Total revenue, expense and valuation adjustments  attributable to members of CSR Limited recognised directly in equity** |   | —           |   | (125.2 | ) | 11.9 |   | 8.4 |   | (104.9 | ) |
| **Total changes in equity not resulting from  transactions with owners as owners**                                         |   | 552.6            |   | 164.9 |   | 123.7 |   | (393.5 | ) | 447.7 |   |

 

F-66

----

 
| **Year ended  March 31, 2001**                                                                                             |   | **A$ million**   |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
|                                                                                                                       |   | **CSR  Limited** |   | **Rinker  Materials  Corporation and its  controlled entities** |   | **Non-  guarantor  subsidiaries** |   | **Consolidation**

**adjustments** |   | **CSR  Consolidated** |   |
|                                                                                                                       |   |             |   |   |   |   |
| **Statement  of financial performance**                                                                                    |   |             |   |   |   |   |
| Trading revenue - sale of goods                                                                                            |   | 1,808.0          |   | 3,589.5 |   | 1,186.3 |   | (159.8 | ) | 6,424.0 |   |
| Cost of sales                                                                                                              |   | (1,244.7         | )      | (2,105.0 | ) | (885.5 | ) | 138.0 |   | (4,097.2 | ) |
| Warehouse and distribution costs                                                                                           |   | (199.6           | )      | (630.6 | ) | (43.9 | ) | — |   | (874.1 | ) |
| Selling costs                                                                                                              |   | (73.6            | )      | (68.6 | ) | (17.9 | ) | 3.4 |   | (156.7 | ) |
| Administration and other operating costs                                                                                   |   | (166.8           | )      | (296.1 | ) | (25.4 | ) | 22.2 |   | (466.1 | ) |
| Equity accounted result of subsidiaries (less dividends received)                                                          |   | 400.3            |   |   |   |   |   | (400.3 | ) |   |   |
| Share of partnership net (loss) income                                                                                     |   | (1.7             | )      | 0.9 |   | 11.4 |   | (11.4 | ) | (0.8 | ) |
| Share of associate entities’ net profit                                                                               |   | 11.4             |   | — |   | 27.4 |   | 11.4 |   | 50.2 |   |
| Operating profit                                                                                                           |   | 533.3            |   | 490.1 |   | 252.4 |   | (396.5 | ) | 879.3 |   |
| Other revenue from ordinary activities                                                                                     |   | 81.8             |   | 78.2 |   | 967.9 |   | (539.0 | ) | 588.9 |   |
| Other expenses from ordinary activities                                                                                    |   | (158.5           | )      | (75.9 | ) | (637.2 | ) | 381.9 |   | (489.7 | ) |
| Dividend income from controlled entities                                                                                   |   | 302.2            |   | — |   | 580.7 |   | (882.9 | ) |   |   |
| Dividend income from others                                                                                                |   | —           |   | 0.6 |   | 0.8 |   |   |   | 1.4 |   |
| Profit from ordinary activities before finance and income tax                                                              |   | 758.8            |   | 493.0 |   | 1,164.6 |   | (1,436.5 | ) | 979.9 |   |
| Interest income                                                                                                            |   | 109.5            |   | 3.2 |   | 51.1 |   | (140.1 | ) | 23.7 |   |
| Borrowing costs                                                                                                            |   | (271.1           | )      | (134.6 | ) | (127.3 | ) | 377.6 |   | (155.4 | ) |
| **Profit from ordinary activities before income tax**                                                                      |   | 597.2            |   | 361.6 |   | 1,088.4 |   | (1,199.0 | ) | 848.2 |   |
| Income tax benefit (expense) relating to ordinary activities                                                               |   | 36.9             |   | (136.3 | ) | (38.5 | ) | (41.2 | ) | (179.1 | ) |
| **Net profit before outside equity interests**                                                                             |   | 634.1            |   | 225.3 |   | 1,049.9 |   | (1,240.2 | ) | 669.1 |   |
| Net (loss) profit attributable to outside equity interests                                                                 |   |             |   | (0.1 | ) | 33.9 |   | 1.2 |   | 35.0 |   |
| **Net profit attributable to members of CSR Limited**                                                                      |   | 634.1            |   | 225.4 |   | 1,016.0 |   | (1,241.4 | ) | 634.1 |   |
| (Decrease)/increase in asset revaluation reserve arising on  revaluation of property, plant and equipment                  |   | (4.7             | )      | 12.5 |   | (6.2 | ) | (6.1 | ) | (4.5 | ) |
| Increase/(decrease) in foreign currency translation reserve arising  on translation of self-sustaining foreign operations  |   | —           |   | 302.6 |   | 19.3 |   | (80.6 | ) | 241.3 |   |
| **Total revenue, expense and valuation adjustments  attributable to members of CSR Limited recognised directly in equity** |   | (4.7             | )      | 315.1 |   | 13.1 |   | (86.7 | ) | 236.8 |   |
| **Total changes in equity not resulting from  transactions with owners as owners**                                         |   | 629.4            |   | 540.5 |   | 1,029.1 |   | (1,328.1 | ) | 870.9 |   |

 

F-67

----

 
| **Year ended  March 31, 2003**                                                                                                                     |   | **A$ million**   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
|                                                                                                                                               |   | **CSR  Limited** |   | **Rinker  Materials  Corporation and its  controlled entities** |   | **Non-  guarantor  subsidiaries** |   | **Consolidation  adjustments** |   | **CSR  Consolidated** |   |
|                                                                                                                                               |   |             |   |   |   |   |
|                                                                                                                                               |   |             |   |   |   |   |
| **Consolidated statement of financial position**                                                                                                   |   |             |   |   |   |   |   |   |   |   |   |
| The consolidated statement of financial position is not required for  2003 because Rinker Group Limited was spun-off prior to March 31, 2003. |   |             |   |   |   |   |   |   |   |   |   |

 
| **Year ended March 31, 2002**                     |   |    |   |    |   |    |   |      |   |    |   |
|---------------------------------------------------|--------|---------|--------|---------|--------|---------|--------|-----------|--------|---------|--------|
| **Consolidated statement of financial position**  |   |    |   |    |   |    |   |      |   |    |   |
|                                              |   |    |   |    |   |    |   |      |   |    |   |
| **Current assets**                                |   |    |   |    |   |    |   |      |   |    |   |
| Cash                                              |   | 63.2    |   | 7.0     |   | 86.4    |   | —    |   | 156.6   |   |
| Receivables                                       |   | 1,566.4 |   | 531.6   |   | 1,671.7 |   | (2,781.7  | )      | 988.0   |   |
| Inventories                                       |   | 149.1   |   | 320.7   |   | 103.3   |   | (0.6      | )      | 572.5   |   |
| Other current assets                              |   | 12.3    |   | 19.2    |   | 1.0     |   | (7.0      | )      | 25.5    |   |
| **Current assets**                                |   | 1,791.0 |   | 878.5   |   | 1,862.4 |   | (2,789.3  | )      | 1,742.6 |   |
|                                              |   |    |   |    |   |    |   |      |   |    |   |
| **Non-current assets**                            |   |    |   |    |   |    |   |      |   |    |   |
| Receivables                                       |   | 862.0   |   | 7.0     |   | 1,516.4 |   | (2,334.5  | )      | 50.9    |   |
| Inventories                                       |   | 16.9    |   | 90.1    |   | 22.2    |   | —    |   | 129.2   |   |
| Equity accounted investment in subsidiaries       |   | 1,141.8 |   |    |   |    |   | (1,141.8  | )      |    |   |
| Investments accounted for using the equity method |   | 125.5   |   | —  |   | 191.1   |   | —    |   | 316.6   |   |
| Other financial assets                            |   | 1,604.6 |   | 11.5    |   | 2,996.1 |   | (4,572.0  | )      | 40.2    |   |
| Property, plant and equipment                     |   | 941.7   |   | 2,217.3 |   | 982.6   |   | (3.7      | )      | 4,137.9 |   |
| Intangibles                                       |   | 8.7     |   | 1,068.7 |   | 27.9    |   | 6.3       |   | 1,111.6 |   |
| Deferred income tax assets                        |   | 108.3   |   | 94.8    |   | 90.7    |   | (10.8     | )      | 283.0   |   |
| Other non-current assets                          |   | 61.6    |   | 67.2    |   | 15.6    |   | (5.7      | )      | 138.7   |   |
| **Non-current assets**                            |   | 4,871.1 |   | 3,556.6 |   | 5,842.6 |   | (8,062.2  | )      | 6,208.1 |   |
| **Total assets**                                  |   | 6,662.1 |   | 4,435.1 |   | 7,705.0 |   | (10,851.5 | )      | 7,950.7 |   |
|                                              |   |    |   |    |   |    |   |      |   |    |   |
| **Current liabilities**                           |   |    |   |    |   |    |   |      |   |    |   |
| Payables                                          |   | 1,204.6 |   | 686.8   |   | 1,812.7 |   | (2,958.8  | )      | 745.3   |   |
| Interest-bearing liabilities                      |   | 5.3     |   | 5.9     |   | 92.8    |   | —    |   | 104.0   |   |
| Income tax liabilities                            |   | —  |   | 12.0    |   | 16.0    |   | (10.7     | )      | 17.3    |   |
| Provisions                                        |   | 229.4   |   | 75.8    |   | 38.8    |   | 8.6       |   | 352.6   |   |
| **Current liabilities**                           |   | 1,439.3 |   | 780.5   |   | 1,960.3 |   | (2,960.9  | )      | 1,219.2 |   |
|                                              |   |    |   |    |   |    |   |      |   |    |   |
| **Non-current liabilities**                       |   |    |   |    |   |    |   |      |   |    |   |
| Payables                                          |   | 0.4     |   | 41.8    |   | 1.0     |   | —    |   | 43.2    |   |
| Interest-bearing liabilities                      |   | 872.2   |   | 1,497.1 |   | 1,758.7 |   | (2,337.3  | )      | 1,790.7 |   |
| Deferred income tax liabilities                   |   | 115.2   |   | 245.7   |   | 158.2   |   | 0.5       |   | 519.6   |   |
| Provisions                                        |   | 212.2   |   | 57.6    |   | 4.9     |   | (1.1      | )      | 273.6   |   |
| **Non-current liabilities**                       |   | 1,200.0 |   | 1,842.2 |   | 1,922.8 |   | (2,337.9  | )      | 2,627.1 |   |
| **Total liabilities**                             |   | 2,639.3 |   | 2,622.7 |   | 3,883.1 |   | (5,298.8  | )      | 3,846.3 |   |
| **Net assets**                                    |   | 4,022.8 |   | 1,812.4 |   | 3,821.9 |   | (5,552.7  | )      | 4,104.4 |   |
|                                              |   |    |   |    |   |    |   |      |   |    |   |
| **Equity**                                        |   |    |   |    |   |    |   |      |   |    |   |
| Contributed equity                                |   | 2,139.4 |   | 1,177.5 |   | 3,623.4 |   | (4,800.9  | )      | 2,139.4 |   |
| Reserves                                          |   | 101.6   |   | 340.0   |   | 273.0   |   | (433.5    | )      | 281.1   |   |
| Retained profits                                  |   | 1,781.8 |   | 287.6   |   | (157.3  | )      | (309.8    | )      | 1,602.3 |   |
| **Equity attributable to members of CSR Ltd**     |   | 4,022.8 |   | 1,805.1 |   | 3,739.1 |   | (5,544.2  | )      | 4,022.8 |   |
| Outside equity interests in controlled entities   |   |    |   | 7.3     |   | 82.8    |   | (8.5      | )      | 81.6    |   |
| **Total equity**                                  |   | 4,022.8 |   | 1,812.4 |   | 3,821.9 |   | (5,552.7  | )      | 4,104.4 |   |

 

F-68

----

 
|                                                                              |   | **A$ million**   |   |
|-----------------------------------------------------------------------------------|--------|------------------|--------|
|                                                                              |   | **CSR  Limited** |   | **Rinker  Materials  Corporation and its  controlled entities** |   | **Non-  guarantor  subsidiaries** |   | **Consolidation  adjustments** |   | **CSR  Consolidated** |   |
| **Year ended  March 31, 2003(a)**                                                 |   |             |   |   |   |   |
| **Statement  of cash flows**                                                      |   |             |   |   |   |   |
|                                                                              |   |             |   |   |   |   |   |   |   |   |   |
| **Cash flows from operating activities**                                          |   |             |   |   |   |   |   |   |   |   |   |
| Receipts from customers                                                           |   | 1,776.7          |   | 4,265.7 |   | 1,586.8 |   | (56.5 | ) | 7,572.7 |   |
| Payments to suppliers and employees                                               |   | (1,649.3         | )      | (3,433.4 | ) | (1,255.1 | ) | 56.5 |   | (6,281.3 | ) |
| Dividends and distributions from associate entities and controlled  entities      |   | 699.6            |   | 0.2 |   | 48.2 |   | (678.5 | ) | 69.5 |   |
| Interest received                                                                 |   | 50.0             |   | 0.9 |   | 7.3 |   | (49.4 | ) | 8.8 |   |
| Income tax paid                                                                   |   | (19.7            | )      | (145.1 | ) | (32.8 | ) |   |   | (197.6 | ) |
| **Net cash from operating activities**                                            |   | 857.3            |   | 688.3 |   | 354.4 |   | (727.9 | ) | 1,172.1 |   |
|                                                                              |   |             |   |   |   |   |   |   |   |   |   |
| **Cash flows from investing activities**                                          |   |             |   |   |   |   |   |   |   |   |   |
| Purchase of property, plant and equipment and other non-current  assets           |   | (74.8            | )      | (170.9 | ) | (69.5 | ) |   |   | (315.2 | ) |
| Proceeds from sale of property, plant and equipment and other  non-current assets |   | 22.0             |   | 50.5 |   | 25.2 |   |   |   | 97.7 |   |
| Purchase of controlled entities and businesses net of cash acquired               |   | —           |   | (971.8 | ) | — |   |   |   | (971.8 | ) |
| Proceeds from sale of interests in controlled entities and businesses             |   | 26.3             |   | 45.5 |   | — |   |   |   | 71.8 |   |
| Return of capital from Sugar Terminals Ltd                                        |   | 5.4              |   | — |   | — |   |   |   | 5.4 |   |
| Loans and receivables advanced                                                    |   | (66.5            | )      | — |   | (1.3 | ) | 60.2 |   | (7.6 | ) |
| Loans and receivables repaid                                                      |   | 9.6              |   | 2.5 |   | 52.7 |   | (60.2 | ) | 4.6 |   |
| **Net cash (used in) from investing activities**                                  |   | (78.0            | )      | (1,044.2 | ) | 7.1 |   | — |   | (1,115.1 | ) |
|                                                                              |   |             |   |   |   |   |   |   |   |   |   |
| **Cash flows from financing activities**                                          |   |             |   |   |   |   |   |   |   |   |   |
| Proceeds from issue of shares - CSR shareholders                                  |   | 42.8             |   | — |   | — |   |   |   | 42.8 |   |
| Share buyback                                                                     |   | (6.7             | )      | — |   | — |   |   |   | (6.7 | ) |
| Net (repayment of) proceeds from borrowings                                       |   | (4.8             | )      | 465.2 |   | 205.8 |   |   |   | 666.2 |   |
| Net financing of controlled entities                                              |   | (289.9           | )      | 23.5 |   | 266.4 |   |   |   |   |   |
| Dividends paid                                                                    |   | (223.6           | )      | — |   | (700.0 | ) | 678.5 |   | (245.1 | ) |
| Interest and other finance costs paid                                             |   | (26.6            | )      | (88.7 | ) | (45.5 | ) | 49.4 |   | (111.4 | ) |
| **Net cash (used in) from financing activities**                                  |   | (508.8           | )      | 400.0 |   | (273.3 | ) | 727.9 |   | 345.8 |   |
|                                                                              |   |             |   |   |   |   |   |   |   |   |   |
| **Net increase in cash held**                                                     |   | 270.5            |   | 44.1 |   | 88.2 |   |   |   | 402.8 |   |
| Cash at the beginning of the financial year                                       |   | 63.2             |   | 7.0 |   | 86.4 |   |   |   | 156.6 |   |
| Cash in demerged entities                                                         |   |             |   | (47.1 | ) | (137.7 | ) |   |   | (184.8 | ) |
| Effects of exchange rate changes                                                  |   | 0.5              |   | (4.0 | ) | (5.0 | ) |   |   | (8.5 | ) |
| **Net cash at the end of the financial year**                                     |   | 334.2            |   |   |   | 31.9 |   |   |   | 366.1 |   |

 

----

| (a) | The demerger of Rinker  Group Limited from CSR Limited occurred on March 28, 2003. The entire fiscal  year has been presented because the period from March 28, 2003 to March 31,  2003 is de minimis. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

F-69

----

 
|                                                                              |   | **A$ million**   |       |
|-----------------------------------------------------------------------------------|--------|------------------|------------|
|                                                                              |   | **CSR  Limited** |       | **Rinker  Materials  Corporation and its  controlled entities** |   | **Non-  guarantor  subsidiaries** |   | **Consolidation  adjustments** |   | **CSR  Consolidated** |   |
| **Year ended  March 31, 2002**                                                    |   |             |       |   |   |   |
| **Statement  of cash flows**                                                      |   |             |       |   |   |   |
|                                                                              |   |             |       |   |   |   |   |   |   |   |   |
| **Cash flows from operating activities**                                          |   |             | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| Receipts from customers                                                           |   | 2,058.9          |       | 4,134.0 |   | 1,119.0 |   | (53.6 | ) | 7,258.3 |   |
| Payments to suppliers and employees                                               |   | (1,916.1         | )          | (3,247.4 | ) | (904.4 | ) | 80.8 |   | (5,987.1 | ) |
| Dividends, and distributions from associate entities and controlled  entities     |   | 227.3            |       | 0.3 |   | 37.5 |   | (210.5 | ) | 54.6 |   |
| Interest received                                                                 |   | 53.4             |       | 3.7 |   | 19.8 |   | (49.1 | ) | 27.8 |   |
| Tax refund from Australian Taxation Office                                        |   | 33.0             |       | — |   | — |   |   |   | 33.0 |   |
| Income tax paid                                                                   |   | —           |       | (135.6 | ) | (56.2 | ) |   |   | (191.8 | ) |
| **Net cash from operating activities**                                            |   | 456.5            |       | 755.0 |   | 215.7 |   | (232.4 | ) | 1,194.8 |   |
|                                                                              |   |             |       |   |   |   |   |   |   |   |   |
| **Cash flows from investing activities**                                          |   |             |       |   |   |   |   |   |   |   |   |
| Purchase of property, plant and equipment and other non-current  assets           |   | (121.3           | )          | (281.3 | ) | (24.4 | ) |   |   | (427.0 | ) |
| Proceeds from sale of property, plant and equipment and other  non-current assets |   | 19.3             |       | 33.8 |   | 67.5 |   |   |   | 120.6 |   |
| Purchase of controlled entities and businesses net of cash acquired               |   | (1.2             | )          | (157.3 | ) | — |   |   |   | (158.5 | ) |
| Proceeds from sale of interests in controlled entities and businesses             |   | 9.1              |       | 32.6 |   | 1.0 |   | (27.2 | ) | 15.5 |   |
| Loans and receivables advanced                                                    |   | (0.9             | )          | (0.2 | ) | (0.1 | ) |   |   | (1.2 | ) |
| Loans and receivables repaid                                                      |   | 3.3              |       | 9.9 |   | 0.1 |   |   |   | 13.3 |   |
| **Net cash (used in) from investing activities**                                  |   | (91.7            | )          | (362.5 | ) | 44.1 |   | (27.2 | ) | (437.3 | ) |
|                                                                              |   |             |       |   |   |   |   |   |   |   |   |
| **Cash flows from financing activities**                                          |   |             |       |   |   |   |   |   |   |   |   |
| Proceeds from issue of shares - CSR shareholders                                  |   | 22.9             |       |   |   | — |   |   |   | 22.9 |   |
| Share buyback                                                                     |   | (208.5           | )          |   |   | — |   |   |   | (208.5 | ) |
| Net proceeds from (repayment of) borrowings                                       |   | 4.5              |       | (253.0 | ) | 5.5 |   |   |   | (243.0 | ) |
| Net financing of controlled entities                                              |   | 31.0             |       | (73.2 | ) | 42.2 |   |   |   |   |   |
| Dividends paid                                                                    |   | (216.3           | )          | (1.1 | ) | (249.3 | ) | 210.5 |   | (256.2 | ) |
| Interest and other finance costs paid                                             |   | (24.5            | )          | (95.8 | ) | (47.1 | ) | 49.1 |   | (118.3 | ) |
| Hedging of foreign operations                                                     |   | —           |       | — |   | 3.3 |   |   |   | 3.3 |   |
| **Net cash (used in) from financing activities**                                  |   | (390.9           | )          | (423.1 | ) | (245.4 | ) | 259.6 |   | (799.8 | ) |
|                                                                              |   |             |       |   |   |   |   |   |   |   |   |
| **Net (decrease) increase in cash held**                                          |   | (26.1            | )          | (30.6 | ) | 14.4 |   |   |   | (42.3 | ) |
| Cash at the beginning of the financial year                                       |   | 88.0             |       | 38.7 |   | 72.8 |   |   |   | 199.5 |   |
| Effects of exchange rate changes                                                  |   | 1.3              |       | (1.1 | ) | (0.8 | ) |   |   | (0.6 | ) |
| **Net cash at the end of the financial year**                                     |   | 63.2             |       | 7.0 |   | 86.4 |   |   |   | 156.6 |   |

 

F-70

----

 
|                                                                              |   | **A$ million**   |       |
|-----------------------------------------------------------------------------------|--------|------------------|------------|
|                                                                              |   | **CSR  Limited** |       | **Rinker  Materials  Corporation and its  controlled entities** |   | **Non-  guarantor  subsidiaries** |   | **Consolidation  adjustments** |   | **CSR  Consolidated** |   |
| **Year ended  March 31, 2001**                                                    |   |             |       |   |   |   |
| **Statement  of cash flows**                                                      |   |             |       |   |   |   |
|                                                                              |   |             |       |   |   |   |   |   |   |   |   |
|                                                                              |   |             | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
|                                                                              |   |             | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| **Cash flows from operating activities**                                          |   |             | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| Receipts from customers                                                           |   | 2,017.5          |       | 3,661.7 |   | 1,055.9 |   | (15.9 | ) | 6,719.2 |   |
| Payments to suppliers and employees                                               |   | (2,106.4         | )          | (2,910.8 | ) | (544.0 | ) | 15.9 |   | (5,545.3 | ) |
| Dividends and distributions from associate entities and controlled  entities      |   | 303.1            |       | 1.5 |   | 36.7 |   | (302.2 | ) | 39.1 |   |
| Interest received                                                                 |   | 111.7            |       | 3.9 |   | 9.5 |   | (100.4 | ) | 24.7 |   |
| Income tax paid                                                                   |   | —           |       | (130.9 | ) | (82.6 | ) |   |   | (213.5 | ) |
| **Net cash from operating activities**                                            |   | 325.9            |       | 625.4 |   | 475.5 |   | (402.6 | ) | 1,024.2 |   |
|                                                                              |   |             |       |   |   |   |   |   |   |   |   |
| **Cash flows from investing activities**                                          |   |             |       |   |   |   |   |   |   |   |   |
| Purchase of property, plant and equipment and other non-current  assets           |   | (91.9            | )          | (273.4 | ) | (25.8 | ) |   |   | (391.1 | ) |
| Proceeds from sale of property, plant and equipment and other  non-current assets |   | 19.7             |       | 53.2 |   | 19.5 |   |   |   | 92.4 |   |
| Purchase of controlled entities and businesses net of cash acquired               |   | (2.9             | )          | (1,090.2 | ) |   |   |   |   | (1,093.1 | ) |
| Return of capital from associate entities                                         |   | 0.6              |       |   |   | 5.0 |   |   |   | 5.6 |   |
| Proceeds from sale of interests in controlled entities and businesses             |   | 353.9            |       | 22.7 |   | 407.1 |   |   |   | 783.7 |   |
| Loans and receivables advanced                                                    |   | (0.8             | )          | (1.3 | ) | — |   |   |   | (2.1 | ) |
| Loans and receivables repaid                                                      |   | 20.5             |       | 4.4 |   | 0.2 |   |   |   | 25.1 |   |
| **Net cash from (used in) investing activities**                                  |   | 299.1            |       | (1,284.6 | ) | 406.0 |   |   |   | (579.5 | ) |
|                                                                              |   |             |       |   |   |   |   |   |   |   |   |
| **Cash flows from financing activities**                                          |   |             |       |   |   |   |   |   |   |   |   |
| Proceeds from issue of shares – CSR shareholders                             |   | 14.4             |       |   |   |   |   |   |   | 14.4 |   |
| Share buyback                                                                     |   | (340.7           | )          |   |   |   |   |   |   | (340.7 | ) |
| Net proceeds from borrowings                                                      |   | 0.5              |       | 418.7 |   | 17.0 |   |   |   | 436.2 |   |
| Net financing of controlled entities                                              |   | 46.2             |       | 356.4 |   | (402.6 | ) |   |   |   |   |
| Dividends paid                                                                    |   | (231.2           | )          | — |   | (347.5 | ) | 302.2 |   | (276.5 | ) |
| Interest and other finance costs paid                                             |   | (37.9            | )          | (130.0 | ) | (100.0 | ) | 100.4 |   | (167.5 | ) |
| Hedging of foreign operations                                                     |   | —           |       | — |   | (56.1 | ) |   |   | (56.1 | ) |
| **Net cash (used in) from financing activities**                                  |   | (548.7           | )          | 645.1 |   | (889.2 | ) | 402.6 |   | (390.2 | ) |
|                                                                              |   |             |       |   |   |   |   |   |   |   |   |
| **Net increase (decrease) in cash held**                                          |   | 76.3             |       | (14.1 | ) | (7.7 | ) |   |   | 54.5 |   |
| Cash at the beginning of the financial year                                       |   | 6.3              |       | 42.3 |   | 72.1 |   |   |   | 120.7 |   |
| Effects of exchange rate changes                                                  |   | 5.4              |       | 10.5 |   | 8.4 |   |   |   | 24.3 |   |
| **Net cash at the end of the financial year**                                     |   | 88.0             |       | 38.7 |   | 72.8 |   |   |   | 199.5 |   |

 

F-71

----

 
|                                                                                     |   | **A$ million**   |   |
|------------------------------------------------------------------------------------------|--------|------------------|--------|
|                                                                                     |   | **CSR  Limited** |   | **Rinker  Materials  Corporation and its**

**controlled  entities** |   | **Non-  guarantor  subsidiaries** |   | **Consolidation**

**adjustments** |   | **CSR  Consolidated** |   |
|                                                                                     |   |             |   |   |   |   |
| **Year ended  March 31, 2003**                                                           |   |             |   |   |   |   |
| **United States generally accepted accounting  principles (US GAAP) information**        |   |             |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |             |   |   |   |   |   |   |   |   |   |
| **Reconciliation of net profit**                                                         |   |             |   |   |   |   |   |   |   |   |   |
| Profit from ordinary activities after income tax attributable to  members of CSR Limited |   | 2,053.5          |   | 285.5 |   | (202.9 | ) | (82.6 | ) | 2,053.5 |   |
|                                                                                     |   |             |   |   |   |   |   |   |   |   |   |
| Revaluation of non-current assets                                                        |   | 1.6              |   | 8.3 |   | 1.6 |   | — |   | 11.5 |   |
| Divestment of assets to joint venture entities                                           |   | 2.8              |   | — |   | — |   | — |   | 2.8 |   |
| Employee shares and share loans (Universal share/option plan)                            |   | (3.5             | )      | — |   | — |   | — |   | (3.5 | ) |
| Other                                                                                    |   | (1.3             | )      | (0.9 | ) | — |   | — |   | (2.2 | ) |
| Executive option plan                                                                    |   | (17.0            | )      | — |   | — |   | — |   | (17.0 | ) |
| Amortisation of goodwill written back                                                    |   | 0.4              |   | 82.6 |   | 0.4 |   | 1.2 |   | 84.6 |   |
| Superannuation (pension) fund                                                            |   | 26.5             |   | 3.6 |   | 0.6 |   | — |   | 30.7 |   |
| Accounting for derivative instruments and hedging                                        |   | (0.1             | )      | (1.2 | ) | — |   | — |   | (1.3 | ) |
| Unrecognised real estate profit                                                          |   | (21.4            | )      | — |   | — |   | — |   | (21.4 | ) |
| Adoption of AASB 1044                                                                    |   | (205.2           | )      | — |   | — |   | — |   | (205.2 | ) |
| Fair value adjustment for Rinker Group Limited demerger                                  |   | (2287.6          | )      | — |   | 738.4 |   | — |   | (1,549.2 | ) |
| Unrecognised insurance debtors                                                           |   | —           |   | (2.3 | ) | (3.9 | ) | — |   | (6.2 | ) |
| Deferred litigation costs not recognised                                                 |   | (10.0            | )      | — |   | — |   | — |   | (10.0 | ) |
| Deferred tax effect of US GAAP adjustments                                               |   | 56.3             |   | (7.8 | ) | 1.6 |   | — |   | 50.1 |   |
| Equity accounted result of subsidiaries                                                  |   | 822.2            |   |   |   |   |   | (822.2 | ) |   |   |
|                                                                                     |   | (1,636.3         | )      | 82.3 |   | 738.7 |   | (821.0 | ) | (1,636.3 | ) |
| **US GAAP net profit attributable to members of CSR  Limited**                           |   | 417.2            |   | 367.8 |   | 535.8 |   | (903.6 | ) | 417.2 |   |

 

**Reconciliationof equity**

The reconciliation of equity is not requiredfor 2003 because Rinker Group Limited was spun-off prior to March 31, 2003.

 

F-72

----

 
|                                                                                     |   | **A$ million**   |    |
|------------------------------------------------------------------------------------------|--------|------------------|---------|
|                                                                                     |   | **CSR  Limited** |    | **Rinker  Materials  Corporation and its  controlled entities** |   | **Non-  guarantor  subsidiaries** |   | **Consolidation**

**adjustments** |   | **CSR  Consolidated** |   |
|                                                                                     |   |             |    |   |   |   |
| **Year ended  March 31, 2002**                                                           |   |             |    |   |   |   |
| **United States generally accepted accounting  principles (US GAAP) information**        |   |             |    |   |   |   |   |   |   |   |   |
|                                                                                     |   |             |    |   |   |   |   |   |   |   |   |
| **Reconciliation of net profit**                                                         |   |             |    |   |   |   |   |   |   |   |   |
| Profit from ordinary activities after income tax attributable to  members of CSR Limited |   | 552.6            |    | 290.1 |   | 111.8 |   | (401.9 | ) | 552.6 |   |
|                                                                                     |   |             |    |   |   |   |   |   |   |   |   |
| Revaluation of non-current assets                                                        |   | (2.7             | )       | 10.6 |   | 0.3 |   |   |   | 8.2 |   |
| Divestment of assets to joint venture entities                                           |   | 2.8              |    | — |   | — |   |   |   | 2.8 |   |
| Restructure and rationalisation                                                          |   | (11.0            | )       | — |   | — |   |   |   | (11.0 | ) |
| Acquisition accounting                                                                   |   | —           |    | (3.8 | ) | — |   |   |   | (3.8 | ) |
| Employee shares and share loans (Universal share/option plan)                            |   | (2.8             | )       | — |   | — |   |   |   | (2.8 | ) |
| Other                                                                                    |   | (0.9             | )       | 0.8 |   | — |   |   |   | (0.1 | ) |
| Executive option plan                                                                    |   | (10.4            | )       |   |   | — |   |   |   | (10.4 | ) |
| Amortisation of goodwill written back                                                    |   | —           |    | 0.5 |   | — |   |   |   | 0.5 |   |
| Superannuation (pension) fund                                                            |   | (7.4             | )       | (1.0 | ) | 0.4 |   |   |   | (8.0 | ) |
| Accounting for derivative instruments and hedging                                        |   | 0.2              |    | (0.3 | ) | — |   |   |   | (0.1 | ) |
| Deferred tax effect of US GAAP adjustments                                               |   | 4.5              |    | (2.1 | ) | (0.1 | ) |   |   | 2.3 |   |
| Equity accounted result of subsidiaries                                                  |   | 5.3              |    |   |   |   |   | (5.3 | ) |   |   |
|                                                                                     |   | (22.4            | )  | 4.7 |   | 0.6 |   | (5.3 | ) | (22.4 | ) |
| **US GAAP net profit attributable to members of CSR  Limited**                           |   | 530.2            |    | 294.8 |   | 112.4 |   | (407.2 | ) | 530.2 |   |
|                                                                                     |   |             |    |   |   |   |   |   |   |   |   |
| **Reconciliation of equity**                                                             |   |             |    |   |   |   |   |   |   |   |   |
| Equity attributable to members of CSR Limited                                            |   | 4,022.8          |    | 1,805.1 |   | 3,739.1 |   | (5,544.2 | ) | 4,022.8 |   |
|                                                                                     |   |             |    |   |   |   |   |   |   |   |   |
| Net effect of US GAAP adjustments on items within the statement of  financial position   |   |             |    |   |   |   |   |   |   |   |   |
| **Current assets**                                                                       |   |             |    |   |   |   |   |   |   |   |   |
| receivables (reclassify loans and receivables to associate entities)                     |   | (22.9            | )       | — |   | (23.2 | ) |   |   | (46.1 | ) |
| deferred income tax assets (reclassification from non-current)                           |   | 47.7             |    | 56.1 |   | 81.8 |   | (10.7 | ) | 174.9 |   |
| deferred income tax assets (derivative instruments and hedging)                          |   | 1.9              |    | 0.8 |   | 4.6 |   | (3.2 | ) | 4.1 |   |
| other financial assets (derivative instruments and hedging)                              |   | 5.7              |    | — |   | 20.6 |   |   |   | 26.3 |   |
| **Non-current assets**                                                                   |   |             |    |   |   |   |   |   |   |   |   |
| property, plant and equipment (revaluation and impairment)                               |   | (113.5           | )       | (74.1 | ) | (64.4 | ) |   |   | (252.0 | ) |
| property, plant and equipment (other)                                                    |   | 6.2              |    | 0.8 |   | (1.0 | ) |   |   | 6.0 |   |
| intangibles (acquisition accounting goodwill)                                            |   | —           |    | 104.5 |   | — |   |   |   | 104.5 |   |
| intangibles (reverse capitalisation of trademarks)                                       |   | —           |    | (4.0 | ) | (10.4 | ) |   |   | (14.4 | ) |
| intangibles (reverse SFAS 142 goodwill amortisation)                                     |   | —           |    | 0.5 |   | — |   |   |   | 0.5 |   |
| intangibles (superannuation (pension) fund)                                              |   | —           |    | 2.5 |   | — |   |   |   | 2.5 |   |
| receivables (reclassify loans to associate entities)                                     |   | (16.1            | )       | — |   | — |   |   |   | (16.1 | ) |
| deferred income tax assets (reclassification to current)                                 |   | (106.7           | )       | (54.9 | ) | (90.7 | ) | 9.3 |   | (243.0 | ) |
| equity accounted result of subsidiaries                                                  |   | (171.4           | )       |   |   |   |   | 171.4 |   |   |   |
| other financial assets (derivative instruments and hedging)                              |   | 0.4              |    | 10.2 |   | 12.4 |   | (0.1 | ) | 22.9 |   |
| investments accounted for using the equity method (divestment of  assets)                |   | (17.1            | )       | — |   | (6.3 | ) |   |   | (23.4 | ) |
| investments accounted for using the equity method (SFAS 133)                             |   | —           |    | — |   | (6.5 | ) |   |   | (6.5 | ) |
| investments accounted for using the equity method (reclassify loans)                     |   | 39.0             |    | — |   | 23.2 |   |   |   | 62.2 |   |
| receivables (employee share loans)                                                       |   | (19.3            | )       | (5.5 | ) | — |   |   |   | (24.8 | ) |
| other (superannuation (pension) fund)                                                    |   | 27.7             |    | (12.8 | ) | 11.9 |   |   |   | 26.8 |   |
| other                                                                                    |   | 10.0             |    | (5.7 | ) | — |   |   |   | 4.3 |   |
| **Current liabilities**                                                                  |   |             |    |   |   |   |   |   |   |   |   |
| deferred income tax liabilities (reclassification from non-current)                      |   | 7.3              |    | (26.3 | ) | (3.1 | ) |   |   | (22.1 | ) |
| provision for dividend                                                                   |   | 121.7            |    | — |   | — |   |   |   | 121.7 |   |
| other financial liabilities (derivative instruments and hedging)                         |   | (12.0            | )       | (1.7 | ) | (30.1 | ) | 10.6 |   | (33.2 | ) |
| other (minimum pension liability)                                                        |   | —           |    | (9.9 | ) | — |   |   |   | (9.9 | ) |
| **Non-current liabilities**                                                              |   |             |    |   |   |   |   |   |   |   |   |
| deferred income tax liabilities (acquisition accounting)                                 |   | —           |    | (119.4 | ) | — |   |   |   | (119.4 | ) |
| deferred income tax liabilities (reclassification to current)                            |   | 60.5             |    | 26.3 |   | 10.3 |   |   |   | 97.1 |   |
| deferred income tax liabilities (US GAAP profit adjustments)                             |   | 7.4              |    | 27.7 |   | (4.9 | ) |   |   | 30.2 |   |
| other financial liabilities (derivative instruments and hedging)                         |   | (5.6             | )       | (15.3 | ) | (6.5 | ) | 5.2 |   | (22.2 | ) |
|                                                                                     |   | (149.1           | )       | (100.2 | ) | (82.3 | ) | 182.5 |   | (149.1 | ) |
| **US GAAP equity attributable to members of CSR  Limited**                               |   | 3,873.7          |    | 1,704.9 |   | 3,656.8 |   | (5,361.7 | ) | 3,873.7 |   |

 

F-73

----

 
|                                                                                     |   | **A$ million**   |   |
|------------------------------------------------------------------------------------------|--------|------------------|--------|
|                                                                                     |   | **CSR  Limited** |   | **Rinker  Materials  Corporation and its**

**controlled  entities** |   | **Non-  guarantor**

**subsidiaries** |   | **Consolidation**

**adjustments** |   | **CSR  Consolidated** |   |
|                                                                                     |   |             |   |   |   |   |
| **Year ended  March 31, 2001**                                                           |   |             |   |   |   |   |
| **United States generally accepted accounting  principles (US GAAP) information**        |   |             |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |             |   |   |   |   |   |   |   |   |   |
| **Reconciliation of net profit**                                                         |   |             |   |   |   |   |   |   |   |   |   |
| Profit from ordinary activities after income tax attributable to  members of CSR Limited |   | 634.1            |   | 225.4 |   | 1,016.0 |   | (1,241.4 | ) | 634.1 |   |
|                                                                                     |   |             |   |   |   |   |   |   |   |   |   |
| Revaluation of non-current assets                                                        |   | (1.3             | )      | (6.0 | ) | 39.0 |   |   |   | 31.7 |   |
| Divestment of assets to joint venture entities                                           |   | 2.8              |   | — |   | — |   |   |   | 2.8 |   |
| Restructure and rationalisation                                                          |   | 11.0             |   | — |   | — |   |   |   | 11.0 |   |
| Acquisition accounting                                                                   |   | —           |   | (5.1 | ) | — |   |   |   | (5.1 | ) |
| Employee shares and share loans (Universal share/option plan)                            |   | (2.4             | )      | — |   | — |   |   |   | (2.4 | ) |
| Other                                                                                    |   | (0.7             | )      | 0.2 |   | (0.1 | ) |   |   | (0.6 | ) |
| Superannuation (pension) fund                                                            |   | 7.1              |   | (2.3 | ) | 0.2 |   |   |   | 5.0 |   |
| Deferred tax effect of US GAAP adjustments                                               |   | (6.2             | )      | 2.7 |   | 0.3 |   |   |   | (3.2 | ) |
| Equity accounted result of subsidiaries                                                  |   | 28.9             |   |   |   |   |   | (28.9 | ) |   |   |
|                                                                                     |   | 39.2             |   | (10.5 | ) | 39.4 |   | (28.9 | ) | 39.2 |   |
| **US GAAP net profit attributable to members of CSR  Limited**                           |   | 673.3            |   | 214.9 |   | 1,055.4 |   | (1,270.3 | ) | 673.3 |   |
|                                                                                     |   |             |   |   |   |   |   |   |   |   |   |
| **Reconciliation of equity**                                                             |   |             |   |   |   |   |   |   |   |   |   |
| Equity attributable to members of CSR Limited                                            |   | 3,983.1          |   | 1,640.7 |   | 3,729.0 |   | (5,369.7 | ) | 3,983.1 |   |
|                                                                                     |   |             |   |   |   |   |   |   |   |   |   |
| Net effect of US GAAP adjustments on items within the statement of  financial position   |   |             |   |   |   |   |   |   |   |   |   |
| **Current assets**                                                                       |   |             |   |   |   |   |   |   |   |   |   |
| receivables (reclassify loans and receivables to  associate entities)                    |   | (12.9            | )      | — |   | (3.0 | ) |   |   | (15.9 | ) |
| deferred income tax assets (reclassification from non-current)                           |   | 90.8             |   | — |   | 30.4 |   |   |   | 121.2 |   |
| **Non-current assets**                                                                   |   |             |   |   |   |   |   |   |   |   |   |
| property, plant and equipment (revaluation and impairment)                               |   | (110.8           | )      | (90.7 | ) | (65.1 | ) |   |   | (266.6 | ) |
| property, plant and equipment (other)                                                    |   | 6.7              |   | 0.2 |   | (1.2 | ) |   |   | 5.7 |   |
| intangibles (acquisition accounting goodwill)                                            |   | —           |   | 125.7 |   | — |   |   |   | 125.7 |   |
| intangibles (reverse capitalisation of trademarks)                                       |   | —           |   | (3.9 | ) | (10.4 | ) |   |   | (14.3 | ) |
| receivables (reclassify loans to associate entities)                                     |   | (15.2            | )      | — |   | — |   |   |   | (15.2 | ) |
| deferred income tax assets (reclassification to current)                                 |   | (174.4           | )      | — |   | (91.6 | ) |   |   | (266.0 | ) |
| equity accounted result of subsidiaries                                                  |   | (174.5           | )      |   |   |   |   | 174.5 |   |   |   |
| investments accounted for using the equity method (divestment of  assets)                |   | (19.9            | )      | — |   | (6.3 | ) |   |   | (26.2 | ) |
| investments accounted for using the equity method (reclassify loans)                     |   | 28.1             |   | — |   | 3.0 |   |   |   | 31.1 |   |
| receivables (employee share loans)                                                       |   | (20.1            | )      | (7.1 | ) | — |   |   |   | (27.2 | ) |
| other (superannuation (pension) fund)                                                    |   | 37.3             |   | (15.0 | ) | 11.6 |   |   |   | 33.9 |   |
| other                                                                                    |   | 7.3              |   | (3.2 | ) | — |   |   |   | 4.1 |   |
| **Current liabilities**                                                                  |   |             |   |   |   |   |   |   |   |   |   |
| deferred income tax liabilities (reclassification from non-current)                      |   | 7.3              |   | — |   | (2.9 | ) |   |   | 4.4 |   |
| provision for dividend                                                                   |   | 114.4            |   | — |   | — |   |   |   | 114.4 |   |
| other                                                                                    |   | 11.0             |   | — |   | — |   |   |   | 11.0 |   |
| **Non-current liabilities**                                                              |   |             |   |   |   |   |   |   |   |   |   |
| deferred income tax liabilities (acquisition accounting)                                 |   | —           |   | (137.7 | ) | — |   |   |   | (137.7 | ) |
| deferred income tax liabilities (reclassification to current)                            |   | 76.3             |   | — |   | 67.4 |   |   |   | 143.7 |   |
| deferred income tax liabilities (US GAAP profit adjustments)                             |   | 8.5              |   | 32.7 |   | (7.4 | ) |   |   | 33.8 |   |
|                                                                                     |   | (140.1           | )      | (99.0 | ) | (75.5 | ) | 174.5 |   | (140.1 | ) |
| **US GAAP equity attributable to members of CSR  Limited**                               |   | 3,843.0          |   | 1,541.7 |   | 3,653.5 |   | (5,195.2 | ) | 3,843.0 |   |

 

F-74

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