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2023 ReportPeers and competitors of TopBuild:
Quanex Building ProductsBoral
a resource-based manufacturing
company with strong reserve and
market positions
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Boral Limited
abn 13 008 421 761
level 39, aMp Centre
50 bridge street sydney nsw 2000
Gpo box 910 sydney nsw 2001
telephone: (02) 9220 6300
international: +61 2 9220 6300
Facsimile: (02) 9233 6605
international: +61 2 9233 6605
internet: www.boral.com.au
email: info@boral.com.au
Stock Exchange Listing
australian securities exchange
Share Registry
c/- link Market services
level 12
680 George street sydney nsw 2000
locked bag a14 sydney south
nsw 1235
telephone: (02) 8280 7133
international: +61 2 8280 7133
Facsimile: (02) 9287 0303
international: +61 2 9287 0303
internet: www.linkmarketservices.com.au
email: registrars@linkmarketservices.com.au
CEO and Managing Director
rod pearse
Chief Financial Officer
Ken barton
Company Secretary
Michael scobie
Auditors
KpMG
The Annual General Meeting of Boral Limited
will be held at the City Recital Hall, Angel Place,
Sydney on Monday 29 October at 10.30am.
Financial Calendar*
ex dividend share trading commences 23 August 2007
record date for final dividend 29 August 2007
Final dividend payable 18 September 2007
annual General Meeting 29 October 2007
Half year 31 december 2007
Half year profit announcement 13 February 2008
ex dividend share trading commences 25 February 2008*
record date for interim dividend 29 February 2008*
interim dividend payable 19 march 2008*
year end 30 June 2008
* timing of events is subject to change
the annual review includes a concise report containing
abbreviated financial statements. Detailed financial statements
are available in the separate 2007 Financial report, which
shareholders may access on boral’s website
www.boral.com.au or request free of charge by phoning
boral’s share registry on (02) 8280 7133 or via email to
registrars@linkmarketservices.com.au or by writing to link
Market services, locked bag a14 sydney south nsw 1235.
boral limited is a company limited by shares, incorporated and
domiciled in australia.
Front Cover: pictured at boral’s petrie Quarry in Queensland are Clayton
Hill, Development Manager, australian Construction Materials, Queensland
and andy stuart, Quarry Manager petrie
Contents for the 2007
Annual Review
Financial Calendar, Website
and Company information
inside Front Cover
Boral: From resource to market 1
Financial Highlights 2
Chairman’s Report 4
managing director’s Review 6
Summary of Reporting Groups 10
Review of Operating divisions
australian Construction Materials 12
Cement 14
Clay & Concrete products 16
timber 18
plasterboard 20
usa 22
management Committee 24
Financial Review 25
Board of directors 27
Corporate Governance 28
directors’ Report 33
remuneration report 37
Concise Financial Report 44
Statutory Statements 56
Shareholder information 57
Financial History 59
Glossary and Abbreviations 60
Contents for the 2007 Sustainability Report
(on the reverse of the Annual Review)
Key Statistics s1
message from the managing director s2
managing Sustainability s4
Our Stakeholders s7
Our People s8
Health and Safety s12
Our environment s16
Our Supply Chain s22
Sustainable Products s23
Community investment s24
divisional Performance
australian Construction Materials s26
Cement s28
Clay & Concrete products s30
timber s32
plasterboard s34
usa s36
independent Assurance Statement s38
Sustainability Reporting and GRi index s39
Glossary and Abbreviations s40
BORAL LIMITED ANNUAL REVIEW 2007a resource-based manufacturing company with strong reserve and market positionsBoralBORAL LIMITED SUSTAINABILITYREPORT 2007Borala resourceful and responsible company valuing people, communities and the environment Over Boral’s 60 year history, we have
developed a valuable integrated position
in the building products and construction
materials industries.
We leverage our strong operational
management capability through industry
value chains across Boral’s geographic
footprint in Australia, the USA and Asia.
Boral’s reserves*
as at 30 June 2007
Hard rock, sand and gravel
australia
usa
thailand
Indonesia
limestone and shale
australia
Clay
australia
usa
years at
current
million production
tonnes
rates
943
31
58
5
141
116
112
35
19
34
11
40
63
36
* comprises reserves which are licensed for extraction and
economically recoverable, with geological certainty in the
proven and probable category. excludes reserves held by
joint venture operations.
Boral’s reserves are a long-term, fundamental
source of value creation. Development and
acquisitions are ongoing to ensure that over time
reserves are replaced as they are extracted.
In august 2007 Boral
acquired the concrete
and sand assets of
schwarz readymix
and a limestone quarry
from arbuckle materials
for us$80 million to
secure the #2 market
position in construction
materials in oklahoma.
Boral’s markets are generally
cyclical in nature, requiring
us to have capacity to supply
the upturns and to manage
well in the downturns.
Boral:
from resource
to market
Boral’s manufacturing expertise is
underpinned by the dedication and
operational know-how of its people
and its broad geographic spread
across 707 operating sites.
Boral’s people and geographic
footprint
Boral’s people
employees
contractors
JV employees
Boral sites
operating sites
total sites
operating countries
16.194
approx. 4,900
approx. 3,500
707
851
11
significant investments to lift capacity for market peaks and
to strengthen Boral’s cost-competitive positions continued
in 2006/07. for example, an $85 million upgrade of cement
grinding capacity of Boral’s JV sunstate cement operation
in Queensland was announced; a new state-of-the-art
plasterboard plant in Queensland will be commissioned by the
end of 2007; full commissioning of midland Brick’s $53 million
kiln #11 continued; and a new us$55 million brick plant in
Indiana will be completed by march 2008, positioning Boral
well for a us market recovery.
Boral Limited annual review 2007
1
Boral’s capability to meet large-scale infrastructure
projects is demonstrated by our successful
execution of the eastLink motorway project in
melbourne (the largest infrastructure project in
australia to date), which continued in 2006/07.
Locating new concrete and asphalt plants
adjacent to the eastLink project is an example
of Boral’s commitment.
Boral has strong downstream market
positions, generally being number one
or number two in the markets in which
we operate. We strive to anticipate and
satisfy the needs of our markets and to
provide our customers with better value
and service than our competitors.
We have cost-competitive
positions close to market. Our
logistics expertise strengthens
our competitive advantage.
Boral has strong downstream market
positions, generally being number one or
number two in the markets in which we
operate. We strive to anticipate and satisfy
the needs of our markets and to provide our
customers with better value and service than
our competitors.
integration
Boral is an integrated resource-based
manufacturing company with strong
upstream reserves and downstream market
positions, around which we continue to
perform and grow.
Boral’s strategic intent is to be a value(s) and market-driven, focused building and
construction materials supplier, operating in australia and increasingly offshore.
our core competencies are:
• securing and extending our cost-competitive natural resource positions close
to market, and
• utilising our manufacturing, logistics and marketing expertise to create cost
and quality competitive materials and products which meet the needs of
building and construction markets.
In 2007, Boral’s performance reflects strength in Boral’s largest reporting group,
construction materials australia, offset by the effects of a continued downturn
in australian housing activity and a severe downturn in us housing markets.
favourable pricing outcomes, operational cost savings and benefits from growth
contributed to a solid underlying result. the company is well positioned to
benefit from recovering market conditions.
key financial results for 2007
• Net profit after tax down 18% to $298 million
• Sales revenue up 3% to $4.9 billion
• EBITDA down 7% to $762 million
• EBITDA to sales margin of 15.5%
• EBIT down 14% to $531 million
• EBIT return on funds employed of 11.9%
• Earnings per share down 19% to 50.0 cents
• Full year fully franked dividend of 34 cents per share
Financial highlights
A$ million unless stated
Year eNDeD 30 JuNe
revenue
eBItDa
eBIt
Net interest
Profit before tax
tax
Profit after tax
cash flow from operating activities
gross assets
funds employed
Liabilities
Net debt
growth and acquisition capital expenditure
stay-in-business capital expenditure
Depreciation
employees
sales per employee, $ million
Net tangible asset backing, $ per share
eBItDa margin on sales, %
eBIt margin on sales, %
eBIt return on funds employed, %
return on equity, %
gearing (net debt/equity), %
Interest cover, times
earnings per share, ¢
Dividend per share, ¢
safety:
Lost time injury frequency rate1
Hours lost, %
2007
4,909
762
531
111
420
122
298
482
5,817
4,470
2,829
1,482
226
192
231
16,194
0.303
4.41
15.5
10.8
11.9
10.0
50
4.8
50
34.0
2.8
0.09
2006 % cHaNge
3
(7)
(14)
13
(18)
(20)
(18)
4,767
823
614
98
516
153
362
449
5,587
4,333
2,832
1,578
307
207
209
15,802
0.302
4.07
17.3
12.9
14.2
13.2
57
6.3
61.7
34.0
3.1
0.11
finanCial
HIgHLIgHts
Sales revenue $m
EBITDA2 $m
EBIT2 $m
9
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4
7
6
7
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4
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9
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7
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6
3
6
5
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5
1
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4
Profit after
tax2 $m
Earnings per
share2 c
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7
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7
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2
6
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8
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6
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Share of revenue3 by market
EBIT by segment
Australian dwellings
Australian non-dwellings
Australian engineering and construction
USA dwellings
USA non-dwellings
USA engineering and construction
Asia
Other
1. per million hours worked
2. fY05 results onwards restated to reflect transition to a-Ifrs accounting standards.
3. Includes Boral’s share of revenues from asia Plasterboard and monierLifetile joint ventures.
Boral Limited annual review 2007
2
Construction Materials, Australia
Building Products, Australia
USA
Asia
EBITDA variance analysis
FY2006 EBITDA
$823m
- VOLUME
+ PRICE
- COST ESCALATION
+ PEP
+ QEU
+ GROWTH
- PLANT ONE-OFFS
- OTHER
FY2007 EBITDA
$762m
Share price
$10.00
8.00
6.00
4.00
2.00
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Boral
ASX 100
10,000
8,000
6,000
4,000
2,000
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A
Volume
US brick and roofing volumes were down due to the severe
downturn in housing construction activity. Australian brick,
roofing and masonry volumes further declined due to the
continued downturn in Australian housing, especially in
New South Wales. Volumes in other business lifted due to
market lifts and/or growth initiatives.
Price
Pricing outcomes were strong despite housing downturns in
two of Boral’s key markets. In Australia, cement, concrete
and quarry prices lifted 4%, whilst bricks and roofing
products were up 2-4%. US bricks and clay roofing
gained 6%.
Costs and PEP
Despite cost savings of $142 million from the Performance
Enhancement Program (PEP), equal to 3.4% of
compressible costs, costs increased by around 6% due in
part to increased US natural gas costs.
Growth and QEU
The benefits of recent growth activities together with
a $9 million lift in Quarry End Use earnings contributed
$62 million in total to the result. Benefits of growth will
progressively enhance Boral’s profitability particularly as
markets recover.
Plant one-offs
One-off production costs at Berrima cement and Galong
lime kilns ($7 million), together with Midland Brick Kiln 11
commissioning costs, extended temporary plant shutdowns
in bricks particularly in the US but also in Australia, impacted
the result.
Other
Other items include the effects of the previous year’s
(FY2006) one-off compensation payment for land resumed
in Shanghai and profit on sales of assets. Foreign exchange
strength cost around $6 million during FY2007.
13 August 2007
Boral announces that it acquired
the assets of two construction
materials businesses in Oklahoma
City: Schwarz Readymix, a ready-
mixed concrete and sand business and
the quarry assets of Davis Arbuckle
Materials. The total acquisition price of
US$80 million represents a multiple of
5.4 times annualised FY2008 projected
EBITDA and the combined acquisitions
will be earnings per share accretive in
the first full year of ownership.
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Company Announcements
18 August 2006
Boral announces the opening of its
new $12 million production facility
at Wacol, Queensland, in response
to industry demand and the high
number of landscaping projects being
undertaken by Australian homeowners.
8 September 2006
Boral announces it would suspend
manufacturing at its Gloucester
plant in New South Wales from 29
September 2006.
27 October 2006
Boral announces that it was expecting
its profit after tax for the year ending 30
June 2007 to be around 15% below the
previous year and its first half year profit
after tax to be around 15% below the
previous year’s corresponding period.
7 February 2007
Boral announces an after tax profit of
$147 million for the half year ended
31 December 2006, a 15% decrease
on the PAT for the half year ended
31 December 2005
29 May 2007
Boral announces that Dr Brian Clark
has been appointed as a non-executive
Director of Boral Limited.
26 June 2007
Leading cement supplier to
Queensland’s construction industry,
Sunstate Cement, has announced
plans for an $85 million expansion
to meet the growing building and
infrastructure needs of the state’s
strong economy. The company is a joint
venture between Adelaide Brighton Ltd
and Blue Circle Southern Cement.
26 July 2007
Boral welcomed the announcement by
the New South Wales Premier, Morris
Iemma, to approve development
of the third and final stage of
the redevelopment of Boral’s
Greystanes site. The redevelopment
of the Greystanes site, as a result of
Boral phasing out its Prospect Quarry
operations, commenced some seven
years ago with the support of the
NSW Government.
Boral Limited Annual Review 2007
3
prior year. We continue to offer
shareholders the opportunity
to participate in the Dividend
Reinvestment Plan (DRP) and we
are preparing for an on-market
share buyback of up to 15 million
shares to offset the anticipated
dilutive effect of the issue of shares
through the DRP during 2005/06
and 2006/07.
Boral retains its 19.9% strategic
shareholding in Adelaide Brighton
Limited (ABL) which was acquired
in December 2003 at a cost of
$167 million or $1.55 per share.
This investment has been strongly
value-creating; as at 30 June
2007, there has been $229 million
of capital growth from the ABL
investment which has not been
included in Boral’s earnings.
Boral’s sustainability
To deliver the Company’s overarching
objective of superior returns in
a sustainable way, the Board is
focused on reviewing and approving
strategies and plans that will position
the Company well for long-term,
sustainable value creation.
We continue to recognise the
importance of comprehensive
reporting of Boral’s non-financial
impacts and achievements. Boral’s
Sustainability Report, which
forms part of this Annual Review,
details the progress we have
made in 2006/07 as well as our
current sustainability priorities and
goals. As in the past, I encourage
shareholders to review Boral’s
Sustainability Report and to provide
feedback to Boral’s Management
(using the contact details on the
inside front cover of this report).
Safety remains the highest of
priorities across Boral. In 2006/07,
Boral’s safety performance as
measured by lost time injury
frequency rate (LTIFR) per million
hours worked and percent hours
lost, continued to improve. LTIFR
was 2.8 for the year ended 30
June 2007, which was a 10%
improvement on the prior year, and
percent hours lost reduced by 18%
to 0.09. However, between August
and December 2006, we had five
tragic accidents that resulted in
fatalities. We deeply regret that
two contractors in the USA were
fatally injured in accidents involving
falls from height; in Indonesia, an
employee was killed in a heavy
vehicle accident; and electrocutions
were the cause of death of an
employee in Thailand and a
contractor in Australia. There were
no workplace-related fatalities in
the second half of the year. The full
year outcome has caused all of us
at Boral great concern and resulted
in extensive reviews of electrical
and contractor safety management.
Chairman’S
REVIEW
The Company’s 2007 financial performance
For the 2006/07 financial year, Boral’s sales revenue of $4.9 billion was
3% higher than the prior year due to price strength, stronger Australian
construction materials volumes and growth initiatives. Boral’s reported net
profit after tax of $298 million however, was 18% below the net profit for the
year ended 30 June 2006, due to housing volume-related weakness in the
USA and in New South Wales.
Boral’s Australian earnings before interest, tax, depreciation and amortisation
(EBITDA) of $605 million were 6% higher than the prior year. Earnings from
Australian construction materials businesses was 11% stronger on the back
of major infrastructure project work and non-dwellings activity particularly in
Queensland and Victoria. Price gains and growth initiatives also benefited the
result. Despite this, ongoing weak Australian dwelling activity continued to
adversely impact earnings, negatively affecting volumes and manufacturing costs.
EBITDA from Boral’s offshore operations decreased by $98 million (or 40%)
to $150 million. A severe downturn in housing construction across all major
US markets negatively impacted sales and production volumes in Boral’s US
brick and roof tile businesses. In Asia, conditions and results improved in a
number of key plasterboard markets, whilst construction materials markets
remained challenging.
Earnings per share for the year decreased by 19% from 61.7 cents to 50.0
cents. Boral’s return on funds employed (ROFE) of 11.9% was below last
year’s ROFE of 14.2%.
Shareholder returns
The Board declared a final dividend of 17.0 cents per share, fully franked,
taking Boral’s full year 100% franked dividend to 34.0 cents per share.
When grossed up for the impact of franking credits, the 34.0 cent dividend
represents, for most shareholders, an annualised dividend yield of 6.1% per
annum on Boral’s average share price for the year to 30 June 2007.
A dividend payout ratio of 68% of after tax profits was up from 55% in the
Boral Limited Annual Review 2007
4
“Boral has demonstrated
a solid underlying
performance in 2006/07
and is well positioned for
long-term value creating
growth as housing
markets on the Australian
east coast and in the
USA recover from
cyclical lows.”
Ken Moss
Chairman
The Board reviews in detail all
fatalities, including the corrective
actions taken. The Board also
reviews divisional Health and Safety
Management Plans, we approve
safety improvement targets and
we regularly monitor performance
against target for all divisions.
Boral’s Directors and executives
are determined to continue to
improve workplace safety for both
employees and contractors working
in Boral’s operations.
Boral’s board
The Board has been very stable
for several years. However, after
11 years of valued contribution,
Mark Rayner, who joined the
Board in 1996, will retire as a
Director at this year’s Annual
General Meeting. The Board and
I acknowledge the significant
contribution that Mark has made to
the Board, including his contribution
as a member of
the Compensation Committee.
In May 2007, we announced that
Dr Brian Clark had been appointed
as a non-executive Director of the
Board. Brian, who is 58, adds to the
Board’s breadth of experience and
expertise. He has particular interest
and skills in the fields of technology,
research and development,
organisational change, international
business, consumer markets and
leadership development.
Currently in his eighth year as
Boral’s CEO and Managing Director,
Rod Pearse continued to provide
strong and effective leadership
in 2006/07. The Board remains
confident in Rod’s ability to
effectively lead the Company and
to deliver Boral’s strategy.
Boral’s people
The Board also has strong
confidence in the ability of the
Management Committee, which
remains a stable team of senior
executives. In March 2007,
following the resignation of Peter
Boyd, Bryan Tisher took up the
role of Executive General Manager,
Timber. Bryan, who is 44, joined
Boral in 1998 and has been a
member of Boral’s Management
Committee since 2000 when he
was appointed General Manager,
Corporate Development. Andrew
Warburton replaced Bryan
Tisher as General Manager,
Corporate Development, joining
the Management Committee in
March 2007. Andrew, who is aged
43, joined Boral’s Construction
Materials division in 2000 and
became General Manager of Boral’s
Quarry End Use business in 2004.
Boral’s succession planning
and performance management
processes are well entrenched
and continue to support internal
promotion, cross-fertilisation, and
executive development.
The contribution from the
management team and all
employees to Boral’s result in
2006/07 is appreciated by the
Board. I thank Boral’s employees
for their persistence and hard work,
particularly in times of challenging
marketing conditions.
Remuneration and governance
Boral’s Directors support
appropriate and transparent
corporate governance processes
and controls. Boral’s corporate
governance framework is kept
under review and is responsive to
changes in Boral’s businesses and
to Boral’s external environment. On
page 28 to 32, we report on our
corporate governance activities in
accordance with the Principles of
Good Corporate Governance and
Best Practice Recommendations of
the ASX. A separate Remuneration
Report for shareholders as part of
the Directors’ Report (on pages
37 to 43) provides extensive
information on the Company’s
remuneration structures.
In order to oversee the
implementation of Boral’s plans
the Board undertakes regular site
visits and takes opportunities to
meet with Boral’s customers,
shareholders, market analysts,
managers and employees. During
2006/07, the Board of Directors
toured Boral’s joint venture
plasterboard operations and Boral’s
construction materials operations
in Asia. We also spent time visiting
clay and concrete products plants
as well as our GoCrete panels
business in Western Australia.
Boral operates in cyclical industries
and is currently experiencing
challenging conditions in a number
of its key markets. The Directors
believe though that Boral has
demonstrated a solid underlying
performance in 2006/07 and is
well positioned for long-term value
creating growth as housing markets
on the Australian east coast and in
the USA recover from cyclical lows.
Ken Moss
Chairman
Boral Limited Annual Review 2007
5
Despite the challenging market
conditions experienced by some of
Boral’s businesses, the underlying
performance of the Company was
solid in 2006/07. Pricing was up in
most businesses, with price gains
contributing well over $100 million
to earnings. Cost savings delivered
through Boral’s Performance
Enhancement Program (PEP)
totalled $142 million, were
equivalent to 3.4% of compressible
costs. Together, price increases and
cost reductions offset inflationary
cost increases including wage
growth and energy cost increases.
Weaker housing volumes reduced
EBITDA by around $100 million
but growth investments lifted
EBITDA by around half that
amount and Quarry End Use (QEU)
earnings increased by $9 million.
A stronger Australian dollar and
the non-repetition of one-off gains
experienced in 2005/06 reduced
EBITDA in 2006/07 compared to
the prior year. Depreciation and
funding costs increased by
$23 million.
Record results in Australian
construction materials
Boral’s largest reporting group,
Construction Materials in Australia,
recorded an 11% lift in earnings
on a 6% increase in sales. This
result was based on strong levels
of activity in commercial and
infrastructure construction in most
Australian states. The 6% lift in
Construction Materials Australia
revenues to $2.5 billion resulted
from strong quarry volumes, price
increases in cement, concrete
and quarries, and higher asphalt
volumes and margins. EBITDA for
Construction Materials increased
by $44 million or 11% on the prior
year to a record $454 million. The
second-half lift in earnings was
particularly significant both in QEU
and in other businesses. Improved
earnings from Blue Circle Southern
Cement, from Asphalt and from
QEU were the key drivers of the
improved result. Our QEU business
delivered $56 million of earnings,
which was $9 million higher than
last year.
Managing well through the
US and Australian housing
downturns
Throughout the Company’s 60-year
history, Boral’s businesses have
benefited from strong volumes
during the cyclical upturns of the
building and construction markets
in which we operate and we have
weathered the cyclical market lows.
manaGinG
DireCtOr’S
REVIEW
We are leveraging our core competencies
Boral is a resource-based, manufacturing company with strong upstream
reserve and downstream market positions. Our core competencies
are around:
• natural resource management,
• manufacturing, logistics and marketing, and
• strategy and execution.
We have expertise in securing and extending cost-competitive natural
resource positions which are close to market and in converting those
positions into a leading market presence. We use our manufacturing, logistics
and marketing competencies to transform our natural resources into cost-
and quality-competitive construction materials and building products that
meet the needs of the markets in which we operate. And our strategic
understanding and operational management of the relevant industry value
chains strengthens our ability to maximise the outcomes from our leading
resource and market positions.
Boral’s Strategic Intent is to be a value(s) and market-driven, focused building
and construction materials supplier, operating in Australia and increasingly
offshore. We leverage our core competencies and our geographic footprint, to
search for opportunities to grow for value through the integrated value chains
of the building products and construction materials industries.
2006/07 financial results
Boral’s 2006/07 sales revenue of $4.9 billion was 3% higher than last year,
and earnings before interest, tax, depreciation and amortisation (EBITDA)
of $762 million was only 4% below 2003/04 earnings which were delivered
at the peak of the Australian housing cycle and when US housing was 25%
stronger than it was in 2006/07.
Boral Limited Annual Review 2007
6
Managing in a sustainable way
Our commitment to pursuing
industry-specific best practice in the
area of sustainability management
and reporting remains firm. In our
2007 Sustainability Report, which
is published on the reverse side of
this Annual Review, on pages s2-s3
I provide a comprehensive message
to shareholders, employees,
customers and other interested
parties on Boral’s sustainability
performance and priority areas,
including detailed commentary
on Boral’s safety performance for
2006/07.
“Our focus has been on
managing well through
the downturns of the
market cycles in which
we operate and ensuring
that the Company
is well positioned to
benefit from the cyclical
upturns.”
Rod Pearse
CEO and Managing Director
on last year due to a one-off land
resumption compensation benefit
in last year’s result. In an underlying
sense, earnings from Asia were
steady year-on-year. A decline
in earnings from construction
materials in Asia due to volume
(Indonesia) and margin pressures
(Indonesia and Thailand) was offset
by significantly improved underlying
earnings in the LBGA plasterboard
joint venture business.
Our balance sheet remains
strong
With a gearing (net debt/equity)
level of 50% at 30 June 2007,
which compares with 57% a
year earlier and Boral’s targeted
gearing range of 40% to 70%,
Boral’s financial position remains
strong. Net debt at 30 June 2007
was $1,482 million compared with
$1,578 million at 30 June 2006.
Cash flows from operating activities
of $482 million were 7% above
the prior year. Capital expenditure
for the year was $418 million,
consisting of $226 million of growth
and acquisition capital expenditure
and $192 million of stay-in-
business capital (which was 83% of
depreciation).
Delivering our financial
objectives
Our three financial objectives
remain unchanged: to exceed the
weighted average cost of capital
(WACC) through the cycle; to
deliver better financial returns than
the competition in comparable
markets; and to deliver superior
total shareholder returns.
Whilst return on funds employed
(ROFE) for 2006/07 of 11.9%
was broadly in line with WACC,
ROFE has averaged 15% since
demerger, which is well ahead of
Boral’s weighted average cost of
capital through the cycle. Boral’s
performance continues to compare
well to competitors in like markets
across most businesses. Boral’s
total shareholder return (TSR)
from share price appreciation and
dividends over the twelve months
to 30 June 2007 underperformed
the ASX100 with a TSR of 12%,
compared with the TSR of the
ASX100 Index of 22%. Over the
seven-and-a-half years since
demerger to 30 June 2007,
however, Boral’s TSR was 25%
per annum which was at the 21st
percentile of ASX100 companies
over this period.
Whilst some Boral businesses
enjoyed favourable market
conditions in 2006/07, especially
construction materials businesses in
Australia, more generally it has been
a challenging financial year. Our US
building products businesses were
significantly impacted (especially
in the second half of the year) by a
dramatic decline in housing activity;
the weakness in the New South
Wales housing market continued;
and in Asia, our construction
materials businesses faced ongoing
difficult market conditions.
Boral’s Australian Building Products
businesses and some Construction
Materials businesses continued to
experience low volumes in east
coast housing markets, especially
in Boral’s key state of New South
Wales where we derive around
40% of our Australian revenues
and where, in 2006/07, housing
activity levels were the lowest in
34 years. Boral’s Building Products
reported a 7% decline in EBITDA
to $151 million. Lower volumes
and higher manufacturing costs
associated with lower levels of
plant utilisation and temporary plant
shutdowns in East Coast markets
together with weaker masonry
earnings impacted the result.
Despite this, our Australian Building
Products businesses reported a 5%
lift in revenues to $1.3 billion, driven
by higher prices offsetting weaker
volumes across bricks, roofing and
masonry. Plasterboard revenues
were underpinned by increased
volumes and sales of re-sale
products. Increased hardwood and
engineered flooring product sales
also contributed.
Boral’s most challenging market
in 2006/07 was the US housing
market, which declined significantly
during the year, falling by 29%1
in the states in which Boral
operates. Revenues from our US
operations were down 2% on last
year to US$699 million. However,
if MonierLifetile revenues (which
are equity accounted) are included
on a pro-rata basis, Boral’s US
revenues reduced by 8%. EBITDA
from US operations declined by
37% to US$102 million. The most
significant decline in US earnings
came from the MonierLifetile joint
venture and from Boral’s US brick
business (which was particularly
impacted by the downturn in US
housing activity in the second half
of the year).
Market conditions remained
challenging for our businesses in
Asia, particularly in Construction
Materials. Boral’s Asian operations
delivered a full year EBITDA of
$21 million, which was down 31%
1 In terms of the value of dwellings work
commenced for the year ended 30 June 2007
in “Boral’s US States”
Boral Limited Annual Review 2007
7
Major growth activities
Growth project
Current status
$95m upgrade of the Waurn Ponds
(Victoria) cement works
Achieved target production levels and around cost of capital returns in FY07;
further optimisation being pursued to meet higher levels of demand.
new US$35m, 100m SBe brick plant
at Union City, Oklahoma (USa)
Commissioning commenced in Mar-06 quarter in line with plan. Benefits
phased from Jun-06 quarter and returns ahead of cost of capital and
business plan. Low-cost plant servicing a relatively resilient South West US
market.
midland Brick’s (Western australia)
new $53m, 50m SBe Kiln #11
Running well with commissioning of full product range to be completed in
Sep-07 quarter. Achieving above cost of capital returns.
$28m upgrade of the cement
bagging plant at maldon nSW
Completed on time/budget. Benefits increasing in line with plan since
Jun-06. Relocation of operations to Maldon allowed closure of Seven Hills
in Jun-06.
new $12m ‘wetcast’ paving plant at
Wacol (Queensland)
Commissioning complete, securing Boral’s low cost position in relatively
fast-growing segment. Currently delivering above cost of capital returns.
acquisition of a further 30% in
Girotto Precast for $9m
Increased exposure to the fast-growing precast market on the East Coast
through lift in Boral’s equity from 50% to 80%.
new 10m m2 plasterboard plant
in Vietnam involving a total JV
investment of US$13m
Completed on time and on budget. Plasterboard production commenced in
the Sep-06 quarter and is achieving business case sales volumes.
new US$12m (132k squares) clay
roof tile plant in trinidad in JV with
anSa mcaL
Completion in FY06 but operating at lower volumes due to weak market
conditions in South Florida. Production issues experienced during the first
year have been resolved.
$24m herons Creek timber mill
upgrade (nSW)
Fully commissioned and achieved design throughputs. Weakness in NSW
market requires reduced operating hours to limit inventory growth.
$27m upgrade of Berrima’s cement
mill #7 to 800k tpa
Practical completion in Jan-07 with benefits to be progressively delivered in
line with business plan.
$7m investment in south east
Queensland Concrete & Quarries
capacity
$30m investment in asphalt plants
at Geelong (Victoria), West Burleigh
(Queensland) and Welshpool
(Western australia) and two mobile
plants.
Building capacity to meet ongoing infrastructure activity in SE Qld, including
Lawnton concrete plant, Narangba, Purga and Stapleton quarries.
Construction completed on Geelong and West Burleigh by Jul-07.
Welshpool is under construction and due for completion by Dec-07. Mobile
plants are currently deployed on EastLink in Victoria and in Queensland.
net $106m new 40m m2
plasterboard plant in Queensland
Construction under way with commissioning anticipated during Dec-07
quarter. Market demand remains solid and in line with expectations.
new US$55m, 120m SBe brick plant
at terre haute, indiana
Construction under way, completion anticipated in Mar-08 quarter. Low-cost
plant will operate at high utilisation rates reaching full production in FY09.
new US$27.5m, 130k square, clay
roof tile plant at ione, California
Construction progressing satisfactorily and completion expected by Dec-07.
US$69m monierLifetile JV concrete
roof tile plants – Las Vegas, nevada
and Lake Wales, Florida
Lake Wales plant successfully commissioned and well positioned to supply
re-roofing market and future recovery in Florida’s new construction market.
Construction of Las Vegas plant delayed due to market downturn.
US$42m upgrade (total) of LBGa’s
Dangjin plant, Seoul, double
capacity to 75m m2
Commissioning expected in early CY2008 with benefits flowing from
anticipated Korean residential market recovery.
US$28m (total) in new LBGa plants
rajasthan, india (8m m2)
and Chengdu, China (10m m2)
Long-term natural gypsum supply to the plant in India and long-term FGD
gypsum supply in Chengdu have been secured. Both plants are expected to
be in operation in the first half of CY2008.
new $10m automated panels
plant at GoCrete in Perth,
Western australia
Due for completion in Dec-07 and will significantly lift our flooring and
walling penetration in multi-unit construction in the buoyant Perth market.
$85m (total) to upgrade cement
grinding capacity of Sunstate
Cement in Queensland
Expansion of clinker storage (and grinding) from 1.0m to 1.5m tpa to meet
growing demand in Qld. Completion of clinker storage expected in first half
of CY2008.
US$80m acquisition of Schwarz
and ami, Oklahoma
Acquired Schwarz concrete and sand assets and AMI limestone quarry to
secure #2 market position in Oklahoma City.
1 One square = 100 square feet.
Boral Limited Annual Review 2007
8
In Asia, we anticipate growth
in Boral’s businesses despite
an expected continuation of
competitive market conditions
for the remainder of 2007/08.
In addition to the expected cost
improvement benefits from PEP
of around 3%, Boral’s growth
initiatives will progressively deliver
improved benefits to the Company,
particularly as markets recover.
It is difficult to comment further at
this time on the expected financial
outcomes for 2007/08 because
of the volatile market conditions
that currently exist in some of our
key markets. We will provide an
update for shareholders on trading
conditions at the Annual General
Meeting on 29 October 2007.
Rod Pearse
CEO and Managing
Director
Strengthening our resource-
based manufacturing positions
Acquisitions and organic growth
projects that have been completed
are proving to be value creating
and have offset the reduction
in Boral’s EBITDA which would
otherwise have resulted from the
significant Australian and USA
housing downturns.
Most organic growth projects take
a few years of construction and
commissioning before benefits are
delivered. As current projects are
completed, and as markets grow,
Boral’s growth portfolio will be
increasingly value-adding and will
improve Boral’s overall returns.
A status of recently completed
and continuing growth projects is
summarised in the accompanying
table (page 8).
During 2006/07, we continued
to invest in growth projects to
strengthen Boral’s leading market
positions. The $226 million of
growth capital in 2006/07 was
spent largely on previously
announced organic growth projects
including the upgrade of cement
mill #7 at Berrima (which is now
complete), new US brick and roof
tile plants and the new Queensland
plasterboard plant (which are
still under construction), and the
acquisition of a further 30% of
Girotto Precast.
The performance of recently
completed growth projects
continued to improve during the
year. Some growth initiatives, such
as those in construction materials
in Australia, have progressively
delivered increased value whilst
others, such as brick and roof
tile investments in the USA, are
positioning Boral well for growth
with market recovery.
Our 50/50 Asian plasterboard joint
venture with Lafarge, LBGA, has
progressed construction of a new
plasterboard plant in Chengdu,
China, and a new plant in Rajasthan,
India, for a total combined
investment of US$28 million.
Both plants are expected to be
in operation in the March 2008
quarter. Together with the new
US$13 million plasterboard plant
in Vietnam, which was completed
in 2006/07, these investments
are securing LBGA’s number one
market position in the Asian region
(excluding Japan), positioning the
business well to benefit from high
growth markets in the longer term.
Following the end of the financial
year, in August 2007 we announced
that Boral had acquired the Schwarz
concrete and sand business and
the Arbuckle limestone quarry in
Oklahoma, for an acquisition price
of US$80 million. This acquisition
is another step in our value-adding
US construction materials growth
strategy. The step out into the
Oklahoma construction materials
market follows Boral’s successful
move into Denver construction
materials in September 2004 and
the continued incremental benefits
delivered from this acquisition
strategy. The Oklahoma acquisition
is expected to be earnings per
share accretive in 2007/08 and
results will improve as synergies
are realised.
Boral’s acquisition spend has
continued to be an important
contributor to current earnings and
is providing substantial strategic
benefits. Overall, acquisitions are
delivering returns which exceed
Boral’s hurdle rate.
Organic growth has accounted for
around half of Boral’s growth spend
and portfolio returns are currently
averaging around cost of capital for
completed projects. These returns
are improving as projects mature.
Outlook for 2007/08
In 2007/08 we expect Australian
dwelling commencements to be
around 145,000 to 150,000 starts
compared to the estimated 149,000
starts in 2006/07. This is well
below underlying demand levels
of around 170,000 starts per
annum. Boral’s building products
results are expected to soften as
result of the weakness in dwelling
construction volumes.
We expect that earnings from our
construction materials businesses
in Australia will continue to improve
as a result of an anticipated increase
in the levels of non-dwelling and
infrastructure construction activity
in 2007/08 and the continued
flowthrough of concrete and
quarry price increases that were
implemented in April 2007.
QEU earnings are expected to be
around $50 million in 2007/08 and
will again be weighted heavily to
the second half of the year.
Forecasters in the USA are currently
expecting housing starts to be
around 1.4 million to 1.5 million
starts in the 2007/08 financial year,
which equates to around a 3% to
10% decline year-on-year. This
decline in housing construction
activity will reduce brick and roof
tile sales and production volumes
and Boral’s US earnings will be
lower compared to 2006/07
levels. Our recently announced
construction materials acquisitions
in Oklahoma City will, however,
positively impact US earnings with
an expected EBITDA contribution of
around US$12 million in 2007/08.
Boral Limited Annual Review 2007
9
SUMMARY OF REPORTING GROUPS
Construction Materials, Australia
Building Products, Australia
Share of External Revenue
Share of External Revenue
* Cement division
includes Blue Circle
Southern Cement
(external revenues),
concrete placement
and scaffolding.
Quarries
Concrete
Asphalt
Transport
QEU
Contracting
Cement*
Bricks
Roofing
Masonry
Windows
Timber
Australian Plasterboard
Revenue $m
EBITDA3 $m
EBITDA/Revenue %
Revenue $m
EBITDA3 $m
EBITDA/Revenue %
9
4
5
,
2
0
1
4
,
2
4
6
1
,
2
9
9
0
,
2
6
4
8
,
0 1
4
6
,
1
8
4
7
,
1
3
2
5
,
1
4
5
4
2
1
4
6
1
4
0
1
4
5
3
3
5
6
2
7
3
2
8
0
2
%
6
.
9
1
%
2
.
9
1
%
2
.
8
1
%
8
.
7
1
%
0
.
7
1
%
2
.
5
1
%
4
.
4
1
%
7
.
3
1
5
7
2
,
1
7
1
2
,
1
3
1
2
,
1
7
8
1
,
1
6
5
1
,
1
5
5
3
,
1
9
9
9
5
5
9
2
0
2
1
9
1
4
6
1
2
6
1
1
5
1
2
8
1
8
2
1
0
1
1
%
6
.
6
1
%
1
.
6
1
%
4
.
3
1
%
8
.
1
1
%
3
.
4
% 1
8
.
2
1
%
4
.
3
1
%
5
.
1
1
0
0
Y
F
1
0
Y
F
2
0
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F
3
0
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F
4
0
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F
5
0
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F
6
0
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F
7
0
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F
0
0
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F
1
0
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F
2
0
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F
3
0
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F
4
0
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F
5
0
Y
F
6
0
Y
F
7
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
1. Includes acquisitions.
2. Boral’s share of revenues from LBGA Asian plasterboard joint venture do not appear
in consolidated accounts. Boral’s profits from LBGA are equity accounted and are
after financing and tax.
3. FY05 result onward has been adjusted for adoption of A-IFRS.
4. FY01 onwards includes Boral’s share of LBGA revenues.
year ended 30 June
2007
2006 change
year ended 30 June
%
2007
2006 change
%
A$ million unless stated
A$ million unless stated
454
318
169
Sales revenue
EBITDA
EBIT
Capital expenditure1
Funds employed1
17.8
EBITDA return on sales, %
EBIT return on sales, %
12.5
EBIT return on funds employed, % 14.0
Employees, number
Revenue per employee
2,549 2,410
410
286
273
2,271 2,202
17.0
11.9
13.0
5,838 5,754
0.437 0.419
6
11
11
(38)
3
Sales revenue
EBITDA
EBIT
Capital expenditure1
Funds employed1
EBITDA return on sales, %
EBIT return on sales, %
EBIT return on funds employed, %
Employees, number
Revenue per employee
151
99
127
1,275 1,213
162
118
119
1,114 1,001
13.4
11.8
9.7
7.8
11.8
8.9
4,107 4,143
0.311 0.293
5
(7)
(16)
7
11
Performance
•
Improved revenues due to strong quarry volumes;
cement, concrete and quarry pricing gains; and
higher asphalt volumes and margins. Boral ownership
of Girotto Precast now 80% and revenues now
consolidated.
Improved earnings from Blue Circle Southern Cement
(BCSC) and Asphalt. Quarry End Use (QEU) contributed
$56m of EBIT.
Significantly improved results in Queensland and WA.
Victoria benefited from Melbourne’s EastLink project.
Markets weaker in NSW; Sydney ABS concrete volumes
were down by 8%.
$17m operational improvement from BCSC Waurn Ponds
kiln. Berrima kiln #6 operating at above rated capacity,
Waurn Ponds and Galong now performing well.
$70m of PEP cost reductions.
•
•
•
•
FY2008 Outlook
•
•
Increased non-dwelling and infrastructure activity.
Concrete and quarry price increases will continue to
flow through.
QEU earnings of around $50m weighted to June half.
•
Boral Limited Annual Review 2007
10
Performance
•
Higher prices offset weaker volumes across bricks,
roofing and masonry.
Plasterboard revenues underpinned by increased
volumes and sales of re-sale products.
Timber revenue lift driven by stronger conditions in
Queensland, sales growth from the Davis & Herbert
business and engineered flooring sales.
Earnings decline due to weaker masonry earnings
and lower volumes and higher manufacturing costs
associated with low plant utilisation and temporary
plant shutdowns.
$32m of PEP cost reductions.
•
•
•
•
FY2008 Outlook
•
•
Expect 145,000-150,000 dwelling starts.
Effective price and cost management should mitigate
volume related impacts and temporary plant closures
should contain inventory growth in bricks and roof tiles.
USA
Share of External Revenue
US Bricks
Concrete Roof Tiles**
Clay Roof Tiles
Construction Materials
Fly Ash
** MonierLifetile joint
venture is equity
accounted – Boral’s
share of revenue
does not appear in
consolidated accounts
but is included in the
revenue pie chart.
Revenue $m
EBITDA3 $m
EBITDA/Revenue %
7
5
9
3
8
8
3
9
7
6
5
7
1
6
7
5
5
7
0
1
8
2
6
6
9
1
2
7
7
1
5
5
1
7
5
1
1
5
1
4
4
2 1
3
1
9
2
1
%
8
.
2
2
%
8
.
1
% 2
0
.
0
2
%
6
.
0
2
%
9
.
9
1
%
6
.
9
1
%
0
.
9
1
%
6
.
4
1
Asia
* Includes Boral’s Asian plasterboard joint venture with
Lafarge and Boral’s Indonesian and Thailand construction
materials businesses.
Revenue $m4
EBIT3 $m
EBIT/Revenue3 %
6
9
4 3
6
3
0
0
3
1
4
2
7
2
2
0
1
2
3
0
1
8
9
9
2
4
2
0
2
3
2 2
2
2
1
4
4
1
-
9
.
1
1
4
.
0
1
4
.
9
0
.
4
4
.
7
2
.
6
1
.
3
6
.
3
1
-
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
2007
2006 change
year ended 30 June
%
2007
2006
change
%
A$ million unless stated
Sales revenue2
EBITDA
EBIT
Funds employed
Return on funds employed, %
3
(31)
(46)
183
21
12
376
3.2
177
30
23
377
6.0
Performance
•
Decline in earnings from construction materials due to
volume (Indonesia) and margin pressures (Indonesia
and Thailand) offset by improved market conditions and
underlying earnings in Asia plasterboard JV.
Concrete and quarry business in Thailand recovered
market share and expanded geographically and concrete
volumes lifted significantly.
Income of $16m from Asian plasterboard JV 18%
below last year, but on an underlying basis earnings
substantially stronger. South Korea trading was more
stable and volumes were well up but there was
continued pressure on prices.
Plasterboard prices up in East China and total China
volumes were higher. Market conditions remained
soft in Thailand and exports were lower, resulting in
continued pressure on prices and volumes.
2 plasterboard plant
New US$13m 10m m
commissioned in Vietnam in August 2006 but faced
some early competitive pressures.
•
•
•
•
FY2008 Outlook
•
Expect continued growth and competitive market
conditions in Asia.
year ended 30 June
US$m
Sales revenue
EBITDA
EBIT
699
102
75
714
163
139
(2)
(37)
(46)
(8)
(41)
(49)
–
(4)
A$m
883
Sales revenue
129
EBITDA
95
EBIT
Capital expenditure1
100
Funds employed1
813
14.6
EBITDA return on sales, %
EBIT return on sales, %
10.7
EBIT return on funds employed, % 11.6
Employees, number
Revenue per employee
957
219
186
100
848
22.8
19.4
21.9
2,503 2,679
0.353 0.357
Performance
•
Severe downturn in US housing activity, with the most
significant decline in earnings coming from the MLT
concrete roof tile joint venture and from US bricks.
Brick and clay roof tile prices up 6% but June 07 on
June 06 brick prices flat and clay roof tiles up 1%.
Concrete roof tiles up 4% year-on-year but June 07 on
June 06 prices down 11%.
Revenue growth in Construction Materials. Concrete
volumes down due to slowing residential market and
adverse weather, but aggregate and block volumes up
and overall price lifts.
US$26m of PEP cost reductions.
•
•
•
FY2008 Outlook
•
Forecasters expect 1.4–1.5 million housing starts down
around 3%–10% on FY2007.
Natural gas costs should be lower than in FY2007.
Schwarz/Arbuckle acquisitions should increase USA
construction materials EBITDA by around US$12m.
•
•
Boral Limited Annual Review 2007
11
remained at 30-year low levels, with
increased demand driven by strong
infrastructure activity. Average price
increases of 4% were not sufficient
to fully offset cost increases.
Asphalt performed very strongly
during the year with higher volumes
underpinning a 16% lift in revenues.
Margins improved despite bitumen
cost escalation.
Quarry volumes were 7% higher
than last year, due to concrete
and asphalt pull-through and
participation in a number of
infrastructure projects. Our quarry
businesses experienced cost
pressures associated with the
resources boom. Our Queensland
and Western Australia plants were
operating at near capacity which put
further pressure on operating costs.
Penrith Lakes (PLDC) costs in
New South Wales increased as
quarrying moved into the final
years of extraction. These cost
pressures were partially offset by
price increases of 4% and cost
reduction initiatives.
Boral Transport’s EBITDA earnings
were lower than last year following
our exit from the Hunter Valley
transport business. The transport
business now largely supports
internal transport needs.
We exited the mining contracting
business in Western Australia
but the asset value of all related
equipment was recovered.
Boral’s Quarry End Use (QEU)
business contributed $56 million
of EBIT (up by around $9 million
on last year). QEU earnings came
from the George’s Fair (Moorebank)
and Nelson’s Ridge (Greystanes)
developments, the sale of land at
Northgate and Richmond Lowlands,
and the Deer Park Western
Landfill operation.
Outlook
We anticipate that increased non-
dwelling and infrastructure activity
will favourably impact ACM in
Australia during FY2008. Concrete
and quarry price increases that
were announced effective 1 April
2007 will continue to flow through
in FY2008. QEU earnings of around
$50m will again be weighted
heavily to the second half of the
FY2008 year.
Widespread cost control programs
exist within the division. Major
performance enhancement
programs are under way in New
South Wales aimed at improving our
cost structure and in Queensland
aimed at further improving our
cost structure and maximising our
network capacity.
REVIEW OF OPERATING DIVISIONS
JOhn DOuGLAS
EXECUTIVE GENERAL MANAGER
aUStraLian
CONSTRUCTION
MATERIALS
The Australian Construction
Materials (ACM) division employs
around 4,600 employees and 1,600
contractors in quarry, concrete,
asphalt, transport, contracting
and land development activities
throughout Australia. With around
400 operating sites, ACM has a
regional focus to serve Boral’s
local markets.
Performance
ACM’s FY2007 sales were around
9% higher than the prior year.
Market conditions in Queensland
and Western Australia remained
strong during the year. In Victoria,
Boral benefited from participation
in Melbourne’s EastLink project.
Robust infrastructure spending
in these states, together with
effective price management, offset
weaker market conditions in New
South Wales where Boral has
significant exposure. In Sydney
where ABS concrete volumes were
down by 8%.
Boral’s concrete volumes were
2% higher during the year, despite
difficult trading conditions in New
South Wales where detached
dwelling construction activity
Boral Limited Annual Review 2007
12
QUarrieS
Boral has leading quarry resource
positions close to market and is
australia’s leading quarry operator
with around 100 quarries, sand pits
and gravel operations producing
products such as concrete
aggregates, crushed rock, asphalt
and sealing aggregates, road base
materials, sands and gravels.
COnCrete
the network of around 240 premix
concrete plants produces a wide
range of mixes in metropolitan and
country areas. Boral’s acquisition of
GoCrete in Western australia and
80% of Girotto Precast on the east
Coast gives it interests in precast
concrete plants in key markets.
aSPhaLt
Boral is a national supplier of
asphalt with around 50 plants
producing asphalt and other
materials for the surfacing and
maintenance of road networks.
tranSPOrt
the company-owned fleet totals
around 400 vehicles providing bulk
transport and logistics solutions
to the construction materials
businesses, other Boral divisions
and to selected external freight
markets where it supports our
internal business. Boral transport
manages approximately a further
300 contracted vehicles and drivers.
QUarry enD USe
QeU focuses on realising
appropriate end uses for quarry
properties and other Boral land
assets that are nearing the end
of their economic life. Current
major QeU activities include
development of the Greystanes
estate and the moorebank brick
plant redevelopment in Sydney and
a 40% share in the Penrith Lakes
Development Scheme.
DARWIN
a key growth driver for aCm, asphalt capacity
has been increased via the construction of
plants at Geelong in Victoria and West Burleigh
in Queensland we have also purchased two
new mobile plants currently located at ipswich
in Queensland and eastlink in melbourne. a
new plant is currently under construction at
Welshpool in Perth and is due for completion by
December 2007. these new plants complement
our existing network which is performing
strongly, as evidenced by the enfield plant in
new South Wales.
PERTH
DARWIN
aCm has significant capacity
and capability to meet the large
scale infrastructure projects
that are forecast to come on
stream over the next few years.
this is demonstrated by our
involvement in the Boddington
Gold mine project in Wa and
the successful execution of
the eastLink motorway project
in melbourne (the largest
infrastructure project in australia
to date). Locating new concrete
and asphalt plants adjacent
to the eastLink project is an
example of the commitment and
capability that aCm can bring to
its infrastructure partners.
ADELAIDE
CANBERRA
MELBOURNE
HOBART
BRISBANE
Queensland’s infrastructure spend
is at unprecedented levels, and
underpinned a solid increase in
revenues from this region. this level of
activity is expected to grow in coming
years. aCm is well placed to meet the
infrastructure demands due to targeted
investment in our concrete, quarry and
asphalt networks, particularly in South
east Queensland.
SYDNEY
ASPHALT
CONCRETE
QUARRIES
TRANSPORT
BRISBANE
PERTH
ADELAIDE
CANBERRA
SYDNEY
aCm is continuing to review the composition of its businesses.
expansion of our precast business is continuing with our investment
in Girotto, which operates on the east Coast, increasing to 80% and
the construction of an automated plant for our GoCrete precast
operations in Perth. Business rationalisation includes exiting the
Cooljarloo contract mining business and unprofitable transport
contracts, both in Western australia, and the sale of our non-core
hunter Valley new South Wales transport business.
Boral Limited Annual Review 2007
13
MELBOURNE
HOBART
ASPHALT
CONCRETE
QUARRIES
TRANSPORT
been operating well. Berrima’s
capability was further enhanced
with the successful March 2007
commissioning of the new 800k
tpa cement mill. The Waurn Ponds
kiln significantly improved its
performance with the benefits of the
upgrade becoming apparent in a $17
million earnings uplift in FY2007.
Lime volumes were up significantly
from last year’s low base with
demand from the steel sector
improving but still short of
expectations. Despite an early
refractory change at Galong costing
around $2 million during the year, the
Galong kiln is now performing well.
The Formwork & Scaffolding
business environment remains very
competitive. During the period,
several competitors sought to
continue to expand market share
using imported hire stock. The
consequent pressure on hiring rates
reduced earnings despite increased
volumes and formwork capability.
De Martin & Gasparini revenues
were down significantly on last year.
EBITDA was lower due to a less
favourable business mix.
Dowell Windows EBITDA earnings
improved on last year due to stronger
volumes and cost controls. Revenue
increased despite difficult conditions
in the housing market particularly
in New South Wales. Sales in
Queensland, Victoria and Western
Australia were stronger.
In Indonesia, concrete volumes
were well down but market share
was stable in an uncertain market
environment driven by large
economy-wide cost increases,
particularly diesel, and major
flooding in Jakarta earlier in 2007.
Price increases did not offset cement
and other cost increases. The quarry
and pipe businesses progressed and
the review of cement supply options
advanced during the year.
In the Thailand Concrete & Quarries
business, concrete volumes lifted
significantly as we recovered market
share and expanded geographically.
There was ongoing political upheaval
and severe monsoonal flooding
during the year. Margin compression
was experienced as a result of
cement and diesel cost increases.
Outlook
Cement demand should remain well
supported by continued strength
in non-dwellings and infrastructure
construction. An increasing
Australian dollar exchange rate and
reduced cement exports from Asia
to the US may have a dampening
effect on increases in domestic
cement pricing in the short term.
Asian operating environments are
expected to remain challenging.
BLUe CirCLe SOUthern
Cement (BCSC)
this leading australian cement
company has 13 operating and four
distribution sites and around 700
employees. the major operations
are in the Southern highlands of
nSW at Berrima where the dry
process cement capacity is 1.4m
tpa. at maldon, up to 300k tpa of
off-white and grey cement can be
produced and development of a
larger scale and lower cost bagging
and dry mix facility has been
completed. BCSC markets fly ash
acquired from power stations in
nSW and has a 50% shareholding
in Fly ash australia. in Victoria, at
Waurn Ponds near Geelong, the
upgraded dry process kiln has a
capacity of 800k tpa. BCSC also has
a 50% interest in Sunstate Cement
which operates a cement milling
facility in Brisbane.
BCSC is a large producer of
limestone for both internal and
external customers from our
substantial reserves at marulan and
at Galong in nSW. Lime is produced
at marulan and at Galong.
BOraL FOrmWOrK &
SCaFFOLDinG (BFS)
Boral is a leader in the hire and
sale of formwork and scaffolding,
providing engineering expertise
to the australian construction
industry. BFS has 30 depots around
australia with an increasing focus
on new formwork products.
De martin & GaSParini (DmG)
DmG is a specialist concrete placing
business which has been servicing
Sydney’s construction industry for
over 50 years. DmG has built its
expertise in large pours, detailed
formwork design and high strength
concrete.
DOWeLL WinDOWS
Dowell operates nationally
through 15 window fabrication
businesses employing around 800
people, focusing on supplying the
residential builder market.
inDOneSian COnStrUCtiOn
materiaLS
Pt Jaya readymix is the largest
producer of premixed concrete in
indonesia, employing around 2,100
people on 28 sites, predominantly
located on the main island of Java.
its hard rock quarries produce
aggregates for the Jakarta market.
the business is expanding its
concrete pipe and precast panels
business.
BOraL thaiLanD COnCrete
& QUarrieS
this business is one of thailand’s
leading concrete and quarry
businesses and operates around 50
concrete batch plants and quarries
throughout the country.
REVIEW OF OPERATING DIVISIONS
PhIL JOBe
EXECUTIVE GENERAL MANAGER
Cement
The Cement division is a portfolio
of businesses comprising Blue
Circle Southern Cement (BCSC),
Boral Formwork & Scaffolding,
De Martin & Gasparini, Dowell
Windows, PT Jaya Readymix
(Indonesia) and Boral Thailand
Concrete & Quarries. The division
operates across 135 operating
sites in Australia, Indonesia
and Thailand and employs
approximately 5,400 people
(with around 3,400 in Asia).
Performance
BCSC drove the Cement division’s
improved operating performance
with the remaining businesses in the
portfolio producing mixed results.
Overall cement volumes were
similar to last year. A decline in
New South Wales volumes was
offset by increases in both Victoria
and Queensland where Sunstate
Cement achieved double digit
growth. Average cement prices
were 4% higher than the prior year.
Following a three-week shutdown
in July 2006 to replace a trunnion
bearing failure costing around
$5 million, Berrima’s kiln #6 has
Boral Limited Annual Review 2007
14
SOUTH
KOREA
CHINA
DARWIN
PHILIPPINES
in June 2007, Sunstate
Cement announced
plans for an $85m
expansion to meet
growing infrastructure
needs in Queensland.
the expansion plans
include an additional
500,000 tpa of cement
CONCRETE
QUARRIES
grinding capacity,
METAL PRODUCTS
together with additional
(PRODUCTION)
clinker, cement and fly
ash storage capacity.
SOUTH
KOREA
THAILAND
CHINA
MALAYSIA
SINGAPORE
INDONESIA
CONCRETE
QUARRIES
METAL PRODUCTS
(PRODUCTION)
THAILAND
PHILIPPINES
MALAYSIA
SINGAPORE
INDONESIA
PERTH
BRISBANE
DARWIN
ADELAIDE
SYDNEY
the Galong lime operation has emerged
from a difficult commissioning phase,
CANBERRA
which culminated in an early kiln
refractory replacement, to perform at
high levels of availability and produce
a high-quality calcined lime product.
Galong is securing its position as a
competitive and long life supplier of
lime to south-east australian markets.
MELBOURNE
HOBART
CEMENT
SCAFFOLDING
WINDOWS
BRISBANE
PERTH
ADELAIDE
SYDNEY
the upgraded Waurn Ponds cement plant
operated at improved levels of availability
throughout the year and consequently lower
cost, which enabled BCSC to lift production
to meet customer requirements in a strong
Victorian market
CANBERRA
MELBOURNE
CEMENT
SCAFFOLDING
WINDOWS
Dowell Windows has improved
its operating and earnings
performance this year against the
background of depressed new
housing construction markets,
particularly in nSW, by a focus
on cost containment and product
innovation.
HOBART
Boral Limited Annual Review 2007
15
In line with market conditions,
overall demand for the division’s
products was lower, which resulted
in lower revenues and earnings on
the prior year.
Despite the pressure from lower
volumes; bricks down 1–2%,
roof tiles down 2% and masonry
products down 7%, pricing
outcomes were generally positive.
Average brick prices improved
by around 2–4% and roofing
prices were up by around 3%.
Masonry prices however were
flat. Market shares were broadly
stable throughout the year, except
in Masonry where we lost market
share following the entry of new
manufacturing capacity. Clay brick
competitors continued to target
the concrete brick share of wall
in Victoria.
Manufacturing performance was
variable across the businesses.
In Roofing, benefits from the Emu
Plains (New South Wales) and
Carole Park (Queensland) concrete
tile plants which have both been
upgraded in recent years, offset
poorer performance at the Wyee
clay tile plant in New South Wales
and at the aging Springvale concrete
tile plant in Victoria.
To match production levels to the
weak market conditions a series of
plant slowdowns and/or extended
temporary shutdowns occurred
across the east coast. Most clay
manufacturing plants had extended
shuts and multiple concrete products
plants operated on reduced shifts.
We continued to operate ageing
high-cost plants in Western Australia
to service continuing strong
demand. This adversely impacted
manufacturing performance as did
labour supply constraints.
Major business improvement
programs continued to deliver in line
with expectations in both the East
Coast Bricks and Concrete Masonry
businesses. A new structured
program was commenced to
improve the effectiveness of the
contract installation business in
Roofing with positive early results.
Outlook
We expect dwelling
commencements in Australia in
FY2008 of around 145,000–150,000
starts compared to the estimated
149,000 starts in FY2007. Effective
price and cost management
should mitigate some volume-
related impacts and an extended
program of temporary plant
closures should contain inventory
growth, particularly in bricks and
roof tiles, but will adversely impact
manufacturing costs.
REVIEW OF OPERATING DIVISIONS
KeITh MITCheLhILL
EXECUTIVE GENERAL MANAGER
CLay &
COnCrete
PRODUCTS
Clay & Concrete Products (C&C)
manufactures and markets clay
and concrete bricks, blocks, roof
tiles and landscaping products.
These products are widely used
in a range of domestic and
commercial walling, roofing and
landscaping applications.
Across 43 Australian locations
including 22 operating sites, C&C
employs around 1,800 people and
over 800 contractors. The products
are sold in Australia, new Zealand
and Asia.
Performance
Australian dwelling construction,
particularly detached housing, is the
primary source of demand for the
division’s products. FY2007 saw a
1% increase in Australian dwelling
approvals, following an 8% decline
in the previous year. Dwelling starts
were around 149,000 for the year,
well below underlying demand
levels of around 170,000 starts
per annum. Again this year the
conditions varied widely between
different regions with near peak
conditions in Western Australia and
record 30-year lows in detached
housing in New South Wales.
Boral Limited Annual Review 2007
16
BriCKS
Boral is australia’s second
largest producer of clay bricks and
pavers. Boral is also an exporter
of clay products to new Zealand,
Japan and increasingly other
asian countries.
Bricks east comprises seven brick
manufacturing sites in Victoria,
new South Wales and Queensland.
Bricks West includes midland Brick
which is the largest clay brick
manufacturer on one site in the
world. midland was established in
1945 and acquired by Boral in 1990.
rOOFinG
as australia’s second largest roof
tile supplier, Boral competes in
both the supply-only and supply-
and-fix market segments. We
operate four concrete roof tile
plants in the cities of Brisbane,
Sydney, melbourne and adelaide
and one clay roof tile plant at
Wyee, on the new South Wales
Central Coast.
maSOnry
Boral is the largest manufacturer
of concrete masonry products in
australia with manufacturing sites
in five states. We are a recognised
leader in the paving, landscaping
and retaining wall segments and
have an industry-leading range
of products.
DARWIN
a $6 million upgrade to the ageing
Springvale concrete tile plant in Victoria
commenced in the June 2007 quarter.
When fully commissioned, the upgraded
plant will deliver improved quality and
lower costs to the previously capacity-
constrained plant.
PERTH
DARWIN
ADELAIDE
Commissioning of a
new state-of-the-art
brick plant at midland
Brick in Perth, Western
australia, continued
throughout the year.
the new Kiln 11 will
manufacture a wide
range of bricks, pavers
and facing tiles. it will
also deliver a wide
range of improved
environmental and
safety outcomes.
SYDNEY
CANBERRA
MELBOURNE
HOBART
BRISBANE
the new ‘wetcast’ paver plant in Wacol,
Queensland, effectively completed
commissioning in the June 2007 quarter,
is the most highly automated plant of its
type in australia and will secure Boral
an industry-leading cost position in this
relatively fast-growing segment.
BRICKS
ROOF TILES
MASONRY
CLAY & CONCRETE
DISTRIBUTION
BRISBANE
PERTH
ADELAIDE
SYDNEY
CANBERRA
MELBOURNE
HOBART
BRICKS
ROOF TILES
MASONRY
CLAY & CONCRETE
DISTRIBUTION
Several new product releases and an overall lift
in the fashionability of the division’s product
range has assisted in improving the relative
positioning of Boral’s product range against
competitor offerings.
Boral Limited Annual Review 2007
17
harDWOOD
Boral’s hardwood business
operates 14 manufacturing
facilities in new South Wales and
distributes product to domestic
and export markets. the business
has a strong position in both
structural and flooring markets.
Boral exports small quantities
of woodchips processed from
sawmill waste, forest residues
and plantation stock from the
hardwood operations in northern
new South Wales.
SOFtWOOD
Softwood’s single manufacturing
facility is located at Oberon in new
South Wales and operates through
a joint venture with Carter holt
harvey. the mill has a capacity
of around 725,000m3 following
a recent capital upgrade. the mill
has not produced to full capacity
to date due to a weak detached
housing market. Softwood
products are primarily sold in east
coast markets.
PLyWOOD
Boral is australia’s leading plywood
producer and operates one large
plywood operation at ipswich in
Queensland. Products are sold in
all major australian markets.
Hardwood volumes were up by
10% due to improving demand
from structural and flooring
markets and strong demand from
infrastructure projects. Average
selling prices for hardwood
products were steady.
EBITDA earnings were flat
compared with the prior year but
well up in the June half. Cost
pressures from log supply and
wages escalation compressed
margins. EBIT declined in the
period as additional depreciation
from last year’s plant upgrade
investments was incurred during
the year.
Manufacturing performance also
improved in the second half of the
year with increased throughput and
recovery at the Herons Creek mill
and the engineered flooring plant
at Murwillumbah. During the year,
Boral Timber closed the Bostobrick
green mill and suspended
operations at its Gloucester
hardwood mill due to the weak
market conditions experienced
in New South Wales.
Hardwood inventory levels
increased during the year due
to the continued softness in the
housing market. The $24 million
upgrade at Herons Creek has
been completed and productivity
improved in the second half of
the year. The engineered flooring
operation showed significant
improvement during the year
with a substantial increase in
sales volumes and improved plant
efficiency. Performance from the
newly acquired Davis & Herbert
business further improved during
the year with operating cashflow
from the business ahead of the
investment case.
Outlook
Demand for softwood and
hardwood timber products is
expected to strengthen in FY2008
as domestic housing construction
activity firms on the east coast
of Australia, particularly in
Queensland. Supply of Australian
hardwood and softwood timber
products is expected to remain
constrained in the year providing a
favourable pricing environment. PEP
cost reduction initiatives will be a
major area of focus for FY2008.
REVIEW OF OPERATING DIVISIONS
BRYAn TISheR
EXECUTIVE GENERAL MANAGER
timBer
The Timber division employs
around 800 people in its
hardwood, softwood and
plywood operations, located
on the east coast of Australia.
Timber operates 17 manufacturing
sites and 6 distribution outlets.
Products are sold into the
structural, commercial and
renovation markets and are
distributed across domestic and
export markets.
Performance
Timber’s revenues increased 12%
to $247m during the year, driven
primarily by stronger market
conditions in Queensland, sales
growth from the recently acquired
South Coast hardwood business
(Davis & Herbert) and increased
engineered flooring product sales.
Softwood volumes were up
3% and prices recovered in the
second half from the price declines
experienced in the six months
ending December 2006. Plywood
prices strengthened during the year
by around 4%.
Boral Limited Annual Review 2007
18
DARWIN
DARWIN
Output from the
engineered Flooring
plant at murwillumbah
increased in the year
with external sales
significantly above the
prior year. resource
recovery and plant
efficiencies improved.
the upgrade of Boral’s
softwood manufacturing
facility at Oberon, a
joint venture with Carter
holt harvey, has been
completed and the mill
now has the capacity to
process 725,000m3 of
incoming log.
BRISBANE
BRISBANE
PERTH
PERTH
ADELAIDE
SYDNEY
CANBERRA
ADELAIDE
MELBOURNE
SYDNEY
CANBERRA
HOBART
MELBOURNE
HOBART
HARDWOOD SALES OFFICE
HARDWOOD MILLS
PLYWOOD
SOFTWOOD
TIMBER FLOORING
RETAIL SHOWROOM
HARDWOOD SALES OFFICE
HARDWOOD MILLS
PLYWOOD
SOFTWOOD
TIMBER FLOORING
RETAIL SHOWROOM
Productivity has improved at the upgraded
herons Creek green mill, particularly in the
second half of the year. the new plant has
improved safety features and is designed
to operate more efficiently with the smaller
diameter regrowth log resource available
from Forests nSW.
the Davis & herbert business, acquired in
June 2005, achieved an improved result in
Fy2007 with operating cashflow ahead of the
investment case.
Boral Limited Annual Review 2007
19
plasterboard demand from most
non-residential markets, improved
non-plasterboard sales through our
own direct distribution channels
and stronger performance from our
residential installation business,
Boral Interior Linings. Boral’s
PartiWALL® and EurekaWALL™
partitioning systems continue to
lead the market. Ongoing cost
reduction initiatives offset lower
prices enabling underlying margins
to be maintained.
GRA, our gypsum supply joint
venture with CSR, was restructured
during July 2007 and Boral’s shipping
needs have now been outsourced to
CSL Australia Pty Ltd, a subsidiary of
Canada Steamship Lines Inc.
Construction of the new 40 million m2
p.a. plasterboard plant in Brisbane is
well advanced and close to schedule.
This plant will be state-of-the-art in its
automation and energy efficiency and
is capable of using recycled water.
Located next to the Brisbane River,
it will allow gypsum feedstock to be
taken directly from ship by conveyor
to plant, further reducing expected
operating costs and reducing
trucks on local roads. It will service
Queensland and other markets and
allow our existing Northgate facility
to be taken out of service.
Our Asian Plasterboard JV with
Lafarge, LBGA, recorded an
equity accounted after tax profit of
$16 million, 18% below the same
period last year which included
a one-off compensation benefit
for land resumed in Shanghai.
The underlying result was
substantially stronger, reflecting
market conditions that were
more stable in South Korea and
strong in China, and the impact of
strong cost reduction and revenue
enhancement outcomes. Energy-
related cost increases continue
to put pressure on margins.
Outlook
Whilst plasterboard demand lags
other products in the construction
process, a cyclical uplift in building
construction will favourably
impact on demand particularly
in Queensland. Potential for
plasterboard imports into Australia
from Asia remains a threat to
Australian prices and margins
but our cost competitiveness,
product range and segment tailored
channels to market position us well
to meet this threat. Plasterboard
market conditions in Korea,
Thailand and China are expected
to remain competitive over the next
year. However, strong underlying
plasterboard demand is expected to
underpin longer term Asian returns.
REVIEW OF OPERATING DIVISIONS
ROSS BATSTOne
EXECUTIVE GENERAL MANAGER
PLaSterBOarD
The Plasterboard division is
an integrated plasterboard
manufacturing, distribution and
installation business with 54
company-owned distribution and
operating sites around Australia
and employing around 700 people.
Boral has 50% shares in gypsum
supply and metal products
manufacturing businesses in
Australia with CSR and a 50%
share of a gypsum products joint
venture across Asia with the
French company Lafarge SA.
Performance
Australian demand for plasterboard
lifted by around 2% in the year,
reflecting stronger new house
construction activity in Queensland
despite weakness in New South
Wales. Imports, mainly from
Thailand, supplied less than 1% of
overall demand, down year-on-year.
Boral’s Australian plasterboard
sales revenues were up 7% to
$351 million despite 1% lower
average prices and EBITDA
earnings were in line with the prior
year. The result benefited from the
buoyant new house construction
market in Queensland, resilient
Boral Limited Annual Review 2007
20
aUStraLia
Boral specialises in the
manufacture, distribution and
installation of plasterboard-based
wall and ceiling lining systems
and aims to be australia’s leading
supplier of wall and ceiling
lining solutions. this is backed
by design and training support
services for a national customer
base of resellers, interior linings
contractors and builders. We have
plasterboard manufacturing plants
in Queensland, new South Wales,
Victoria and South australia, a
specialty plasters and jointing
compounds plant in Victoria,
cornice plants in new South Wales
and Victoria, an integrated national
network of over 50 specialist
trade centres and australia’s
largest residential wall and ceiling
installation service. Boral is a 50%
shareholder in Gypsum resources
australia (Gra) and in rondo
Building Systems, the leading metal
products supplier for wall and
ceiling lining systems.
aSia JOint VentUre
Boral has a 50% shareholding of
the Lafarge Boral Gypsum asia
(LBGa) JV, the leading plasterboard
producer in asia (outside Japan).
around one in every four square
metres of plasterboard sold in this
region comes from LBGa. the JV
has 306 million m2 of plasterboard
capacity, specialist ceiling tile
plants, a metal roll forming mill and
production capacity for jointing
compounds and industrial plasters,
all feeding established distribution
networks. Boral and Lafarge intend
that LBGa continues to profitably
grow its leadership position across
asia in a manner which substantially
increases markets for plasterboard
systems and associated products
and delivers value.
SOUTH
KOREA
DARWIN
CHINA
SOUTH
KOREA
CHINA
MALAYSIA
SINGAPORE
THAILAND
INDONESIA
SOUTH
KOREA
THAILAND
PHILIPPINES
THAILAND
PHILIPPINES
CHINA
PLASTERBOARD (SALES OFFICE)
PLASTERBOARD (PRODUCTION)
PLASTERBOARD (SALES OFFICE)
PLASTERBOARD (PRODUCTION)
the construction of the new Queensland
Plasterboard plant is progressing well. at a
budgeted net investment of $106m, this 40m
m2 p.a. plant is adjacent to the river in the
suburb of Pinkenba and will be australia’s
largest plasterboard plant when completed.
Commissioning is anticipated during the
December 2007 quarter.
MALAYSIA
SINGAPORE
INDONESIA
PHILIPPINES
PLASTERBOARD (SALES OFFICE)
PLASTERBOARD (PRODUCTION)
BRISBANE
MALAYSIA
SINGAPORE
INDONESIA
PERTH
DARWIN
ADELAIDE
SYDNEY
CANBERRA
MELBOURNE
HOBART
through LBGa, we are continuing to
strengthen our leading plasterboard
position in asia. Our asian
Plasterboard JV has commissioned
the first plasterboard plant in Vietnam,
located in the ho Chi minh City area,
for a total investment of around
US$13m. Capacity is expected to
be 10m m2 p.a. and the site allows
flexibility to increase capacity in
the future. a new US$42m total
investment is being made at LBGa’s
Dangjin plant near Seoul, South Korea,
to double plant capacity to 75m m2 p.a.
the new capacity is expected to be
commissioned in early calendar year
2008. new plants are also being built
at rajasthan in india (US$17m, 8m
m2) and Chengdu in China (US$11m,
10m m2), strengthening LBGa’s supply
position in these markets.
PLASTERBOARD
(PRODUCTION)
PLASTERBOARD
(DISTRIBUTION)
GYPSUM MINE
BRISBANE
PERTH
ADELAIDE
SYDNEY
Our plasterboard business continues
to benefit from product research and
development activities. While products such
as eurekaWaLL™ and CinemaZone® enjoy
great success, there are many more coming
through the innovation pipeline.
CANBERRA
MELBOURNE
HOBART
PLASTERBOARD
(PRODUCTION)
PLASTERBOARD
(DISTRIBUTION)
GYPSUM MINE
Boral Limited Annual Review 2007
21
Revenue from Bricks was down
by 3% due to an 11% decline in
sales volumes only partially offset
by 6% higher average prices and
an increased proportion of Boral
manufactured bricks that were sold
through direct distribution, which
is now up to approximately 80%.
Prices weakened by around 1% in
the June half and June 2007 prices
were flat with those achieved in June
2006. Brick sales volumes reduced
by 11% (5% down in the December
half and 17% down in the June half)
and production volumes were 12%
lower (4% up in the December half
and 26% lower in the June half).
EBITDA earnings were significantly
down as a result of lower volumes,
related production network
inefficiencies and because of an
US$11 million increase in natural
gas costs. Production and logistics
efficiencies from Brick’s “step
change” program, and improved
fuel efficiencies partially offset
inflationary impacts.
MLT delivered a loss of US$4 million
compared to last year’s record profit
of US$28 million. Average prices
increased by around 4% because of
the flowthrough of price increases
which occurred in FY2006 but
prices deteriorated by 10% in the
second half and were 11% lower in
June 2007 than in June 2006. Sales
volumes were down by 35% (down
27% in the December half and
down 44% in the June half). MLT
operations are heavily concentrated
on the West Coast in California,
Nevada and Arizona and in Florida;
the decline in single family housing
starts in these key markets averaged
around 40% in FY2007. Production
costs were higher than last year
due to raw material cost increases
(cement and sand) and inefficiencies
from decreased production rates
necessary to control inventory levels,
which reduced throughout the year.
US Clay Tile’s plant in Southern
California experienced reduced
volumes with the deterioration in the
western housing market and required
reductions in plant output during the
year. Average prices increased by
6% because of the flowthrough of
price increases which occurred in
FY2006 but prices weakened by 1%
in the June half and June prices were
1% above those achieved in June
2006. Sales volumes were down by
14% (down 9% in the December half
and down 18% in the second half).
EBITDA earnings were well below
last year as volumes and production
costs were directly impacted by
the slowdown in West Coast
markets resulting in lower rates of
production to avoid inventory build.
The new plant in Trinidad incurred a
loss of US$1.7 million as a result of
deteriorating market conditions in
South Florida. The construction of
a new tile plant at Ione in Northern
California is well under way and is
scheduled to begin production in late
2007. This plant will replace an older,
less efficient line at our Corona plant
in Southern California which requires
a kiln rebuild.
Profit from the Boral Material
Technologies Inc. (BMTI) fly ash
business was steady compared to
last year’s record result as higher
prices and new product initiatives
offset lower volumes resulting
from the loss of the Belews Creek
power station contract mid-year and
because of very weak demand for
cementitious products in Florida.
EBITDA earnings from Denver
Construction Materials increased
significantly in FY2007. Price
increases for aggregates, concrete
and block were sufficient to recover
increases in the costs of fuel, cement
and other raw materials. Concrete
volumes were below last year due to
slowing residential construction, as
well as adverse weather conditions,
however aggregate and block
volumes were above last year. Key
PEP initiatives also contributed to the
improved result.
In August 2007 we announced the
US$80 million acquisition of the
Schwarz concrete and sand business
and the Arbuckle hardrock quarry
in Oklahoma, which continues
the Company’s value-adding US
construction materials growth strategy.
Outlook
Following a significant decline in
activity during FY2007 with total
housing starts (single and multi-
dwellings in Boral’s US states)
declining by 27% compared to the
previous year, unsold inventories are
at high levels, foreclosure rates are
up and credit markets are tightening.
It is unclear when a turnaround
may occur.
Forecasters currently expect
USA housing starts to be around
1.4–1.5 million in FY2008, down
around 3%–10% on FY2007 levels
(1.55 million starts) which will reduce
brick and roof tile sales / production
volumes and earnings compared to
FY2007 levels. Natural gas costs
should be lower than in FY2007.
The Schwarz / Arbuckle acquisitions
announced in August 2007, should
increase USA construction materials
EBITDA in FY2008 by around
US$12 million.
We have long-term confidence
in the US market. We believe that
underlying demand for dwellings
in the USA is around 1.8 million
starts (excluding manufactured
housing). Boral is well positioned
in the markets it serves, and US
growth initiatives are expected to
strengthen those positions and
deliver benefits as markets recover.
REVIEW OF OPERATING DIVISIONS
eMeRY SeVeRIn
PRESIDENT, BORAL USA
USa
Boral employs around 2,500
people across 162 operating
and distribution sites across
the uSA. The uS operations
include the country’s largest brick
manufacturer, the largest clay tile
manufacturer and one of the largest
fly ash suppliers. The group holds
a strong position in the Denver
construction materials market
and more recently in Oklahoma
construction materials. Through
the 50%-owned MonierLifetile
(MLT), Boral is the largest concrete
roof tile manufacturer in the
united States.
Performance
In the USA, EBITDA earnings
decreased by 37% on the prior year
of US$102 million. The result was
driven by a severe downturn in single
family home construction across
all major markets which negatively
impacted sales and production
volumes in the brick and roof tile
businesses. The Denver, Colorado,
construction materials businesses
offset soft residential demand with
increased commercial business,
improving on last year’s performance.
Boral Limited Annual Review 2007
22
WASHINGTON
OREGON
CALIFORNIA
ARIZONA
WASHINGTON
WYOMING
US tile is constructing a new US$28m clay
roof tile plant at ione, California, to produce
130,000 squares1 per annum, with completion
expected by December 2007. in addition,
a 132,000 squares1 per annum 50% joint
venture clay roof tile plant in trinidad was
completed in Fy2006 to supply product for
MICHIGAN
importation into the Florida market. this plant
is currently operating at lower volumes due
to weak market conditions in South Florida.
OHIO
NEVADA
OREGON
MICHIGAN
COLORADO
WYOMING
KENTUCKY
MISSOURI
NORTH CAROLINA
OHIO
NEVADA
ARKANSAS
OKLAHOMA
COLORADO
MISSISSIPPI
CALIFORNIA
TEXAS
ARIZONA
TENNESSEE
SOUTH CAROLINA
GEORGIA
MISSOURI
ALABAMA
KENTUCKY
TENNESSEE
NORTH CAROLINA
SOUTH CAROLINA
ARKANSAS
OKLAHOMA
MISSISSIPPI
FLORIDA
GEORGIA
ALABAMA
TEXAS
FLORIDA
BMTI (FLY ASH)
CONSTRUCTION MATERIALS
USA BRICK (PRODUCTION)
USA BRICK (DISTRIBUTION)
MONIERLIFETILE
CONCRETE ROOF TILES
US TILE CLAY ROOF TILES
the new US$30m Lake Wales, Florida,
plant was commissioned during the
year, increasing monierLifetile’s Florida
capacity by around 500,000 squares1 per
annum.
1 One square = 100 square feet.
BMTI (FLY ASH)
CONSTRUCTION MATERIALS
USA BRICK (PRODUCTION)
USA BRICK (DISTRIBUTION)
MONIERLIFETILE
CONCRETE ROOF TILES
US TILE CLAY ROOF TILES
in august 2007, Boral acquired the concrete and sand assets
of Schwarz readymix and the quarry assets of Davis arbuckle
materials for US$80m. the acquisitions will be ePS accretive
in the first full year of ownership and positions Boral as the
second largest concrete producer in Oklahoma city. the
acquisitions demonstrate Boral’s ongoing commitment to
growing in construction materials in the USa.
MEXICO
MEXICO
Boral Bricks’ new US$35m Union City, Oklahoma, brick
plant was commissioned during the year and with an
output of 100 million standard brick equivalents, the
plant increases manufacturing capacity by around 6%
and services the relatively resilient key South West US
market. Boral Bricks is constructing a new US$55m,
120 million standard brick equivalent plant at terre
haute, indiana, with completion anticipated in the march
2008 quarter.
BriCKS
Boral’s brick business operates 24
plants across 15 locations in eight
States, primarily in the south-
eastern and south-western areas
of the country. Boral sells over 80%
of its clay bricks and pavers through
a network of 60 company-owned
direct selling locations with the
remainder via a strong network of
independent distributors.
rOOF tiLeS
Boral owns 50% of monierLifetile.
the joint venture has 14 concrete
roof tile plants in the western and
south-western states and also
in Florida. US tile, the country’s
largest clay roof tile producer,
operates from a plant in Southern
California. through a 50% interest
in a joint venture, US tile recently
commissioned a new plant in
trinidad producing roof tiles for
importation into the Florida market.
FLy aSh
Bmti is one of the largest
marketers and distributors of coal
combustion products in the USa.
it has around 40 locations around
the country including operations
at electrical utility plants, fly ash
terminals and sales offices. With
cementitious properties, fly ash is
used as a cement substitute.
COnStrUCtiOn materiaLS
Boral has a strong number three
position in the growing Denver
market with eight concrete
batching plants, 109 trucks, three
sand and gravel deposits and two
masonry plants. in august 2007,
Boral acquired Schwarz concrete
and sand business and arbuckle
limestone quarry in Oklahoma. the
business has 18 concrete plants, five
sand mines and a limestone quarry.
Boral Limited Annual Review 2007
23
with the Boston Consulting group,
Pioneer Concrete uK, John Mowlem
international and douglas Partners.
He holds a civil engineering degree
with First Class Honours from the
university of Adelaide and an MBA
from london Business school.
Phil Jobe 3
ExECutivE gEnERAl MAnAgER, CEMEnt
Phil is 53 and has been Executive
general Manager of the Cement
division since late 1999. Prior to this
he was Regional general Manager for
Boral’s nsW Construction Materials
business and general Manager of
Boral’s Construction Related Businesses
from 1995–1999. Before joining Boral,
Phil was Managing director of
the stegbar group of Companies from
1987–1994. He holds a commerce
degree from the university of nsW.
Keith Mitchelhill 4
ExECutivE gEnERAl MAnAgER,
ClAy & COnCREtE PROduCts
Keith is 44 and rejoined Boral as
Executive general Manager of Clay
& Concrete Products in August 2002
from sirius telecommunications
where he was CEO of the Phoneware
division. He was previously Executive
general Manager of Boral timber from
2000–2001, general Manager, Boral
Masonry from 1997–1999 and general
Manager Marketing, Boral Building
Products group from 1996–1997. Prior
to that he held positions with laminex
BtR nylex and nEC Australia. He holds
an economics degree (Honours) and an
MBA from Monash university.
Bryan Tisher 5
ExECutivE gEnERAl MAnAgER, tiMBER
Bryan is 44 and was appointed Executive
general Manager, timber in March 2007.
Prior to this he was general Manager
Corporate development, a role which
he held from 2000–2007. He was
previously general Manager, strategic
Planning for Boral’s Construction
Materials group from 1998–1999.
Prior to joining Boral he held a variety
of positions at Rio tinto (1985–1998)
including roles in project finance,
business development and engineering
design and construction. He holds a
civil engineering degree (First Class
Honours) from Monash university and
an MBA from Harvard Business school.
Ross Batstone 6
ExECutivE gEnERAl MAnAgER,
PlAstERBOARd
Ross is 59 and was Boral’s divisional
general Manager Plasterboard Australia
from 1996–2000 before becoming
Executive general Manager of the
Plasterboard division. He was
previously Boral’s divisional general
Manager Roofing from 1991–1995,
Chief Executive Montoro Resources
ltd from 1988–1990 and held various
roles at shell Company of Australia
from 1970–1987. He holds chemical
engineering and commerce degrees
from Queensland university.
Emery Severin 7
PREsidEnt, BORAl usA
Emery is 51 and was previously
Executive general Manager of the
Australian Construction Materials
division from 1999–2004 before being
appointed as President of Boral usA
in August 2004. He was previously
national general Manager of Blue Circle
southern Cement from 1998–1999.
Prior to that he was Regional general
Manager of Boral’s nsW Construction
Materials group from 1996–1998.
Prior to joining Boral he held various
management roles at BHP steel from
1986–1995. Emery has a doctorate
of philosophy in physical chemistry
from Oxford university and a science
degree (First Class Honours) from the
university of nsW.
Ken Barton 8
CHiEF FinAnCiAl OFFiCER
Ken is 41 and has been Boral’s Chief
Financial Officer since december 2002.
He was previously vice President
and Chief Financial Officer of Boral
industries inc in the usA from August
2000. Prior to joining Boral, he was
vice President Finance, Pioneer usA
from 1997–2000 and prior to that
he was a Partner in the Corporate
Finance division of Arthur Andersen
based in sydney. Ken has a Bachelor of
Economics degree from the university
of sydney and is an Associate of the
institute of Chartered Accountants in
Australia and a fellow of the Financial
services institute of Australia.
Michael Scobie 9
gEnERAl MAnAgER, CORPORAtE
sERviCEs And COMPAny sECREtARy
Michael is 61 and is general Manager,
Corporate services and Company
secretary of Boral. He joined the Boral
group as a corporate lawyer and has
over 30 years’ service. He became
the Company secretary in 1983 and
has also held general counsel and
other corporate roles since then.
Michael holds a law degree from
the university of sydney.
Robin Town 10
gEnERAl MAnAgER,
HuMAn REsOuRCEs
Robin is 55 and has been Boral’s
general Manager Human Resources
since June 2001. He was previously
President of Boral Material technologies
in the usA from 1999–2001 and
Regional general Manager of Boral’s
Construction Materials business in
Queensland from 1996–1999. Prior
to joining Boral, he worked in the
cement industry with Queensland
Cement for 23 years. He holds a
chemical engineering degree from
the university of Queensland.
Andrew Warburton 11
gEnERAl MAnAgER,
CORPORAtE dEvElOPMEnt
Andrew is 43 and is general Manager,
Corporate development. He was
previously national general Manager,
Quarry End use from 2004–2007.
Prior to joining Boral, he held marketing,
business development and financial
positions in the plastics and electronics
industries based in Europe and funds
management in Australia. Andrew
holds an economics degree from the
university of sydney and an MBA
from insEAd.
1
3
5
7
2
4
6
management
COMMittEE
8
9
10
11
Rod Pearse 1
CEO And MAnAging diRECtOR
Biography on p.27
John Douglas 2
ExECutivE gEnERAl MAnAgER,
AustRAliAn COnstRuCtiOn MAtERiAls
John is 45 and has been in his current
position for three years. He joined
Boral in 1995 and has held roles as
Regional general Manager of Boral’s
nsW Construction Materials business,
general Manager of nsW Metropolitan
Quarries and general Manager strategic
Planning for Boral’s Construction
Materials group. Prior to joining
Boral, John held various positions
Boral Limited Annual Review 2007
24
segment, contributed to the growth
in revenue with around 4% price
increases in concrete, quarry
products and cement. strength
in the infrastructure segment
contributed to volume growth in
concrete, quarry products and
asphalt. despite continued weak
housing markets across Australia’s
east coast, revenue increased
modestly in the Australian building
products segment. the revenue
growth was driven largely by
price increases combined with
the volume impacts of growth
initiatives, particularly across the
timber products. us revenues in
local currency declined by 2%
as housing starts across the us
declined by around 27%. the
revenue decline does not include
the impact of lower revenues in the
Monierlifetile business which is
equity accounted. Monierlifetile’s
markets experienced greater
declines in housing starts than
the brick markets and the us as a
whole. the Australian dollar was
stronger against the us dollar,
which resulted in the reported
Australian dollar revenue decreasing
by around 8%. Revenues in Asia,
which consists of the indonesian
and thailand concrete and quarry
businesses, rose around 3%.
indonesian volumes were slightly
weaker due to lower levels of
construction activity. in thailand,
while volumes were higher, costs,
particularly energy and cement,
grew at a greater rate than prices
and margins declined.
the group’s underlying operating
profit before interest and tax for the
year declined by 14% compared to
the previous year to $530.9 million.
the Australian operations generated
operating profits of $417.2 million
during the year, up 3% compared
to the prior year. the improvement
in earnings was due to increased
building activity in a number of
key markets, particularly in non-
residential segments, as well as
favourable pricing outcomes.
the Construction Materials
operations in Australia reported an
operating profit of $318.0 million,
which compares to $286.0 million
in the prior year. strength in the
non-residential building markets
and in the infrastructure segments
underpinned increased volumes
across most construction materials
businesses, with the notable
exception of nsW. Price increases
were achieved in cement, concrete,
quarry products and asphalt. these
price increases, together with
cost savings and higher volumes,
saw the Construction Materials
profit margin increase during the
year from 11.9% to 12.5%. the
improvement over the prior year
was also partly attributable to
improved profitability from quarry
end use property sales.
Results from the Australian Building
Products businesses were down
by 16% compared to the prior year.
this segment includes bricks, roof
tiles, masonry, plasterboard, timber
and windows which are all heavily
reliant on the new residential
construction market as a driver of
demand. the Australian Building
Products businesses in most cases
achieved increased prices
compared to the prior year, a
notable achievement given the
softer residential market conditions
on the east coast. Profits were
lower in bricks and in masonry.
new entrants in the masonry
markets in nsW and Queensland
led to volume declines and some
price weakness.
the strength observed in the us
housing market in prior years turned
around during 2006/07. substantial
declines in activity, particularly in
key rooftile markets in California,
Arizona, nevada and Florida, led to
substantial declines in profitability in
a number of the us businesses.
Income Statement
For the year ended 30 June
sales revenue
EBitdA
depreciation and amortisation
EBIT
net interest
Operating profit before tax
income tax expense
Minority interests
Profit after tax
Earnings per share (cents)
2007
$ millions
2006
$ millions
4,909.0
4,767.4
762.3
822.6
(231.4)
(208.6)
530.9
(110.5)
420.4
614.0
(98.2)
515.8
(122.3)
(153.1)
–
298.1
50.0
(0.3)
362.4
61.7
financial
REviEW
Financial Performance
the results for the 2006/07
financial year reflected the strength
of the Construction Materials
businesses in Australia, offset by
weak Australian residential markets
and a substantial decline in activity
in the us residential market.
largely as a result of the weaker
us markets, Boral’s net profit for
the year decreased by 18% to
$298.1 million. this net profit is
equivalent to 50.0 cents per share,
a decrease of around 11.7 cents
per share compared with the prior
year. A final dividend of 17.0 cents
per share has been declared which
will be fully franked, bringing the
full year dividends to 34.0 cents.
the dividends remained unchanged
from the 2006 dividends which
were also fully franked.
the group’s revenue from
operating activities increased by
3% compared with the previous
year to $4.9 billion. the increase in
revenues can be largely attributed
to increased prices across most
Australian businesses and the
impact of acquisitions. Price and
volume increases, particularly
in the construction materials
Boral Limited Annual Review 2007
25
Profits translated to Australian
dollars were 49% lower than the
prior year. in us dollar terms,
profits decreased by 46%. despite
increased prices across most
products, the impact of lower
volumes led to declines in profits
in the bricks, concrete tile and
clay tile businesses. the recently
acquired denver construction
materials business delivered
improved results and the profits
from the fly ash business were
steady compared to the prior year.
these two businesses benefit from
more diversified end use than the
brick and roof tile businesses. to
further increase Boral’s exposure
to the us construction materials
market, a further acquisition was
announced subsequent to year
end. us$80 million was spent
to acquire the concrete and sand
operations of schwarz Readymix
and the hard rock quarry assets of
davis Arbuckle Materials. these
businesses operate in and around
Oklahoma City, Oklahoma.
in Asia volumes improved in
plasterboard in most major markets.
during the year, a new plant was
successfully commissioned in
vietnam. the reported result from
the Asian plasterboard business
was lower due to the prior year
benefit of a compensation payment
for land resumed from lBgA in
shanghai. the group’s Construction
materials businesses in Asia
reported weaker results due to
lower margins as cost increases
were not recovered through higher
prices. Concrete volumes were also
lower in indonesia due to lower
levels of construction activity.
net interest expense increased
from $98.2 million to $110.5 million.
this increase was predominantly
due to an increase in average net
debt although closing net debt was
lower due to the translation effect
of the appreciation of the Australian
dollar. EBit interest cover declined
from 6.3 times to 4.8 times as
a result of the higher interest
expense.
the average underlying tax rate for
the year was slightly lower than
the prior year at 29%, due partly
to the decline in earnings from the
us where those earnings attract a
higher tax rate.
the interim and final dividends for
the year totalled $203.4 million
which, combined, represent a
payout ratio of 68% of profit
after tax, a higher payout ratio
than the 55% ratio for the prior
year. Boral continued its dividend
Reinvestment Plan (dRP) during the
fiscal year. this resulted in proceeds
of $53.7 million being applied to the
issue of 7.3 million new ordinary
shares. Boral will continue to offer
Balance Sheet
As at 30 June
Current assets
non current assets
Total assets
Current liabilities
non current liabilities
Total liabilities
Net assets
Total equity
Debt and Gearing
As at 30 June
total debt
total cash and deposits
Net debt
total shareholder equity
Gearing ratios %
net debt: equity (%)
net debt: equity plus net debt (%)
interest cover (times)
a dRP and will again prepare for
an on-market buy-back to reduce
earnings per share dilution.
Financial Position
the net financial position of the
group strengthened during the year
with total equity increasing by 8%
to $2,987.3 million. net borrowings
decreased by 6% from $1,578.2
million to $1,482.3 million. the
reduction in net borrowings was
after approximately $226 million
of growth capital and investments
during the year and was partly due
to a favourable currency adjustment
of around $109 million from the
appreciation of the Australian dollar
and translation of our significant
us dollar borrowings. the group’s
gearing (measured as net debt to
equity) reduced from 57% to 50%at
the lower end of the stated target
range of 40% to 70%.
Boral’s long-term and short-term
credit ratings continued at BBB+/A2
with standard and Poor’s and Baa1/
P2 with Moody’s investors service.
At 30 June 2007, the group had
available undrawn committed and
uncommitted debt facilities of
$2,198 million. Boral’s average debt
maturity profile at 30 June 2007
was 4.9 years compared with 6.1
years at 30 June 2006.
Boral has hedged its foreign
exchange exposures (primarily us
dollar denominated) arising from
investments in overseas operations.
Earnings from foreign operations
are not hedged.
Boral Limited Annual Review 2007
26
2007
$ millions
2006
$ millions
1,451.0
1,400.8
4,365.6
4,186.2
5,816.6
5,587.0
921.8
863.2
1,907.5
1,968.8
2,829.3
2,832.0
2,987.3
2,755.0
2,987.3
2,755.0
2007
$ millions
2006
$ millions
1,518.0
1,654.4
35.7
76.2
1,482.3
1,578.2
2,987.3
2,755.0
50
33
4.8
57
36
6.3
Boral is exposed to financial risk
in its operations as a result of
fluctuations occurring in interest/
foreign exchange rates and certain
commodity prices. Boral uses
financial instruments to manage
such risks.
Boral’s return on shareholders
funds declined from 13.2%
to 10.0% during the period as
shareholders funds increased with
retained earnings and other equity
movements while earnings declined
by around 18%.
Cash Flow
the group generated operating
cash flows of $481.9 million after
payment of interest and income
tax. this represents an increase
of 7% or $32 million compared to
the cash flow reported last year.
the increase in operating cash flow
reflects the lower earnings and
higher working capital offset by
lower tax payments.
these cash flows were used to
fund around $418.1 million of capital
and acquisition expenditure. this
largely related to major capital
projects in the us and Australia, the
largest being in the plasterboard
operation in Queensland, the new
brick plant in indiana, new rooftile
operations in California and a
number of new asphalt plants in
Australia.
Chairman of Outward Bound Australia
and serves as a Councillor for the
Australian Business Arts Foundation. He
has a commerce degree (Honours) from
the university of new south Wales and
a MBA (High distinction) from Harvard
university.
Elizabeth A Alexander, AM
nOn-ExECutivE diRECtOR, AgE 64
Ms Alexander joined the Boral Board
in 1994. Ms Alexander is Chairman
of Csl limited and a director of dB
RREEF Funds Management limited (the
responsible entity for the dB RREEF
trust). A chartered accountant, she was
a partner in PricewaterhouseCoopers in
Melbourne until 2002. Ms Alexander is
a member of the takeovers Panel and
the Financial Reporting Council. she has
a commerce degree from the university
of Melbourne.
Ms Alexander is the chair of the Audit
Committee.
Mr Cloney is the Chairman of the
Compensation Committee.
Richard A Longes
nOn-ExECutivE diRECtOR, AgE 62
Mr longes joined the Boral Board in
2004. He is a director of Austbrokers
Holdings limited and Metcash limited.
Mr longes is a lawyer and a non-
executive director of investec Bank
(Australia) limited. He was previously an
executive of investec Bank, a principal
of Wentworth Associates, the corporate
advisory and private equity group, and a
partner of Freehills, a leading law firm.
He has arts and law degrees from the
university of sydney and a MBA from
the university of new south Wales.
Mr longes is a member of the Audit
Committee.
Mark R Rayner
nOn-ExECutivE diRECtOR, AgE 69
Mr Rayner joined the Boral Board
in 1996. Mr Rayner is a director of
Alumina limited. He was previously the
Chief Executive of Comalco from 1979
Board
OF diRECtORs
Kenneth J Moss
nOn-ExECutivE CHAiRMAn, AgE 62
dr Moss joined the Boral Board in 1999
and became the Chairman of directors
in 2000. dr Moss is the Chairman of
Centennial Coal Company limited
and a director of gPt RE limited (the
responsible entity for the general
Property trust) and Macquarie Capital
Alliance group (the responsible entity
for the Macquarie Capital Alliance trust).
dr Moss was previously the Managing
director of Howard smith limited and
is experienced in building materials
businesses. He has an engineering
degree (Honours) and a doctorate of
philosophy in mechanical engineering
from newcastle university.
dr Moss is a member of the
Compensation Committee.
Rodney T Pearse
MAnAging diRECtOR, AgE 60
Mr Pearse became the Managing
director and Chief Executive Officer
of Boral in January 2000. He joined
the Boral group as the Managing
director, Construction Materials group
in 1994. Mr Pearse had previously held
senior management positions in shell
international, shell Australia and CsR
limited. He is a Board Member of the
Business Council of Australia, a member
of the Advisory Panel of the Australian
graduate school of Management, the
J Brian Clark
nOn-ExECutivE diRECtOR, AgE 58
dr Clark joined the Boral Board in May
2007. dr Clark has experience as a
non-executive director on the Boards
of a number of companies in Australia
and overseas. in south Africa, he was
President of the CsiR and CEO of telkom
sA. in 1997 he joined the uK’s vodafone
group and moved to Australia. He was
CEO vodafone Australia, CEO vodafone
Asia Pacific and group Human Resources
director. dr Clark has a doctorate in
physics from the university of Pretoria,
south Africa and completed the Harvard
AMP106.
dr Clark is a member of the
Compensation Committee.
E John Cloney
nOn-ExECutivE diRECtOR, AgE 66
Mr Cloney joined the Boral Board in
1998. Mr Cloney is the Chairman of
QBE insurance group limited and a
director of Maple-Brown Abbott limited
and ABn AMRO Australia Holdings Pty
limited. He is a member of the Advisory
Council in Australia of ABn AMRO.
His career was in international insurance
and he was previously the Managing
director of QBE insurance group
limited. Mr Cloney is a fellow of the
Australian institute of Management and
the Australia and new Zealand institute
of insurance and Finance.
Boral Limited Annual Review 2007
27
to 1989 and an executive director of
CRA limited. Mr Rayner has a chemical
engineering degree (Honours) from the
university of new south Wales.
Mr Rayner is a member of the
Compensation Committee.
J Roland Williams, CBE
nOn-ExECutivE diRECtOR, AgE 68
dr Williams joined the Boral Board in
1999. He is a director of Origin Energy
limited. dr Williams had an international
career with the Royal dutch/shell group
from which he retired as Chairman and
Chief Executive of shell Australia. He
has a chemical engineering degree
(Honours) and a doctorate of philosophy
from the university of Birmingham.
dr Williams is a member of the Audit
Committee.
Pictured above, from left to right;
top row: Mark Rayner, Rod Pearse,
Roland Williams, Brian Clark, John Cloney;
bottom row: Elizabeth Alexander,
Ken Moss and Richard longes.
– approving and monitoring financial
reporting and reporting to
shareholders on the Company’s
direction and performance.
– meeting legal requirements and
ensuring that the Company acts
responsibly and ethically and
prudently manages business risks
and Boral’s assets.
in fulfilling these functions,
directors seek to enhance
shareholder value.
Structure of the Board
the Board of directors comprises
seven non-executive directors
(including the Chairman) and one
executive director, the Managing
director and Chief Executive Officer
(CEO). the roles of Chairman
and CEO are separate. the skills,
experience and expertise of each
director are set out on page 27 of
the Annual Review.
the Board has assessed the
independence of non-executive
directors in light of their interests
and relationships and considers
all of them to be independent.
it is considered that none of the
interests of directors with other
firms or companies having a
business relationship with Boral
could materially interfere with
the ability of those directors to
act in Boral’s best interests. the
criteria considered in assessing the
independence of non-executive
directors includes:
– the director is not a member of
of the Company’s affairs and
implementation of its strategy and
policy initiatives are delegated to
the chief executive officer and
senior executives.
the functions of the Board include:-
– oversight of the Company
including its conduct and
accountability systems.
– reviewing and approving overall
financial goals for the Company.
– approving strategies and plans
for Boral’s businesses to achieve
these goals.
– approving financial plans and
management.
annual budgets.
– monitoring implementation of
strategy, business performance
and results and ensuring
appropriate resources are
available.
– approving key management
recommendations (such as major
capital expenditure, acquisitions,
divestments, restructuring and
funding).
– appointing, rewarding and
determining the duration of
the appointment of the chief
executive officer and ratifying the
appointments of senior executives
including the chief financial officer
and the company secretary.
– reviewing the performance of the
chief executive officer and senior
management.
– reviewing and verifying systems
of risk management and internal
compliance and control, codes of
conduct and legal compliance.
– reviewing sustainability
performance and overseeing
occupational health and safety and
environmental management and
performance.
– the director is not a substantial
shareholder of the Company
or otherwise associated with a
substantial shareholder.
– within the last 3 years, the
director has not been employed
in an executive capacity by a
Boral company or been a director
after ceasing to hold any such
employment.
– within the last 3 years, the
director has not been a principal
of a professional adviser or
consultant to a Boral company
or an employee of an adviser or
consultant materially associated
with any service provided by it.
– the director is not a significant
supplier or customer of Boral
or otherwise associated with a
significant supplier or customer.
– the director has no significant
contractual relationship with Boral
other than as a director.
– the director is free from any
interest and any business or
other relationship which could,
or could reasonably be perceived
to, materially interfere with the
corporate
gOvERnAnCE
this section of the Annual Review
discloses the key details of Boral’s
governance framework. Boral
is committed to ensuring its
policies and practices reflect good
governance and compliance with all
requirements applying to Australian
listed companies.
the directors consider that its
governance framework and
adherence to that framework are
fundamental in demonstrating
that they are accountable to
shareholders and are appropriately
overseeing the management of
risk and the future direction of the
Company.
Functions and Responsibilities
of the Board
the Board of directors is
responsible for setting the strategic
direction of the Company and for
overseeing and monitoring its
businesses and affairs. directors are
accountable to the shareholders for
the Company’s performance.
the Board reviews and approves
the Company’s strategic and
business plans and guiding
policies. day to day management
Boral Limited Annual Review 2007
28
director’s ability to act in the best
interests of the Company.
the Board periodically undertakes
an evaluation of its own
performance. the evaluation
encompasses a review of the
structure and operation of the
Board, the skills and characteristics
required by the Board to maximise
its effectiveness and whether the
blending of skills, experience and
expertise and the Board’s practices
and procedures are appropriate for
the present and future needs of the
Company.
the Board has considered
establishing a nomination
Committee and decided in view
of the relatively small number of
directors that such a Committee
would not be a more efficient
mechanism than the full Board for
detailed selection and appointment
practices.
the appointment of Brian Clark
as a new non-executive director
in May 2007 followed a process
during which the full Board
assessed the necessary and
desirable competencies of potential
candidates and considered a
number of names before deciding
on the most suitable candidate for
appointment. the selection process
included obtaining assistance from
an external consultant to identify
suitable candidates and in assessing
them. Confirmation is sought from
prospective directors that they
would have sufficient time to fulfil
their duties as a director.
the key terms and conditions
relative to the appointment of
directors and the Company’s
expectations of them are set out in
a letter when a new non-executive
director is appointed.
the Company’s Constitution
currently requires that one third of
the directors must retire from office
at the Annual general Meeting
each year and that a director
must retire no later than the third
Annual general Meeting or three
years following that director’s last
election or appointment. Retiring
directors are eligible for re-election.
When a vacancy is filled by the
Board during a year, the new
director must stand for election at
the next Annual general Meeting.
the requirements relating to
retirement from office do not apply
to the managing director of the
Company.
the directors believe that limits
on tenure may cause loss of
experience and expertise that
are important contributors to the
efficient working of the Board. As
a consequence, the Board does
not support arbitrary limits on
tenure and regards nominations for
re-election as not being automatic
but based on the individual
performance of directors and the
needs of the Company. Before the
business to be conducted at the
Annual general Meeting is finalised,
the Board discusses the tenure of
directors standing for re-election in
the absence of those directors.
directors are required to declare
the nature of any interest they have
in business to be dealt with by the
Board. Except as permitted by the
Corporations Act, directors leave
Board Meetings and do not vote
when business in which they are
interested is considered.
After consultation with the
Chairman, directors may seek
independent professional advice in
furtherance of their duties at the
Company’s expense.
Pursuant to the Company’s
Constitution and agreements
with directors and to the extent
permitted by law, the Company
must indemnify directors and
executive officers against liabilities
to third parties incurred in their
capacity as officers of the Company
and against certain legal costs
incurred in defending an action for
such a liability.
Ethical Standards and
Dealings in Boral Shares
the Board’s policy is that Boral
companies and employees must
observe both the letter and spirit
of the law, and adhere to high
standards of business conduct and
comply with best practice. Boral’s
Management guidelines contain
a Code of Corporate Conduct
and other guidelines and policies
which set out legal and ethical
standards for employees. As part
of performance management,
employees are assessed against
the Boral values of leadership,
respect, focus, performance and
persistence.
this policy and code guide the
directors, the CEO, the chief
financial executive, the company
secretary and other key executives
as to the practices necessary
to maintain confidence in the
Company’s integrity and as to the
responsibility and accountability
of individuals for reporting and
investigating reports of unethical
practices. the code also guides
compliance with legal and
other obligations to legitimate
stakeholders.
Boral directors must hold
a minimum shareholding of
1,000 shares.
the Board has a policy that Boral
limited group directors, officers
and senior executives may not buy
or sell Boral shares except within a
Boral Limited Annual Review 2007
29
period of one month after any major
public announcement regarding
the Company’s results and trading
prospects (such as the yearly and
half yearly profit announcements
and the Chairman’s and Managing
director’s Addresses to the Annual
general Meeting). the policy
precludes executives from entering
into any hedge or derivative
transactions relating to options or
share rights granted to them as
long term incentives, regardless
of whether or not the options or
share rights have vested. the policy
supplements the Corporations Act
provisions precluding directors and
officers from trading in securities
when they are in possession
of price sensitive “insider”
information.
share dealings by directors are
promptly notified to Asx.
Work of Directors on Strategy
and Other Matters
the Board reviews the strategic
action plan, approves the
annual budget and monitors the
Company’s performance against
them. initiatives have included
disciplined growth strategies, capital
management, cost efficiencies
and other aspects of operational
improvement programs.
directors and senior management
meet annually for two days to
discuss in detail the strategic
direction of the Company’s
businesses. the Board’s focus is on
improving shareholder returns and
pursuing disciplined growth.
Each month, directors receive a
detailed operating review from the
CEO regardless of whether or not a
Board Meeting is being held.
non-executive directors would
spend approximately 30 days
each year on Board business and
– review from time to time
remuneration framework and the
structure of the arrangements for
non-executive directors.
the Committee reviews all of
the above matters and makes
recommendations to the full Board
on remuneration arrangements for
the CEO and senior executives and
as appropriate, on other aspects
arising from its functions.
AUDIT COMMITTEE
the Audit Committee is chaired by
Elizabeth Alexander with Richard
longes and Roland Williams being
the other members. the members
possess sufficient technical
expertise to fulfil the functions of
the Committee. the Committee
meets at least four times each year.
the Audit Committee has a formal
charter which sets out its role
and responsibilities, composition,
structure and membership
requirements. the Committee has
the necessary power and resources
to meet the charter including rights
of access to management and
auditors (internal and external) and
to seek explanations and additional
information.
the Committee also reviews
the Company’s compliance with
applicable accounting standards
and generally accepted accounting
principles.
Accounting and financial control
policies and procedures have been
established and are monitored
by the Committee to ensure the
accounts and other records are
accurate and reliable. Any new
accounting policies are reviewed by
the Committee. Compliance with
these procedures and policies and
limits of authority delegated by the
Board to management are subject
to review by the external and
internal auditors.
When considering the yearly and
half yearly financial reports, the
Audit Committee reviews the
carrying value of assets, provisions
and other accounting issues.
Questionnaires completed by
divisional management are
reviewed by the Committee half
yearly.
As required by the Corporations Act
for year end financial reports, the
CEO and the chief financial officer
give a declaration to the directors
that the Company’s financial records
have been properly maintained
and that the financial reports give
a true and fair view before the
Board resolves that the directors’
declarations accompanying the
financial reports be signed.
At each scheduled meeting of
the Committee, both external
the company secretary is
accountable to the CEO and to
the Board, through the Chairman,
on compliance and governance
matters.
Boral is committed to effective
communication with its investors
so as to give them ready access
to balanced and understandable
information.
Board Committees
A Compensation Committee and
an Audit Committee assist the
effective operation of the Board.
Both Committees are wholly
comprised of independent non-
executive directors.
Copies of Minutes of Committee
Meetings are provided to the full
Board.
COMPENSATION COMMITTEE
the current members of the
Committee are John Cloney
(Chairman), Brian Clark, Ken Moss
and Mark Rayner.
the functions of the Committee
are:-
– remuneration and incentive
policies and practices (including
performance appraisal
methodology) for Boral generally.
– remuneration arrangements
for the CEO and other senior
executives (including incentives)
and the annual review of those
arrangements.
– recruitment, retention and
termination policies and practices.
– any Company share plan or other
incentive scheme.
– superannuation arrangements
insofar as they are relevant
to remuneration policies and
practices.
corporate
gOvERnAnCE
activities including Board and
Committee meetings, the strategy
meeting, visits to operations and
meeting employees, customers,
business associates and other
stakeholders.
during the year, the Board visited
a number of sites in Western
Australia including Midland Brick.
the Board also spent a week in
May 2007 in Asia visiting Boral’s
construction materials operations
in indonesia and the plasterboard
business of lafarge Boral gypsum
in Asia limited, the 50% owned
joint venture, in south Korea and
China.
the Chairman regularly
communicates with the CEO to
review key issues and performance
trends.
Disclosure and Communication
the Company complies with
all relevant disclosure laws and
listing Rules in Australia and has
policies and procedures designed
to ensure accountability at a
senior management level for that
compliance.
Boral Limited Annual Review 2007
30
and internal auditors report to
the Committee on the outcome
of their audits and the quality of
controls throughout Boral. As part
of its agenda, the Audit Committee
meets with the external and
internal auditors in the absence of
management twice during the year.
the scope of the external audit is
reviewed by the Audit Committee
each year.
the internal audit function
is outsourced with
PricewaterhouseCoopers being the
Company’s internal audit service
provider. the internal audit program
is approved by the Audit Committee
before the start of each year and
the effectiveness of the function is
kept under review.
the Chair of the Audit Committee
ordinarily reports to the full Board
after Committee Meetings.
Audit Independence
the Audit Committee has approved
a process for the monitoring and
reporting of non-audit work to be
undertaken by the external auditor.
services by the external auditor
which are prohibited because they
have the potential or appear to
impair independence include the
participation in activities normally
undertaken by management, being
remunerated on a “success fee”
structure and where the external
auditor would be required to review
their work as part of the audit.
An independence declaration by
the external auditor is now required
to form part of the directors’ Report
and is set out on page 36.
Recognising and Managing
Risk
the managers of Boral’s businesses
are responsible for identifying
and managing risks. the Board
(in the case of financial risk as
noted above, through the Audit
Committee) is responsible for
satisfying itself that a sound system
of risk oversight and management
exists and that internal controls are
effective. in particular, the Board
ensures that:
– the principal strategic, operational,
financial reporting and compliance
risks are identified.
– systems are in place to assess,
manage, monitor and report on
these risks.
these matters are analysed and
discussed by the Board at least
annually and more frequently if
required.
in addition to maintaining
appropriate insurance and other risk
management measures, identified
risks are managed through:
– established policies and
procedures for the managing
of funding, foreign exchange
and financial instruments
(including derivatives) including
the prohibition of speculative
transactions. the Board has
approved treasury policies
regarding exposures to foreign
currencies, interest rates,
commodity price, liquidity and
counterparty risks which include
limits and authority levels.
Compliance with these policies is
reported to the Board monthly and
certified by treasury management
to the Audit Committee twice
yearly.
– key business risks being identified
on a divisional basis and on a
corporate wide basis and reported
to directors as part of the
strategic planning process.
– policies, standards and procedures
in relation to environmental and
health and safety matters.
– training programs in relation to
legal and compliance issues
such as trade practices/antitrust,
intellectual property protection,
occupational health and safety and
environmental.
– procedures requiring that
significant capital and revenue
expenditure and other contractual
commitments are approved at an
appropriate level of management
or by the Board.
– comprehensive management
guidelines setting out the
standards of behaviour expected
of employees in the conduct of
the Company’s business.
the internal audit function is
involved in risk assessment and
management and the measurement
of effectiveness. the internal and
external audit functions are separate
and independent of each other.
in addition to an overall risk
management policy, Boral has
numerous risk management
systems and policies that govern
the management of risk.
the CEO and the chief financial
officer provide written statements
to the Audit Committee confirming
that the Company’s yearly and half
yearly financial reports present a
true and fair view, in all material
respects, of the Company’s financial
condition and operational results
and are in accordance with relevant
accounting standards. the CEO
and the chief financial officer also
confirm that the above statement
is founded on a sound system
of risk management and internal
compliance and control which
implements the policies adopted by
the Board and that the Company’s
risk management and internal
Boral Limited Annual Review 2007
31
compliance and control system is
operating efficiently and effectively
in all material respects.
Compliance
the Company has adopted
policies requiring compliance with
occupational health and safety,
environmental and trade practices
laws.
there are also procedures
providing employees with
alternative means to usual
management communication lines
through which to raise concerns
relating to suspected illegal or
unethical conduct. the Company
acknowledges that whistleblowing
can be an appropriate means to
protect Boral and individuals and
to ensure that operations and
businesses are conducted within
the law.
there are ongoing programs for
audit of the large number of Boral
operating sites. Occupational health
and safety, environmental and other
risks are covered by these audits.
Boral also has staff to monitor and
advise on workplace health and
safety and environmental issues
and in addition, education programs
provide training and information on
regulatory issues.
despite the Company’s policies
and actions to avoid occurrences
which infringe regulations, there
have been a small number of
prosecutions against subsidiary
companies for breach of
occupational health and safety and
environmental legislation.
a recommendation, this has been
disclosed and explained.
the corporate governance
framework of the Company will be
kept under review to respond to
changes in Boral’s businesses and
applicable regulations.
Corporate governance information
on Boral’s website at www.boral.
com.au contains more information
on corporate governance within
Boral and copies of relevant policies
and charters.
– executive rewards be competitive
in the markets in which Boral
operates.
– executive remuneration has an
appropriate balance of fixed and
variable reward.
– remuneration be linked to Boral’s
performance and the creation of
shareholder value.
– variable remuneration for
executives has both short and
long term components.
– a significant proportion of
executive reward be dependent
upon performance assessed
against key business measures,
both financial and non-financial.
these principles ensure that
the level and composition of
remuneration is sufficient and
reasonable and that its relationship
to corporate and individual
performance is defined.
A detailed Remuneration Report
is set out in clause (19) of the
directors’ Report on pages 37-43.
As required by the Corporations
Act, a resolution that the
Remuneration Report be adopted
will be put to the vote at the Annual
general Meeting however the vote
will be advisory only and will not
bind the directors or the Company
ASX Corporate Governance
Council Guidelines
Corporate governance has been
reported on in this section of the
Annual Review in accordance with
the Principles of good Corporate
governance and Best Practice
Recommendations of the Australian
stock Exchange (Asx) Corporate
governance Council.
Boral complied with the guidelines
in all substantial respects
throughout the 2006/07 financial
year. in the few instances where
Boral has an alternative approach to
corporate
gOvERnAnCE
Human Resources
the directors place emphasis
on Boral’s people and its human
resource practices. there are
ongoing reviews of recruitment
(including graduate recruitment),
training, management development
and succession planning for
executives.
Boral has a performance
management system in place
for all managers and staff. the
system includes processes for the
setting of objectives and the annual
assessment of performance against
objectives and workplace style and
effectiveness.
Remuneration
Part of the role of the
Compensation Committee is
to advise the Board on the
remuneration policies and practices
for Boral generally and the
remuneration arrangements for
senior executives.
Boral’s remuneration policy and
practices are designed to attract,
motivate and retain high quality
people. the policy is built around
principles that:
Boral Limited Annual Review 2007
32
directorS’
REPORt
the directors of Boral limited
(“the Company”) report on the
consolidated entity, being the
Company and its controlled entities
(“Boral”), for the financial year
ended 30 June 2007:
(1) Review of Operations
the directors review the operations
during the year of Boral and the
results of those operations as
stated in the Chairman’s Review
and Managing director’s Review on
pages 4 to 9 of the Annual Review.
(2) State of Affairs
there were no significant changes
in Boral’s state of affairs during the
year.
(3) Principal Activities
and Changes
Boral’s principal activities are the
manufacture and supply of building
and construction materials in
Australia, the usA and Asia. there
were no significant changes in the
nature of those activities during the
year.
(4) Events After End of
Financial Year
there are no matters or
circumstances that have arisen
since the end of the year that
have significantly affected, or may
significantly affect:
(a) Boral’s operations in future
financial years; or
(b) the results of those operations
in future financial years; or
(c) Boral’s state of affairs in future
financial years
other than the acquisitions of the
schwarz Readymix, a ready-mixed
concrete and sand business, and
the davis Arbuckle Materials
quarry in Oklahoma, usA for prices
totalling us$80m.
(5) Future Developments
and Results
Other than matters referred to
under the heading “Outlook
for 2007/08” in the Managing
director’s Review on page 9 of
the Annual Review, the directors
have no reference to make to
likely developments in Boral’s
operations in future financial years
and the expected results of those
operations.
(6) Environmental
Performance
details of Boral’s performance
in relation to environmental
regulation are set out under Our
Environment on pages s16 to s21 of
the sustainability Report which is a
supplement to the Annual Review.
(7) Other Information
Other than information in the Annual
Review, there is no information that
members of the Company would
reasonably require to make an
informed assessment of:-
(a) the operations of Boral; and
(b) the financial position of Boral;
and
(c) Boral’s business strategies and
its prospects for future financial
years.
(8) Dividends Paid or Declared
dividends paid to members during
the year were:
total
dividend
$ million
100.4
101.5
the final dividend of
17 cents per ordinary
share (fully franked at the
30% corporate tax rate)
for the year ended 30
June 2006 was paid on
18 september 2006
the interim dividend of
17 cents per ordinary
share (fully franked at the
30% corporate tax rate)
for the year was paid on
21 March 2007
the final dividend of 17 cents per
ordinary share (fully franked at the
30% corporate tax rate) for the year
has been declared by the directors
and will be paid on 18 september
2007.
(9) Names of Directors
the names of persons who have been directors of the Company during or since the end of the year are:
Elizabeth A Alexander
J Brian Clark
E John Cloney
Richard A longes
Kenneth J Moss
Rodney t Pearse
Mark R Rayner
J Roland Williams
All of those persons, other than dr Clark, have been directors at all times during and since the end of the year.
dr Clark was appointed a director on 29 May 2007 and has been a director at all times since that date.
(10) Options
details of options that are granted over unissued shares of the Company, options that lapsed during the year and shares
of the Company that were issued during the year as a result of the exercise of options are:
tranche
grant date
Expiry date
Exercise
price
Balance
at beginning
of year
Options issued
during the year
Options lapsed
during the year
shares issued
during the year
as a result of
exercise of options
Options at end of year
number
number
number
number
issued
vested
(xi)
(xii)
(xiii)
(xiv)
(xv)
(xvi)
06/11/2001
06/11/2006
$3.35
156,100
04/11/2002
04/11/2009
$4.12
680,900
29/10/2003
29/10/2010
$5.57
4,662,300
29/10/2004
29/10/2011
$6.60
2,099,500
31/10/2005
31/10/2012
06/11/2006
06/11/2013
$7.70
$7.32
3,353,100
–
–
–
–
–
–
–
156,100
–
–
465,100
215,800
215,800
130,260
1,655,232
2,876,808
978,954
46,400
47,600
–
4,717,900
–
–
2,053,100
– 3,305,500
–
4,717,900
–
–
–
10,951,900
4,717,900 224,260
2,276,432 13,169,108 1,194,754
the abovementioned options were held by 157 persons.
Boral Limited Annual Review 2007
33
directorS’
REPORt
(10) Options (continued)
since the end of the year, a further
42,400 shares of the Company have
been issued at the price of $4.12
each as a result of the exercise of
options in tranche (xii) and 73,236
such shares have been issued at
the price of $5.57 each as a result
of the exercise of options in tranche
(xiii).
tranche (xvi) was issued during
the year pursuant to the Boral
senior Executive Option Plan.
the number of options in that
tranche granted to each of Mr R
t Pearse, the Managing director
and Chief Executive Officer, and
the executives named in the
Remuneration Report in clause (19)
as part of their emoluments for
the year and certain other details
of the terms of the options are set
out in the Remuneration Report on
page 43 of the Annual Review. the
grant of options to Mr Pearse was
approved by shareholders at the
Company’s Annual general Meeting
held on 21 October 2004.
Each option granted over unissued
shares of the Company entitles
the holder to subscribe for one
fully paid share in the capital of
the Company. Optionholders have
no rights under any options to
participate in any share issue or
interest issue of any body corporate
other than the Company. no
unissued shares and interests of the
Company or any controlled entity
are under option other than as set
out in this clause.
(11) Indemnities and Insurance
for Officers and Auditors
during or since the end of the year,
Boral has not given any indemnity
to a current or former officer or
auditor against a liability or made
any agreement under which an
officer or auditor may be given any
indemnity of the kind covered by
sub-section 199A(2) or (3) of the
Corporations Act 2001.
during the year, Boral paid
premiums in respect of directors’
and Officers’ liability and legal
Expenses insurance contracts for
the year ended 30 June 2007 and
since the end of the year, Boral has
paid, or agreed to pay, premiums
in respect of such contracts for
the year ending 30 June 2008.
the insurance contracts insure
against certain liability (subject
to exclusions) persons who are
or have been directors or officers
of the Company and controlled
entities. A condition of the contracts
is that the nature of the liability
indemnified and the premium
payable not be disclosed.
(12) Directors’ Qualifications,
Experience and Special
Responsibilities and
Directorships of Other Listed
Companies in the Last Three
Financial Years
Each director’s qualifications,
experience and special
responsibilities are set out on page
27 of the Annual Review.
details for each director of all
directorships of other listed
companies held at any time in the
three years before the end of the
year and the period for which such
directorships has been held are:
E A Alexander
Amcor limited from 1994 to
October 2005
Csl limited from 1991 (current)
dB RREEF Funds Management
limited from January 2005 (current)
J B Clark
national Australia Bank limited
from 2001 to August 2004
E J Cloney
Patrick Corporation limited from
2003 to May 2006
QBE insurance group limited from
1981 (current)
R A Longes
Austbrokers Holdings limited from
november 2005 (current)
gPt Management limited from
1984 to november 2004
lend lease Corporation limited
from 1986 to november 2005
Metcash trading limited from 2000
to January 2006
Metcash limited from April 2005
(current)
viridis investment Management
limited from september 2005 to
August 2007
K J Moss
Adsteam Marine limited from 2001
to March 2007
Centennial Coal limited from 2000
(current)
gPt Management limited from
2000 to June 2005
gPt RE limited from June 2005
(current)
Macquarie Capital Alliance group
(being Macquarie Capital Alliance
limited,
Macquarie Capital Alliance
Management limited and
Macquarie Capital
Alliance Bermuda limited) from
March 2005 (current)
national Australia Bank limited
from 2000 to August 2004
R T Pearse
nil
M R Rayner
Alumina limited from december
2002 (current)
J R Williams
Origin Energy limited from 2000
(current)
(13) Meetings of Directors
the number of Meetings of the Board of directors and each Board Committee held during the year and each director’s
attendance at those Meetings was:
E A AlExAndER
J B ClARK
E J ClOnEy
R A lOngEs
K J MOss
R t PEARsE
M R RAynER
J R WilliAMs
Board of directors
Audit Committee
Compensation Committee
MEEtings HEld
WHilE A diRECtOR
MEEtings
AttEndEd
MEEtings HEld
WHilE A MEMBER
MEEtings
AttEndEd
MEEtings HEld
WHilE A MEMBER
MEEtings
AttEndEd
10
nil
10
10
10
10
10
10
10
nil
10
9
10
10
10
10
4
–
–
4
–
–
–
4
4
–
–
3
–
–
–
4
–
nil
2
–
2
–
2
–
–
nil
2
–
1
–
2
–
Mr Pearse, the Managing director, is not a member of the Audit and Compensation Committees but attended all of the
Meetings held by those Committees.
Boral Limited Annual Review 2007
34
(14) Company Secretary
the qualifications and experience of the Company secretary, Michael B scobie, are set out on page 24 of the
Annual Review.
(15) Directors’ Shareholdings
details of each director’s interests in the shares and other securities of the Company are:
E A AlExAndER
J B ClARK
E J ClOnEy
R A lOngEs
K J MOss
R t PEARsE
M R RAynER
J R WilliAMs
shares
15,583
15,000
14,456
12,985
21,000
3,903,301
20,000
45,275
non-Executive
directors’
share Plan a
Options and share
Acquisition Rights
(sARs)
5,483
140
22,512
4,152
12,911
–
28,883
18,128
–
–
–
–
–
b
–
–
the shares are held in the name of the director except in the case of dr J B Clark, 14,000 shares are held by uBs
Wealth Management Australia nominees Pty limited
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