we want more

What the directors are paying and proposing to shareholders is good.

The directors have paid a fully franked interim dividend ($0.03 cents) and propose a fully franked special dividend ($0.913 cents) on the 2 February.

But is it enough?

I would like to see directors declare a generous fully franked final dividend for the financial year ended 31 March 2011. They could apply an 80% dividend payout of net profit after tax (before significant items). Depending on second half profit results, hopefully the final dividend could be around $0.09 to $0.12 cents per share. This would be an appropriate reward for loyal long-term investors who have supported the company and given it credibility.

Another point about growing the company.

CSR is now a focused manufacturer of building products for the local market. There may be worthwhile expansion opportunities to pursue at the RIGHT PRICE and TIME.

Possibilities might include any of the following:-

1. Buying back the Humes Concrete Pipes business from Holcim Australia. The Humes operation was a part of the Rinker group which was demerged from CSR in 2003. This long-established business uses innovative technologies and is Australia?s leading maker of concrete pipes and pre-cast concrete products. It has extensive manufacturing facilities and distribution networks across Australia. By acquiring this business, CSR would gain manufacturing exposure to the expected surge in national infrastructure and civil works spending .

2. Buying a supplier of raw materials to the existing manufacturing operation. (CSR already has a gypsum mine joint venture as well as its its own clay quarries for sourcing raw materials for making some products). A bargain purchase here could produce synergies by reducing input costs to improve margins. Potential targets to consider might be Penrice Soda Holdings Ltd who make soda ash and mine limestone (both primary ingredients for making glass and cement) or the much larger Adelaide Brighton Ltd, who makes cement and lime.

3. Raising its interest in the Tomago aluminium smelter joint venture - an investment that generates attractive returns. Presently, CSR has a 70% interest in Gove Aluminium Finance Ltd. which holds a 36.5% interest in the Tomago smelter. The remaining 30% is held by AMP. Under the relevant agreement, if AMP were to sell its interest, CSR would have the first right to buy. A buyout of the AMP minority interest would increase the effective overall interest of CSR in the smelter from 25.24% to 36.5%. This in turn would mean higher contributions to earnings from this source .



Disclaimer
Please note that I am not providing valuations, advice, information, recommendations or predictions. The above statements are merely my own calculations, comments and thoughts as an ordinary shareholder without any special skills or knowledge. I absolutely disclaim any responsibility or liability whatsoever for any consequences arising from the use of my calculations, comments and thoughts expressed. If you require advice or information, you should seek the services of an appropriately qualified independent expert professional person as well as do your own proper and thorough research.