CSR acquires a leading Australian downstream value-added processor and distributor of flat glass, Don Mathieson & StaffGlass Pty Ltd (DMS Glass) for $175 million

The acquisition is an extension of the stated growth strategy for CSR Building Products and an excellent synergistic fit with the recently acquired Pilkington Australasia glass business (Pilkington)

The combination of DMS Glass and Pilkington will provide CSR with an enhanced position in the Australian value-added glass market

The business is ideally positioned to capitalise on the expected increasing demand for architectural glass products in residential and non-residential construction and an increasing focus on energy efficiency

CSR’s entry into the glass market through the acquisitions of DMS Glass and Pilkington is supported by compelling financial parameters

Combined annual synergies of at least $33m byYEM10 (including previously stated Pilkington synergies of $20m)

DMS standalone acquisition multiple of 6.1xYEM08 maintainable EBITDA1

The Pilkington and DMS transactions, together,represent an acquisition multiple of 7.5x YEM08 maintainable EBITDA2

The combined acquisitions are expected to be EPS neutral in YEM08 and accretive thereafter

The acquisitions of Pilkington Australasia and DMS Glass will be funded by a combination of debt and equity

$150m underwritten placement of CSR shares to institutional shareholders

Share purchase plan (SPP) of approximately$75m

Underwritten dividend reinvestment plan (DRP)for two dividend payments in November 2007 and July 2008

This combination of placement, SPP and underwritten DRP for two dividend payments replaces the underwriting of the DRP for three dividend payments as was foreshadowed at the time of the Pilkington acquisition

CSR has entered into a conditional agreement to acquire Don Mathieson & StaffGlass Pty Ltd, a leading Australian downstream value-added glass manufacturing and distribution business. The acquisition is conditional on ACCC clearance and will proceed in as short a time frame as possible.

The acquisition is an important extension of the growth strategy already announced for CSR Building Products and is an excellent fit with the recently acquired Pilkington business.

“The acquisition of DMS Glass is consistent with CSR’s strategy of growing in closely related business segments by acquisition and extending our range of products, especially high growth speciality glass products and those that improve energy efficiency and thermal and acoustic comfort in new buildings,”CSR Managing Director Jerry Maycock said.

“In addition, the acquisition complements CSR Building Products’ recent acquisition of Pilkington Australasia, will increase the size and scale of Pilkington’s downstream processing operations and delivers increased volumes for primary products produced by Pilkington.

“The integration of Pilkington is proceeding according to plan and we are pleased with the first two months’ results following the acquisition,” Mr Maycock said.

DMSGlass operates two glass processing and storage facilities in Clayton and Braeside in Victoria and has recently acquired SA Independent Glass in SouthAustralia. DMS Glass will provide sophisticated processing capabilities,including insulated glass unit production, toughening and laminating. Together with the Pilkington business, DMS Glass will be a leading value-added glass distributor in Australia. Importantly, the acquisition will provide CSR with significant downstream capability in Australia and New Zealand.

DMSGlass will provide CSR with a number of leading brands, which are expected to be extended across the Pilkington product offerings.

The business is headquartered in Melbourne and employs approximately 400 people.The business’ end markets include glass distributors, window fabricators,shower screen and furniture manufacturers, solar panel manufacturers and glaziers. DMS Glass generated revenue of around $96m for the year ended 30 June2007.

The existing DMS Glass senior management team will continue to lead the business,reporting to the Executive General Manager of Pilkington. Don Mathieson, the chairman of DMS Glass since its foundation in 1985, has also agreed to enter into a consulting agreement with Pilkington.

The combination of the purchase prices for DMS Glass and Pilkington represents 7.5xYEM08 maintainable EBITDA, after maintainable synergies and before one-off costs of around $21m in YEM08 which will be expensed as significant items. The combination of the two businesses is expected to generate YEM08 EBITDA of $116 mafter annual maintainable synergies of $33m.

The acquisition is expected to be earnings per share neutral in the first year ofCSR ownership (YEM08) and positive thereafter, excluding one-off costs.

The acquisitions of DMS Glass and Pilkington are to be funded by a combination of debt and equity. It is proposed to raise $225m of equity by way of an underwritten A$150m institutional placement in conjunction with a share purchase plan of approximately $75m. CSR also intends to arrange for the underwriting of its dividend reinvestment plan (DRP) for dividend payments inNovember 2007 and July 2008, rather than underwriting the DRP for three dividend payments as was foreshadowed at the time of the Pilkington acquisition. In the unlikely event that the transaction does not close, the underwriting of theDRPs will be not be required, and the proceeds from the Placement and SPP will be applied to repay existing bank debt.

CSR also wishes to notify members of a proposed amendment to bring its current SPP and DRP up to date with current market practice, and to enable the plans to be reinstated in the near future. Under the Company’s current SPP and DRP, CSR must give one month’s notice of any proposed amendments. By this announcement,CSR gives that notice and confirms that no issues will be made under the new plans for a period of at least one month from the date of this notice. The proposed terms of the SPP and DRP have been posted on the investor relations section of CSR’s website atwww.csr.com.au

TheRecord Date for entitlements to participate in the SPP will be 19 September2007. Accordingly, participation in the SPP will be open to all persons registered as holders of ordinary shares at 7.00 pm (Sydney time) on 19September 2007, and whose address in the company’s share register is inAustralia or New Zealand.

Further details regarding the acquisition of DMS Glass are included in a presentation lodged with the Australian Securities Exchange together with this announcement.

Goldman Sachs JBWere acted as financial adviser to CSR for the acquisition and as Underwriter and Sole Lead Manager and Book runner for the placement.

12 September 2007

After maintainable synergies of $13m and before $6m of one-off costs

After maintainable synergies of $33m and before $21m of one-off costs