Introduction Peter Kirby Managing Director and CEO Analyst - PDF document

TM Introduction Peter Kirby Managing Director and CEO Analyst Presentation 10 February 2003

Agenda � Introduction - Peter Kirby MD & CEO, CSR Limited � CSR Limited - Alec Brennan MD & CEO, CSR Limited ( post- demerger ) Deputy MD and Director Strategy & Investments, CSR Limited (currently) � Rinker Group Limited - David Clarke MD and CEO Rinker Group Limited (post- demerger) Chief Executive, Rinker Materials Corporation (currently) Questions & Answers 2

Timetable Item Date Lodge Scheme Booklet 10 February 2003 Transaction launch 10 February 2003 Institutional and retail 11 February – 27 March 2003 roadshow Shareholder meeting 25 March 2003 28 March 2003 (est.) Final court approval hearing CSR and RGL shares begin trading 31 March 2003 (est.) separately 3 The expected timetable shows the shareholder meetings will be held on 25 March, followed by the court sign off before we conclude – hopefully as planned on 31 March.

Heavy building materials 70% of CSR group earnings at end Sept 02 (business EBIT) Y/E Mar 95 Y/E Sept 02 Building Products Sugar Aluminium 16% Aust NZ & Asia 13% Sugar 16% 6% Construction Timber Aluminium Aust & Asia 9% 13% 12% Building Rinker Products Construction Materials Aust NZ & (US) 18% Aust & Asia Asia 18% Rinker Materials Corporation (US) 19% 61% (pre Kiewit) Heavy building materials – aggregates, concrete, cement and concrete pipe & products Note: Based on business EBIT from CSR Annual Reports; excludes corporate costs and unallocated gains/losses (eg major land sales) 4 Around three quarters of CSR group EBIT today comes from heavy building materials…that is aggregates, concrete, cement and concrete pipes and products You can see the very significant change in the portfolio over the past few years.

EBITDA margin & cash flow up EBITDA / Sales % Operating cash flow A$m* 19.9 20.9 20.8 19.7 1195 18.2 1048 1024 15.3 16.4 832 912 H H Y Y E E 554 545 S S 0 0 1 2 0 0 1 2 9 8 99 00 01 02 6 9 8 99 00 01 02 6 Months Months Year- ended March Year- ended March only only * Net operating cash flow after tax 5 • The next few charts just give you a quick reprise of our results over the past few years. • This one shows the EBITDA to sales margin and operating cash flow have continued the upward trend of the past five years. • Cash generation is one of the great strengths of CSR.

Financial ratios Return on funds employed Return on Equity % % 17.0* 14.3 15.9 13.7 14.6 15.5 14.5 12.9 12.7 12.7 12.6 10.1 10.9 Y Y Y Y 8.7 E E ES ES S S 0 0 0 0 0 1 2 1 1 2 9 8 99 00 01 02 Year 9 8 99 00 01 02 Year ended ended Year- ended March Year- ended March Sept Sept * Excludes funds employed for Kiewit Materials Corporation – purchased 26 Sept 02 with no sales or profit contribution during HYESO2 6 • The return on funds employed also continues to improve – although it does bounce around with acquisitions. • Return on equity has more than doubled over the past five years.

Strong financial position Gearing % Interest cover (net debt / net debt + equity) (times) 34.0 35.2* 34.2 32.6 34.0 11.8 29.7 9.1 SE SE 8.5 8.0 22.2 P P 6.8 T T H H 5.3 Y Y 4.3 0 0 0 0 1 2 2 1 00 01 02 9 8 99 9 8 99 00 01 02 6 Sept Months March Year- ended March only * Includes Kiewit Materials. Red line shows the gearing ratio at 24% if Kiewit excluded. 7 • CSR’s financial position is very strong. • Gearing is up this year due to the acquisition of Kiewit. • But interest cover of almost 12 times at the half year ended September is extremely comfortable.

Return on Equity 16.8 15.9 14.4 13.9 13.7 12.4 11.0 10.6 10.3 9.8 9.5 9.2 9.0 7.2 4.1 CRH Holcim Hardie n Limited r e x p o m d e u Vulcan Materials Ind s p Martin Marietta e m o n A u . i t r s a s m e G o C Rock e H u i r i C r G d L t n s M u I Lafarge Nth R s e l d g a e S R e r Florida n m r o a t C a I B g a a f s J e a L r x g e g T A Source: Annual Reports As at last reported FY to 17 Jan 03 8 We have also managed to lift our return on equity to within the top quartile of our peers – with a return up to 14.3% at the end of September 2002.

Price/ Earnings ratio 15.7 14.8 14.0 12.7 12.5 12.5 11.9 12.0 10.6 10.7 10.5 10.0 10.0 6.4 CRH Holcim r Boral Limited n x e p o CSR Limited Florida Rock Ind e m Group u Martin Marietta s m o n Vulcan Materials Texas Industries A Indus. e r a G C H C Lafarge M Nth Aggregate R Lafarge Source: Company records; CSR research Price at 17 Jan 03 / latest published annual financial data CSR Share price = $6.13 9 Yet on ratios such as price / earnings – based on latest reported profit – we continue to rate in the bottom quartile

EV / free cash flow 31.1 20.5 20.7 17.4 16.3 15.2 13.5 13.4 13.4 11.1 11.1 11.2 10.6 H m n r R e d d o C c i e e p m p s u l t s a t d u n A s o m i . l m i n o s a t t o a r e H e I r H G i i u r i i k G r L d e r i L s t a c C n t R o u a M e M I M R g h d l S t a e r N R n r t n C a a I o a n d f g i t a e s B a r i g e c a r L a M o r x r u l l a g F e V a f T g A L Source: Bloomberg FCF is latest published T12mths Share price as at 17 Jan 03. CSR = $6.13 10 Similarly with enterprise value to free cash flow, where we are right at the bottom of the pack

CSR group strategy… a demerger into 2 different companies is the logical next step to complete the separation process CSR group CSR group today today 70% 30% DEMERGE Sugar 18% Construction Aluminium Rinker Materials Materials Aust & Building Products 40% Corporation (US) 88% Aust, NZ & Asia 42% Asia 12% Rinker Rinker Group Group CSR CSR post demerger post demerger Based on YES02 business EBIT from CSR Annual Reports; excludes c orporate costs and 11 unallocated gains/losses (eg major land sales) • The logical next step in our strategy to build value then is to complete this separation process through a demerger. • The demerger involves spinning off the heavy building materials assets out of CSR…..and forming a new company called Rinker Group Ltd (“Rinker Group”). • CSR Limited will then comprise : the Building Products business – which is the leading • manufacturer of building products in Australia our Aluminium interest – which holds a 25% stake in • the Tomago aluminium smelter near Newcastle, and CSR Sugar, which is among the largest and most • efficient sugar cane milling businesses in the world.

Two strong Australian listed companies, appealing to different groups of investors Rinker Group Limited (RGL) One of the world’s top 10 heavy building materials companies, growing strongly and building strong regional market positions in its key products… CSR Limited A higher dividend yielding, diversified company, with a stable earnings history, strong cash flows and some of Australia’s best known household brands… 12 We will then have two separate Australian companies – both listed on the Australian Stock Exchange, both expected to be within the ASX Top 100 and both headquartered in Australia.

Strategic rationale and benefits of a demerger � In line with CSR strategy since 1998 for separation and growth of heavy building materials while lifting shareholder value � Creates two strong, focused companies – both investment grade, and expected to be in ASX Top 100 � Precedents show step change in management and board focus lead to improved performance over time � Improved ability to pursue growth options, including longer term flexibility for RGL equity as acquisition currency, if appropriate � Separation offers a clear outcome and provides shareholder choice � Dividend policy and capital allocation to better facilitate individual business strategies � Clearer alignment of employee compensation plans with shareholder value for Rinker people � Opportunity for stock market re- rating 13

Costs of the demerger � Transaction cost of $75 million before tax or est. A$54m after tax, ie a one- off impact of 5 . 8 cents per share – adviser, legal and expert fees, stamp duty, insurance (A$32m) – once- up cost of establishing RGL as a separate entity (A$28m) – refinancing costs (including restructuring US bonds) (A$15m) � Lower LT credit ratings but ratings agencies have indicated investment grade for both RGL and CSR � Short term impact on CSR’s ability to pay fully- franked dividends; Rinker’s franking capacity will be lower but solid earnings from Readymix will underpin franking for shareholders � Post- demerger, additional cost of RGL and CSR operating as independent, separately listed companies 14 The demerger is estimated to cost around $75 million pre- tax and around $54 million after tax – or a one- off cost of just 5.8 cents per share. That compares with $65 million for each of the BHP Steel and One Steel demergers – both of which were significantly smaller – and around $127 million for Western Mining.