UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 20-F

(Mark One)

o  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ý  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2006

OR

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

o  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:  001-31823

RINKER GROUP LIMITED

ABN 53 003 433 118

(Exact name of Registrant as specified in its charter)

New South Wales, Australia

(Jurisdiction of incorporation or organization)

Level 8, Tower B, 799 Pacific Highway, Chatswood, NSW 2067, Australia

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual report:

Ordinary shares, fully paid    910,116,219

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  ý   No  o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes  o   No  ý

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ý   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o

Indicate by check mark which financial statement item the registrant has elected to follow

Item 17  o   Item 18  ý

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o   No  ý

(1)  Not for trading but only in connection with the listing of the American Depositary Shares.

(2)  Evidenced by American Depositary Receipts, each American Depositary Share representing five Ordinary Shares.

TABLE OF CONTENTS

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Australian Adoption of Australian Equivalents to International Financial Reporting Standards

Rinker has adopted Australian Equivalents to International Financial Reporting Standards (A-IFRS) for its current fiscal year ended March 31, 2006.  Accordingly, Rinker’s accounting policies have now been amended to ensure consistency with A-IFRS and results shown for fiscal year 2006 have been prepared under those A-IFRS accounting policies. 

In addition, results shown for the year ended March 31, 2005 have been restated to be comparable to the current year. 

The principal impact of A-IFRS on reported results is the reduction in goodwill amortization expense to zero.  Prior to the adoption of A-IFRS Rinker’s goodwill amortization expense during the year ended March 31, 2005 was US$56.3 million.  Additional information is included in Note 1 in the financial statements included elsewhere in this annual report.

Compliance with A-IFRS ensures compliance with International Financial Reporting Standards. 

Certain definitions

The fiscal year for Rinker ends on March 31.  As used throughout this annual report, unless otherwise stated or the context otherwise requires, the fiscal year ended March 31, 2006 is referred to as fiscal year 2006 and other fiscal years are referred to in a corresponding manner.  All other references to years are specified and relate to calendar years.

References to tonnes herein are to metric tonnes, each of which equals approximately 2,205 pounds or 1.102 short tons.  Certain measures of distance referred to herein are stated in kilometers, each of which equals approximately 0.62 miles.  Certain measures of area referred to herein are stated in square kilometers or hectares; one square kilometer equals 0.3861 square miles and one hectare equals 2.47 acres.  Certain measures of volume referred to herein are stated in cubic meters, each of which equals approximately 1.31 cubic yard.

Estimates with respect to market size information represent the judgment of the management of Rinker, based on records and experience of Rinker and its subsidiaries as well as information available from industry and government publications and other sources.

Any discrepancies between totals and sums of components in tables contained in this annual report are due to rounding.

Unless otherwise indicated, all references in this annual report to:

“A-IFRS” means Australian equivalents to International Financial Reporting Standards, which are currently the accounting principles generally accepted in Australia.

“ADR” means American Depositary Receipt, evidencing American Depositary Shares.

“American Depositary Shares” or “ADSs” each represent five ordinary shares.

“associate or associated company” means in relation to Rinker, an entity other than a consolidated entity, where Rinker has the capacity to influence significantly the financial and operating policies of the entity.

“ASX” means the Australian Stock Exchange.

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 “consolidated entity,” means an entity that Rinker is required to consolidate within the financial statements.

“Consolidated” means, in relation to the financial statements for the year ended March 31, 2006 and 2005, the consolidated financial statements for Rinker Group Limited and controlled entities. 

 “CSR” means CSR Limited, ABN 90 000 001 276, an Australian company.

“CSR group” means CSR and the entities that CSR must consolidate under A-IFRS.

“EBIT” means profit before finance and income tax expense in accordance with A-IFRS.

“finance” means borrowing costs net of interest income.

“financial statements” means: (i) the audited consolidated balance sheets of the Rinker group as at March 31, 2006 and 2005; and (ii) the audited consolidated income statements, statements of recognized income and expense, and cashflow statements of the Rinker group for each of the one-year periods ended March 31 for the years 2006 and 2005, together with accompanying notes included herein at pages F-1 to F-63. 

“fiscal year” means financial year ended March 31.

“GST” means Australian goods and services tax.

“hedge settlement rate” means the 9:55 a.m. hedge settlement rate compiled by the Australian Financial Markets Association at the end of each month in the period, as displayed on the Reuters financial news service.

“heritage business” means the business excluding all acquisitions that have not been included in Rinker group companies’ prior year operations for the full prior fiscal year.

“Kiewit” means Rinker Materials Western, Inc. (formerly known as Kiewit Materials Company), a company incorporated in Delaware, and its subsidiaries, which was acquired by Rinker Materials in September 2002.

“NYSE” means the New York Stock Exchange.

“ordinary shares” means fully paid ordinary shares in the issued capital of Rinker.

“Readymix” means Rinker Australia Pty Limited, ABN 87 099 732 297, an Australian corporation, and its subsidiaries.

 “Rinker” means Rinker Group Limited, ABN 53 003 433 118, an Australian corporation. 

“Rinker Materials” means Rinker Materials Corporation, a company incorporated in Georgia, and its subsidiaries.

“Rinker group” means Rinker and its consolidated entities.

“SEC” means the Securities and Exchange Commission.

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“Superseded Australian GAAP” means accounting principles accepted in Australia, prior to the adoption of A-IFRS.

 “trading revenue” means revenue received from customers (net of discounts, returns and allowances), including fees for services as agent, rents and royalties.

“US GAAP” means accounting principles generally accepted in the United States of America.

Where you can find more information about Rinker Group Limited

Rinker is subject to the reporting obligations contained in the Securities Exchange Act of 1934.  You may read and copy any document that Rinker files at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549.  Rinker’s filings with the SEC are available over the Internet at the SEC’s website at www.sec.gov.  Copies of these filings can also be obtained from Rinker upon request.  Requests should be directed to Rinker Group Limited, Level 8, Tower B, 799 Pacific Highway, Chatswood, New South Wales 2067, Australia; Attention: Investor Relations.  Telephone requests may be directed to the attention of Investor Relations at  +61 2 9412 6608.

Forward-Looking Statements

This annual report contains a number of forward-looking statements.  Such statements can be identified by the use of forward-looking words such as “may,” “should,” “expect,” “anticipate,” “estimate,” “scheduled” or “continue” or the negative thereof or comparable terminology.  Rinker can give no assurances that the expected impact on financial condition, anticipated trading results or returns of entities in the Rinker group would not differ materially from the statements contained in this annual report.

Such forward-looking statements are not guarantees of future results or performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Rinker, which may cause actual results of the Rinker group or industry results to differ materially from those expressed or implied in the statements contained in this annual report.  Such factors include, among other things, the following:

•      general economic and business conditions in the United States (including the regional economies within the United States) and Australia;

•      trends and business conditions in the United States and Australian building and construction industries;

•      changes in interest rates;

•      competition from other suppliers in the industries in which the Rinker group operates;

•      changes in the Rinker group’s strategies and plans regarding acquisitions, dispositions and business development;

•      the Rinker group’s ability to efficiently integrate past and future acquisitions;

•      compliance with, and potential changes to, governmental regulations related to the environment, employee safety and welfare and other matters related to the entities of the Rinker group; and

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•      changes in exchange rates, in particular the rate of exchange between United States dollars and Australian dollars.

The foregoing list of factors is not exhaustive.  When relying on forward-looking statements to make decisions with respect to investing in Rinker shares, a potential investor should carefully consider the foregoing factors and other uncertainties and potential events.  Rinker does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Rinker or on Rinker’s behalf.  For a discussion of certain of these factors, see “Item 3.D. - Risk Factors,” and see also “Item 3. - Key Information,” “Item 4. - Information on the Rinker group,” “Item 5. - Operating and Financial Review and Prospects,” “Item 8. - Financial Information” and “Item 11. - Quantitative and Qualitative Disclosures about Market Risks.”

PART I

Item 1           Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2           Offer Statistics and Expected Timetable

Not applicable.

Item 3           Key Information

Currency of Presentation and Exchange Rates

Rinker Materials maintains its financial records in US dollars and Readymix maintains its financial records in Australian dollars.  Under A-IFRS, Rinker’s presentation currency is US$, although Rinker intends to continue to disclose Readymix results in both US$ and A$.   In this annual report, unless otherwise specified herein or the context requires, references to “US$” or “US dollars” are to United States dollars and references to “A$” or “Australian dollars” are to Australian dollars.  

For the year ended March 31, 2006, around 80% of the Rinker group’s trading revenue was generated by Rinker Materials in the United States.  For the years ended March 31, 2006 and 2005 there were virtually no movements of currency between US dollars and Australian dollars that resulted in a material amount of realized exchange gains or losses.  As a result, the only significant impact of changes in the US dollar/Australian dollar exchange rate is one of accounting translation for financial reporting purposes.  An appreciation of the A$ relative to the US$ would be expected to have a favorable impact on the Rinker group’s reported US$ results.

The directors believe that the best measure of performance for Rinker Materials in the United States and Readymix in Australia is their respective local currencies in as much as each generates all revenue and incurs all costs in that local currency.  Set out below is selected financial data for the Rinker group in US dollars. 

For the purposes of this annual report, A$ transactions are translated into US$ at the average of the hedge settlement rate at the end of each month in the period presented and A$ balances are translated into US$ at the hedge settlement rate at fiscal year end, consistent with the requirements of A-IFRS and US GAAP.

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The following are the average of the monthly rates expressed in US dollars per A$1.00 that have been used to translate Readymix A$ transaction amounts in this annual report:

Unless otherwise stated the following year-end rates, expressed in US dollars per A$1.00 have been used to translate Readymix A$ balances at March 31 into US dollars in this annual report:

The Australian dollar is convertible into United States dollars at freely floating rates and there are currently no restrictions on the flow of Australian currency between Australia and the United States.

A.    Selected Financial Data

The following table presents selected financial data of the Rinker group in United States dollars.  This table should be read in conjunction with “Item 5. - Operating and Financial Review and Prospects,” and the audited financial statements that are included elsewhere in this annual report.

The US GAAP financial statements and other information for the fiscal years ended March 31, 2003 and 2002 have been prepared on a carve-out basis and include the balance sheet, income statement and cash flows of Rinker Materials US businesses and the Readymix businesses that were transferred to the Rinker group from CSR prior to the demerger of Rinker group from CSR effective March 28, 2003.  These financial statements have been prepared from historical accounting records of the CSR group and present all of the operations of the business as if the Rinker group had been a separate economic entity inclusive of all of these businesses for all periods presented.  The historical financial information presented for fiscal years prior to 2004 is not indicative of the Rinker group’s future financial performance.

The balance sheet data as of March 31, 2006 and 2005 and income statement data for the years ended March 31, 2006 and 2005, set forth below are derived from, and are qualified in their entirety by reference to, the Rinker group’s audited financial statements that are included elsewhere in this annual report. With respect to the US GAAP selected financial data, information for the Rinker group is provided for fiscal years 2006, 2005, 2004, 2003 and 2002. 

The Rinker group’s financial statements are prepared in accordance with A-IFRS, which differs in certain material respects from US GAAP.  See Note 40 to the financial statements that are included elsewhere in this annual report for a description of the principal differences between A-IFRS and US GAAP as they relate to the Rinker group and a reconciliation of net profit and shareholders’ equity for the years and as at the dates therein indicated.

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As permitted by SEC Form 20-F, historical data for fiscal year 2004 and prior fiscal years has not been prepared under A-IFRS and therefore has not been presented for comparative purposes.

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(1)   Throughout this annual report “EBIT” means profit before finance and income tax expense in accordance with A-IFRS.

(2)   Income from continuing operations is the same as net profit attributable to members of Rinker, and income from continuing operations per share is the same as basic earnings per share.

(3)   Dividends shown for 2006, 2005 and 2004 represent the amounts provided for.  The dividends in 2003 represent amounts paid to CSR when Rinker was a wholly owned subsidiary.  Dividend per share information for fiscal years 2003 and 2002 has therefore been based on the 944.7 million shares issued and outstanding subsequent to the demerger. These amounts are not necessarily representative of the amounts that would have been paid if Rinker had been a separate publicly listed company.

(4)   Operating capital expenditure represents capital expenditure required to maintain existing operating capabilities.

 (5)  Development capital expenditure represents capital expenditure to acquire businesses, expand operating capabilities and extend market coverage.

(6)   As a result of the demerger from CSR, 944.7 million Rinker ordinary shares were listed on the ASX on March 31, 2003 (on a deferred settlement basis), prior to being issued on April 11, 2003.   Prior to that time Rinker was a 100% owned subsidiary of CSR.  The weighted average number of ordinary shares assumes that same number of shares existed throughout fiscal years 2003 and 2002.

(7)   During the year ended March 31, 2005 Rinker issued 0.2 million shares as part of the Employee Universal Share Plan “USP”.  During the year ended March 31, 2006, Rinker purchased 31.1 million shares as part of an on-market buy-back.  See “Item 16E – Purchase of Equity Securities by the Issuer and Affiliated Purchasers” for further details.

B.    Capitalization and Indebtedness

Not applicable.

C.    Reasons for the Offer and Use of Proceeds

Not applicable.

D.    Risk Factors

Rinker group entities are subject to various risks resulting from changing economic, political, social, industry, business and financial conditions, particularly in the United States and Australia.  Certain of these risks are described below.  Rinker group entities could also be subject to other risks that management has not anticipated.

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Rinker group’s operations are dependent to a significant extent on demand across the construction industry economic cycle and the Rinker group’s revenues and profits in future periods may fluctuate with that cycle.

The activity of businesses in the Rinker group is dependent on the level of activity in the construction industry in the various regional markets in the United States and in Australia where Rinker group companies operate.  The construction industry in a given geographic market has historically tended to be cyclical.   Within each geographic region construction industry spending can vary significantly from peak to trough through the business cycle.   The construction industry is also very sensitive to fluctuations in general economic activity in the particular economy.  Rinker estimates that a 1% revenue change related to volumes across the Rinker group as a whole, without regard to the different cycles within each industry, region, or market, would have an annual impact on revenue of approximately US$51 million and on EBIT of approximately US$12 million. Rinker is not able to predict the timing, extent or duration of the business cycles or economic downturns in the construction industry in the geographic regions in which Rinker group companies operate.   Because many of Rinker group’s costs are fixed, if an extended downturn in one or more segments of the construction industry occurs, particularly in Florida or Arizona in the US or in Australia, companies in the Rinker group may not readily be able to reduce their costs in proportion to the extent of the downturn.  Any significant or extended downturn in the construction industry in those geographic regions will negatively affect the Rinker group’s financial performance and condition where revenues fail to grow or fall and costs do not move to compensate.  An overview of the United States and Australian markets is included in “Item 4 – Information on the Rinker group”.

The Rinker group’s operations are dependent to a significant extent on demand in selected key US states and the Rinker group’s revenues and hence profits in future periods may fluctuate with the underlying industry economic cycle of those states.

A significant proportion of the Rinker group’s revenue was generated from Florida (44%) and Arizona (13%) in the year ended March 31, 2006.  As a result, fluctuations in the underlying economic cycle may result in variations in EBIT in similar proportion to the overall margin impact on Rinker as previously described for the construction industry cycle.  The Rinker group is especially dependent on market demand for its heavy building materials products in those markets.  A downturn in demand in the residential or other heavy building materials markets in these states could have a significant adverse impact on the Rinker group’s financial performance and condition where revenues fail to grow or fall and costs do not move to compensate.  Any adverse impacts on the Florida economy arising from the cessation or significant restriction of quarrying operations in the Lake Belt could also have a material adverse effect on Rinker.  See Legal Proceedings in “Item 8.A. Consolidated Statements and Other Financial Information” on page 120.

Government funded construction activity in the US may be lower in future periods and the Rinker group’s revenues and profits in future periods may fluctuate depending on the level of Government funding of civil construction.

The Rinker group’s largest exposure to the US civil construction sector is in roads, highways and bridges.  Approximately 13% of the Rinker group’s revenue for the year ended March 31, 2006 is estimated to be related to the US civil construction sector.    Any significant decrease in future US federal or state infrastructure funding levels may negatively affect the Rinker group’s financial performance and condition where revenues fall and costs do not move to compensate.

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Rinker group’s operations depend on securing and permitting aggregate reserves that can be supplied economically to growing markets.

Construction aggregates are bulky and the cost to transport may surpass the cost of material.  Generally, aggregate is supplied from local quarries.  New quarry sites often take a number of years to develop and must be planned well in advance.  As communities grow, existing quarry locations may be depleted, or quarry production may be restricted by additional regulation and some of the most attractive sites for new quarries may be used for other building, or may be difficult to permit for quarrying.  To meet forecasted needs, Rinker’s strategy is to secure additional land and permits in target markets where possible, and to develop the distribution network to transport aggregates by truck, rail and water in order to maintain economic sources of supply.   Certain quarry permits in South Florida are currently being challenged.  See Legal Proceedings in “Item 8.A. Consolidated Statements and Other Financial Information” on page 120.

The Rinker group has grown significantly through acquisitions and may be unable to continue its growth by this means if suitable opportunities cannot be identified. The Rinker group’s performance is also affected by its ability to integrate any acquisitions into its existing operations.

The Rinker group has grown significantly in recent years through a series of bolt on acquisitions, the most recent major acquisition being Kiewit in September 2002.  A key element of the Rinker group’s growth strategy is to continue its acquisition strategy.  The Rinker group’s ability to realize benefits from future acquisitions depends, in large part, on its ability to integrate the acquired businesses with its existing operations in a timely and effective manner.  The Rinker group’s efforts to integrate any future acquisitions may not be successful.  The Rinker group’s acquisition strategy also depends on its ability to identify and acquire suitable assets at desirable prices.  The Rinker group may not be successful in identifying or acquiring suitable assets at acceptable prices in the future.  To the extent the Rinker group fails to be successful in acquiring suitable assets at acceptable prices in the future, it is unlikely to be able to continue to grow its earnings at the same rate as it has done in the recent past.

Rinker may need to pay for all or part of the purchase price for any future acquisitions with its ordinary shares.  These acquisitions and investments, if they were to occur, could have a diluting effect for Rinker’s shareholders and, whether they are paid for in cash or Rinker shares may cause Rinker’s share price to decrease.

The Rinker group may be affected by problems in previously acquired businesses or newly constructed plants.  Unforeseen problems may impact future profits.

The Rinker group has completed a number of significant acquisitions and plant construction projects as detailed in “Item 4 – Information on the Rinker group.”  The Rinker group may not have anticipated all problems of acquired businesses and plant construction, and losses associated with these acquisitions or projects may come to light prior to the expiration of any warranty and indemnity protections, or the Rinker group may be unable to enforce such provisions against the parties making the indemnities.   If problems arise they may impact the Rinker group’s future profit if the Rinker group is required to extinguish unforeseen liabilities or there is significant impairment of assets requiring write down at some future date.

The Rinker group may be subject to competition from existing and new market entrants and products, which could impact future revenues and profits.

Each market in which Rinker group companies operate is highly competitive.  The competitive environment can be significantly affected by a number of regional factors, such as the number of competitors, production capacity, economic conditions and product demand in the relevant regional market.  The pricing policies of competitors and the entry of new competitors into the regional markets in which Rinker group companies operate can have an adverse effect on demand for their products and on

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their financial performance or condition where revenues fail to grow or fall and profit margins are reduced.

Rinker group companies face competition from alternative products.  For example, the concrete pipe products operations of Rinker Materials and Readymix face competition from plastic, metal and fiber cement pipe products in the smaller diameter size segment of the market.  Product substitution of alternative materials for Rinker group products may have an adverse effect on the Rinker group’s financial performance or condition where revenues fail to grow or fall and profit margins are reduced.  In many markets in which the Rinker group operates there are no significant entry barriers that would prevent new competitors from entering the market or existing competitors from expanding in the market.  

Rinker group entities are subject to extensive health, environmental, land use, and other governmental laws and regulations, which could have an impact on the Rinker group’s future financial performance.

Rinker group entities are subject to extensive health, environmental, land use, and other governmental laws and regulations and increasing regulatory compliance requirements.  Depending on the extent of future regulations that may be enacted, Rinker group entities may be required to invest in preventive or remedial action, which could be significant, in which case it could have an adverse impact on the Rinker group’s financial performance and condition.    

Tighter land use or zoning restrictions affecting existing quarry permits or making new quarry permits more difficult to obtain could also restrict the ability of companies in the Rinker group to conduct their businesses economically or restrict some activities altogether.  Legal challenges to existing permits could restrict the ability of the Rinker group to utilize existing quarry reserves.  See Legal Proceedings in “Item 8.A. Consolidated Statements and Other Financial Information” on page 120 for a discussion of a challenge to certain permits issued in South Florida.

Environmental liabilities, if incurred, could have an adverse impact on the Rinker group’s financial performance and condition.  Stricter environmental laws and regulations, or stricter interpretation and enforcement of existing laws or regulations, may impose new liabilities on Rinker group companies or result in the need for additional investments in pollution control equipment, either of which could result in a decline in the Rinker group’s profitability.  Further details regarding environmental regulation and certain liability issues affecting companies within the Rinker group are contained in section “Item 4 – Information on the Rinker group.”

Occupational health and safety risks and regulations may have an impact on future productivity and financial performance.

Rinker group entities are subject to the operating risks associated with construction materials and other manufacturing and handling risks, including the related storage and transportation of raw materials, products and wastes.  These hazards include storage tank leaks and ruptures, explosions, discharges or releases of hazardous substances, manual handling, exposure to dust and the operation of mobile equipment and manufacturing machinery.

Such operating risks can cause personal injury and property damage, and may result in the imposition of civil or criminal penalties.  The occurrence of any of these events may have an adverse effect on the productivity and profitability of a particular manufacturing facility and the operating results of Rinker group entities through increased costs or reduced operating flexibility and productivity.

Crystalline silica dust and its control have been identified as an occupational health issue in Rinker group entities’ operations in Australia and in the US.  Rinker group entities use raw materials containing

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silica in cement manufacturing, concrete plants, concrete products plants and asphalt plants.  Many quarry products also contain silica. Rinker group entities may face future costs of engineering and compliance to meet new standards relating to crystalline silica since regulatory agencies in Australia and the US are re-examining existing standards and considering stricter exposure limits.  Rinker group entities cannot reliably quantify future claims related to crystalline silica.  Any future claims could have an impact on the Rinker group’s profitability.

Labor disputes between Rinker group companies and unions could disrupt operations that could have an impact on the Rinker group’s future financial performance.

Approximately forty percent of Rinker Materials’ employees and approximately thirty per cent of Readymix employees are covered by bargaining agreements which periodically come up for renegotiation and renewal.  In the next twelve months, 11 contracts, covering approximately 700 employees, are scheduled to expire in the United States.  In Readymix, Australia, 18 agreements are due to be renegotiated in the next twelve months covering approximately 600 employees.

Disputes with trade unions could lead to strikes or other forms of industrial action that could disrupt operations within the Rinker group, raise costs and reduce Rinker group’s revenues and profits.  Any such disruptions to operations within the Rinker group may adversely affect the group’s financial performance and condition through increased costs and reduced productivity.

The Rinker group may face potential liability for defective products, which could have an impact on future profits.

Due to the nature of its operations, claims against Rinker group entities could arise from defects in material or products manufactured and/or supplied by Rinker group entities.   Purchasers and third parties could make claims against Rinker group entities based on their delivery of defective materials or products, or for damage or loss arising from the use of these defective materials or products.  If any claims of this type are determined against Rinker group entities and if the Rinker group’s existing insurance arrangements do not cover the liability, it could have an adverse effect on the financial performance and condition of the Rinker group due to increased rectification costs or liability for compensation.

Antitrust (trade practices) risks may restrict the Rinker group’s business activities and its ability to grow.

Rinker group entities are subject to antitrust or trade practices laws.  Antitrust or competition considerations may restrict business activities within the Rinker group and the ability to grow through acquisitions or participate in industry rationalization in particular geographic markets.  This could have an adverse impact on the Rinker group’s financial performance where revenues fail to grow or fall and or profit margins are reduced.

Operation and supply failures or shortages could have an impact on the Rinker group’s future revenues and profits.

The manufacturing facilities and supply of finished products to customers of Rinker group entities could be disrupted for reasons beyond their control.  These disruptions include extremes of weather, fire, natural catastrophes, supplies of materials, transport logistics, services, energy or fuel, system failures, workforce actions or environmental issues.  Any significant disruptions or shortages could adversely affect Rinker group entities’ ability to make, sell and deliver products, which could cause revenues to decline or costs to increase and result in lower profits.

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Rinker group entities may be required to provide further funds to cover the defined benefit obligations of those superannuation (pension) funds in which it participates.

Superannuation (pension) funds in which Rinker group entities participate provide both defined benefits and accumulation benefits.  Any funding deficits are intended to be funded progressively by Rinker group entities and all minimum funding requirements have currently been satisfied.  The estimated liability for the total defined benefit obligation, including the US$25.7 million funding deficit for US plans under A-IFRS, is accrued on the balance sheet.  There is a risk that, in the future, changes in the value of the funds’ assets, changes in actuarial determinations of the funds’ liabilities or changes to government legislation could require Rinker group entities to increase their current level of contributions to these funds and adversely impact financial performance.  Details of Rinker group entities’ defined benefit plans are included in “Item 5.H. – Details of defined benefit pension plans”.  

The Rinker group could be affected by interest rate fluctuations.  If interest rates rise, borrowing costs may be higher, and higher interest rates may adversely affect construction activity levels.

The Rinker group’s external borrowings at March 31, 2006 were US$651 million of which, prior to the effect of interest rate swaps, approximately US$356 million or 55% was paying interest at fixed rates.  Taking into account around US$250 million of variable to fixed rate interest rate swaps in place at March 31, 2006, the Rinker group’s net fixed interest rate borrowings were approximately US$606 million or 93% of gross debt.  Accordingly, movements in interest rates may impact the Rinker group’s debt servicing obligations and borrowing costs, impacting its financial performance.  Rinker estimates that based on the amount of its outstanding indebtedness at March 31, 2006, a 1% increase in variable interest rates would have had an insignificant adverse impact on the Rinker group’s net profit for the year ended March 31, 2006.

An increase in interest rates may reduce construction activity levels within both the residential and commercial segments of the market.  This could have an adverse impact on the Rinker group’s financial performance where revenues fail to grow or fall and costs do not move to compensate.  Details on interest rate risks are included in “Item 11 - Quantitative and Qualitative Disclosure about Market Risks.”

General risks associated with investing in shares may impact the value of Rinker shares and ADRs.

The price of Rinker ordinary shares and ADRs is subject to many influences that may affect the broad trend in the stock market or the share prices of individual companies.  The price at which Rinker ordinary shares trade on ASX and at which Rinker ADRs trade on NYSE may be affected by a number of factors unrelated to the Rinker group’s financial and operating performance and over which Rinker has no control.  Factors such as currency exchange rates, product prices, the level of industrial production, changes in government fiscal, monetary and regulatory policy, investor attitudes, stock market fluctuations in Australia and other stock markets around the world, changes in interest rates and inflation, and variations in general market or economic conditions could all have an adverse effect on the price of Rinker ordinary shares and ADRs.

E.     Supplementary Information - Australian Dollar/Exchange Rates

Currency of Presentation and Exchange Rates

Rinker’s US and Australian subsidiaries each generate virtually all revenue and incur all costs in their local currency.  As a result, directors believe their performance is best measured in their local currency.  At the group level, Rinker Materials represents around 80% of earnings.  As a result, US$ performance represents the most appropriate measure of Rinker’s performance and value.  Under A-IFRS, Rinker’s

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selected reporting currency is US$, although Rinker group intends to continue to disclose Readymix results in both US$ and A$.

Readymix Australian dollar results are translated to US dollar presentation currency using the principles set out in AASB 121 “The Effects of Foreign Exchange Rates.”  Assets and liabilities are translated at the closing rate and income/expense items are translated using an average rate (the closing rate for the month the transactions occurred).  All foreign currency translation adjustments are taken directly to equity through foreign currency translation reserve.  The financial statements of the parent entity (Rinker Group Limited) have been translated into United States dollars using the methodology described above.  This is consistent with both Australian Accounting Standard AASB 121 “The Effects of Changes in Foreign Exchange Rates” and SEC Rule 3-20(d) of Regulation S-X.  The exchange rate used is the Australian 9:55 a.m. hedge settlement rate at the end of each month. 

The following table sets forth, for each of the Rinker group’s fiscal years indicated and for the most recent months, the high, low, average and period-end Noon Buying Rates for Australian dollars expressed in United States dollars per A$1.00.

(1)   The average of the Noon Buying Rates on the last day of each month during the year or the average for each day of the month as applicable.

On May 11, 2006, the Noon Buying Rate was A$1.00 = US$0.7781.

The Australian dollar is convertible into United States dollars at freely floating rates and there are currently no restrictions on the flow of Australian currency between Australia and the United States.

Item 4             Information on the Rinker group

Estimates with respect to market size information represent the judgment of the management of Rinker, based on records and experience of Rinker and its subsidiaries, as well as information available from industry and government publications and other sources.

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A.    History and Development of the Rinker group

Background

Rinker (formerly HBM International Limited which was formerly CSR Investments Overseas Limited) was incorporated under the laws of the Commonwealth of Australia on December 23, 1987 and operates under the Corporations Act 2001.  From incorporation to the date of the demerger, Rinker operated as a 100% owned subsidiary of CSR, holding principally the CSR group’s non-Australian interests.

On March 28, 2003, the Federal Court of Australia approved the demerger of Rinker from CSR. On March 31, 2003, Rinker ordinary shares commenced trading on the ASX (on a deferred settlement basis). In accordance with the terms of the demerger, Rinker issued 944.7 million ordinary shares on April 11, 2003. 

The effect of the demerger resulted in Rinker owning the ordinary shares of Rinker Materials and Readymix and becoming a separate company listed on the ASX.  As at March 31, 2006 the Rinker group had total assets of US$4,457 million and generated trading revenue of US$5,108 million in the year ended March 31, 2006.

Rinker has its registered office at Level 8, Tower B, 799 Pacific Highway, Chatswood, NSW 2067, Australia, telephone (61-2) 9412 6600.

General

Rinker group companies are leading manufacturers and suppliers by revenue of heavy building materials in the US and Australia, based on published financial data of the Rinker group’s competitors.  In the US, Rinker’s subsidiary Rinker Materials is one of the largest producers of heavy building materials, also based on published financial data of Rinker Materials’ competitors, with its principal operations in Florida and Arizona, and additional operations in 27 other states.   Products include aggregate, cement, concrete, concrete block, asphalt and concrete pipe.  Rinker Materials also has a gypsum wallboard distribution business in Florida.  Since 1998, the Rinker group has grown through a number of acquisitions, in particular through the following acquisitions by Rinker Materials:

During the year ended March 31, 2005 Rinker Materials divested its non-core Prestress and Polypipe polyethylene pipe businesses for total cash proceeds of US$100 million.

In Australia, Rinker’s subsidiary Readymix is one of the leading producers of aggregate, concrete, concrete pipe and other concrete products, based on Readymix’s knowledge of the industry.  Readymix also holds a substantial joint venture interest in an Australian cement manufacturer.  In China, Readymix operates four concrete plants in the northern cities of Tianjin and Qingdao.

During the year ended March 31, 2006 Readymix divested its non-core 50% joint venture interest in the Emoleum asphalt and road pavement maintenance business.  Readymix has retained a long term aggregate supply contract with the purchaser, a subsidiary of Downer EDI Limited.

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At March 31, 2006 commitments for capital expenditure totaled US$63.8 million. 

Rinker is not directly or indirectly controlled by another corporation or by any foreign government and does not know of any arrangement the operation of which may at a subsequent date result in a change of control of Rinker.

The chart above provides an overview of Rinker group companies’ operations.

Business Strategy

The Rinker group aims to be in the top quartile of its construction materials industry peers with respect to growth in revenue, profits and shareholder value, and to deliver top quartile shareholder returns.  Rinker group companies’ strategies to achieve these goals include:

Achieving the number one or number two market position in each market served in the US

The management of Rinker believes that performance is enhanced by holding the number one or number two position by market share in terms of revenue in all of the markets it serves.  Rinker group companies have applied this strategy in most of their acquisitions.   A substantial portion of its revenue is now generated in markets where it has leading positions.  If this objective is not met after specific plans to achieve it have been implemented, the relevant business may be considered for divestment.

Overall cost leadership

Companies in the Rinker group aim to hold cost leadership positions in the majority of their markets.  Rinker group companies aim to instill a culture of continuous improvement through the benchmarking of performance against competitors as well as the implementation of operational improvement projects.  Businesses within the Rinker group have a track record of generating significant cost savings with total estimated savings from these initiatives for the year ended March 31, 2006 of US$52 million.

Continued growth through acquisitions

Rinker has grown significantly in recent years through regional and bolt-on acquisitions (acquisitions of businesses which thereafter share existing administration, supply and distribution arrangements).

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The Rinker group’s acquisition growth strategy is to:

•      Hold or develop the number one or number two positions by market share in terms of revenue, in each region, with a focus on Rinker Materials’ growth in US states where population growth is above the national average;

•      Focus on the acquisition of quarry operations in new regions with the acquisition of integrated operations considered on a case by case basis;

•      Consider acquisitions, such as concrete, cement and asphalt, to create vertically integrated operations, in markets where Rinker group companies have quarry operations; and

•      Consider small, value adding expansion opportunities in Australia, and in concrete pipe and gypsum distribution in the US.

Rinker Materials is expected to use its regional presence in the south east and western US to pursue bolt-on acquisitions with the current objective of investing an average of US$300 million a year on acquisitions and greenfields expansion.  The Rinker group continues to pursue potential major acquisitions which can generate a positive return for shareholders.

A safe workplace

Rinker group companies recognize that good safety performance is an integral part of good business performance. The Rinker group is focused on improving the safety of its companies’ workplaces in the interests of all stakeholders.  Rinker group companies’ policies and approaches to managing health and safety are based on the key principles of management accountability, personal responsibility and training.

B.    Business Overview

1.     Introduction

Business segments are reported along geographic lines (Rinker Materials in the United States and Readymix in Australia and China) and within the United States, along product lines.  The business segments for Rinker Materials are Aggregate; Cement; Concrete, concrete block and asphalt; Concrete pipe and products; and Other.  Readymix is one segment.  These segments are the same as those used for internal management as the basis for making decisions regarding the allocation of resources.

Rinker Materials business segments:

•      Aggregate:  Rinker Materials extracts aggregate, which is crushed and sized for delivery to customers, primarily for use in the production of concrete, roadbase and asphalt.  Rinker Materials’ principal operations are in Florida and Arizona.  Overall, Rinker Materials is the fifth largest supplier of aggregate in the US, based on US Geological Survey production output data, with 89 quarries, sand and aggregate plant operations.  Rinker Materials is a market leader, as measured by production, in Florida and Arizona.  Rinker Materials supplied about 101 million tons of aggregate for the year ended March 31, 2006.  For the year ended March 31, 2006, Rinker Materials’ estimated end markets for aggregate by trading revenue were about 40% residential and the balance equally divided between commercial and civil construction.

•      Cement:  Cement is produced through a highly capital intensive process with limestone as the major raw material.  Rinker Materials is the leading cement supplier in Florida in terms of volume sold,

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based on the Portland Cement Association’s production output statistics collected for the industry, operating two plants, which produced about 2.1 million tons for the year ended March 31, 2006.  Rinker Materials also has two strategically located cement import terminals in Florida, which imported 2.1 million tons for the year ended March 31, 2006.   For the year ended March 31, 2006, Rinker Materials’ estimated external end markets for cement by trading revenue were about 65% residential, 30% commercial and 5% civil construction.

•      Concrete, concrete block and asphalt:  Rinker Materials produces concrete by combining cement, aggregate, water and additives in batch plants for delivery to customers’ sites in mixer trucks.  Rinker Materials produced about 18 million cubic yards of concrete for the year ended March 31, 2006. Rinker Materials is a market leader in Florida, Arizona and Nevada, based on Rinker Materials’ knowledge of the industry, and operated a total of 172 concrete plants at March 31, 2006.  For the year ended March 31, 2006, Rinker Materials’ estimated end markets for concrete by revenue were about 65% residential, 25% commercial and 10% civil construction.

Rinker Materials produced around 200 million units of concrete block for the year ended March 31, 2006.  Concrete block is used for residential and commercial building.  Rinker Materials’ concrete block operations are principally located in Florida and Nevada, where it was the market leader in terms of production for the year ended March 31, 2006, based on Rinker Materials’ knowledge of the industry.

Rinker Materials also produces asphalt, which is used for roads, highways and airports with plants located in Arizona, northern California, Oregon and Washington state.

•      Concrete pipe and products:  Concrete pipe is produced by inserting concrete into a mold, which is subsequently removed.  Rinker Materials, through its Concrete Pipe Division, is one of the leading suppliers of reinforced concrete pipe and pre-cast concrete products in the United States, based on Rinker Materials’ knowledge of the industry, with production of around 3.7 million tons for the year ended March 31, 2006 from 49 plants located in 22 states.  The principal product is concrete pipe, which is used for storm water transmission, sewerage and irrigation.  For the year ended March 31, 2006, the estimated end markets for concrete pipe and products by trading revenue were about 45% residential, 20% commercial and 35% civil construction.

•      Other:  This segment includes gypsum supply.  The pre-stressed concrete products and polyethylene pipe operations were previously included in this segment and were divested during the year ended March 31, 2005.

Readymix:

In Australia, Readymix operates a vertically integrated heavy building materials business with leading market positions, based on Readymix’s knowledge of the industry.  As at March 31, 2006, Readymix had 348 operating plants including 84 quarries and sand mines, 247 concrete plants and 17 concrete pipe and product plants.  Concrete pipe and products are produced by Readymix’s Humes business.

Readymix also holds a 25% interest in Australia’s largest cement manufacturer, the Cement Australia joint venture, which has the capacity to produce over three million tonnes of cement a year from three plants in Gladstone, Queensland; Railton, Tasmania; and Kandos, New South Wales.  The joint venture was formed on June 1, 2003 with the merger of Australian Cement Holdings (50% Readymix, 50% Hanson Australia Pty Ltd) and Queensland Cement Limited (“QCL”) (a 100% owned Holcim Ltd subsidiary).

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Rinker group trading revenue:

The table below sets out the Rinker group’s trading revenues by segment for the fiscal years 2006 and 2005:

(1)   Eliminations represent internal revenue derived from sales by Aggregates and Cement to other segments within Rinker Materials, eliminated on consolidation.

Volumes for all market segments are sensitive to weather conditions, although historically seasonal patterns have not greatly impacted financial results.  In the United States, most operations of Rinker Materials are located in regions with relatively mild climates and normal weather patterns that have historically resulted in only slightly higher activity during the first half of the fiscal year (April – September) than the second half (October – March).  In Australia, although construction activity slows during the traditional summer holiday period in the months of December and January, this is largely offset by increased volumes during February and March which are historically very busy months.

2.     Major Acquisitions

On September 26, 2002, Rinker Materials acquired Kiewit for US$540 million (net of cash).  Kiewit was renamed Rinker Materials Western, Inc. (“Rinker Materials West”) in fiscal year 2003.  Rinker Materials West has significant operations in aggregates, concrete and asphalt in Arizona, representing over 75% of Rinker Materials West revenue for the fiscal year 2006.  Other regions in which Rinker Materials West operates include Oregon, Washington state and northern California.  These operations market to a wide variety of customers including highway contractors, commercial, industrial and residential contractors, public works contractors, wholesalers and retailers of decorative rock products, interstate railroads and manufacturers of concrete block products.

Similar to Rinker Materials’ other operations, Rinker Materials West’s operating results are primarily impacted by the level of construction activity in the residential, commercial and civil segments of the construction materials markets where it operates.  Rinker Materials estimates that about 55% of Rinker Materials West’s revenue was derived from residential construction, 25% from commercial construction, and 20% from civil construction during fiscal year 2006.

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Prior acquisitions

The Rinker Materials operations that exist today were built on the substantial integrated quarrying, concrete and cement business in Florida acquired in 1988.  

Since 1988, Rinker Materials has made a series of significant acquisitions in addition to Kiewit:

•      In 1990, it acquired the aggregate, concrete, asphalt and concrete pipe subsidiaries of ARC America Corporation for US$650 million;

•      In June and July 2000, it acquired American Limestone Company and Florida Crushed Stone Company, for US$211 million and US$348 million, respectively.

3.     United States industry overview

Based on data compiled by Dodge, a division of the McGraw-Hill Companies, the US construction and building market was estimated to have been about US$595 billion in calendar year 2005 (about 5.3% of the US gross domestic product).  Dodge figures are based on the ‘put-in-place’ value of contracts for new construction projects and include the cost of all types of building and construction materials, some of which are not produced by Rinker Materials, and the cost of labor.  ‘Put-in-place’ figures provided by Dodge are based on data Dodge collects at the time of the contract award and allocated over the course of the performance of the contract.

The construction materials industry primarily operates on a regional basis due to significant transportation costs and low value products.

The regional markets for Florida and Arizona are particularly important to Rinker Materials, representing about 56% and 17% of its trading revenue, respectively, for the year ended March 31, 2006. Based on industry and Federal Government statistics, both these markets show high levels of activity and growth compared to national averages.

The construction materials industry comprises three major segments: residential, commercial (non-residential) and civil (non-building).  Residential construction includes single and multi-dwelling residential housing.  Commercial construction includes office buildings, hotels, shopping malls, sports stadiums, education facilities and hospitals.  Civil construction involves the construction of roads, highways, bridges and dams as well as many other infrastructure projects.  For calendar year 2005, Dodge estimates that the total value of new construction contracts in the US was residential 58%, commercial 27% and civil 15%.  The civil construction activity has been influenced heavily by the Transportation Equity Act for the 21^st Century (TEA-21, which covered the 6 year period 1998 to 2003) and the Safe, Accountable, Flexible and Efficient Transportation Equity Act (SAFETEA which covers the 6 year period 2004 to 2009).

The construction market is generally cyclical but with a general upward trend.  Based on Dodge estimates, the total value of new construction contracts grew by an annual growth rate of 8.3% between calendar years 1995 and 2005.  Based on Dodge estimates, the total value of new construction contracts in Florida increased by an annual growth rate of 13.0% between calendar years 1995 and 2005 and 10.6% in Arizona in the same period.

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The key factors impacting on construction and building activity in the US include:

•      Population growth;

•      Economic growth;

•      Government infrastructure spending;

•      Interest rates; and

•      Business and consumer confidence.

4.     Australian industry overview

For the year ended December 31, 2005, the Australian Bureau of Statistics estimates that total construction and building industry spending was A$97 billion, equivalent to US$74 billion. This comprised expenditure on construction materials such as aggregate, concrete and cement but includes other building materials such as clay bricks, roofing, plasterboard and aluminum doors and windows.   

Based on Australian Bureau of Statistics estimates, total Australian construction and building market spending increased by an annual growth rate of 5.4% between the years ended December 31, 1995 and December 31, 2005.  The market segments are similar to those categorized for the US market, namely residential, commercial and civil.

 For the year ended December 31, 2005, the Australian Bureau of Statistics estimates that total construction spending by segment was about 40% for residential, 21% for commercial and 39% for civil.

For the year ended December 31, 2005, there was a slight increase in spending in the residential segment, however spending across the commercial and civil segments increased significantly.  Total construction spending increased by 12.8% for the year ended December 31, 2005 compared to the previous year.  Residential spending was up by 1.8%, commercial by 17.2% and civil by 24.3%.

Over the last three fiscal years, construction activity in the residential segment has been influenced primarily by changes in interest rates and house price affordability.  Following two interest rate rises, in November 2004 and December 2004, there was a gradual decline in residential construction commencements during fiscal years 2005 and 2006.  The decline, however, has been mild by historical standards with the market supported by a relatively strong economy and low levels of unemployment.  According to the Australian Bureau of Statistics, total spending in the residential segment increased slightly to US$29.5 billion (A$38.8 billion) in the year ended December 31, 2005, from US$28.2 billion (A$38.1 billion) in the year ended December 31, 2004.  Spending was US$23.5 billion (A$33.7 billion) in the year to December 2003.

The commercial segment of the construction market strengthened during fiscal year 2006 compared to fiscal year 2005.  According to the Australian Bureau of Statistics total spending in the commercial segment has grown from US$13.6 (A$18.4) billion in the year ended December 31, 2004 to US$16.4 (A$21.5) billion in the year ended December 31, 2005, due to higher business investment levels, supported by the relatively strong economy.  Spending was US$11.1 (A$15.9) billion in the year to December 2003.

Civil construction in Australia is largely dependent on government infrastructure programs. According to the Australian Bureau of Statistics spending in the civil segment has risen from US$21.8 (A$29.5) billion in the year ended December 31, 2004 to US$27.9 (A$36.7) billion in the year ended December 31, 2005.  Spending was US$18.2 ($26.1) billion in the year to December 2003.

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Several large infrastructure projects have contributed to the buoyant activity in the civil segment, including the recently completed A$1.6 billion Westlink (Western Sydney Orbital motorway) project, and two major projects still under construction (the A$1.1 billion Lane Cove tunnel and the A$2.5 billion Eastlink freeway in Victoria).  The level of activity in the civil sector will continue to depend upon large public and private infrastructure projects, such as the yet to be approved A$1.4 billion Brisbane North-South Bypass tunnel. 

5.     Rinker Materials

Rinker Materials business segments including annual volumes as at March 31, 2006

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i.      Aggregate

Overview

Rinker Materials is the fifth largest supplier of aggregate by volume in the US, based on US Geological Survey statistical data, with operations principally in the southeast (Florida, Georgia, Tennessee and Kentucky) and the western US states (Arizona, Nevada, Oregon, Washington state and northern California).  In total, Rinker Materials supplied about 101 million tons of aggregate for the year ended March 31, 2006.

In Florida, Rinker Materials is the market leader, based on Rinker Materials’ industry knowledge, by volume sold, with a market share estimated to be more than 30% for the year ended March 31, 2006.   Rinker Materials is also the market leader, by volume sold, in Arizona.

Sales

Rinker Materials’ aggregate operations are often integrated with Rinker Materials’ downstream concrete and asphalt operations with over one-third of Rinker Materials’ aggregate production supplied for use in Rinker Materials’ manufacture of concrete, concrete block, asphalt and other products.  The balance is supplied to other construction companies primarily for the production of concrete, asphalt and roadbase.   Rinker Materials’ products are generally supplied at a local level directly to a large number of unaffiliated customers that are generally the end users.  Rinker Materials has no material long-term supply contracts for aggregate other than supply contracts to specific construction projects that have been generally subject to a competitive tender process.  These are typically made on the basis of competitive prices in each market area.   For the year ended March 31, 2006, Rinker Materials’ estimated end markets for aggregate by trading revenue were about 40% residential and the balance equally divided between commercial and civil construction.

Crushed stone and sand are largely commodity products.  The basis of competition is as the lowest cost delivered supplier into the market.  Distribution logistics are very important, requiring a strong transport and distribution network.

Rinker Materials’ major competitors are: Florida Rock Industries, Tarmac Limited (Titan Cement Company), Vulcan Materials Company, Martin Marietta Materials, and Hanson Building Materials America, as well as smaller competitors who compete in certain regions.

Facilities, reserves and distribution

Aggregate (sand, gravel, crushed stone, and other quarry products) is used for roads, civil construction and building projects and as a raw material in the production of concrete, concrete block, cement and asphalt.  Aggregate production involves extracting quarry material that is then crushed and sized.  The product is then distributed by truck or rail.  The choice of aggregate for a particular purpose also depends largely on the local geology or availability.  As aggregate is expensive to transport relative to its price, the cost of transport will generally limit the availability of aggregate to what is readily accessible in the local area.  In Florida, aggregate is transported greater distances than in other states due to construction grade aggregate only being available in certain areas of the state.  This is primarily achieved using an extensive railway network serving the entire east coast of Florida and into central Florida.  For example, Rinker Materials’ FEC quarry near Miami in southern Florida, transports aggregate up to Jacksonville in northern Florida.

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As at March 31, 2006, Rinker Materials operated 89 quarries, sand and aggregate plant operations located in 14 states.  The majority of these are located in Florida (14), Tennessee (10), Arizona (38) and Washington state (12).  Rinker Materials’ total estimated aggregate reserves as at March 31, 2006, were 2,720 million tons with an average reserve life estimated to be 30 years at current usage levels.

Rinker Materials’ estimated aggregate reserves by product type as at March 31, 2006

Estimates of reserves are of recoverable stone, sand and gravel and other quarry products of suitable quality for economic extraction based on drilling, studies and mine plans reviewed annually by Rinker Materials geologists and engineers, recognizing reasonable economic and operating restraints as to maximum depth of overburden and aggregate excavation.  Reserves are proven (measured) or probable (indicated) based upon inspection, sampling and measurement and the geological character of the resource.

In determining the average life of aggregate reserves Rinker Materials management has used the most recent annual production rate at each quarry.  The foregoing life by product type is an overall average.  Certain locations, however, are subject to more limited reserves and have a relatively short life.  Rinker Materials sand and gravel quarries are typically small operations producing from reserves with a shorter life.

Rinker Materials’ estimated aggregate reserves by region as at March 31, 2006

Approximately 70% of quarry reserves are on Rinker Materials owned sites, with the remainder located on leased property.  In Rinker Materials Florida operations, owned reserves constitute approximately 80% of total reserves.  In Arizona, owned reserves comprise approximately 55% of total reserves.  Leasehold reserves are subject to various expiry dates and renewal options.  While not all of the reserves are permitted, it is Rinker’s view that the ultimate permitting of the reserves is probable.

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Of Rinker Materials 89 aggregate, sand and gravel quarries, the largest 4 by quarry reserves as at March 31, 2006 were as follows:

Rinker Materials’ largest quarry in terms of production is the FEC Quarry in Miami, Florida.  The quarry is one of the largest in the US, producing about 12.5 million tons of aggregate each year.  See Legal Proceedings in “Item 8.A. Consolidated Statements and Other Financial Information” on page 120 for additional discussion of Rinker Materials’ reserves.

Rinker Materials has a continuing program to identify, acquire or lease replacement reserves and in the case of Florida to pursue offshore reserves.

ii.    Cement

Overview

Rinker Materials cement operations are in Florida where it is a leading cement supplier by volume, based on Portland Cement Association data on supplier output.   For the year ended March 31, 2006, Rinker Materials produced about 2.1 million tons of cement and imported 2.1 million tons of cement through two strategically located terminals.  Rinker Materials supplies grey and white cement and a range of special products.  Rinker Materials estimates the total Florida cement market to be about 13.5 million tons a year.

Sales

Rinker Materials supplies cement to its concrete businesses as well as to external pre-mix, masonry and pre-cast concrete producers and building supply companies.  For the year ended March 31, 2006, about 55% of Rinker Materials’ cement production was sold internally.

Rinker Materials manages its cement business by fully utilizing its own cement production capacity and supplying any additional demand from imports and purchasing cement from other domestic producers.

For the year ended March 31, 2006, Rinker Materials’ estimated external end markets for cement by trading revenue were about 65% residential, 30% commercial and 5% civil construction.

Rinker Materials’ competitors’ positions in Florida have changed significantly during the past several years.  Tarmac America has been acquired by Titan Cement Company and Southdown by Cemex.  The Eastern Cement terminal on the west coast of Florida has been acquired by Schwab and Florida Rock has acquired the LaFarge import terminals on the west coast of Florida.  Domestic and import capacity has also increased with both Florida Rock Industries and Votorantim (Suwanee) recently constructing new Florida cement plants.  Titan Cement Company has built a new cement import terminal on the west coast of Florida in Tampa and doubled their Miami capacity.  Rinker Materials’ major competitors in cement are Cemex, Lehigh (Heidelberg), Titan Cement Company, and Florida Rock Industries.

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Facilities and distribution

The production of cement is a highly capital intensive business.  The production process starts by crushing limestone aggregate.  The crushed limestone aggregate and other raw materials, depending on the type of cement to be produced, are fed into a grinding process, which mixes the various materials more thoroughly and reduces them further in size in preparation for the kiln.  In the dry process, the raw materials are calcined or processed at a very high temperature in the kiln to produce clinker.   Clinker is the intermediate product used to manufacture cement.  Finally, clinker and gypsum are fed into a cement grinding mill where they are ground into extremely fine powder to produce finished cement.

Rinker Materials has two cement plants, located in Miami and Brooksville in Florida.  The Miami plant was upgraded and commissioned in 2000 for a total cost of US$150 million, which increased annual capacity from 0.6 million tons to about 1.3 million tons.  The Brooksville plant was acquired in 2000 as part of the Florida Crushed Stone acquisition and has an annual capacity of about 0.8 million tons.  Both cement plants are located adjacent to quarries owned and operated by Rinker Materials that provide the limestone raw material.  The estimated limestone reserves owned by Rinker Materials exceed the currently anticipated life of the plants.  Expansion plans at Brooksville have been approved which are expected to increase production by over 1.0 million tons per annum with a target date to complete the project in 2008.  Both plants are dry process technology operations that utilize modern energy efficiency and emission control systems.  The plants source electricity from local utilities at state-regulated prices.

The cement produced is delivered to concrete plants and other concrete product manufacturing facilities, normally within a radius of about 125 miles, by bulk cement tankers or in bagged form. 

Rinker Materials imports a large volume of cement (fiscal year 2006, 2.1 million tons) through cement import terminals located at Port Everglades in southeastern Florida and Port Canaveral in central Florida.  Cement is sourced primarily from Europe and the Far East on contracts that expire annually. 

iii.   Concrete, concrete block and asphalt

Overview

Rinker Materials produced about 17.8 million cubic yards of concrete in the year ended March 31, 2006, from 172 concrete plants.  In Florida, Rinker Materials’ concrete operations are integrated with its cement and aggregate operations, providing it with a number of supply advantages.  Overall, Rinker Materials is the market leader in Florida with an estimated total market share by volume sold in the year ended March 31, 2006 of around 30%, based on Rinker Materials’ industry knowledge.  Rinker Materials also held market leadership positions, by volume sold, in Arizona and Nevada in the year ended March 31, 2006.

In concrete block, Rinker Materials produced about 200 million units for the year ended March 31, 2006, that was used for residential and commercial building. Rinker Materials’ concrete block operations are principally located in Florida where it was the market leader in terms of volumes sold in the year ended March 31, 2006, based on Rinker Materials’ industry knowledge.

Rinker Materials also produces asphalt, which is used for roads, highways and airports with plants located in Arizona, northern California, Oregon and Washington state.

Sales and facilities

As at March 31, 2006, Rinker Materials operated 172 concrete and 29 concrete block plants, with a delivery fleet of over 2,900 company owned vehicles.   These plants are located in Arizona, California,

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Florida, Nevada, New Mexico, Oregon, Tennessee and Washington state.   Of the 172 concrete plants, 92 are in Florida and 48 in Arizona.

During the last two fiscal years Rinker Materials has invested in an additional 31 concrete plants and 7 block plants.  Eight new readymix plants and five new block plants have been constructed in Florida to meet customer demand in growing regions of that state or to replace facilities to better meet strong demand in existing market areas.  The balance of new plants have been from business acquisitions.  Construction on a further ten plants in Florida is underway with completion expected during fiscal year 2007.

Concrete is produced by combining cement, aggregate, water and additives in a batch plant for delivery to the customer’s site in a mixer truck.  For the year ended March 31, 2006, Rinker Materials’ estimated end markets for concrete by trading revenue were about 65% residential, 25% commercial and 10% civil construction. Rinker Materials’ concrete operations provide a full range of products to meet a number of applications, including reinforced slabs for residential construction, high strength concrete for high rise structures and flowable fill concrete for back filling trenches.

Concrete block is manufactured in factories by a continuous process of combining cement and aggregate raw materials, which are molded and cured into required dimensions.  Delivery to customers takes place on trucks, which usually have on-board material handling equipment to permit the driver to unload at the job site.  Concrete block customers are primarily residential and commercial building companies.

Rinker Materials also manufactures and sells hot-mix asphalt products.  These are a mixture of aggregate and asphalt oil made to the customer’s specification in a batch plant. Rinker Materials produced about 4.3 million tons of asphalt for the year ended March 31, 2006.  All asphalt operations are vertically integrated with Rinker Materials’ aggregate businesses.   In most instances the asphalt plants are located on the site of a Rinker Materials’ quarry, offering significant synergies both in raw material supply and management and administration resources.  Asphalt is sold to road contractors for the construction of highways, driveways and parking lots and directly to state and local authorities. 

In concrete, the main competitors are a combination of large publicly listed companies and a number of small privately held regional companies.  In asphalt, competitors vary between regional markets, including large public companies such as Vulcan and Granite Construction, but often include smaller local operations.

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Concrete, concrete block and asphalt plants as at March 31, 2006

iv.    Concrete pipe and products

Overview

Rinker Materials’ Concrete Pipe Division is one of the largest producers by volume of reinforced concrete pipe and concrete products in the US in the year ended March 31, 2006, with a market share in excess of 20% based on Rinker Materials’ industry knowledge.   Products are primarily concrete pipe, concrete box and other pre-cast products used for storm water transmission, sewerage and irrigation.  Auxiliary products include manholes, drainage structures and storm water pollution prevention devices. Rinker Materials has progressively expanded the geographic presence of the concrete pipe and products business since its acquisition in 1990 with a series of small bolt-on acquisitions and investment in new plant and equipment to expand production capacity.

Sales

Sales demand is driven by the construction of roads and highways, residential and commercial developments and airports.  The primary customers of the business are general and utility contractors that provide services for federal, state and local government agencies and private developers.

In most markets Rinker Materials competes with other large companies, including Hanson, CRH plc, and The Cretex Companies, Inc.  Despite substantial consolidation in recent years, the industry remains fragmented and localized, with over 100 producers operating more than 300 plants.  High freight costs for transporting concrete pipe limit most markets to a radius of about 150 miles from the plant site.  On a national basis Hanson is Rinker Materials’ principal competitor.   In addition, producers of alternative plastic, metal, and fiber cement pipe products compete with Rinker Materials particularly in the market for small diameter pipes.

For the year ended March 31, 2006, Rinker Material’s estimated end markets by trading revenue were about 45% residential, 20% commercial and 35% civil construction. 

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Facilities

Rinker Materials manufactures concrete pipe primarily using the dry cast, packerhead and wet cast processes.  In the dry cast manufacturing process, a dry formulation of concrete is introduced into a mold.  The concrete is then compacted by an intense mechanical vibration.  The mold is immediately stripped from the product and is reused repeatedly throughout the production run.

In the packerhead method, a vertical mold is filled with a dry formulation of concrete.  A revolving trowel packs the concrete outward against the mold, while simultaneously forming the inside wall of the pipe.  As with the dry process, the mold is stripped and reused.  In the wet cast process wet concrete is introduced into a mold.  Unlike the dry and packerhead methods, the product remains in the mold until sufficient strength has developed in the concrete to allow the mold to be removed.

As at March 31, 2006, Rinker Materials operated 49 concrete pipe and product plants.  A program of plant upgrades, replacements and rationalization of capacity over the past several years has allowed Rinker Materials to reduce its cost structure through the benefits of more modern technology and economies of scale.  During fiscal year 2006 Rinker Materials commenced construction on a new concrete pipe plant in Central Florida that will replace three aging facilities in that state.  Rinker Materials also acquired the Carder Concrete Products business with locations in Colorado and Wyoming and is consolidating its existing operations with the newly acquired plants.

v.     Other businesses

Gypsum supply

During the period 1992 to 1996, Rinker Materials acquired several wallboard distributors in Florida, becoming one of the state’s leading distributors of gypsum wallboard, based on Rinker Materials’ industry knowledge.   Rinker Materials also acquired Dierco Supply, a ceiling tile and insulation distributor.

As at March 31, 2006, Rinker Materials had 30 gypsum supply outlets (in Florida (28), South Carolina (1), and Alabama (1)).  An export operation in Miami sells its products for delivery in the Caribbean, and Central and South America.

Rinker Materials’ principal competitor in gypsum supply is L&W Supply, owned by USG Corporation.

Pre-stressed concrete products and Polyethylene pipe

During the fiscal year 2005, Rinker Materials sold the principal assets of its small prestress concrete products business to Coreslab Structures as well as the stock of its polyethylene pipe and liner business to the Halifax Group.  Both businesses were regarded as “non-core” operations and had been slated for divestment for some time.  During the fiscal year 2006 Rinker Materials continued to deliver and recognize revenue on completed manufactured prestressed concrete components, which were not sold to Coreslab. 

6.     Readymix

Readymix operates a vertically integrated heavy building materials business in Australia, with about 35% of aggregate production used internally in the concrete and concrete pipe businesses (40% including sales under a long term supply agreement to the Emoleum asphalt business sold in February 2006), which also source about 75% of their cement requirements on the east coast of Australia from the Cement Australia joint venture.  Operations and investments include the production of aggregate, concrete,

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cement and reinforced concrete pipe and products.  Readymix subsidiaries also operate concrete businesses in Tianjin and Qingdao, China.  Readymix has been involved in the supply of heavy building materials in Australia, initially through CSR, since 1965 when it and Blue Metal Industries Limited jointly acquired Ready Mixed Concrete Limited.  In 1981, the operations of Ready Mixed Concrete were divided between Readymix and Blue Metal Industries.

Readymix (through its predecessor) has made a series of acquisitions to expand into new products:

•      In 1974, it entered the cement industry in a joint venture with Pioneer Services Limited (since acquired by Hanson), with the acquisition of Australian Cement Holdings Pty Limited (“ACH”);

•      In 1988, it acquired the reinforced concrete pipes and other concrete products business of Humes Limited;

•      In 1989, ACH purchased Goliath Cement of Tasmania;

•      In 1994, established a joint venture in Tianjin, China.  In June 2003, Readymix increased its ownership to 99% with 100% rights to profits and assets in this concrete business; and

•      In June 2003, ACH merged with QCL to form the Cement Australia joint venture.  Subsequently, Readymix acquired three aggregate operations and six concrete plants from a subsidiary of the joint venture.

Including joint ventures, Readymix operated 359 plants in Australia and four in China at March 31, 2006.  An overview of Readymix’s current organization structure is provided in the above chart.

i .     Aggregate

Based on Readymix’s knowledge of the industry, Readymix is one of the leading suppliers of aggregate in Australia, producing a range of gravel, road pavement materials and manufactured and natural sand.  Readymix operates in all mainland states and territories in Australia.   In the year ended March 31, 2006, Readymix produced about 26 million tonnes of aggregate.  As at March 31, 2006 Readymix had estimated aggregate quarry reserves of about 1,073 million tonnes, with an average reserve life of 43 years.

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Readymix’s estimated aggregate reserves by product type as at March 31, 2006

Estimates of reserves are of recoverable stone, sand and gravel of suitable quality for economic extraction, based on drilling, studies and mine plans reviewed annually by Readymix geologists and engineers, recognizing reasonable economic and operating restraints as to maximum depth of overburden and aggregate excavation.  Reserves are proven (measured) or probable (indicated) based upon inspection, sampling and measurement and the geological character of the resource.

In determining the average life of aggregate reserves Readymix management has used the most recent annual production rate at each quarry.  Certain locations, however, are subject to more limited reserves and have a relatively short life.  The foregoing life by product type is an overall average.

Readymix’s largest quarry in terms of annual production is at Penrith, New South Wales and is operated under the Penrith Lakes Development Corporation Limited (PLDC) joint venture with Boral and Hanson.  The operation currently supplies about 4.5 million tonnes of the Sydney market’s estimated 7.7 million tonne annual requirement for concrete aggregates, and has an estimated life of 5 years.  Other quarries in the Sydney basin have limited capacity for expansion.  Readymix sales volumes from Penrith for fiscal year 2006 were 1.5 million tonnes.

Readymix has a continuing program to identify, acquire or lease replacement reserves, and during fiscal year 2005 acquired property at Marulan, on the outskirts of Sydney, as a potential replacement for the Penrith quarry.   During fiscal year 2006, Readymix received development consent for a 5 million tonne per annum quarry on the Marulan site.

The Australian market for aggregate was estimated to have been over 90 million tonnes in the calendar year 2005, generating in excess of US$1.7 billion (A$2.4 billion) in revenue.  Readymix’s quarry operations are highly integrated with about 40% of aggregate volumes sold internally in the year ended March 31, 2006.   For the year ended March 31, 2006, Readymix’s estimated aggregate end use markets were about 25% residential, 35% commercial and 40% civil construction.  Readymix’s major competitors are Boral and Hanson Australia.

ii.    Concrete

Readymix manufactures and distributes concrete throughout all states and territories of Australia.  Customers are normally located within a 20 kilometer radius of the plant.   In the year ended March 31, 2006, Readymix produced in excess of 6.9 million cubic meters of concrete from 247 plants.

The Australian market for concrete was estimated by the Australian Bureau of Statistics to have been 23.7 million cubic meters in the calendar year 2005, generating about US$2.5 billion (A$3.3 billion) in revenue.  Readymix’s major competitors are Boral and Hanson.  For the year ended March 31, 2006, Readymix’s estimated end use markets were about 40% residential, 35% commercial and 25% civil construction.

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iii.   Concrete pipe and reinforced concrete products

Readymix produces concrete pipe and reinforced concrete products through its Humes business.  Based on Humes’ knowledge of the industry, Humes is one of the two leading suppliers in Australia with production of over 510 thousand tonnes a year.  As at March 31, 2006 Humes operated 17 plants producing concrete pipe, pre-cast concrete products including pre-stressed beams, storm water pollution prevention devices and other environmental products, concrete sleepers and flooring products.

The Australian civil infrastructure market was estimated, based on Humes’ knowledge of the industry to be 1.3 million tonnes in calendar year 2005, generating more than US $365 million (A$480 million) in revenue.  For the year ended March 31, 2006, Humes’ estimated end use markets were about 95% civil and 5% commercial construction.  Humes’ main competitor is Rocla Pipeline Products, and there are also small companies who compete in individual regional sectors of the market. 

iv.    Cement

At the beginning of fiscal year 2004, Readymix held a 50% interest in ACH, a joint venture with Hanson Australia Pty Ltd.  On June 1, 2003, ACH merged with QCL, a 100% owned Holcim subsidiary, to form Australia’s largest cement manufacturer, based on Readymix’s knowledge of the industry, the Cement Australia joint venture.  Readymix holds a 25% interest in the joint venture, Hanson holds 25%, and QCL holds the remaining 50%.  Annualized production volumes are in excess of 3.5 million tonnes of which approximately 75% is sold internally to shareholders.

The size of the Australian market for cement and cement blends was estimated by the Australian Bureau of Statistics to be about 9.3 million tonnes for the calendar year 2005, generating approximately US$890 million (A$1,170 million) in revenue.  Cement Australia’s main competitors in cement are Blue Circle Southern Cement (a 100% owned Boral subsidiary), Adelaide Brighton Limited and imported cement.

Additionally, the Cement Australia joint venture owns 100% of Pacific Lime which produces high grade lime products and a 50% interest in Australian Steel Mill Services which is responsible for processing of blast-furnace slag, a by product of iron and steel making at the BHP Steel facility at Port Kembla in New South Wales.

v.     Asphalt

During the fiscal year 2006 Readymix divested its 50% interest in the Emoleum asphalt pavement and road maintenance joint venture with a subsidiary of Exxon Mobil Australia Pty. Limited to a subsidiary of the engineering services group Downer EDI Limited.  The investment in Emoleum was regarded as non core. Readymix will continue its aggregate supply to the business under a long term supply contract with the purchaser.

7.     Government Regulation

The business activities of Rinker group companies in each country where they operate are subject to and affected by laws and regulations relating to the environment, health and safety, and other regulatory matters.

Environment, health and safety

Rinker Materials’ operations are subject to extensive regulation by US federal, state and local environmental control agencies.  Environmental laws and regulations impose requirements on a broad

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range of environmental matters including air emissions, effluent limitations, site remediation, the use, handling and disposal of hazardous materials and wastes, employee health and safety, groundwater quality, noise and the protection of wetlands and other natural resources.  These laws require Rinker Materials to obtain and operate in compliance with the conditions of permits and other authorizations and requirements of the relevant governmental authorities.

In the United States, environmental, health and safety laws and regulations are promulgated and overseen by a variety of federal, state and local bodies.  Among these are the US Environmental Protection Agency, state environmental protection agencies, the US Army Corps of Engineers, various state water management districts, the US Occupational Safety and Health Administration, the US Mine Safety and Health Administration, various state occupational health and safety agencies, and local zoning boards. 

For Readymix, Australia’s principal laws governing environmental and sustainable management of natural and physical resources are contained in legislation and regulations enacted by the Commonwealth Government and the states and territories of the Commonwealth of Australia.  This body of legislation regulates the operations of companies principally in regard to air, water and noise emissions, waste disposal, land contamination, and the handling and storage of environmentally hazardous chemicals and dangerous goods.  The principal environmental regulators in Australia are the state Environmental Protection Agencies/Authorities and, at the federal level, Environment Australia/Department of Environment and Heritage.  The principal safety regulators to which Readymix is subject are the state workers’ compensation authorities and state mine authorities. 

Rinker Materials and Readymix have implemented comprehensive safety, health and environmental management systems.  These systems are based on US, Australian and international standards and set out the requirements for managing and monitoring environmental impacts across operations.  Sites are routinely audited for compliance.

As with other construction materials companies engaged in similar activities, environmental compliance obligations and liability risks are inherent in many activities within the Rinker group.   From time to time Rinker group companies investigate and remediate contamination at their properties, consisting primarily of petroleum compounds associated with fuel storage and vehicle maintenance and elevated pH levels related to the processing and handling of limestone and concrete products.  In the US certain environmental remediation laws, such as the federal “Superfund” law, can impose joint and several liability for site clean-up, regardless of fault, upon certain statutorily-defined categories of parties, including companies that sent wastes to a contaminated third party site.   Rinker Materials has been named as a potentially responsible party at five sites requiring environmental remediation.  These liability claims are expected to be resolved without having a material effect on Rinker group companies.  The Rinker group holds provisions for anticipated clean up costs and does not expect to incur any additional material remedial obligations.  Although unanticipated and unexpected remedial obligations can always arise in the course of operations, management is not aware of any remedial actions that would be expected to have a material effect on the Rinker group companies’ operations or competitive positions.

Following its demerger from CSR, as between Rinker and CSR, Rinker is responsible for any liabilities and costs associated with environmental contamination and compliance in respect of the businesses it owns after the demerger.  CSR has agreed to indemnify the Rinker group, to the maximum extent permitted by law, in respect of the liabilities and costs associated with environmental contamination and compliance in respect of the businesses owned by CSR group companies after the demerger.  In each case, the indemnity applies irrespective of when the contamination occurred or the liabilities or costs arose.

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Antitrust (trade practices) laws

Rinker group companies in the United States are subject to antitrust laws.

Rinker group companies in Australia are subject to regulation by the Australian Competition and Consumer Commission (“ACCC”) which administers the Trade Practices Act 1974.  Rinker group entities are from time to time involved in investigations conducted by the ACCC.

Antitrust or competition considerations may restrict business activities within the Rinker group and the ability to grow through acquisitions or participate in industry rationalization in particular geographic markets.

8.     Marketing channels and sales methods

Details of marketing channels and sales methods are included in the business analysis above. Customers include a range of commercial building and construction companies, government departments and a variety of trades and individuals.  Sales personnel operate from central regional locations or individual operating facilities.

Rinker’s management does not believe the loss of any single contract would have a material impact on the Rinker group’s performance.

9.     Source and availability of raw materials and inputs

A large proportion of the raw materials and inputs used in Rinker group entities’ products are bulk commodities, which are either produced internally or are purchased under contract or agreements with outside vendors.  Rinker’s management is not aware of any restrictions on the availability of raw materials, under normal circumstances and subject to normal competitive forces, which would materially impact the Rinker group’s result.

10.  Corporate and securities regulation

As an Australian company, Rinker is subject to corporate regulation by (principally) the Australian Securities and Investments Commission.  Because its ordinary shares are listed on the securities exchange operated by ASX, Rinker is also subject to regulation by ASX.

Rinker files periodic reports and other information with the SEC, including this annual report on Form 20-F.  Rinker also furnishes to the SEC on Form 6-K its semi-annual consolidated financial statements, prepared in accordance with A-IFRS, and other material information on Form 6-K that Rinker makes public in Australia or provides to its shareholders.  See “Where you can find more information about Rinker Group Limited.”  Furthermore, as its ordinary shares are registered under the Securities Exchange Act of 1934 and American Depositary Shares (“ADSs”) representing its ordinary shares are listed for trading on the NYSE, Rinker is subject to various US corporate governance requirements including those resulting from the enactment of the Sarbanes-Oxley Act of 2002 and those promulgated by the NYSE.

C.    Organizational Structure

Rinker group has more than 70 subsidiaries in the United States, Australia and China.   The complete list of these entities, with their country of incorporation and percentage of Rinker’s ownership, is listed at Note 37 to the financial statements included elsewhere in this annual report.

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D.    Description of Property, Plant And Equipment

Rinker’s principal executive offices are located at, Level 8, Tower B, 799 Pacific Highway, Chatswood, New South Wales, 2067, Australia.

As at March 31, 2006, Rinker group entities had over 700 production facilities in the United States, Australia and China.

These sites include:

In addition, Rinker group entities have a number of distribution sites.

As a result of the demerger, CSR’s beneficial 40% interest in the PLDC joint venture, which extracts the majority of the aggregates for the Sydney region, was transferred to Readymix.  Boral and Hanson own 40% and 20% respectively of PLDC.  Readymix has agreed to share future profits produced from land sales equally with CSR.  A significant portion of the PLDC land holdings have been identified as having potential, subject to planning approvals, for a major urban land development, creating up to 4,900 residential lots.

Management believes that the facilities of Rinker group entities are suitable and adequate for its present needs and are well maintained and in good operating condition.  The Rinker group entities carry insurance covering property and casualty and certain other risks to which their facilities and operations may be subject.  The Rinker group entities own most of their principal operating facilities and lease the remainder.  Management does not believe the Rinker group earnings are dependent upon any single operating facility.  The most significant single facility is FEC quarry, which is discussed below.

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The following table is a list of the principal facilities in the Rinker group.  This list is not intended to be a complete list of all the Rinker group’s operating locations.  Principal facilities are owned by Rinker group entities unless stated otherwise.

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(1)   40% beneficial interest in quarry land held through PLDC.  See above.

(2)   The FEC quarry near Miami is one of the largest volume quarries in the US, producing about 12.5 million tons of aggregate each year.  Its in-situ reserves are estimated to be about 305 million tons of aggregate, and comprises approximately 10% of Rinker Materials’ total estimated recoverable reserves as at March 31, 2006.  For the fiscal year ended March 31, 2006, aggregate accounted for about 27% of Rinker Materials’ trading revenue. About 13% of Rinker Materials’ total aggregate trading revenue is derived from the FEC quarry in Florida. Accordingly, Rinker Materials’ revenues could be materially adversely affected if its access to the aggregate reserves of FEC quarry for both internal use and external sale were restricted. See Legal Proceedings in “Item 8.A. Consolidated Statements and Other Financial Information”.

Environmental issues affecting properties, plant and equipment

Certain environmental issues that are potentially material to the operations of businesses in Rinker group companies are discussed below:

Lake Belt Permit Challenge.  Rinker Materials holds one and is the beneficiary of one other of 12 federal quarrying permits granted for the Lake Belt area in South Florida.  The permit held by Rinker Materials covers Rinker Materials’ SCL and FEC quarries.  Rinker Materials’ Krome quarry is operated under one of the other permits.  The FEC quarry is the largest of Rinker Materials’ quarries measured by volume of aggregates mined and sold.  The Rinker Materials’ Miami cement mill is located at the SCL quarry and is supplied by that quarry.  See “Item 3.D. Risk Factors – Operation and supply failures or shortages could have an impact on the Rinker group’s future revenues and profits” and “Item 3.D. Risk Factors – Rinker group’s operations depend on securing and permitting aggregate reserves that can be supplied economically to growing markets”.  A ruling was made on March 22, 2006 by a single judge of the U.S. District Court for the Southern District of Florida in connection with litigation brought by environmental groups concerning the manner in which all 12 permits were granted.  Although not named as a defendant, Rinker Materials has intervened in the proceedings to protect its interests.  The judge ruled that there were deficiencies in the procedures and analysis undertaken by the relevant governmental agencies in connection with the issuance of the permits.  The judge has returned the permits to the relevant governmental agencies for further review of the issues raised and has set further proceedings to determine the activities to be allowed during the period of further review, which review the governmental agencies have indicated in recent court filings should take approximately 18 months.  Rinker expects quarrying operations to be unaffected pending the outcome of a court hearing scheduled to commence on June 13, 2006.  While Rinker believes Rinker Materials permits were validly issued, it is not possible to determine the likely outcome of these further proceedings or what impact that will have

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on Rinker Materials’ operations.  If the Lake Belt permits, including the key permits for the SCL, FEC and Krome quarries were ultimately set aside or quarrying operations under them restricted, Rinker Materials and the other industry participants with quarries in the Lake Belt region would need to source aggregates, to the extent available, from other locations in Florida or import aggregates.  This would likely affect Rinker Materials’ ability to make, sell and deliver products, which could cause revenues to decline or costs to increase and result in lower profits.  Any adverse impacts on the Florida economy arising from the cessation or significant restriction of quarrying operations in the Lake Belt could also have a material adverse effect on Rinker Materials.

Cement Kiln Dust:  Like other cement manufacturing facilities, Rinker Materials’ Miami cement plant has a cement kiln dust (“CKD”) former disposal site that could pose a risk of elevated pH levels and other impacts to surrounding groundwater.  Cement kiln dusts are currently reused in the manufacturing process and as such Rinker Materials does not currently envisage a need to open a new CKD landfill.  If it did so, such a site would require extensive permitting and environmental controls.  

Silica Exposure:  Rinker group entities are defendants in silicosis litigation in Florida at present.  See Legal Proceedings in “Item 8.A. Consolidated Statements and Other Financial Information”.  Rinker group has a comprehensive workplace silica exposure monitoring program in place with current exposure action levels in accord with the recommendations of a number of independent occupational health organizations.  Rinker group’s voluntary action levels are 50% below the applicable US and Australian standards.

Waste Disposal:  In the United States, regulated solid and hazardous wastes are sent to licensed third party sites.  Rinker Materials also operates permitted inert fill/construction and demolition debris landfills in Arizona, Nevada, Oregon, Washington and Florida.  In Miami, Florida, Rinker Materials operates a facility that receives petroleum contaminated soils from outside sources, burns the soils in a kiln to remove the petroleum and uses the clean soils in its cement manufacturing process.

Quarry Reclamation:  Permits for some of the Rinker group’s quarries require reclamation activities to be performed when quarry activities cease.  See critical accounting policies and property plant and equipment for further information and reclamation obligations.

Item 5           Operating and Financial Review and Prospects

Significant Events in fiscal year 2006

In April 2005, Rinker disposed of a property at Buffalo Road, Las Vegas, Nevada for net proceeds of US$33.6 million.  A gain on disposal of US$19.8 million, net of tax, was recognized in the financial statements for the year ended March 31, 2006.

In December 2005, Rinker announced the sale of its 50% stake in the Emoleum Australian asphalt joint venture with Exxon Mobil Australia Pty Limited to a subsidiary of the engineering services group Downer EDI Limited.  The sale was completed in February 2006.  A gain on disposal of A$18.2 million (US$15.7 million), net of tax, was recognized in the financial statements for the year ended March 31, 2006.

Events subsequent to March 31, 2006

On May 11, 2006, the directors proposed a capital return of 50 A$ cents per ordinary share (A$2.50 per ADR), or approximately A$455 million (approximately US$341 million assuming a 0.75 exchange rate).  The return is subject to receiving a favorable class ruling from the Australian Tax Office confirming that

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it is a 100% capital return, and majority shareholder approval at the Annual General meeting on July 18, 2006.

Additionally, the directors declared a special dividend of 40 A$ cents per ordinary share (A$2.00 per ADR), or approximately A$364 million (approximately US$273 million assuming a 0.75 exchange rate).  This special dividend is unfranked and will be paid on July 4, 2006 with a record date of June 9, 2006.  The entire dividend will be paid from the Rinker group’s conduit foreign income amount, thus eliminating Australian withholding tax for all overseas shareholders.  The special dividend in respect of ordinary shares for the year ended March 31, 2006 has not been recognized in the financial statements because it was declared after March 31, 2006.

Basis of preparation and presentation

The financial statements for fiscal years ended 2005 and 2006 included elsewhere in this annual report include Rinker and its controlled entities.

Rinker group changed its accounting policies on April 1, 2005 to comply with Australian Equivalents to International Financial Reporting Standards (‘A-IFRS’).  The transition to A-IFRS is accounted for in accordance with Accounting Standard AASB 1 “First-time Adoption of Australian Equivalents to International Financial Reporting Standards”, with April 1, 2004 as the date of transition.  The previous policies were in accordance with the now superseded Australian GAAP.  An explanation of how the transition from superseded policies to A-IFRS has affected the consolidated entity’s balance sheet, income statement and cash flows is discussed in Note 1 to the financial statements included elsewhere in this annual report.

Critical accounting policies

The financial statements included elsewhere in this annual report are prepared under A-IFRS.  A description of the significant accounting policies is included in the financial statements.

A US GAAP reconciliation to A-IFRS is provided in Note 40 to the financial statements.  Under superseded AGAAP, the only significant difference in the reconciliation of profit from superseded AGAAP to US GAAP was the amortization of goodwill.  Under A-IFRS, goodwill is no longer amortized, and no significant differences in the reconciliation of profit between A-IFRS and US GAAP remain.

The accounting policies under A-IFRS and US GAAP that Rinker management believes are critical to understanding the Rinker group’s financial performance and financial condition are discussed below.

Use of estimates and assumptions

In applying A-IFRS and US GAAP, Rinker group entities’ management will often be required to make individual estimates and assumptions regarding expected outcomes or uncertainties.  Actual results or outcomes generally differ from estimated or assumed amounts.  In the past, these differences have not been material.  In the future such differences will be included in the financial statements of the Rinker group as soon as they are known.  The individual estimates and assumptions generally do not involve a level of risk or uncertainty that would be material to the financial statements of the Rinker group as a whole because, although numerous, they generally are relatively immaterial in amount.