Highlights

• Netprofit before significant items up 25.3% to $200.8 million

• $400million of announced growth initiatives underway

• Finaldividend declared of 6 cents per share with franking lifted to 100%

• Capitalreturn of 20 cents per share or $182 million, subject to shareholders’ approval

CSR Limited today announced a 25.3% increase in net profitbefore significant items to 
$200.8 million for the year ended 31 March 2005. CSR’s Sugar and Property operations improvedstrongly while Building Products and Aluminium were down on the previousyear. Earnings per share beforesignificant items were up 28.1% to 21.9 cents compared with 17.1 cents lastyear.

CSR’s total net profit after tax was $287.1 million whichincludes significant items relating to settlements paid to CSR followingresolution of some longstanding litigation issues and the one-off tax benefitof $55 million as a result of entry during the year into tax consolidation.

Trading revenue rose 20.1% to $2,367.5 million dueprincipally to the inclusion of $261.8 million in revenue from Sugarrefineries following full consolidation from 1 October 2004. Earnings beforeinterest, tax and significant items (EBIT) were up 22.6% to $322.0 million.Profitability improved with the EBIT margin (EBIT/trading revenue) increasingto 13.6% from 13.3%. Return on shareholders’ funds lifted to 16.2% – thehighest level in three years.

Financial results summary

Overview

“CSR has delivereda 25% increase in net profit before significant items, a higher total dividendand full franking, and a proposed capital return of 20 cents a share,” saidManaging Director and CEO Alec Brennan.

“We are also starting to see benefit from over $400 millionin growth initiatives announced over the past two years and our efforts toimprove operational performance are reflected in this year’s results.”

“CSR’s strong performance this year is a powerfultestament to the continuing vigour of this company after 150 years ofoperation,” Mr Brennan said.

Review of significant items

CSR made good progress resolving a number of major issuesthis year  accounted for in the profit resultas significant items totalling $86.3 million.

CSR reached settlements with various insurers under whichCSR was paid $45.3 million. As a result of the settlement, $39.4 millionof deferred legal costs were written off. CSR is continuing its proceedingsagainst a number of other insurers and currently expects the trial to commencein or about October 2005.

CSR received $21.6 million from Alcan Northern TerritoryAlumina Pty Limited and wrote back provisions of $3.8 million in settlement ofa dispute that arose following sale of our interest in the bauxite and aluminajoint venture at the Gove Peninsula in the Northern Territory in January 2001.

Also, CSR’s entry into the tax consolidation systemprovided a one-off tax benefit of $55.0 million.

Financialreview

CSR’s net debt and gearingincreased during the year as a result of spending on a number of growthprojects but both remain low. Gearing(measured as net debt/net debt + equity) ended the year at 16.5% with net debtrising to $270.1 million.

As announced in May 2004, the on-marketbuyback that commenced in 2003 was extended for a further 12 months ending on10 June 2005. During the year ended 31 March 2005, 4.8 million shares werepurchased at an average price of $2.03 a share. The directors have decided that no further shares will be purchasedunder this buyback.

CSRcontinues to pay a significant proportion of sustainable profit as dividends,subject to available franking credits. The final dividend to be paid on 4 July will be 6cents a share, bringing total dividends for the year to 12 cents a share, upfrom 11 cents, with franking increased from 70% to 100%.

Proposed capital return of 20 cents per share or$182 million

CSR proposes to make a returnof capital of 20 cents per share or $182 million. This proposal is part ofthe company’s ongoing strategy of actively managing the balance sheet to createvalue for shareholders.

The directors believe that return of capital will give thecompany a more efficient capital structure appropriate to CSR’s range ofbusinesses and liabilities, while retaining flexibility for future growth.

The company understands that the Australian TaxationOffice will issue a class ruling for CSR shareholders confirming that receiptof the return of capital will not be subject to tax.

If the capital return is approved by shareholders, CSR’sgearing is expected to increase to approximately 30% from 16.5%. Interest expense after tax will increase byapproximately $8 million per year ($5 million in the financial year ending 31March 2006). Interest cover (EBITDA /net interest expense) is expected to remain within conservative levels.

Review of results by segment

Earnings before interest, tax and significant items(EBIT) by segment

1. Includes product liability andsuperannuation top-up payments.

Building Products Trading revenue of $932.3 million rose slightly by 1.6% with newmarketing initiatives offsetting a sharp slowdown in residential buildingconstruction in New South Wales and Victoria. EBIT of $108.0million fell by 4.1% as additional costs were incurred for initiatives toenhance customer service and reduce longer term factory and distribution costs.These changes are expected to support the acceleration of our operational improvementprogram this year.

Aluminium Trading revenue from aluminium sales, including hedging, rose 5.4% to$473.6 million. EBIT of $141.9 million was 1.6% down on the previousyear as higher aluminium prices and production were offset by a higher A$/US$exchange rate and lower prices from hedged sales. Tomago completed constructionof its 15% expansion project on time and on budget.

Sugar Trading revenue rose to $960.5 million from the previous year’s lowlevel of $600.2 million. This increase includes $261.8 million ofadditional revenue from the sugar refining businesses. The financial resultsfor Sugar Australia and New Zealand Sugar Company were consolidated into CSR’s accounts from 1October 2004 following the acquisition of an additional 25% stake in the jointventures.

EBIT was $89.8 million, up from $37.6 million.The improvement followed a recovery of world raw sugar prices. The sugarcanecrop was above that of the previous season, due to the success of industryproductivity initiatives and improved weather during the growing season. Theresult was also boosted by the acquisition of the additional share in therefined sugar businesses and a payment to CSR under the first part of theAustralian Government’s sugar reform program (announced in April 2004).

Property EBIT improved to $28.6 million from $15.9 million, followingthe hand over of land for a major residential development in Woodcroft, Sydney.

$400 million of announced growth projects under way

Over the past two years, over $400million has been committed for growth projects and acquisitions.

Building Products CSR initiated expansions at brick plants inOxley, south of Brisbane, and in New Lynn, Auckland. In Insulation, the Ingleburn glasswoolfactory in Sydney’ssouth will increase capacity by 50%.

In January 2005, the companyacquired the Karreman concrete roof tile business in Brisbanefor $12.5 million, enabling CSR to expand in the growing south east Queensland market.

In Asia, growth continues inthe China insulation business to meet growing demand in the Asian region. Commissioning of the new leased Nanning glasswoolinsulation plant was completed in August 2004. The expanded Dongguan rockwoolplant began production in March 2005.

Aluminium CSR invested $75 million as its share in a projectto expand capacity at Tomago aluminium smelter, near Newcastle, NSW.

Sugar A 63 megawatt renewableelectricity plant under construction at the Pioneer raw sugar mill in theBurdekin River District, North Queensland, isto be operating during this year’s sugarcane harvesting and milling season.This will expand CSR’s commercial generation of renewable electricity – fuelledby sugarcane waste fibre.

The project is expected to generatereturns above the cost of capital notwithstanding that the project will nowcost approximately $140 million, up from the initial estimate of $100million. This increase is due tochanges in the scope of the project and escalation in the cost of labour andmaterials. The renewable energy plantwas originally approved on the basis of operating for about eight months eachyear, primarily during the sugarcane milling season. To boost returns further,plans are being developed to operate the plant all year round.

In April 2004, CSR increased itsstake in the Sugar Australia joint venture and New Zealand Sugar CompanyLimited by 25% to 75% with the acquisition of Man Group plc’s interest for 
$61 million.

Property Thisyear $32 million was approved for infrastructure and road construction on the Erskine Park,Sydney, former quarry site. The 100 hectare site willbe sold or developed and leased as industrial zoned land over the next two orthree years.

Outlookfor the year ahead

Commenting on the outlook for theyear ahead, Mr Brennan noted that CSR’s profit performance is subject to anumber of influences, including movements in exchange and interest rates,commodity prices (including fluctuations in the raw sugar market) and levels ofbuilding activity. “At this early stagein the year, we would expect a result broadly in line with last year.”

Building Products “Our plans for thisyear are based on the expectation that the number of new dwellingswill fall by around 5%. This should be partly offset by demand from thecommercial building sector. With the benefit of operational improvementinitiatives across the businesses, the Building Products’ result is expected tobe broadly in line with last year.”

Aluminium “Lower A$ returns will reduce Aluminium EBITby between 5% to 10%. The rate of growth in aluminium demand is expected toslow. However, earnings will continue to be supported by the current hedgingposition.”

Sugar “Reasonably good growing conditions are expected this season, butthe sugarcane crop should be slightly below that of last season. Assumingthat world raw sugar prices remain at current levels, combined with additionalrevenue from the renewable energy plant at Pioneer mill, the Sugar resultshould be broadly in line with last year.”

Property “Resultsare expected to be at least in line with last year following the completion ofthe first sale of land at Erskine Park and further development of the Ferntree Gully, Melbourne, properties.”

The result will also be impacted by CSR’s adoption ofInternational Financial Reporting Standards from 1 April 2005, which is likelyto increase profit after tax for the year by approximately 3% to 5%.