| Dear Shareholder |
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| OUR COMMITMENT TO OUR SHAREHOLDERS |
| Whilst the judgment
on our reputation is made by you and
others, it is driven by the values and
drivers that guide the group’s
14,000 employees in how they think and
operate. It is the fabric that binds
the organisation: the common threads
Rinker people share as we make decisions
and go about our tasks each day. |
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| So what are these common threads? |
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| Firstly,
the safety and well being of our
people is paramount and is not
open to compromise. We also strive
to deliver: |
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| value
for you, our shareholder |
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| care
of our communities
and the environment |
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| customers
who repeatedly select
us ahead of our competitors |
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| We
continue to work tirelessly at
each of the above but will never
reach a point of satisfaction,
because the goals are always being
set higher. You can read more
about how we are doing in this
report. However, it is ‘How
are we delivering value for shareholders?’
which I would like to address
here. |
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| Total
shareholder return (TSR) –
share price appreciation plus
dividends reinvested – is
often used to assess value for
shareholders. In A$, Rinker’s
TSR over the financial year to
31 March 2004 was 45% and in US$,
82%. |
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| Your
directors have announced a 14%
increase in the final dividend
to eight cents (A$) per ordinary
share, making a total dividend
of 14 cents per share. |
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| Both
the final and the interim dividend
are fully franked (70% franked
last year). This provides an additional
benefit for most of our Australian
and international shareholders,
by reducing their income or withholding
tax obligations. At the current
dividend level, we expect to retain
full franking for the foreseeable
future. |
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| The
closing share price on 31 March
2003 – our first day of
trading after the demerger from
CSR Limited – was A$4.93.
A year later it closed at A$6.95
– up 41%. |
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| For
our US shareholders, who now comprise
more than 25% of our share register
(beneficial ownership), Rinker’s
share price rose from US$2.98
to US$5.27, up 77%. |
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| Return
on shareholders’ equity
(ROE) is an important measure,
as it looks at what returns we
are generating from the funds
shareholders have invested in
the company. We saw significant
improvement last year, with ROE
up from 12.2% to 14.2%, measured
in A$, and up from 11.4% to 13.0%
in US$. |
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| Rinker
is a growth company, and as such,
our first priority is to fund
expansion of the existing business
and value adding acquisitions.
Currently, Rinker’s strong
cash flows are more than sufficient
to fund expansion and acquisitions. |
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| We
believe a share buyback is a sensible
way of delivering value to our
shareholders. We repaid US$298
million (A$455 million) in debt
last year and our balance sheet
is very strong, with gearing (net
debt/net debt plus equity) at
a low 21%. Therefore in February
we announced an on-market share
buyback to commence after the
release of our annual results
in May, to buy up to 10% of the
company’s shares over the
next year. ABN AMRO and UBS have been appointed
brokers to manage the buyback.
Directors are conscious of the
need to maintain an efficient
balance sheet. We look at a buyback
as we would any capital investment
decision and we believe it is
an appropriate use of shareholders’
funds. |
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| STAFF REWARD AND MOTIVATION |
| Rinker’s
people have a very clear understanding
that our shareholders expect good
returns on their investment, and
our performance assessment and
reward criteria encourage them
to think and act more like owners
of the business. |
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| We
believe this focus on shareholder
value and delivering high performance
‘stretch goals’ has
played a significant role in lifting
Rinker’s performance in
recent years, both in Rinker Materials
and Readymix. |
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| CORPORATE
GOVERNANCE |
| Directors
are acutely aware of the need
to ensure that shareholder value
is delivered within a robust corporate
governance framework. |
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| Our
desire for transparency and accountability
in the way we manage your company
has meant we support a rigorous
level of disclosure. We have outlined
our governance policies in detail
on our internet site and in this
report. We have revamped our remuneration
and incentive programs to align
our people even more closely with
shareholder interests. Recognising
the wishes of the shareholding
community and the likely direction
of future legislation, we are
submitting our remuneration report
to shareholders, for adoption
by way of a non-binding vote.
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| By
reporting quarterly – an
additional, voluntary disclosure
– we are providing more
information to the market, enabling
you to judge our performance more
frequently. |
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| BOARD
COMPOSITION |
| Marshall
Criser and Walter Revell joined
the board on 12 April 2003, immediately
after demerger formalities were
completed. |
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| The
only other change in Board composition
during the year was the appointment
of Mr John Ingram, following the
resignation of Mr John Ballard,
who was appointed CEO of Southcorp. |
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| OUTLOOK |
| The
outlook for the current year looks
positive, albeit with a number
of challenges. We will be aiming
to exceed last year’s operating
profit performance, measured in
local currencies, in both the
US and Australia. Any further
acquisitions or new greenfields
expansion would generate additional
growth. |
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| I
would like to take this opportunity
to thank my fellow directors,
the management team led so effectively
by David Clarke and the entire
Rinker workforce for their outstanding
contribution during the past 12
months. |
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| Thank
you for being a shareholder in
Rinker. We appreciate your support
and look forward to delivering
further on our commitment to you
in the year ahead. |
|
John Morschel
Chairman |
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