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Boral Limited Annual Review 2009
Boral Limited
ABN 13 008 421 761
Contents for the 2009
Annual Review
Responding to the Global Economic
Downturn 2
Chairman’s Review 4
Managing Director’s Review 6
Management Committee 9
Summary of Results 10
Summary of Reporting Groups 12
Review of Operating Divisions
Australian Construction Materials 14
Cement 16
Construction Related Businesses 18
Clay & Concrete Products 20
Timber 22
Plasterboard 24
USA 26
Financial Review 28
Board of Directors 30
Corporate Governance 31
Directors’ Report 38
Remuneration Report 43
Concise Financial Report 60
Statutory Statements 78
Shareholder Information 79
Financial History 81
Glossary and Abbreviations 82
Our 2009 Sustainability Report can
be found on the reverse side of this
Annual Review.
The Annual Review includes a
concise report containing abbreviated
financial statements. Detailed financial
statements are available in the
separate 2009 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: Boral Transport vehicle driving
on the Hume Highway near Berrima in New
South Wales. During the year, Blue Circle
Southern Cement and Boral Transport
acquired a competitive advantage by winning
and successfully supplying cement and fly
ash to three major Hume Highway projects
simultaneously. The projects required a large
scale logistics feat with an average lead
distance of 360km. The distance travelled by
the fleet was equal to circumnavigating the
earth 120 times.
The Annual General Meeting of Boral Limited will be
held at the City Recital Hall, Angel Place, Sydney
on Wednesday 28 October 2009 at 10.30am.
Financial calendar*
Ex dividend share trading commences 24 August 2009
28 August 2009
Record date for final dividend
28 September 2009
Final dividend payable
28 October 2009
Annual General Meeting
31 December 2009
Half year
Half year profit announcement
10 February 2010
Ex dividend share trading commences 17 February 2010
23 February 2010
Record date for interim dividend
23 March 2010
Interim dividend payable
30 June 2010
Year end
* Timing of events is subject to change.
CEO and Managing Director
Rod Pearse
Chief Financial Officer
Ken Barton
Company Secretary
Margaret Taylor
Auditor
KPMG
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
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2008/09
Boral is an integrated, resource-based manufacturing
company supplying products and materials into
building and construction markets in Australia, the
USA and Asia.
With the global recession presenting significant
market challenges, Boral’s businesses are responding
with comprehensive cost, price and capital management
initiatives to lift Boral’s performance in the short-term
and to strengthen Boral’s position for the long-term.
In 2008/09, the US housing market collapsed, the Australian housing and commercial
construction markets declined significantly and Asian markets were impacted by the
global downturn. Boral’s businesses delivered record cost reductions and price increases,
which helped to offset the significant impacts of volume declines and cost increases on
Boral’s results.
Key financial results for 2008/09:
• Net reported profit after tax down 42% to $142 million
• Underlying profit after tax down 47% to $131 million
• Sales revenue down 6% to $4.9 billion
• EBITDA1 down 22% to $539 million
– Australian EBITDA down from $657 million to $573 million
– USA EBITDA down from A$11 million profit to A$61 million loss
– Asia EBITDA2 up from A$16 million to A$30 million
• EBITDA1 to sales margin of 11.1%
• Underlying earnings per share down 46% to 22.2 cents
• Full year fully franked dividend of 13.0 cents
1 Earnings before interest, tax, depreciation and amortisation (EBITDA) excluding significant items.
2 Includes EBITDA from construction materials in Asia and Boral’s equity share of after tax and financing profits from the LBGA joint venture.
1
Boral Limited Annual Review 2009
Responding to the Global Economic Downturn
We are responding comprehensively to the market
downturn, which intensified in 2009.
Boral is exposed to a number of market segments in the
building and construction industries across a number
of geographies. With the exception of the Australian
infrastructure market segment1, which remained strong, Boral’s
major markets deteriorated significantly during the year.
While we remain confident in the long-term strength of Boral’s
markets, in the short-term we have made some tough decisions
to strengthen returns through the downturn and to position
the Company well for an economic recovery.
Share of revenue 20092
Australian dwellings
Australian non-dwellings
Australian RHS&B
USA
Asia
Other
US housing market at a 50 year low
US housing starts
(millions)
2
0
.
2
4
0
.
2
5
9
.
1
3
7
.
1
4
6
.
1
7
5
.
1
5
6
.
1
5
5
.
1
3
1
.
1
5
6
.
0
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
8
0
Y
F
9
0
Y
F
As the largest brick and
roof tile manufacturer in the
USA, traditionally around
20% of Boral’s revenues
and earnings are derived
from US housing and
construction markets. With
a 68% decline in housing
activity from peak levels
in FY2006, including a
42% year-on-year decline
in FY2009, revenues have
nearly halved since FY2006.
The US business delivered a
significant loss in FY2009.
Response
•
Despite the collapse in market volumes, prices
and market share have held. Average brick prices
increased by 1% in FY2009.
•
•
•
US$94 million of cost reductions and performance
enhancement programs with US$59 million already
delivered.
Boral’s underlying US labour force is down by
around 1,700 full-time equivalent employees
(or over 50%) since the peak in FY2006.
Rolling plant closures and mothballing to match
production and sales and to manage inventories;
brick plant utilisation averaged 30% of capacity
and concrete roof tile plant utilisation averaged
16% in FY2009.
Australian housing market at the bottom of a five year downturn
Australian housing starts
(‘000)
9
.
1
7
1
7
.
4
7
1
5
.
0
7
1
5
.
4
6
1
6
.
4
1
1
4
.
0
6
1
5
.
8
5
1
3
.
2
5
1
2
.
2
5
1
3
.
0
3
1
0
0
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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
8
0
Y
F
9
0
Y
F
2
In recent years, the
Australian housing market
has reflected a “two speed”
dual economy, where
resource intensive states
have grown, Victoria has
been strong due to good
affordability and planning,
but NSW has declined due
largely to poor affordability.
However, in FY2009, the
global recession led to
a significant decline in
housing activity in most
states, including Queensland
and Western Australia.
Overall, Australian dwelling
activity was 18% lower
in FY2009.
Response
•
Disciplined pricing outcomes with cement and
concrete prices up 7%, quarry products up 5%,
and bricks, roof tiles, timber and plasterboard
prices up 3-4% in FY2009.
•
•
•
•
An inventory build in the first half of FY2009 was
largely reversed in the second half as production
output was slowed through temporary and
extended plant shutdowns and slowdowns. In WA,
Midland Brick’s Kiln 4 has been mothballed and
Kiln 8 production suspended.
Accelerated step change and performance
enhancement programs in Building Products
delivered $38 million of benefits in FY2009.
Australian full-time equivalent employees reduced
by around 500 or 5% in FY2009 due to cost and
production rationalisation programs.
Capital expenditure has been significantly reduced.
Construction of the new WA masonry plant was
slowed but is now continuing.
NSW housing activity the lowest in more than 40 years
NSW housing starts
(‘000)
9
.
0
5
2
.
8
4
1
.
7
4
5
.
5
4
2
.
3
3
6
.
9
3
9
.
2
3
5
.
1
3
8
.
9
2
7
.
2
2
0
0
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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
8
0
Y
F
9
0
Y
F
Around 40% of Boral’s
Australian revenues are
traditionally derived in
NSW and Boral has a large
integrated asset base in
NSW representing around
50% of Boral’s Australian
assets. The significant and
protracted downturn in NSW
over the past six years has
had a substantial impact on
Boral. The NSW housing
market was down a further
28% in FY2009, with activity
levels around 52% below
underlying demand.
Response
•
In NSW, Boral’s plants are operating between
around 50% and 80% of capacity. The Gloucester
parquetry plant has been closed and production
suspended at several NSW operations, including
the Walcha timber mill, Galong lime kiln and
Kempsey brick plant. Rolling plant shutdowns have
impacted most other operations.
•
•
•
With production volumes low to match sales and
manage inventory, manufacturing costs per unit of
production have increased, requiring cost reduction
programs in all businesses.
While the Berrima cement works is operating
well and benefited from the Hume Highway
construction projects in FY2009, production
volumes have been lowered to match demand.
Quarry End Use earnings, which are typically
around $40-$50 million p.a., are expected to
reduce to around $25-$30 million in FY2010,
reflecting the slowdown in residential and
commercial property markets, particularly in NSW.
Australian concrete volumes down 10% (and 18% down in second half)
Australian concrete volumes
(‘000 cubic metres)
5
7
5
,
6
2
4
9
8
,
3
2
1
3
9
,
4
2
2
1
9
,
3
2
3
1
9
,
2
2
9
6
4
,
2
2
3
0
0
,
1
2
7
4
4
,
9
1
4
3
6
,
0
2
0
5
2
,
7
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
8
0
Y
F
9
0
Y
F
Typically, 40% of concrete
demand is driven by
dwelling, 35% by RHS&B
infrastructure1 and 25% by
non-dwellings construction
activity. Dwelling starts
were down around 18%
and non-dwelling value
of work approved was
down 25%, while RHS&B
activity was 25% stronger
in FY2009. This resulted in
a 10% reduction in concrete
demand in FY2009 with
volumes in the second half
of the year down 18% on the
prior corresponding period.
Response
•
Despite volume pressures, a strong focus on
disciplined pricing behaviour saw cement and
concrete prices lift by 7% in FY2009.
•
•
•
Due to Boral’s strong focus on lifting margins
through price increases, some temporary market
share loss was experienced during the year.
Australian Construction Materials delivered
$76 million of step change and cost reduction
benefits in FY2009 from a range of initiatives
including reductions in overtime, labour hire, and
administration costs, and improvements in logistics
and concrete mix designs.
A significant step change program is underway in
Blue Circle Southern Cement with early indications
of a possible 10% compressible cost reduction
over FY2010 and FY2011.
•
Boral’s Asphalt business performed strongly,
benefiting from strong infrastructure volumes.
1 Boral’s Australian infrastructure activity is predominantly Road, Highways, Subdivisions and Bridges (RHS&B).
2 Includes Boral’s equity accounted share of joint venture revenues from MonierLifetile (USA) and LBGA (Asia).
Sources:
• US housing starts seasonally adjusted data from US Census.
• Australian and NSW housing starts from Australian Bureau of Statistics (ABS) to Mar-09; estimate for Jun-09 quarter based on Mar-09 quarter approvals.
• Australian concrete volumes from ABS.
• Non-dwelling value of work approved from ABS to Mar-09; estimate for Jun-09 quarter based on BIS Shrapnel value of work commenced forecast (as at Jun-09).
• RHS&B value of work done from ABS to Mar-09; Jun-09 quarter based on BIS Shrapnel forecast (as at Jul-09).
3
Boral Limited Annual Review 2009
Chairman’s Review
Responding to significant market challenges
To help mitigate the impacts of the severe decline in US
markets and the downturns in Australia and Asia, extensive
cost reduction programs, disciplined price management,
capacity rationalisation and substantial lowering of capital
expenditure continued throughout the business.
Step change cost reductions and “performance enhancement
programs” (PEP) delivered $195 million of benefits during the
year. This was the largest cost down/PEP program of the past
10 years. Employee numbers at 30 June 2009 of 14,766 were
7% lower compared with 15,928 employees in the prior year.
Across most operations we are also using a lot less contract
labour, with total full-time equivalent contractors reducing from
around 7,000 to around 5,700 during the year. Overall, Boral’s
total number of full-time employees and contractors reduced
by 2,460 or about 11% in FY2009.
A comprehensive focus on managing the business for cash
through the downturn helped to support Boral’s solid balance
sheet. Cash flow from operations, lower capital expenditure,
proceeds from the divestment of Boral’s 17.6% stake in
Adelaide Brighton and a 16% appreciation of the AUD/USD
exchange rate at 30 June 2009 compared to 31 December
2008 resulted in Boral’s net debt of $1,514 million at 30 June
2009 being $670 million lower than the net debt of
$2,184 million at 31 December 2008. Gearing (debt/equity)
decreased from 79% at 31 December 2008 to 55%
at 30 June 2009.
Shareholder returns
A fully franked final dividend of 5.5 cents per share takes the
full year fully franked dividend to 13.0 cents. The final dividend
represents a pay-out ratio of 58% of underlying after tax
earnings, which is in line with an average of around 60% of
earnings over the past nine years. As a result of the significant
market related earnings decline, the full year dividend of 13.0
cents is substantially lower than the 34.0 cent dividend which
has been paid out of earnings over the past four years.
For the half year dividend, shares issued under Boral’s Dividend
Reinvestment Plan (DRP) were issued at a 2.5% discount to the
market price and the takeup of the DRP lifted from around 30%
to 41%. This initiative assisted in preserving cash in the period.
The 2.5% DRP discount will also apply to Boral’s final dividend.
Boral’s total shareholder return (TSR) from share price
appreciation and dividends was around 16% per annum over
the nine and a half years since demerger to 31 August 2009.
Boral’s TSR performance is above average, ranking in the
second quartile of ASX 100 companies over the period.
Corporate governance and remuneration
Following Boral’s 2008 Annual General Meeting, the Board
undertook a fundamental review of executive remuneration
practices in Boral, which was carried out with the assistance
of an independent adviser, Ernst & Young. The review process
was concluded with a comprehensive stakeholder engagement
program, involving members of the Remuneration Committee
and other Board members meeting with representatives of
retail and institutional investors and governance advisory firms.
We have worked hard to balance the needs and expectations
of our shareholders and the broader community with the
need to appropriately remunerate our people in a competitive
marketplace. Our remuneration policies and practices are
focused on linking performance and reward while taking into
Ken Moss
All of Boral’s major markets deteriorated
significantly during the year, particularly
in the second half of the year, with the
exception of the Australian roads and
infrastructure market segment, which
remained strong. US housing activity
slumped to around 650,000 starts, a 42%
decline on the prior year; Australian housing
activity was down by 18% to 130,000 starts;
the value of non-dwelling activity in Australia
was down 1% and approvals were down 25%;
and in Asia, the global recession slowed
activity in domestic building and
construction markets.
In 2008/09, Boral delivered a reported profit after
tax of $142 million, which was 42% below the
prior year. The reported profit included a number
of significant items which had a net favourable
impact of $11 million. Excluding those significant
items, Boral’s underlying profit after tax of
$131 million was 47% lower than the prior year.
This reduced profit reflects significant downturns
in activity in Boral’s housing and commercial
construction markets underpinned by the
global recession.
The significant items that delivered a net benefit
of $11 million in 2008/09 included a $27 million
after tax profit arising from the sale of Boral’s
17.6% shareholding in Adelaide Brighton Limited
and a $64 million favourable reduction in tax
provisions. These favourable significant items
were largely offset by $63 million of after tax
impairment charges and a $17 million after tax
expense in relation to contractual obligations
to purchase fly ash in Florida where market
conditions are limiting product sales. The
impairment charges were taken in relation to
US construction materials, an Australian precast
concrete panels business, idle US and Australian
brick production assets, and land and capitalised
project costs in Australia and Asia.
For the year ended 30 June 2009, sales revenue
of $4.9 billion was 6% lower than the prior year
and Boral’s underlying EBITDA (earnings before
interest, tax, depreciation and amortisation) was
down 22% to $539 million.
4
Following Rod’s decision to retire, I made a decision that I
would seek re-election as Boral’s Chairman to provide continuity
during the change of CEO. Assuming I have shareholders’
support, I intend to stay on as Chairman until May 2010.
In July 2009, we announced that Dr Bob Every had been
appointed Deputy Chairman of the Board with the intention
of Bob becoming Chairman when I retire in May 2010.
We also announced that John Cloney, who joined the Board
in 1998, will retire as a Director at this year’s Annual General
Meeting. Together with the Board, I acknowledge the significant
contribution that John has made to Boral, including his valued
contribution as Chair of the Remuneration Committee.
The Board is continuing to progress the appointment of a
new CEO and Managing Director to take over from Rod from
1 January 2010. We intend to make an announcement prior
to Boral’s Annual General Meeting, which is scheduled for
28 October 2009.
Boral’s people
Apart from Boral’s CEO, the remaining 11 senior executives
on Boral’s Management Committee have an average tenure
of 11 years with Boral, ranging from one to 21 years. This is
a capable team of executives with a good blend of internal
and external experience. During the year, there was some
renewal on the Management Committee with the appointment
of Margaret Taylor as Boral’s new General Counsel and
Company Secretary and the internal appointments of three
new Executive General Managers, Nick Clark, Warren Davison
and Mike Beardsell. Nick is running Boral’s Clay & Concrete
Products division, Warren is heading up Construction Related
Businesses, and Mike Beardsell is running the Cement division.
These three appointments followed the resignation of two
long-serving EGMs earlier in the year.
I thank Boral’s CEO, management team and all of Boral’s
employees for their hard work and contribution over the past
year. It has not been an easy time for any of our businesses
and when the focus is on reducing costs as far as possible, it
is commendable to see morale remaining strong and safety
performance continuing to strengthen.
Ken Moss, CHAIRMAN
consideration the particular challenges that a cyclical company
like Boral presents.
In addition to the specific actions taken by the Board as
a result of the formal remuneration review, a number of
remuneration restraint initiatives were implemented during
the year in response to shareholder concerns and the difficult
market conditions impacting Boral’s profitability. These
restraint initiatives include: a salary “freeze” for the CEO,
Management Committee and other senior executives from
September 2008 through to September 2010; the CEO and
Management Committee voluntarily forgoing their short
term incentive entitlements for 2008/09; and a “freeze” on
Directors’ fees from July 2008 through to July 2010. These
actions demonstrate a shared commitment of the Board and
Management to lead by example.
This year’s Remuneration Report (on pages 43 to 59 of
Boral’s Annual Review) provides further detail of our approach
to remuneration, the improvements that have been made
following the review and remuneration outcomes in 2009.
Boral’s Directors are committed to ensuring that Boral’s policies
and practices reflect a high standard of corporate governance.
On pages 31 to 37, we report on our corporate governance
activities in accordance with the Corporate Governance
Principles and Recommendations of the ASX Corporate
Governance Council.
Boral’s Board and CEO succession
In 2008/09, there were a number of announcements and steps
taken in relation to Board and CEO succession.
In September 2008, Paul Rayner was appointed as a non-
executive Director of Boral Limited. His appointment was
confirmed by shareholders at the 2008 Annual General Meeting.
In June 2009, Rod Pearse announced his intention to retire
at the end of December 2009, when his second five year
contract comes to an end. Rod joined Boral in 1994 and has
been Managing Director and CEO since the demerger of the
Company in January 2000. While Rod still has several months
in the job, on behalf of the Board, I congratulate Rod for his
achievements as Boral’s CEO and I thank him for the way he
has led the Company in good times and in challenging times.
Rod is a natural leader with strong personal values that have
permeated throughout the organisation and in his dealings
with customers, shareholders and others.
While he may not be retiring at a point in the cycle when Boral’s
earnings are strong, Rod has successfully reshaped Boral into a
focused building and construction materials company that has
performed well through the cycle. Rod has delivered strong
improvements in pricing and in the underlying performance of
the business as well as continuous improvements in safety and
sustainability outcomes. On the growth side, around $2.5 billion
has been invested in growth initiatives over the past decade,
which has seen Boral’s production capacity, resource positions
and distribution networks strengthen as well as stepouts into
new markets and geographies. Of note has been Boral’s move
into construction materials in the USA, growth in plasterboard
throughout Asia, and numerous bolt-on acquisitions in Australia
that have secured Boral’s leading market positions. The Quarry
End Use business was established early in Rod’s tenure; it
has contributed an average annual profit of almost $40 million
over the past nine years. Boral is very well positioned to deliver
superior performance as markets recover.
5
Boral Limited Annual Review 2009
Managing Director’s Review
was coupled with funding constraints and increased
borrowing costs.
Approvals for the construction of dwellings and non-dwellings
were down in all states during the year. In Boral’s largest state
market, New South Wales, approvals for dwellings were down
26% and non-dwellings value of work approved was down by
around 28%. Housing activity in New South Wales remained the
lowest it has been in more than 40 years.
In Australia, Boral’s production output has been slowed to match
sales demand and to reduce inventory. We have suspended
production at several operations, including the Walcha timber
mill, our lime kiln at Galong, Midland Brick’s Kiln 8 and the
Kempsey brick plant, and we have continued a program of
temporary and extended plant shutdowns and slowdowns.
Boral’s Australian Building Products revenue of $1.3 billion
was down 6% and EBITDA of $98 million was down 41%
due to significantly weaker market conditions and reduction of
inventories, particularly in the June half. Higher manufacturing
costs resulting from plant slowdowns and shutdowns had a
significant adverse impacted on profits. Construction Materials
revenue was down 5% to $2.8 billion, reflecting lower volumes
and lower Quarry End Use (QEU) revenues offsetting benefits
from price increases and higher asphalt volumes. Construction
Materials EBITDA was down 3% or $14 million on last year to
$475 million including QEU earnings of $47 million which were
$7 million lower year-on-year.
USA
In the USA, housing activity continued its dramatic decline.
Housing starts were down 42% to 650,000 starts in 2008/09.
In the first half of the year, housing activity was at an annualised
rate of around 765,000 starts while in the second half it
deteriorated to around 535,000 starts per annum. Over the past
50 years, US housing starts have averaged 1.5 million starts per
annum and underlying housing activity is estimated to be around
1.8 million starts per annum.
We operated our concrete roof tile plants at around 20% of
capacity in the first half of the year and lowered this to 12% in
the second half. Similarly, capacity utilisation in our brick plants
averaged 30% during the year with second half utilisation
around 20%. At year end, eight of Boral’s 23 brick plants were
mothballed and a further six temporarily closed until market
demand recovers.
We are operating at record low volumes in the USA and are
well below the break-even point. With revenue down 33% on
the prior year to US$406 million, the US business reported an
EBITDA loss of US$45 million (or A$61 million in Australian
dollars), which compares to a US$10 million (or A$11 million)
profit in the prior year.
The US business moved from a position of profitability to
reporting a loss once the market had fallen below around
1.1 million housing starts. Through a significant cost reduction
program, we have reduced the break-even point of the business;
it should return to an EBIT profit when the market exceeds
around 900,000 to 950,000 housing starts per annum.
Asia
In Asia, Boral’s key market exposures are in South Korea,
Thailand, Indonesia and China. The global economic downturn
impacted Asian construction activity from the September 2008
quarter. Various governments in Asia, notably China, have
announced major stimulus packages to counter the economic
downturn which should be favourable for future construction.
Rod Pearse
Last year I said that in 2007/08 and looking
forward it was not business as usual. I said
that several extraordinary external factors
had coincided to create a particularly
challenging business environment. In
2008/09, those external market challenges
intensified, with the global recession having
a significant impact on Boral’s US and
Australian markets, and in Asia.
The synchronised downturn in market activity
has required a comprehensive response to lift
performance in the short-term and to position
the Company well for an inevitable recovery
and for long-term growth.
Market challenges intensify in 2009
In January 2009, we foreshadowed to the market
that our second half earnings would be well
down on the first half as a result of an anticipated
deterioration in market activity in the USA and
Australia. This is precisely what happened.
Fortunately, the Australian infrastructure market
(predominantly roads, highways and bridges)
remained strong during the year, supported by
government spending. Activity in Boral’s other
major markets deteriorated significantly. The
market downturn was particularly severe in the
second half of the year.
Boral’s reported sales revenue of $4.9 billion for
the year ended 30 June 2009 was 6% lower than
last year. Boral’s underlying profit after tax (PAT)
of $131 million, before significant items, was 47%
below last year’s underlying PAT of $247 million
but was 9% above Boral’s January guidance.
Australia
Australian dwellings were down by around 18% to
an estimated 130,000 starts in 2008/09. Dwelling
starts in the first half were running at around
144,000 per annum, and in the second half activity
declined to around 116,000 starts on an annualised
basis. This compares with BIS Shrapnel’s forecast
of underlying demand of 183,000 starts per annum
for the past three years.
Non-dwelling approvals, which indicate the level of
forthcoming commercial construction, were down
by around 25% with project cancellations and
deferrals increasing as weaker business confidence
6
Pleasingly, revenues from Asia increased by 15% to
A$219 million, reflecting significant price increases that were
necessary to recover input cost increases. EBITDA from
operations in Asia increased to $30 million from $16 million last
year reflecting significant operational improvements and price
gains in construction materials despite lower volumes and difficult
market conditions. Results from Boral’s 50%-owned plasterboard
joint venture, LBGA, were weaker in the first half but pricing
improvements and a significant cost reduction program offset
lower volumes and cost pressures during the second half.
Responding to the downturn by lifting
short-term performance
Our response to the significant synchronised downturns in Boral’s
markets has been to substantially decrease production to match
sales and to manage inventories, together with a disciplined
approach to pricing, widespread and rigorous cost reduction
initiatives, a focus on improving cash flow and substantial
constraints on capital expenditure.
The $195 million of cost reduction benefits delivered during the
year represent a record 4.5% reduction in compressable costs.
These benefits are being delivered through a range of initiatives
including: reductions in overtime and labour hire; streamlining
of management and administration functions; improvements in
logistics, concrete and asphalt mix designs, and quarry yields;
increased use of alternative fuels and materials; and rationalisation
of transport depots and distribution branches.
In the USA, we have rolled out a comprehensive US$94 million
cost reduction program which delivered US$49 million of benefits
in 2008/09. Further incremental benefits in excess of
US$24 million have been targeted for 2009/10 (including Boral’s
50% share of MonierLifetile). The size of these additional savings
will be dependent on market activity levels but will be based on
a further reduction in the workforce, improved manufacturing
processes and lower procurement costs.
A disciplined approach to price management has also been
critically important in lifting performance through the downturn.
Prices increased in most businesses in 2008/09 with $165 million
of benefits delivered from price improvements, the largest year-
on-year price lift in at least 10 years. Our pricing focus in the
first half of 2009/10 will be to gain full traction from previously
announced price increases and where possible implement new
price increases. For example, concrete, quarry and cement
price increases that were announced effective 1 April 2009
are continuing to be realised. Price increases of 6% have been
announced for bricks and pavers in New South Wales and
Queensland to take effect from 1 October 2009 and a similar
increase was implemented in Victoria effective 1 July 2009.
With increased focus on cash management, managing working
capital and reducing capital spending has been a priority. While
operating cash flow decreased by $163 million to $419 million
over the year, cash flow of $278 million in the June half nearly
doubled the cash flow of $141 million delivered in the
December half.
Capital expenditure has continued to be significantly
wound back, with growth and acquisition capital expenditure
reduced by 76% to $77 million. Stay-in-business capital of
$163 million was $6 million lower and remained at around 62% of
depreciation levels. Several new growth investments have been
delayed until markets and cash flows recover. We are, however,
continuing to monitor and assess growth opportunities that will
create shareholder wealth through the cycle.
Boral’s balance sheet is in a relatively strong position at the
bottom of the cycle with gearing (debt/equity) of 55%, well
within Boral’s target range of 40%-70%. Boral’s liquidity is strong
and should continue to sustain us well through the downturn; we
have around $820 million of undrawn committed facilities at
30 June 2009 and no material refinancing requirements until
August 2011.
Outlook for 2009/10
While forecasting remains particularly difficult in the current
economic climate and Boral’s businesses have developed plans
that allow for a range of market outcomes, we expect that
2009/10 will be another year of challenging market conditions.
In Australia, Boral’s Building Products businesses are currently
producing at a rate to supply housing starts of around 120,000.
However, the Housing Industry Association is forecasting a lift to
around 145,000 starts in 2009/10 and BIS Shrapnel is forecasting
a more significant rebound to 160,000 starts. Lower interest
rates combined with improvements to the First Home Owners
Grant have significantly improved affordability and flow through
is expected from the social and defence housing component of
the Federal Government Stimulus Package. Finance approvals
for new dwelling construction have risen which will eventually
flow through to building activity. Boral’s production levels will lift
to match sales increases as they eventuate and our Australian
Building Products earnings are expected to lift in 2009/10 on the
back of stronger volumes and improved pricing.
On the other hand, Construction Materials activity and
earnings in Australia are expected to decline in 2009/10 due to
the decline in non-dwellings and softer infrastructure activity.
We anticipate QEU earnings to fall in 2009/10 to around
$25 million to $30 million due to the downturn in the property
sector and to be less heavily weighted to the second half
than in previous years.
In the USA, it remains unclear when a turnaround in housing
activity will occur. Many economists are forecasting a recovery to
begin from late calendar year 2009. We expect US housing starts
in the December 2009 half to be similar to June 2009 half starts,
with a recovery occurring in the June 2010 half. Overall, we
anticipate a broadly similar level of housing activity in 2009/10 as
was experienced in 2008/09. Continued benefits from significant
cost reduction programs across the entire business and increased
second half sales and production volumes will reduce losses in
the US in 2009/10, particularly in the June half.
In Asia, domestic building activity remains sensitive to the effect
of the global recession, however, plasterboard volumes and
profits will be more resilient as product penetration continues
and a strong focus on better pricing outcomes and cost
reduction programs is expected to continue to support margins.
In Construction Materials in Asia we expect some volume and
earnings pressures.
Across Boral’s businesses, performance enhancement programs
and step change initiatives of 4% of compressible costs have
been targeted for 2009/10. Interest expense will be lower
because of reduced debt levels. Capital expenditure will be
further reduced and working capital will continue to be managed
tightly.
Current market conditions are expected to broadly continue
during the first half of 2009/10. Second half activity levels are
expected to be stronger than in the December 2009 half but are
difficult to forecast at this point in time.
We will provide a trading update at Boral’s Annual General
Meeting on 28 October 2009.
7
Boral Limited Annual Review 2009
Managing Director’s Review continued
Positioning the Company well for the long-term
Despite the current depressed levels of demand, we have
long-term confidence in Boral’s markets. We support the view
of Harvard University’s Joint Centre for Housing Studies that
underlying demand for new housing in the USA is around
1.8 million starts per annum. In Australia, according to BIS
Shrapnel, underlying demand over the past three years has been
around 183,000 starts per annum and over the next five years
will be around 169,000 per annum, reflecting a reduction in net
overseas migration.
Over the past 10 years, we have positioned the Company well
to supply the market through the peaks and the troughs of the
building cycles and to deliver strong returns when the market is
operating at underlying demand and long-term average levels.
We have invested in low cost modern capacity in higher growth
markets and we have closed higher cost older capacity at the
bottom of the cycle. We have grown Boral’s distribution networks
and stepped out into new markets and new geographies. A
decade ago, Boral was operating in five countries; today, Boral
has operations in 10 countries and a distribution presence in
a further three. We have strong, cost-competitive resource
positions that have strengthened Boral’s competitive advantage
over the past decade.
Over the past year, we have significantly reduced capital
expenditure until markets recover. We are, however, moving
forward with several capital projects. We are rebuilding the
Artarmon concrete batching plant for around $12 million, which
is critical to supply Sydney, North Sydney and Chatswood
business districts; the Artarmon plant is expected to be
completed in the June 2010 quarter and is benefiting from
the Federal Government’s Investment Allowance. In Western
Australia, the construction of our previously announced new
$44 million masonry plant to replace two existing plants was
slowed but is now continuing; market growth and cost reduction
benefits together with cash flows from the sale of the Jandakot
and Cannington sites will result in strong investment returns.
In Asia, LBGA is building a new US$48 million plasterboard
plant at Baoshan in Shanghai, China, and a new US$43 million
production line at Saraburi in Thailand, which are expected to
be in operation by June 2010 and September 2010 respectively.
These investments are being funded by the JV and are important
to retaining LBGA’s leading position in Asia and to supplying the
strong underlying growth in plasterboard in the region.
Delivering our objectives through the cycle
When I took over as Boral’s CEO and Managing Director
nearly 10 years ago, following the demerger of the Company
from Boral Energy (now Origin Energy), our goal was to reshape
Boral into a focused building and construction materials company
operating in Australia and increasingly offshore. This increased
focus has made Boral more exposed to the cyclical highs and
lows of the building industry but considerable shareholder value
has been created as a result of the increased focus.
Over the past decade, we have had four financial objectives and,
through the cycle, performance against objectives has been solid.
Our first objective is to deliver returns that exceed Boral’s
weighted average cost of capital through the cycle. Since
demerger, Boral’s EBIT return on funds employed has averaged
12.7%, which is above Boral’s weighted average cost of capital.
Our second objective has been to deliver better financial returns
than the competition in comparable markets. Pleasingly, Boral’s
financial returns continue to compare well with competitors in
like markets across most businesses, and in some businesses
8
where there was a performance gap it has closed as Boral has
outperformed in areas such as cost and price management.
Boral’s third objective has been to deliver superior total
shareholder returns (TSR) for our shareholders. Despite
extraordinarily challenging conditions and Boral’s share price
deteriorating in recent years as a result of the market driven
earnings decline, Boral’s TSR from share price appreciation
and dividends was around 16% per annum over the nine and
a half years since demerger to 31 August 2009. Boral’s TSR
performance is above average, ranking in the second quartile
of ASX 100 companies over the period.
Finally, Boral’s fourth and overarching objective is to deliver
superior returns in a “sustainable way”; this means in a financial,
human resources, environmental and social sense. From a cost,
price and capital perspective, Boral is positioned well to deliver
strong sustainable returns. Boral’s non-financial sustainability
measures have continued to improve over time, including safety.
In 2008/09, a lost time injury frequency rate for employees
of 1.8 was delivered versus 2.5 in the prior year and 9.0 in
1999/00 and 1998/99; contractor safety management has also
improved significantly. This improved safety performance was
better than our targeted performance improvement; however,
it was tragically overshadowed by the death of an employee in
Indonesia who was fatally injured in a heavy vehicle accident
involving two concrete agitators in November 2008. This
employee fatality was a tragic reminder of the risks we need to
manage every single day and the importance of continuing to
focus our efforts on ensuring a safe workplace for all of Boral’s
people. Further details about Boral’s safety performance and
environmental and social impacts can be found in Boral’s 2009
Sustainability Report, which forms part of this Annual Review.
Boral’s fifth changing of the guard
After 10 years as Boral’s CEO and Managing Director, I will retire
at the end of December 2009. I have had a personal goal of
wanting to hand the business over in better shape at the end of
my tenure than when I started. Over Boral’s 63 year history, I
believe that my four predecessors have done this.
I am confident that the underlying performance of the business
has strengthened considerably over the past decade. This has
better positioned Boral to weather the most severe downturn
that we have witnessed in our careers. It also means that as
markets recover, Boral’s financial returns will dramatically lift.
I thank Boral’s Management Committee and all of Boral’s
employees for their hard work, their persistence and their support
during my time as CEO. I also thank the Chairman Ken Moss and
the whole Board for their support and their invaluable counsel.
It has been a pleasure and a privilege to lead Boral over the last
decade. I will hand over the reins to Boral’s next CEO in coming
months. I wish my successor the very best of success with
Boral’s future.
Rod Pearse, CEO AND MANAgINg DIRECTOR
Boral Limited Annual Review 2009
Management Committee
Rod Pearse 1
CEO AND MANAGING DIRECTOR
Biography on p.30.
John Douglas 2
EXECUTIVE GENERAL MANAGER, AUSTRALIAN
CONSTRUCTION MATERIALS
John is 47 and has been in his current position
since 2004. 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 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.
Mike Beardsell 3
EXECUTIVE GENERAL MANAGER, CEMENT
Mike is 51 and was appointed Executive
General Manager of Cement in April 2009.
Mike joined Boral in 2001 and has been
National General Manager of Blue Circle
Southern Cement since 2004. Before joining
Boral, Mike worked as an independent
consultant and has held senior roles in Iron
Ore Co of Canada, Peak Hill Resources and
North Forest Products, Tasmania, where he
was the Chief Executive. Mike holds a PhD
in industrial forestry operations and a Master
of Science.
Warren Davison 4
EXECUTIVE GENERAL MANAGER,
CONSTRUCTION RELATED BUSINESSES
Warren is 56 and was appointed Executive
General Manager of Construction Related
Businesses in April 2009. Warren joined Boral
from Alcan in 1998 as General Manager of
Boral Formwork & Scaffolding and became
General Manager of Boral’s Construction
Related Businesses in 2003. Warren came to
Boral with a strong background in sales and
manufacturing management in Australia and
New Zealand. Warren has a Master of Science
(Hons) degree and postgraduate business
qualifications.
Nick Clark 5
EXECUTIVE GENERAL MANAGER,
CLAY & CONCRETE PRODUCTS
Nick is 46 and was appointed Executive
General Manager of Clay & Concrete Products
in February 2009. Nick joined Boral as
General Manager, Bricks East in 2003. Prior
to joining Boral he held a number of positions
at Rio Tinto, Pacific Dunlop and Mayne/
Toll Logistics including marketing, sales,
operational and general management roles.
He has a mechanical engineering degree
from Melbourne University and an MBA from
Harvard Business School.
Bryan Tisher 6
EXECUTIVE GENERAL MANAGER, TIMBER
Bryan is 46 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, and 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, engineering design and construction
in a variety of locations including Australia,
USA, Africa and Indonesia. He holds a civil
engineering degree (First Class Honours) from
Monash University and an MBA from Harvard
Business School.
Ross Batstone 7
EXECUTIVE GENERAL MANAGER,
PLASTERBOARD
Ross is 61 and was Boral’s Divisional General
Manager, Plasterboard Australia from 1996-
2000 before becoming Executive General
Manager of the Plasterboard division. He
was 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 8
PRESIDENT, BORAL USA
Emery is 53 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 National
General Manager of Blue Circle Southern
Cement from 1998 to 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 9
CHIEF FINANCIAL OFFICER
Ken is 43 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.
1
3
5
7
9
11
2
4
6
8
10
12
Margaret Taylor 10
GENERAL COUNSEL AND COMPANY SECRETARY
Margaret is 49 and was appointed General
Counsel and Company Secretary of Boral
Limited in November 2008. Prior to joining
Boral, Margaret was Regional Counsel
Australia/Asia with BHP Billiton, and prior
to that she was a partner with law firm
Minter Ellison for many years, specialising in
corporate and securities law. Margaret holds
law and arts degrees from the University
of Queensland.
Robin Town 11
GENERAL MANAGER, HUMAN RESOURCES
Robin is 57 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 12
GENERAL MANAGER,
CORPORATE DEVELOPMENT
Andrew is 45 and is General Manager,
Corporate Development. He was previously
National General Manager, Quarry End Use
from 2003-2007 and General Manager,
Business Development for Australian
Construction Materials (2000-2003). 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.
9
Boral Limited Annual Review 2009
Summary of Results
A$ million unless stated
YEAR ENDED 30 JUNE
Revenue
EBITDA1
EBIT1
Net interest1
Profit before tax1
Tax1
Minority interest
Underlying profit after tax
Net significant items
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 sales1, %
EBIT margin on sales1, %
EBIT return on funds employed1, %
Return on equity1, %
Gearing
Net debt/equity, %
Net debt/net debt + equity, %
Interest cover1, times
Underlying earnings per share1, ¢
Dividend per share, ¢
Safety: (per million hours worked)
Lost time injury frequency rate
Recordable injury frequency rate
2009
4,875
539
276
(127)
149
(17)
–
131
11
142
419
5,491
4,268
2,738
1,514
77
163
263
14,766
0.330
4.12
11.1
5.7
6.5
4.8
55
35
2.2
22.2
13.0
1.8
26.1
2008 % change
5,199
688
448
(112)
336
(90)
1
247
(4)
243
582
5,895
4,425
2,985
1,515
327
169
240
15,928
0.326
4.41
13.2
8.6
10.1
8.5
52
34
4.0
41.4
34.0
2.5
26.7
(6)
(22)
(38)
14
(56)
(81)
–
(47)
(42)
(28)
(7)
(4)
(8)
–
(76)
(4)
10
(7)
1
(7)
(16)
(34)
(36)
(44)
6
4
(46)
(46)
(62)
(28)
(2)
Sales revenue $m
EBITDA1 $m
EBIT1 $m
Profit after tax1 $m
Earnings per share1 c
9
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10
1 Excluding significant items.
EBITDA variance analysis ($ million)
Announcements to the ASx
688
539
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Volume
Substantially lower volumes, which were experienced in all
businesses except Asphalt, reduced Boral’s EBITDA by around
$215 million in FY2009. The adverse impact of lower volumes was
particularly pronounced in the second half of the year.
Price
Disciplined price management across Boral’s businesses has lifted
performance through the downturn. Price increases delivered
$165 million of benefits in FY2009, the largest year-on-year price
lift in at least 10 years.
Costs and PEP
Cost savings of $195 million were delivered from Performance
Enhancement Programs (PEP) and other cost reduction initiatives,
which was a record 4.5% of compressible costs. Taken together,
price and PEP outcomes were $360 million which substantially
exceeded cost escalation of $215 million (around 5% of
compressible costs).
growth and QEU
Reflecting the market downturn, there were no benefits delivered
from growth initiatives in FY2009 and earnings from Quarry End
Use (QEU) activities were down $7 million on the prior year, as a
result of slower property markets.
Plant one-offs and other
Plant slowdowns and shutdowns cost around $46 million, of
which about half was in the USA. Transitioning costs for the new
Plasterboard plant at Pinkenba in Queensland also impacted the
result. Other costs included a $14 million foreign exchange variation
on the prior year.
19 August 2009
Boral announces an after tax profit of $142 million for the year
ended 30 June 2009, a 42% or $101 million decrease on the
reported PAT for the year ended 30 June 2008.
27 July 2009
Boral announces that Dr Bob Every has been appointed Deputy
Chairman of Boral and that Dr Ken Moss intends to retire as
Chairman and from the Board in May 2010, at which time Dr Every
will assume Chairmanship of Boral.
15 June 2009
Boral announces its response to the ACF/ACJP Report on Corporate
Climate Risk Disclosure. Boral strongly refutes the allegations made
by the ACF and the ACJP.
6 May 2009
Boral announces that it has sold its entire stake in Adelaide Brighton
Limited being 107.8 million shares for a price of $210 million or
$1.95 per share.
6 April 2009
The Chairman of Boral, Dr Ken Moss, advises that Boral has
commenced an executive search process to consider suitable
internal and external candidates to replace Boral’s current CEO
and Managing Director, Mr Rod Pearse.
6 March 2009
Boral announces the resignation of Phil Jobe from Boral and the
separation of Boral’s Cement division into two operating divisions
– Cement and Construction Related Businesses. Mike Beardsell is
appointed as EGM of the new Cement division and Warren Davison
was appointed as EGM of Construction Related Businesses.
11 February 2009
Boral announces a profit after tax of $75 million for the half year
ended 31 December 2008, 44% below the $132 million for the half
year to December 2007.
28 January 2009
Boral advises that due to deterioration in market conditions in the
USA, Australia and Asia it is revising its full year guidance for its
FY2009 result from $200 million to $120 profit after tax.
19 January 2009
Boral Timber announces it has achieved Chain of Custody
certification for its hardwood product range. This achievement
builds on the previously awarded Chain of Custody Certification for
Boral Plywood and Boral Sawmillers Exports.
15 December 2008
Boral announces its initial response to the Federal Government’s
Carbon Pollution Reduction Scheme White Paper. Boral is pleased
that cement is recognised as an EITE industry and will receive
transitional assistance but is concerned by the stated conclusion of
the safety price cap in 2015.
17 November 2008
Boral announces Margaret Taylor has been appointed Company
Secretary of Boral Limited following the resignation of Michael
Scobie.
7 November 2008
Boral announces Mr Nick Clark will replace Keith Mitchelhill as EGM
of the Clay & Concrete Products division of Boral.
5 September 2008
Boral announces that Mr Paul Rayner has been appointed as a
non-executive Director of Boral Limited.
Boral announces that Ms Elizabeth Alexander will retire as a
non-executive Director of Boral Limited.
11
Boral Limited Annual Review 2009
Summary of Reporting Groups
Construction Materials, Australia
Building Products, Australia
Share of FY2009 external revenue
Share of FY2009 external revenue
Concrete
Quarries
Asphalt
Transport
QUE
* Cement division includes
Blue Circle (excluding internal
sales to Boral businesses)
and Construction Related
Businesses of De Martin &
Gasparini and Formwork &
Scaffolding
Bricks
Roofing
Masonry
Windows
Timber
Cement division*
Australian Plasterboard
Revenue, $m
EBITDA1, $m
Revenue, $m
EBITDA1, $m
0
6
9
,
2
7
1
8
,
2
9
4
5
,
2
0
1
4
,
4 2
6
1
,
2
9
9
0
,
6 2
4
8
,
1
8
4
7
,
1
0
4
6
,
1
3
2
5
,
1
9
8
4
5
7
4
4
5
4
2
1
4
6
1
4
0
1
4
5
3
3
5
6
2
7
3
2
8
0
2
5
5
3
,
1
7
5
3
,
1
7
7
2
,
1
5
7
2
,
1
7
1
2
,
6 1
5
1
,
1
3
1
2
,
1
7
8
1
,
1
9
9
9
5
5
9
2
0
2
1
9
1
4
6
1
8
6
1
2
6
1
1
5
1
2
8
1
8
2
1
0
1
1
8
9
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
8
0
Y
F
9
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
8
0
Y
F
9
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
8
0
Y
F
9
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
8
0
Y
F
9
0
Y
F
Year ended 30 June
2009
2008 % change
Year ended 30 June
2009
2008 % change
A$ million unless stated
Sales revenue
EBITDA1
EBIT1
Capital expenditure2
Funds employed2
EBITDA1 return on sales, %
EBIT1 return on sales, %
EBIT1 return on funds employed, %
Employees, number
Revenue per employee
2,817
475
330
140
2,240
16.9
11.7
14.7
5,544
0.508
2,960
489
351
180
2,310
16.5
11.9
15.2
5,798
0.511
A$ million unless stated
(5)
(3)
(6)
(23)
(3)
(4)
–
Sales revenue
EBITDA1
EBIT1
Capital expenditure2
Funds employed2
EBITDA1 return on sales, %
EBIT1 return on sales, %
EBIT1 return on funds employed, %
Employees, number
Revenue per employee
1,277
98
40
64
1,188
7.7
3.1
3.4
3,814
0.335
1,357
168
114
125
1,178
12.4
8.4
9.7
4,080
0.333
(6)
(41)
(65)
(48)
1
(7)
1
Performance
•
Revenues steady in the first half but 12% down in the second
half due to lower housing related volumes, particularly in
Western Australia and Queensland, more than offsetting price
increases across all businesses.
Earnings were significantly lower due to extensive temporary
plant slowdowns and shutdowns to run down inventories and
to match weaker sales demand.
Stronger pricing outcomes across all building products and
$38 million of PEP cost reductions were delivered.
•
•
Performance
•
Revenues down as lower Quarry End Use (QEU) revenues
offset increased asphalt volumes (due to strong infrastructure
activity) and pricing gains in concrete, quarry, cement and lime.
Boral’s concrete volumes down 12%, reflecting lower
dwellings and non-dwellings activity and some temporary
market share loss predominantly due to Boral’s strong focus
on lifting margins through price increases.
EBIT from QEU of $47 million versus $54 million in prior year.
$92 million of PEP cost reductions contributing to an EBITDA
margin lift to 16.9%.
•
•
•
12
USA
Asia
Share of FY2009 external revenue
Includes Boral’s Asian plasterboard joint venture with
Lafarge3, LGBA, and Boral’s Indonesian and Thailand
construction materials businesses.
Bricks
Clay roof tiles*
Concrete roof tiles*
Fly ash
* MonierLifetile and Trinidad
JVs are equity accounted –
Boral’s share of revenue does
not appear in consolidated
accounts but is included in
the revenue pie chart.
Construction materials
Revenue, $m
EBITDA1, $m
Revenue, $m
EBIT1, $m
3
9
6 7
5
7
1
6
7
5
5
7
0
1
8
2
6
6
7
5
9
3
8
8
1
7
6
5
4
5
9
1
2
7
7
1
9
2
1
5
5
4 1
4
1
7
5
1
1
5
1
2
3
1
1
1
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
8
0
Y
F
9
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
8
0
Y
F
)
1
6
(
9
0
Y
F
1
6
4
1
1
4
6
9
3
4
6
3
0
0
3
1
4
2
7
2
2
0
1
2
3
0
1
8
9
9
2
4
2
0
2
3
2 2
2
9
1
2
1
7
4
)
4
1
(
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
8
0
Y
F
9
0
Y
F
0
0
Y
F
1
0
Y
F
2
0
Y
F
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
8
0
Y
F
9
0
Y
F
2009
2008 % change
Year ended 30 June
2009
2008 % change
Year ended 30 June
US$ million
Sales revenue
EBITDA1
EBIT1
A$ million
Sales revenue
EBITDA1
EBIT1
Capital expenditure2
Funds employed2
EBITDA1 return on sales, %
EBIT1 return on sales, %
EBIT1 return on funds employed, %
Employees, number
Revenue per employee
406
(45)
(81)
545
(61)
(109)
27
812
(11.1)
(20.0)
(13.4)
1,592
0.342
607
10
(25)
671
11
(27)
180
789
1.7
(4.0)
(3.4)
2,208
0.304
(33)
(545)
(230)
(19)
(640)
(301)
(85)
3
(28)
13
Performance
•
33% revenues decline and earnings loss reflects
unprecedented fall in US market; housing starts down 42% to
around 650,000 versus 1.13 million starts in FY2008.
US$39 million of PEP cost reductions plus US$10 million from
MonierLifetile (50% share). Full-time equivalent employees
down 28% or 616 people.
Average capacity utilisation of 30% in bricks and 16% in
concrete roof tiles in FY2009, to match record low sales
demand and manage inventory.
Prices held despite collapse in market volumes.
•
•
•
A$ million unless stated
Sales revenue
EBITDA1
EBIT1
Funds employed
Return on funds employed, %
219
30
19
297
6.4
15
87
189
191
16
7
285
2.3
Performance
•
•
•
•
Improved Construction Materials earnings offset weaker
earnings from LBGA.
In Indonesia, improved concrete prices restored margins
despite volumes down 8%, and in Thailand, margins and
profits improved due to significant operational improvements
and lower costs despite concrete prices down 5% and
volumes down 21%.
Plasterboard sales volumes down 6% due to global recession
impacting from December 2008 quarter, but stronger pricing
and cost reductions offset lower volume impacts in the
June half.
New plasterboard plants commissioned in Chengdu
(central west of China) and Rajasthan (India) in FY2009
and investments underway in Baoshan (China) and
Saraburi (Thailand).
1 Excluding significant items; FY05 results onwards restated to reflect transition to A-IFRS
accounting standards.
2 Capital expenditure and funds employed include acquisitions.
3 Boral’s profits from the Asian Plasterboard joint venture, LBGA, are equity accounted and
are after financing and tax. Boral’s share of revenue from LBGA does not appear in Boral’s
consolidated accounts; however, Boral’s share of LBGA revenue is included in the revenue bar
chart for Asia from FY01 onwards.
13
Boral Limited Annual Review 2009
Review of Operating Divisions
Australian Construction Materials
development in New South Wales, the Prominent ZHill Copper
and Gold Mine in South Australia and the Boddington Gold Mine
in Western Australia. Our integrated national Quarry, Concrete
and Asphalt networks position us well in the supply of product
and in contracting to these major infrastructure developments.
Revenues from the combined Concrete and Quarries businesses
of $1.4 billion were 5% below last year and EBITDA was
marginally lower. Concrete volumes were down 12% due to
the drop-off in residential and non-dwelling activity and Quarry
volumes were 7% lower with lower concrete pull-through
volumes partly offset by higher asphalt pull-through and from our
participation in infrastructure projects. The impact of concrete
and quarry volume declines and increased costs were largely
offset by strong pricing outcomes, effective cost reduction
programs and improved production efficiencies. Prices increased
by 7% for delivered concrete and by 5% for quarry products.
Asphalt performed strongly during the year, achieving an 11% lift
in revenue. The solid result was driven by infrastructure activity
such as the Gateway Bridge project in Brisbane and the Sturt
Highway upgrade in South Australia. Margins remained robust
due to strong pricing and cost management outcomes.
Boral’s Quarry End Use (QEU) business contributed $47 million
of EBIT compared with $54 million in the prior year. QEU
earnings came from George’s Fair (Moorebank), the Southern
Employment Lands (Greystanes), the sale and leaseback of
eight sites and from the Deer Park Western Landfill operation.
For ACM’s safety and environmental outcomes for 2008/09
refer to page s30 of Boral’s 2009 Sustainability Report.
Outlook
Despite the Federal Government stimulus funding, softening
infrastructure activity and the continuing decline in non-dwelling
activity will offset an expected improvement in residential
activity in 2009/10. Cost reduction programs will remain a key
focus as activity reduces from the high levels of recent years.
Concrete and quarry price increases that were announced
effective 1 April 2009 will continue to flow through in 2009/10.
QEU forecast earnings of around $25-30 million but will be
weighted less heavily to the second half than in previous years.
John Douglas, EXECUTIVE GENERAL MANAGER
Transport
The company-owned fleet totals around 350 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 500
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. Boral’s Western Landfill operation
at Deer Park in Victoria is also a part of the QEU business.
John Douglas
Australian Construction Materials (ACM) produced solid
profit and cash flow outcomes in challenging economic
conditions. This performance was achieved by leveraging
our national integrated positions and capabilities in
supplying product and contracting services to the large
scale infrastructure projects around Australia while at
the same time ensuring appropriate pricing outcomes
and closely managing costs, working capital and
capital expenditure.
In 2008/09, revenue from ACM (excluding Quarry End Use)
held steady on the prior year. Performance was underpinned
by strong infrastructure activity, effective price management
and disciplined cost reduction programs. Ongoing engineering
construction projects, supported by government stimulus
expenditure late in the year, partially offset significant weakness
in residential and non-dwelling sectors. Solid underlying
profitability combined with focused working capital management
and reduced capital spending generated strong cash flow.
Boral’s involvement in large government-funded infrastructure
projects during the year, many of which are ongoing, included
the Ipswich Motorway and the Gateway Bridge in Queensland,
the Ballina Bypass and the F3 widening in New South Wales, the
Deer Park Bypass in Victoria and the Perth to Bunbury Highway
in Western Australia. Other privately-funded or public-private
partnership projects include the Airport Link and the North-South
Bypass Tunnel toll road in Queensland, the Cadia Gold Mine
The Australian Construction Materials (ACM) division employs
around 4,230 employees and 2,600 contractors in quarry,
concrete, asphalt, transport and land development activities
throughout Australia. With around 400 operating sites, ACM has
a regional focus to serve Boral’s local markets.
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 250 premix concrete plants produces a
wide range of mixes in metropolitan and country areas.
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.
14
76656 p14-30.indd Sec2:14
76656 p14-30.indd Sec2:14
14/9/09 9:34:11 PM
14/9/09 9:34:11 PM
Darwin
ASPHALT
CONCRETE
QUARRIES
TRANSPORT
Perth
Adelaide
Sydney
Canberra
Melbourne
Hobart
Large scale infrastructure projects
have been a key source of revenue
for ACM. ACM has significant
capacity and capability to meet
the demands of such projects
due to our strong contracting
and production capabilities and
resource position nationally. This
segment is forecast to soften but
will remain at strong levels, partly
funded by Federal Government
stimulus spending. Amongst a
range of projects, Boral is currently
supplying the F3 widening in
NSW (pictured).
ACM’s Asphalt business has
gone from strength to strength
in recent years, building on
our comprehensive national
presence, our solid track record
working with Australia’s major
contracting companies and our
quality production and contracting
capabilities. Our significant
investment in production facilities
and capability in recent years in all
our state operations has enabled our
Asphalt business to meet the current
high level of infrastructure activity.
Cost reduction programs have been
implemented in all ACM businesses
and are vital to maintaining
profitability in the face of challenging
market conditions. Particular
focus has been on reducing spend
on labour hire, logistics and
administration costs, as well as
improving concrete and asphalt
mix designs, rationalising transport
depots and improving quarry yields.
These programs have been very
successful to date and will continue
to underpin profitability going
forward.
The rebuilding of Boral’s Artarmon
concrete plant has commenced,
involving investment of around
$12 million. The Artarmon plant
is strategically positioned to
supply Sydney, North Sydney and
Chatswood CBDs and is expected
to be completed in the June 2010
quarter. The new plant is positioned
well for Sydney’s future Barangaroo
development and has been designed
with improved truck access as well
as increased capacity and storage.
Brisbane
15
Boral Limited Annual Review 2009
Review of Operating Divisions
Cement
Mike Beardsell
Typically, around 40% of cement demand
is driven by the housing sector, 35% by
infrastructure and 25% by non-dwelling
construction activity. For Boral’s Blue Circle
Southern Cement (BCSC) business we are
disproportionately exposed to East Coast
markets, particularly New South Wales,
because of our large cement manufacturing
assets at Berrima in New South Wales and
Waurn Ponds in Victoria. The immediate
focus of the Cement division is to realign
our cost base and supply network with
reduced market demand while maintaining
capability to respond quickly to improving
market conditions.
During the year, Cement volumes were down
9% on last year, with strong sales to the Hume
Highway upgrade projects moderating the
impact of weakening demand from the premixed
concrete industry, particularly in the second half
of the year. Average cement prices increased by
7% as suppliers sought to recover soaring input
costs at the peak of the resources boom.
The Cement division operates across 13 operating sites in
Australia and 95 in Asia, and employs approximately 4,200
people (including 3,460 in Asia)
Blue Circle Southern Cement (BCSC)
Blue Circle has 13 operating and four distribution sites. Major
operations are in the Southern Highlands of NSW at Berrima
where the dry process cement capacity is 1.4 million tonnes
p.a. At Maldon, up to 300k tonnes p.a. of off-white and grey
cement can be produced and there is a bagging and dry mix
facility. 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 dry process kiln
has a capacity of 800k tonnes p.a. 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.
16
Lime volumes fell by 29% as demand from the steel industry
contracted but continuing focus on pricing delivered a 12%
improvement year-on-year. In mid January 2009, production
at the quicklime facility at Galong in New South Wales was
temporarily suspended due to reduced demand from the
steel sector.
EBITDA from BCSC was weaker, with reduced volumes and
a steep rise in energy and imported clinker costs (to supply
Sunstate) adversely impacting the result.
In Asia, despite the global economic downturn impacting
from the September 2008 quarter and the unstable market
environment in Thailand dampening overall construction
activity, Boral’s construction materials results in Asia improved
significantly for the period. Concrete volumes in Indonesia fell
by 8%; however, margins recovered on the back of rigorous
cost control and a significant improvement in concrete prices.
Market share leadership was maintained in Indonesia. In
Thailand, concrete prices were down 5% and volumes were
down 21% in challenging markets but a shift in focus from
growth to cost reduction delivered a substantial improvement
in gross margins.
For Cement’s safety and environmental outcomes for 2008/09
refer to page s32 of Boral’s 2009 Sustainability Report.
Outlook
Activity in Australia is expected to decline in 2009/10 due to the
decline in non-dwellings and softening in infrastructure activity
which will more than offset the benefits from slightly stronger
dwellings activity and improved pricing. Our pricing focus in the
first half of 2009/10 will be to gain full traction from previously
announced price increases. Cement price increases that were
announced effective 1 April 2009 are continuing to be realised.
A significant step change program is underway in BCSC with
the diagnostic phase completed in July 2009. Early indications
are targeting a 10% compressible cost reduction over 2009/10
and 2010/11.
In Construction Materials in Asia we expect some volume and
earnings pressures.
Mike Beardsell, EXECUTIVE GENERAL MANAGER
Indonesian Construction Materials
PT Jaya Readymix is the largest producer of premixed concrete
in Indonesia, operating on 41 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
Boral’s Thailand concrete and quarry business operates around
54 concrete batch plants and quarries throughout the country.
South
Korea
China
Thailand
Philippines
CONCRETE
QUARRIES
CONCRETE PIPES
Darwin
Malaysia
Singapore
Indonesia
CONCRETE
QUARRIES
CONCRETE PIPES
CEMENT MANUFACTURING
CEMENT GRINDING
LIME MANUFACTURING
DISTRIBUTION/OTHER
South
Korea
China
Thailand
Philippines
Malaysia
Singapore
Indonesia
Perth
Adelaide
Sydney
Canberra
Melbourne
Hobart
In January 2009, production
at Boral’s quicklime facility at
Galong in New South Wales was
temporarily suspended due to
reduced demand from the steel
sector. Galong lime production will
recommence when a sustainable
lift in demand is expected.
Preparing for Australia’s impending
emissions trading scheme or Carbon
Pollution Reduction Scheme (CPRS)
has been a key priority for BCSC. We
continue to engage with Government
to minimise the impact on our import
competitiveness, until such time as
there is a global response, and to
reduce incentives to manufacture
overseas, which will simply result
in “carbon leakage” and have no
overall environmental benefit.
During the year, a significant
operational improvement program
was implemented in Thailand
construction materials, which
included a focus on improving
the culture and employee morale.
Despite volume pressures a solid
turnaround in performance was
delivered from the Asia construction
materials businesses in Thailand
and Indonesia.
The $85 million upgrade of Sunstate
Cement’s capacity in Queensland
from 1.0 million to 1.5 million tonnes
per annum has been completed.
The expanded clinker storage was
completed in the September 2008
quarter and the increased grinding
capacity was completed in the
June 2009 quarter. Sunstate is well
positioned to meet Queensland’s
growing cement demand as
markets recover.
Brisbane
17
Boral Limited Annual Review 2009
Review of Operating Divisions
Construction Related Businesses
rationalisation project which was completed in July 2008 and
resulted in branch numbers being halved. While hire stock
utilisation was strong in the first half, the weakening commercial
sector saw demand decline in the second half. Both prices
and utilisation were down on the previous year. The formwork
business contributed to the EBITDA improvement as further
investment was made in the formwork product range targeting
civil and infrastructure projects.
Boral Precast reported lower revenues and a lower EBITDA.
The new automated precast plant commissioned in May/June
2008 performed to expectation, meeting all business case
metrics and delivering a low cost position in the Perth market.
On the East Coast, a new entrant with an automated plant
in Sydney changed the dynamics of that market with Girotto
moving more towards multistorey construction away from the
traditional industrial sector. Strong cost reduction initiatives have
been undertaken with a 35% reduction in employee numbers.
De Martin & Gasparini (DMG) reported lower sales and reduced
EBITDA. Sydney concrete volumes reduced and projects were
increasingly more competitively bid as funding constraints
saw projects either deferred or cancelled. DMG’s main project
at Top Ryde Shopping Centre with Bovis Lend Lease is now
progressing after initial construction delays.
For Construction Related Businesses’ safety and environmental
outcomes for 2008/09 refer to page s32 of Boral’s 2009
Sustainability Report.
Outlook
We anticipate that the Australian housing market will improve
during 2009/10, more so in the second half of the year. The
non-residential construction market is expected to weaken
further with effective price and cost management critical to
offsetting the decline.
Warren Davison, EXECUTIVE GENERAL MANAGER
Warren Davison
Construction Related Businesses (CRB) is
exposed to Australia’s housing and commercial
construction markets, which were down
around 18% and 25%, respectively. New
South Wales and Queensland markets which
collectively account for around two-thirds of
CRB’s revenues were approximately 17% lower.
With the decline in demand, dramatic cost
reductions have been required to minimise
the impact on profitability. Employee numbers
were reduced by 15% but we have been careful
to preserve capability for the housing upturn
that is beginning to emerge.
Revenues from Dowell Windows were down 12%
on last year to $140 million, with weakness in
all states except Victoria which was steady. The
sales contraction was most severe in Queensland
and New South Wales where aggressive cost
reduction actions were taken. Despite cost
reductions EBITDA was lower.
Formwork & Scaffolding experienced weaker
volumes with revenues down on the prior
year. Despite lower revenues, EBITDA lifted as
benefits were delivered from the national branch
The division operates across 31 operating sites in Australia and
employs approximately 1,300 people and 500 subcontractors.
Boral Formwork & Scaffolding (BFS)
Boral is a leader in the hire and sale of formwork and
scaffolding, providing engineering expertise to the construction
industry. BFS has 16 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
Boral’s window businesses operate under various brand names,
the largest of which is Dowell Windows. Dowell Windows is
the leading supplier of aluminium windows and doors in the
Australian housing market. The business operates nationally
through 14 window fabrication businesses focusing on
supplying the residential builder market.
Boral Precast
Trading under the Girotto and GoCrete brands, Boral Precast
operates five plants around Australia, supplying the precast
walling and flooring markets in East Coast capital cities and
recently commissioned an automated precast plant in the Perth
market.
18
Darwin
SCAFFOLDING
WINDOWS
DE MARTIN
& GASPARINI
Perth
Adelaide
Sydney
Canberra
Melbourne
Hobart
Dowell Windows has released an
upgraded window range as part of
a national product standardisation
program. In colder climates such
as Victoria, double glazed products
have grown with increasing
regulatory requirements as part
of the House Energy Rating
Schemes (HERS). Dowell is further
developing its range to meet
evolving building codes expected
to require a 6 star HERS level
from May 2011 and some builders
already designing 7-star homes.
Boral Formwork & Scaffolding works
closely with Boral Precast and De
Martin & Gasparini to tackle a range
of challenging projects. The use of
systems formwork is increasingly
being used to compress construction
times.
De Martin & Gasparini is building
concrete structures for a range
of leading builders in the Sydney
market. Major contracts currently
underway include the Top Ryde
Shopping Centre with Bovis Lend
Lease and the new office block
being built at No. 1 Bligh Street
by Grocon. Less cement-intensive
concrete supplied by Boral’s Concrite
business is helping to achieve a
6-star energy rating for the building.
During the year Boral’s new
automated precast plant became
fully operational supplying wall
and flooring elements to the Perth
market. The Australian precast
market is continuing to evolve
from initial penetration in industrial
buildings to more recent activity
in single dwelling homes. Builders
see reduced construction time
and lower costs as benefits of
precast construction.
Brisbane
19
Boral Limited Annual Review 2009
Review of Operating Divisions
Clay & Concrete Products
15% with volume declines experienced in all states. Market
shares were broadly stable throughout the year, with the
exception of the Western Australian brick market where share
declined slightly.
Pricing outcomes were positive across all businesses. Average
prices improved by around 4% in Bricks and around 3% in Roof
Tiles. Prices lifted by around 10% in Masonry, due to strong
price improvements and a shift in the mix of products sold.
A series of plant slowdowns and/or extended temporary
shutdowns continued across the business. Capacity utilisation
of brick plants was approximately 70-75%, while plant utilisation
in both Roof Tiles and Masonry was below 60%. In Western
Australia, Midland Brick’s Kiln 4 was permanently shut during
the year and Kiln 8 was mothballed until demand recovers.
Production at the Kempsey brick plant in northern New South
Wales was suspended in July 2009 due to the downturn in
New South Wales and Queensland.
Major business improvement programs continued to deliver
in line with expectations in the East Coast Bricks, Roofing
and Masonry businesses. The merging of management and
administration functions in East Coast Bricks and Roofing
businesses will generate annual savings of $4 million from
2009/10 onwards. A business improvement program has
commenced at Midland Brick with benefits expected from
2009/10 onwards.
For Clay & Concrete Products’ safety and environmental
outcomes for 2008/09 refer to page s34 of Boral’s 2009
Sustainability Report.
Outlook
Our plants are currently set to supply housing starts of around
120,000 per annum but production levels will lift to match sales
increases as government stimulus initiatives and improved
affordability underpins a lift in demand. Earnings are expected
to improve in 2009/10 as volumes improve. Effective price and
cost management will be critical to realising improved earnings.
Nick Clark, EXECUTIVE GENERAL MANAGER
Nick Clark
Demand for Clay & Concrete Products is
primarily driven by dwelling construction,
particularly detached housing. Australian
dwelling starts were around 130,000 in
2008/09, 18% below the prior year, and well
below underlying demand. Our major challenge
is managing high fixed cost businesses during
a period of low demand and rising costs.
We continue to use plant shutdowns and
slowdowns to reduce inventory and match
production to sales volumes. Performance
enhancement programs and price management
have been critical in offsetting higher costs in a
lower volume environment.
Revenues from Clay & Concrete Products were
down 7% on the prior year, driven by lower
volumes across all states except Victoria. Earnings
were also down on the prior year.
Brick volumes were down 14% nationally,
reflecting lower activity in Western Australia, New
South Wales and Queensland, and the entry of a
new competitor into the Western Australian brick
market. Roof tile volumes were down 1%, driven
by declines in New South Wales partially offset by
growth in Victoria. Masonry volumes were down
Clay & Concrete Products has 45 Australian locations including
23 operating sites, and employs around 1,750 people and
over 800 contractors. The products are sold in Australia, New
Zealand and Asia.
Bricks
Boral is Australia’s second largest producer of clay bricks
and pavers. Boral also exports a small proportion 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.
Boral operates 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 second 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.
20
Darwin
BRICKS
ROOF TILES
MASONRY
DISTRIBUTION
Perth
Adelaide
Sydney
Canberra
Melbourne
Hobart
Construction of a new $44 million
concrete masonry plant at Middle
Swan, Western Australia, which
commenced in the September
quarter, is continuing. The new
plant will replace ageing plant at
Cannington and Jandakot, remove
existing capacity constraints and
facilitate exit from the current
production sites, releasing them for
redevelopment. The new plant will
manufacture a range of walling and
landscaping products at lower costs
and with improved environmental
and safety outcomes.
A new automated dehacker is being
installed at the Badgerys Creek
(NSW) brick plant. This will reduce
costs, reduce packaging and provide
transport efficiencies. In addition to
production efficiency improvements,
new brick products and marketing
initiativess are underway. Boral
is working with industry bodies
to promote product penetration
and develop brick and block laying
apprentices.
Boral Masonry’s product range
spans four product groups: blocks
and bricks in the commercial product
sector and retaining walls and
pavers in the landscape product
sector. Boral Masonry has won
the large commercial contract to
supply retaining walls for Stage 1
of the Southern City Freight Line, a
dedicated single freight line along
the corridor of the main south train
line in Sydney.
New product development continues
to underpin market shares and
price growth. Recent product
development includes lightweight
masonry blocks, Contour roof tiles
and clay facing tiles. In June, Boral
launched its 2009 residential design
award program for architects,
building designers and students.
Originally started in C&C, the Boral
Design Award now focuses on
incorporating the range of Boral
products in innovative, sustainable
residential designs.
Brisbane
21
Boral Limited Annual Review 2009
Review of Operating Divisions
Timber
be down 11% for the year and down 18% in the second half.
Export residue sales volumes were similar to the prior year.
To adjust to reduced levels of demand, production curtailment
initiatives were undertaken during the year with the mothballing
of the Walcha sawmill and the closure of the Grafton parquetry
operation in the first half of the year. Production was reduced at
most other facilities, particularly in the second half of the year.
Production curtailment strategies, including plant slowdowns
and mothballing and reduced capital expenditure, resulted in
lower inventories and improved cash flow compared to last year.
Product price gains of around 4% partially offset a significant
increase in log costs and increased energy costs. Consolidation
of Boral Timber’s Brisbane warehouse network into one
location together with step change operational improvements
in Hardwood, Plywood and Engineered Flooring operations
is delivering benefits and resulted in a 15% reduction in the
workforce in the Timber business in 2008/09. Despite a strong
focus on cost reduction during the year, lower production
volumes than sales, cost increases and restructuring costs
resulted in a reduced EBITDA.
For Timber’s safety and environmental outcomes for 2008/09
refer to page s36 of Boral’s 2009 Sustainability Report.
Outlook
Boral Timber’s results in 2009/10 should improve through a
full year’s benefit of the operational improvement programs
commenced in 2008/09, further restructuring of the fixed cost
base and strengthening housing markets in New South Wales
and Queensland. Production restraint should help to reduce
inventories and generate increased cash flow in the year.
Bryan Tisher, EXECUTIVE GENERAL MANAGER
Bryan Tisher
Boral’s Timber business is largely New South
Wales-based, with sales predominantly into
East Coast markets. Earnings from the Timber
division are largely underpinned by new
dwelling construction and alterations and
additions as well as commercial projects and
some infrastructure work. Activity in Timber’s
two largest state markets, New South Wales
and Queensland, was down significantly during
the year, with new dwelling approvals down
26% and 37%, respectively. A comprehensive
program of plant shutdowns and slowdowns
has been implemented to reduce inventory
with lower sales volumes.
Sales revenue from the Timber division of
$256 million was 6% lower than last year,
reflecting significantly reduced sales revenue
in the June half. Reduced housing construction
activity, particularly in New South Wales and
Queensland, together with a significant decline
in demand from commercial, mining and industrial
segments, caused domestic sales volumes to
The Timber division employs around 680 people in its
hardwood, softwood and plywood operations, located on the
East Coast of Australia. Timber operates 17 manufacturing
sites and five distribution outlets. Products are sold into
the structural, commercial and renovation markets and are
distributed across domestic and export markets.
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 725,000 m3 per annum. Softwood products are
primarily sold in East Coast markets.
Hardwood
Boral’s hardwood business operates 15 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. Through
Sawmillers Exports Pty Ltd (SEPL), Boral exports small
quantities of woodchips processed from sawmill waste, forest
residues and plantation stock from the hardwood operations
in northern New South Wales.
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.
22
Darwin
HARDWOOD
SALES OFFICE
HARDWOOD MILLS
PLYWOOD
SOFTWOOD
Perth
Adelaide
Sydney
Canberra
Melbourne
Hobart
Boral Plywood produces a range of
structural, cladding, premierwood,
flooring, formply and marine
plywood products. Boral Plywood
has won the supply of its EzyShield
noise barrier product to the Monash
Freeway in Melbourne.
In 2009, Boral Timber achieved Chain
of Custody certification for all its
timber products. This achievement
builds on the earlier Chain of Custody
Certification for Boral Plywood and
Boral Sawmillers Exports. Chain of
Custody certification (AS4707 – 2006)
confirms that Boral hardwoods and
softwoods are sourced legally and
sustainably from managed certified
sources and the company can prove
traceability of its wood materials
from the forest through to the sale of
its products.
Boral Plywood’s new modular
Bridgewood system allows a
dramatic reduction in the installation
time for regional hardwood bridges.
It is a cost-effective way to replace
rural hardwood bridges with
minimum disruption to regional
traffic flows. This new product is
creating considerable interest from
local councils.
Boral Timber is the first Australian
company to install the latest
European scanning technology
to grade Australian hardwoods.
The new scanner which has been
trialled at Boral’s Kyogle mill, is able
to automatically detect defects in
Australian hardwoods which reduces
costs and waste.
Brisbane
23
Boral Limited Annual Review 2009
Review of Operating Divisions
Plasterboard
Australian EBITDA was well down in the year despite only
marginally weaker revenues. One-off costs associated with
the transition from our Brisbane plant in Northgate to our new
plasterboard plant at Pinkenba and its subsequent work-up to
full operational performance contributed to the weaker EBITDA.
Price increases and cost reductions largely offset cost inflation.
Markets in Asia have been impacted by the global economic
recession but we remain very happy with our position and
the ability of our Asian Plasterboard JV business, LBGA, to
successfully manage operating margins whilst delivering key
growth investments. Boral’s equity accounted after tax profit
of $13 million from LBGA was 26% below the same period last
year. Sales volumes were down around 6% after the benefit
of strong volumes in the September 2008 quarter was offset
by weaker outcomes in the December 2008 and March 2009
quarters. Promisingly, sales volumes recovered in the June
2009 quarter and margins also strengthened in the second half
as cost pressures dissipated and an aggressive cost reduction
program was implemented.
During the year, new plants were commissioned in Chengdu
(central west of China) and in Rajasthan (India). LBGA also
announced construction of a new plant at Baoshan in China
and gained FOI approval in Thailand to substantially lift capacity
at its existing plant at Saraburi, near Bangkok.
For Plasterboard’s safety and environmental outcomes for
2008/09 refer to page s38 of Boral’s 2009 Sustainability Report.
Outlook
An uplift in new house construction buoyed by improvements
in affordability and government stimulus spend is expected to
favourably impact on future demand, particularly in Queensland
and New South Wales. A recovery in non-residential markets
looks further off, given continuing financing constraints. Market
conditions in Korea, Thailand and Indonesia are expected
to remain exposed to the global economic recession and
associated shortage of project finance over the next year,
despite stimulus programs initiated by several governments,
notably China. However, strong underlying plasterboard demand
is expected to underpin longer-term Asian returns.
Ross Batstone, EXECUTIVE GENERAL MANAGER
Asia Joint Venture
Boral has a 50% shareholding of the Lafarge Boral Gypsum Asia
(LBGA) JV, the leading multi-country 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 373 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.
Ross Batstone
During the year, we completed the transition
to our new plasterboard plant and logistics
centre in the Brisbane suburb of Pinkenba.
This low operating cost facility also has
superb sustainability features and provides a
great platform for growth. We are focused on
ensuring our costs elsewhere in the business
continue to be carefully managed and that we
create sales through the development of new
products and lightweight building systems
employing plasterboard.
Australian Bureau of Statistics data shows that
Australian plasterboard production was steady
year-on-year, at around 153 million square metres.
Markets were resilient in Victoria and South
Australia, weaker in Queensland and Western
Australia, and new dwelling construction in
New South Wales remained depressed.
Australian sales revenue was down 1% to
$371 million, despite a 3% lift in average selling
prices. This reflected weaker sales volumes of
plasterboard, cornice and jointing compounds
which we manufacture and weaker sales of non-
manufactured products bought for resale through
our extensive network of company owned and
operated specialised trade stores.
With around 680 employees, the Plasterboard division is
an integrated plasterboard manufacturing, distribution and
installation business with 53 company-owned distribution and
operating sites around Australia.
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. We have plasterboard manufacturing
plants in Queensland, New South Wales and Victoria, a
specialty plasters and jointing compounds plant in Victoria,
cornice plants in New South Wales and Victoria, an integrated
national network of 48 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.
24
South
Korea
China
India
Darwin
Thailand
Philippines
PLASTERBOARD AND CORNICE PRODUCTION
PLASTERBOARD DISTRIBUTION
GYPSUM MINE
Vietnam
PLASTERBOARD DISTRIBUTION
PLASTERBOARD PRODUCTION
Malaysia
Singapore
Indonesia
Brisbane
Perth
PLASTERBOARD AND CORNICE PRODUCTION
PLASTERBOARD DISTRIBUTION
GYPSUM MINE
Darwin
Adelaide
Sydney
Canberra
Melbourne
Hobart
LBGA is investing a total of
US$48 million to purchase land
and to construct a new plant at
the Baoshan Industrial Zone in
Shanghai, China. The new plant
is expected to be in operation
in the December 2009 quarter.
Plasterboard production capacity
will be 34 million m2 p.a. initially
with site flexibility to increase
capacity in the future. The
additional plant will strengthen
LBGA’s leading position in East
China and position the business
well to supply the growing market.
Perth
Our new “state of the art” plant at
Pinkenba in Brisbane was completed
in May 2008 and production at
the Northgate plant ceased in
September 2008. The new 40 million
m2 p.a. plant, Australia’s largest
plasterboard facility, is largely
achieving efficiency goals, with key
sustainability benefits. Natural gas
used per tonne of plaster is more
than 30% below that of our other
plants and around 50% of water
used to manufacture plasterboard
was rain water harvested on site.
We continue to focus on the
development and release of
new plasterboard products and
accessories and lightweight building
systems which, in the period,
included BoxCote™; IntRwall™, an
upgrade to our industry leading
EurekaWall™ inter-tenancy system;
systems for education and bushfire
prone areas; ENVIROTMPlasterboard
which is certified by GECA (Good
Environmental Choice Australia); and
Echostop® ceiling boards.
Plasterboard has significantly
invested in an integrated approach
to talent management and
development, and was a winner in
the Western Sydney 2009 Suncorp
Awards for Business Excellence.
National training development
programs, involving over half our
employees annually, include –
“BEST” sales excellence, frontline
distribution and manufacturing
“cert III”, BWell and “BILT”
plastering traineeships. Sustained
high levels of employee engagement
and satisfaction, despite the
economic downturn, has resulted.
Brisbane
Adelaide
Sydney
Canberra
Melbourne
Hobart
25
Boral Limited Annual Review 2009
Review of Operating Divisions
USA
Our 50%-owned concrete roof tile joint venture, MonierLifetile
(MLT), reported a loss of US$2 million compared to a
US$21 million loss last year (Boral’s share). Cost reductions of
US$10 million offset the impact of lower volumes. Average prices
were up 1% on a mid-year price increase. Plant utilisation was
down to 16% compared to 27% in the prior year.
Revenue of US$16 million from Clay Roof Tiles was down 34%
as a 38% volume decline more than offset a 5% increase in price.
EBITDA was well below last year as costs were impacted by lower
production and related inefficiencies from the commissioning and
subsequent mothballing of the new plant in Ione.
Profit from BMTI was lower than last year. Fly ash volumes were
down 23% on lower demand, which also resulted in additional
royalty costs under take or pay contracts. Higher prices and new
product initiatives did not offset lower volumes and the continued
weak residential construction in Florida and Georgia.
Revenue from US Construction Materials of US$96 million
was down 23% on the prior year primarily due to declining
commercial and infrastructure sales, and continued weak residential
construction. EBITDA was down year-on-year. Concrete volumes
were 30%-40% lower but price increases and cost controls offset
higher fuel and other inflationary cost impacts. A step change
program was completed for Construction Materials and Fly Ash
businesses identifying around US$23 million of potential profit
improvement opportunities, with around US$4.4 million delivered
in 2008/09.
For USA’s safety and environmental outcomes for 2008/09
refer to page s40 of Boral’s 2009 Sustainability Report.
Outlook
It remains unclear when a turnaround in US activity will occur
and we have set our businesses accordingly. Brick utilisation is
around 25% at the start of 2009/10 and concrete roof tiles remain
at around 15%. Market forecasters currently expect a recovery
to begin from late CY2009. We expect US housing starts in the
December 2009 half to be similar to June 2009 half starts, with
a recovery occurring in the June 2010 half. Overall, we expect
a broadly similar level of housing starts in 2009/10 to those in
2008/09. Further incremental benefits of US$24 million from
ongoing cost reduction initiatives are expected in 2009/10, and
increased second half sales and production volumes will reduce
losses in the US, particularly in the June half.
Boral has well positioned, low cost, modern manufacturing
facilities, and will deliver benefits as markets recover.
Emery Severin, PRESIDENT BORAL USA
Emery Severin
Boral’s US business continued to experience the most
challenging market conditions since Boral began trading
in the US some 30 years ago. Housing market demand is
down around 75% from the 2006 peak. We have dramatically
reduced our workforce, mothballed plants and optimised
plant networks. We have continued to reduce overheads and
other fixed costs to minimise the impacts of the downturn,
and importantly, processes have been put in place to ensure
that the cost reductions and disciplines are maintained
when the market recovers so that we emerge a stronger and
leaner business.
In the USA, revenue was down 33% to US$406 million and
EBITDA decreased by US$55 million on the prior year to a
US$45 million loss. The result was driven by the continued
deterioration in housing activity, with US housing starts down
by 42% to around 650,000. The non-housing sectors also declined
during the year, impacting construction materials businesses.
Cost reduction initiatives, including network optimisation aimed at
reducing fixed costs, were implemented across all businesses and
delivered US$49 million in benefits during the year.
Revenue from Bricks was down by 42% to US$202 million due to
a 44% decline in sales volumes. Average brick prices increased by
1% mainly due to an energy surcharge in the first half of the year
partially offset by a less favourable regional and product mix. Boral
bricks sold through direct distribution remains at approximately
80% of total volumes. Brick plant utilisation averaged 30%, down
from 56% last year. EBITDA was significantly down as a result of
low volumes and related production inefficiencies.
Boral employs around 1,600 people at 155 sites across the USA.
Bricks
Boral Bricks operates 22 plants across 19 locations in nine states,
primarily in the south-east and south-west. Over 80% of product
sales are through a network of around 60 company-owned
direct selling locations with the remainder via a network of
independent distributors.
Roof Tiles
Boral owns 50% of MonierLifetile (MLT). The joint venture
has 12 operating 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 and in Northern California. Through a 50% interest in
a joint venture, US Tile operates in Trinidad, producing roof tiles
for importation into Florida.
Fly Ash
Boral Material Technologies Inc. (BMTI), one of the largest
marketers and distributors of coal combustion products in
the USA, has around 26 locations 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 plants, 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 and has the number two position.
The business has 18 concrete plants, two sand mines and a
limestone quarry.
26
Washington
Nevada
California
Colorado
Missouri
Ohio
Indiana
Kentucky
Tennessee
Arizona
Arkansas
Oklahoma
Mississippi
Georgia
Alabama
Texas
Mexico
BMTI (FLY ASH)
CONSTRUCTION MATERIALS
USA BRICK (PRODUCTION)
USA BRICK (DISTRIBUTION)
MONIERLIFETILE CONCRETE ROOF TILES
US TILE CLAY ROOF TILES
North Carolina
South Carolina
Florida
We have been expanding the
product range and supplementing
more traditional brick sales through
Boral’s direct distribution network,
with sales of mortar, angle iron,
cultured stone, thin brick and
ReCoteTM. This is repositioning Boral
from a traditional brick business to
focus more on cladding solutions.
In response to natural gas prices
and an objective to avoid replacing
natural gas with other fossil
fuels, we have a comprehensive
alternative fuels program for brick
manufacturing. The program is
based on gasification, landfill gas
and direct injection. While the
downturn has slowed the program,
we are continuing to make progress
and anticipate significant savings
when markets recover.
Boral Bricks’ network optimisation
program saved approximately
US$2.5 million in FY2009. By
selling products close to their
manufacturing base, we have
substantially reduced the number
of standard products across the
business and reduced the amount
of transport required. We have
worked closely with our customers
to communicate the benefits of the
changes and ensure their needs have
been met.
We have kept an eye on growth
opportunities and continued
innovation with a focus on new
product development. During the
year, MonierLifetile introduced the
Madera Tile and US Tile introduced
Cielo, ProSlate and an integrated
solar panel. In BMTI new products
and technologies continue to
be developed including Powder
Activated Carbon Treatment (PACT)
to increase the amount of useable
fly ash.
27
Boral Limited Annual Review 2009
Financial Review
Financial Performance
Significant external factors continued to weigh heavily on the
Group’s results for the 2008/09 year. The continued decline
in US housing starts had a pronounced impact on the US
businesses, particularly the brick and roof tile operations,
which resulted in EBIT for the US segment declining from a
loss of $27.1 million in 2007/08 to a loss of $108.8 million in
2008/09. In Australia, dwelling approvals and starts were down
around 20% which resulted in sales volumes declining across
all Australian building products businesses. The residential
weakness, combined with weakness in non-dwelling activity,
resulted in concrete market volumes declining by around 10%.
While cost reduction programs and price increases were
successfully implemented, these were not sufficient to offset
the volume declines. Australian segment operating profit was
20% below the prior year.
Largely as a result of the weaker US and Australian residential
markets, Boral’s net profit for the year decreased by 42% to
$142.0 million. This net profit is equivalent to 24.1 cents per
share, a decrease of around 16.6 cents per share compared
with the prior year. A final dividend of 5.5 cents per share has
been declared which will be fully franked, bringing the full year
dividends to 13 cents. The total dividends for 2009 were 62%
below the dividends for the 2008 year. The pay-out ratio of
54% is in line with the target range of 50% to 70%.
The Group’s net profit of $142.0 million includes a number of
significant items. These are shown in the table below:
Reconciliation of underlying results
to reported results
$ millions
EBIT
Interest
Tax
Minority
interest
Profit
after tax
Underlying results
Significant items
Disposal of investment
Impairment of assets
Onerous contract
Tax matters
Total
Reported results
275.7
(127.2)
(17.1)
(0.2) 131.2
38.3
(80.4)
(27.2)
–
(69.3)
206.4
–
–
–
29.5
29.5
(97.7)
(11.5)
17.0
10.3
34.8
50.6
33.5
–
–
–
–
–
26.8
(63.4)
(16.9)
64.3
10.8
(0.2) 142.0
During the year, the Group recognised a profit of $38.3 million on
the disposal of its investment in Adelaide Brighton Limited (ABL).
The Group has also reviewed the carrying value of its assets
including goodwill which has resulted in a write-down of the
value of the goodwill and other assets of $80.4 million. In the
US, goodwill arising on the acquisition of construction materials
businesses in Colorado and Oklahoma has been written down
by $30.8 million. The Group has also written down goodwill
by $17.2 million in the precast concrete panels business in
Australia. The Group also wrote down the value of assets
other than goodwill by $21.4 million. This relates to idle brick
plants in the US and Australia as well as previously capitalised
project costs in Asia of $4.3 million. Penrith Lakes Development
Corporation Limited, an associate, has assessed the carrying
value of freehold land and capitalised costs and recorded an
impairment charge in its accounts. The net impact of this
impairment charge of $11.0 million has been included in equity
income of the Group.
In addition, the Group also recognised an amount of
$27.2 million, reflecting expected future losses on contractual
obligations in the fly ash operations in the USA.
During the year, agreements were reached with the Australian
Taxation Office and the US Internal Revenue Service over a
number of disputed matters. As a result of reaching these
agreements, provisions held for interest and tax related to
these matters were reduced accordingly.
The net effect of the above significant items was an increase
in the profit of $10.8 million, taking underlying profit of
$131.2 million to a reported profit of $142.0 million.
The Group’s revenue from ordinary activities declined by 6.2%
compared with the previous year to $4.9 billion. The decrease
in revenues can be largely attributed to lower volumes across
most businesses. This was partially offset by increased prices,
particularly in the Australian Construction Materials segment.
Continued weak housing markets in Australia resulted in a 6%
revenue decline in the Australian Building Products segment.
US revenues in local currency declined by 33% as housing
starts across the US declined by around 42%. Revenues in
Asia, which consists of the Indonesian and Thailand concrete
and quarry businesses, rose around 15%.
The Group’s underlying1 profit before interest and tax for
the year declined by 38% compared to the previous year
to $275.7 million.
The Australian operations generated operating profits of
$370.3 million1 during the year, down 20% compared to
the prior year. The reduction in earnings was due largely
to reduced building activity in a number of key markets,
particularly in residential, commercial and industrial segments.
The Construction Materials operations in Australia reported
an operating profit of $330.1 million1, which compares to
$350.9 million in the prior year. Strength in the infrastructure
segment was not sufficient to offset declines in activity levels
in other markets and concrete, quarry and cement volumes
were lower. Price increases were achieved in cement, concrete
and quarry products. These price increases, together with cost
savings and higher volumes, were able to largely offset the
impact of volume declines and cost increases and the profit
margin remained at around the same level as the prior year
at 11.7%1.
Operating profit for the Australian Building Products segment
for 2008/09 declined by 65% compared to the prior year to
$40.2 million1, largely as a consequence of lower volumes and
the impact of plant fixed costs. 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
achieved increased prices compared to the prior year, a notable
achievement given the softer residential market.
The US housing market continued to weaken during 2008/09.
Substantial declines in activity, particularly in single family
detached housing, led to increased losses being incurred in the
US segment. Brick sales volumes declined by 44%, although
prices increased by around 1%. Concrete roof tile sales volumes
declined by 39% although prices in that business also increased
by around 1%. Despite price increases and cost improvements,
volume declines in the Denver and Oklahoma construction
materials business led to reduced profits. Profits from the fly
ash business were lower than the prior year.
In Asia, volumes declined in plasterboard in most major markets
during the year as activity slowed in response to weaker
economic conditions. Price increases and cost reductions,
however, were able to partially offset the impact of the volume
28
declines. The reported result from the Asian plasterboard
business was 26% below the prior year. The Group’s
construction materials businesses in Asia reported improved
results as cost increases were recovered through higher prices
and margins improved. Concrete volumes were also lower in
Thailand due to lower levels of construction activity.
Net interest expense increased from $111.9 million to
$127.2 million1. This increase was predominantly due to an
increase in average net debt and the impact of a weaker
Australian dollar. Underlying EBIT interest cover declined from 4.0
times to 2.2 times, largely as a result of the decline in earnings.
The average underlying1 tax rate for the year was lower than the
prior year at 11.5%, due to the tax effect of the losses incurred
in the US which are subject to a higher tax rate than Australian
earnings. Boral’s reported tax expense includes a net benefit
of $50.6 million relating to significant items.
The interim and final dividends for the year totalled $76.6
million which, combined, represent a pay-out ratio of 54% of
profit after tax, which was lower than the 83% ratio for the
prior year although in line with Boral’s policy of a 50% to 70%
pay-out range. Boral continued its Dividend Reinvestment Plan
(DRP) during 2009 and for both the interim and final dividend
offered a 2.5% discount on the price of shares issued under the
DRP. During the year, proceeds of $49.7 million were applied
to the issue of 12.1 million ordinary shares issued under the
DRP relating to the final 2008 dividend and the interim 2009
dividend. Shares issued under the DRP relating to the final
dividend for 2008 were bought back on-market. A total of
4.95 million shares were bought back at a cost of $31.5 million.
Income statement
for the year ended 30 June
Sales revenue
EBITDA1
Depreciation and amortisation
EBIT1
Net interest1
Operating profit before tax1
Income tax expense1
Minority interests
Underlying profit after tax1
Net significant items
Profit after tax
Earnings per share1 (cents)
Earnings per share (cents)
1 Excluding significant items.
2009
$ millions
4,875.1
539.0
(263.3)
275.7
(127.2)
148.5
(17.1)
(0.2)
131.2
10.8
142.0
22.2
24.1
2008
$ millions
5,198.5
688.2
(240.2)
448.0
(111.9)
336.1
(90.1)
0.6
246.6
(3.8)
242.8
41.4
40.7
Financial Position
The net financial position of the Group remained relatively
unchanged during the year with total equity decreasing by
5.4% to $2,753.6 million. Net borrowings decreased to
$1,513.6 million from $1,515.1 million. The reduction in net
borrowings was after approximately $77 million of growth capital
and acquisitions during the year, and despite a depreciation in
the Australian dollar and the impact on US dollar borrowings.
The growth and acquisition expenditure, stay in business capital
expenditure and the adverse currency movement was offset by
strong operating cash flows and the proceeds of the sale of
Boral’s shareholding in ABL. The Group’s gearing (measured as
net debt to equity) increased from 52% to 55% which is at the
mid point of the stated target range of 40% to 70%.
Boral’s long-term and short-term credit ratings were adjusted
down from BBB+/A2 with Standard and Poor’s to BBB/A3 and
from Baa1/P2 with Moody’s Investors Service, to Baa2/P2.
In both cases a negative outlook has been applied.
At 30 June 2009, the Group had available undrawn committed
debt facilities of around $820 million. Boral’s average debt
maturity profile at 30 June 2009 was around 6.1 years
compared with 6.0 years at 30 June 2008.
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 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 reported return on shareholders’ funds declined from
8.4% to 5.2% during the period as reported earnings declined
by around 42%.
Balance sheet
As at 30 June
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Total equity
2009
$ millions
1,577.0
3,914.2
5,491.2
844.3
1,893.3
2,737.6
2,753.6
2,753.6
2008
$ millions
1,570.8
4,324.2
5,895.0
1,025.3
1,960.1
2,985.4
2,909.6
2,909.6
Cash Flow
The Group generated operating cash flows of $418.8 million
after payment of interest and income tax. This represents a
reduction of 28% or $163.0 million compared to the cash flow
reported last year. The reduction in operating cash flow reflects
the lower earnings offset by lower tax payments and improved
working capital management.
These cash flows were used to fund around $239.5 million
of capital and acquisition expenditure. The sale of the ABL
shareholding provided around $205.5 million of cash. Net
borrowings reduced by $235.8 million before the impact of
translation of the Group’s offshore borrowings.
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 cover1 (times)
1 Excluding significant items.
2009
$ millions
1,614.1
100.5
1,513.6
2,753.6
55
35
2.2
2008
$ millions
1,562.5
47.4
1,515.1
2,909.6
52
34
4.0
29
2
4
6
8
Boral Limited Annual Review 2009
Board of Directors
1
3
5
7
Robert L Every 5
DEPUTY CHAIRMAN, AGE 64.
Dr Bob Every joined the Boral Board in
September 2007. He is the Chairman of
Iluka Resources Limited and Chairman of
Wesfarmers Limited. He is also on the
Board of Malcolm Sargeant Cancer Fund for
Children Limited known as Redkite. He held
senior executive positions with Tubemakers
of Australia and BHP and was the Managing
Director and CEO of OneSteel Limited. He
is a fellow of the Australian Academy of
Technological Sciences and Engineers. He has
a science degree (honours) and a doctorate of
philosophy (metallurgy) from the University of
New South Wales.
Member of the Remuneration Committee.
Richard A Longes 6
NON-ExECUTIVE DIRECTOR, AGE 64.
Richard Longes joined the Boral Board in
2004. He is a Director of Austbrokers Holdings
Limited and Metcash Limited. He 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.
Member of the Audit Committee.
Paul A Rayner 7
NON-ExECUTIVE DIRECTOR, AGE 55.
Paul Rayner joined the Boral Board in 2008.
He is a Director of Qantas Airways Limited
and Centrica plc, a UK listed company. He has
held senior executive positions in finance and
operations in Australia including Executive
Director, Finance and Administration of
Rothmans Holdings Limited and as Chief
Operating Officer of British American Tobacco
Australasia Limited. He was Finance Director
of British American Tobacco plc from January
2002 until 2008, based in London. He has
an economics degree from the University of
Tasmania and a masters of administration from
Monash University.
Chairman of the Audit Committee.
J Roland Williams, CBE 8
NON-ExECUTIVE DIRECTOR, AGE 70.
Dr Roland Williams joined the Boral Board
in 1999. He is a Director of Origin Energy
Limited. He 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.
Member of the Audit Committee.
Kenneth J Moss, AM 1
NON-ExECUTIVE CHAIRMAN, AGE 64.
Dr Kenneth Moss joined the Boral Board in
1999 and became the Chairman of Directors
in 2000. He is the Chairman of Centennial
Coal Company Limited and Chairman of GPT
RE Limited (the responsible entity for the
General Property Trust). He 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.
Member of the Remuneration Committee.
Rodney T Pearse, OAM 2
MANAGING DIRECTOR, AGE 62.
Rod 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. He 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 School of Business at the
University of New South Wales, the 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.
J Brian Clark 3
NON-ExECUTIVE DIRECTOR, AGE 60.
Dr Brian Clark joined the Boral Board in May
2007. He has experience as a non-executive
director in Australia and overseas. He is a
Director of AMP Limited. In South Africa, he
was President of the Council for Scientific and
Industrial Research (CSIR) and CEO of Telkom
SA. He also spent 10 years with the UK’s
Vodafone Group as CEO Vodafone Australia,
CEO Vodafone Asia Pacific and Group Human
Resources Director. He has a doctorate
in physics from the University of Pretoria,
South Africa and completed the Advanced
Management Program at the Harvard
Business School.
Chairman of the Remuneration Committee.
E John Cloney 4
NON-ExECUTIVE DIRECTOR, AGE 68.
John 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. He is a member of
the Advisory Council of RBS Group (Australia)
Pty Limited. His career was in international
insurance and he was previously the Managing
Director of QBE Insurance Group Limited.
He is a fellow of the Australian Institute of
Management and the Australia and New
Zealand Institute of Insurance and Finance.
Mr Cloney is a member of the Remuneration
Committee, having been Chairman of that
Committee throughout the reporting period.
30
Boral Limited Annual Review 2009
Corporate Governance
Introduction
This section of the Annual Review outlines Boral’s governance
framework.
Boral is committed to ensuring that its policies and practices
reflect a high standard of corporate governance. The Directors
consider that Boral’s governance framework and adherence
to that framework are fundamental in demonstrating that the
Directors are accountable to shareholders and are appropriately
overseeing the management of risk and the future direction of
the Company.
Throughout the 2008/09 financial year, Boral’s governance
arrangements were consistent in all substantial respects with
the Corporate Governance Principles and Recommendations
released by the Australian Securities Exchange (ASX) Corporate
Governance Council in August 2007, other than as regards the
recommendation of the Council that a Nomination Committee
be established. Boral has adopted an alternative approach in
relation to this recommendation, as explained at page 32 of
this Statement.
The table on page 37 indicates where specific ASX Principles
and Recommendations are dealt with in this Statement.
In accordance with the ASX Principles and Recommendations,
the Boral policies referred to in this Statement have been
posted to the corporate governance section of Boral’s
website: www.boral.com.au.
Principle 1: Lay solid foundations for management
and oversight
Responsibilities of the Board and management
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 and governance.
Under the Company’s Constitution, the business of the Company
is managed by or under the direction of the Directors, with
the Directors being permitted to delegate any of their powers
(including the power to delegate) to the managing director.
The matters that the Board has reserved for its decision 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 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;
approving and monitoring financial reporting and reporting to
shareholders on the Company’s direction and performance,
and
meeting legal requirements and ensuring that the Company
acts responsibly and ethically and prudently manages
business risks and Boral’s assets.
A statement of matters reserved for the Board is available
on Boral’s website.
Non-executive Directors would spend approximately 30 days
each year on Board business and activities including Board
and Committee meetings, meeting for two days with senior
management to discuss in detail the strategic direction of
the Company’s businesses, visits to operations and meeting
employees, customers, business associates and other
stakeholders. During the year, the Directors visited a number
of sites, including Boral Timber’s hardwood operations on the
north coast of New South Wales and softwood operations at
Oberon, and Greystanes (Quarry End Use).
Each month, Directors receive a detailed operating review
from the Managing Director and Chief Executive Officer (CEO)
regardless of whether a Board Meeting is being held that month.
The Board has delegated to the CEO and, through the CEO,
to other senior executives, responsibility for the day to day
management of the Company’s affairs and implementation of
the Company’s strategy and policy initiatives. The CEO and
senior executives operate in accordance with Board-approved
policies and delegated limits of authority, as set out in Boral’s
Management Guidelines.
Senior executives reporting to the CEO have their roles and
responsibilities defined in position descriptions, as set out in
relevant letters of appointment.
Evaluating the performance of senior executives
The performance of senior executives is reviewed annually
against appropriate measures as part of Boral’s performance
management system, which is 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.
On an annual basis, the Remuneration Committee and
subsequently the Board formally review the performance of the
CEO. The criteria assessed are both qualitative and quantitative
and include profit performance and other financial measures,
safety performance and strategic actions.
The CEO annually reviews the performance of each of Boral’s
senior executives, being members of the Management
Committee, using criteria consistent with those used for
reviewing the CEO. The CEO reports to the Board through the
Remuneration Committee on the outcome of those reviews.
A performance evaluation for senior executives took place
in the 2008/09 year in accordance with the processes
described above.
Further details on the assessment criteria for CEO and senior
executive remuneration (including equity-based plans) are set
out in the Remuneration Report which forms part of the
Annual Review.
31
Boral Limited Annual Review 2009
Corporate Governance continued
Principle 2: Structure the board to add value
Structure of the Board
Together, the Board members have a broad range of financial
and other skills, experience and expertise necessary to oversee
Boral’s business. The Board of Directors comprises seven
non-executive Directors (including the Chairman) and one
executive Director, the CEO. The roles of Chairman and CEO
are not exercised by the same individual. The skills, experience
and expertise of each Director are set out on page 30 of the
Annual Review.
The Directors determine the size of the Board by reference to
the Constitution, which provides that there will be a minimum
of three Directors and a maximum of 12 Directors.
Paul Rayner was appointed to the Board in September 2008.
In July 2009, it was announced that John Cloney will retire
after the 2009 Annual General Meeting.
The period of office held by each current Director is:
Ken Moss, Chairman
Rod Pearse, CEO
Brian Clark
John Cloney
Bob Every
Richard Longes
Appointed
Last elected at an
Annual General Meeting
1999
2000
2007
1998
2007
2004
27 October 2006
Not applicable
29 October 2007
27 October 2006
29 October 2007
29 October 2007
Paul Rayner
September 2008
24 October 2008
Roland Williams
1999
29 October 2007
Details of the number of Board and Committee meetings
attended by each Director are set out on page 40 of the
Annual Review.
Chairman’s appointment and responsibilities
The Board selects the Chairman from the non-executive
independent Directors. The Chairman leads the Board and
is responsible for the efficient organisation and conduct of
the Board’s functioning. He ensures that Directors have the
opportunity to contribute to Board deliberations. The Chairman
regularly communicates with the CEO to review key issues and
performance trends. He also represents the Company in the
wider community.
Currently, Dr Ken Moss is the Chairman. In July 2009, the
Board introduced the new role of Deputy Chairman as part
of the Board’s succession planning, with Dr Bob Every being
appointed Deputy Chairman. Dr Every will assume the role of
Chairman in May 2010 when Dr Moss retires from the Board.
Committees
To assist the Board to carry out its responsibilities, the Board
has established an Audit Committee and a Remuneration
Committee. The qualifications of each Committee member and
the number of meetings they attended during the reporting
period are set out on pages 30 and 40 of the Annual Review.
These Committees are discussed further below under
Principle 4 (Audit Committee) and Principle 8 (Remuneration
Committee).
32
•
Director independence
The Board has assessed the independence of each of the
non-executive Directors (including the Chairman) in light of
their interests and relationships and considers each of them
to be independent. The criteria considered in assessing the
independence of non-executive Directors include that:
the Director is not a substantial shareholder of the
•
Company or an officer of, or otherwise associated
directly with, a substantial shareholder;
the Director is not employed, or has not previously been
employed, in an executive capacity by a Boral company or,
if the Director has been previously employed in an executive
capacity, there has been a period of at least three years
between ceasing such employment and serving on the Board;
the Director has not within the last three years been a principal
of a professional adviser or consultant to a Boral company, or
an employee associated with the service provided;
the Director is not a significant material supplier or customer
of a Boral company or an officer of or otherwise associated
directly or indirectly with a material supplier or customer, and
the Director has no material contractual relationship with a
Boral company other than as a Director.
•
•
•
The Board considers 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. Material in the context
of Director independence is, generally speaking, regarded as
being 5% of the revenue of the supplier, customer or other
entity being attributable to the association with a Boral
company or companies.
Accordingly, all of the non-executive Directors (including
the Chairman) are considered independent.
Nomination and appointment of Directors
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 full Board performs
the functions that would otherwise be carried out by a
Nomination Committee.
The Board’s policy for the selection, appointment and
re-appointment of Directors is to ensure that the Board
possesses an appropriate range of skills, experience and
expertise to enable the Board to carry out its responsibilities
most effectively. As part of this appointment process, the
Directors consider Board renewal and succession plans
and whether the Board is of a size and composition that is
conducive to making appropriate decisions.
The appointment of Paul Rayner as a new non-executive
Director in September 2008 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 includes obtaining assistance from an
external consultant to identify suitable candidates and to assess
these candidates. Candidates identified as being suitable are
interviewed by one or more Directors. Confirmation is sought
from prospective directors that they would have sufficient time
to fulfil their duties as a Director.
At the time of appointment of a new non-executive Director, the
key terms and conditions relative to that person’s appointment,
the Board’s responsibilities and the Company’s expectations of
a Director are set out in a letter of appointment provided to that
new Director.
Induction
Management, with the Board, provides an orientation program
for new directors. The program includes discussions with senior
executives, the provision to the new director of materials such
as the Strategic Plan and the Share Trading Policy, site visits
to some of Boral’s key operations and discussions with
other Directors.
Tenure of Directorships
Under the Company’s Constitution, and as required by the
ASX Listing Rules, a Director must not hold office (without
re-election) past the longer of the third Annual General
Meeting and 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.
Evaluation of Board performance
The Board periodically undertakes an evaluation of the
performance of the Board and its Committees. 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. Steps involved in the evaluation include the
completion of a questionnaire by each Director, review of
responses to the questionnaire at a Board Meeting and a private
discussion between the Chairman and each other Director.
An evaluation of the Board’s performance was undertaken in
September/October 2008 in accordance with the evaluation
process described above.
Conflicts of interest
In accordance with Boral’s Constitution and the Corporations
Act 2001, 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 2001, Directors
with a material personal interest in a matter being considered
by the Board may not be present when the matter is being
considered and may not vote on the matter.
Access to information, independent advice
and indemnification
After consultation with the Chairman, Directors may seek
independent professional advice, in furtherance of their duties,
at the Company’s expense. The Company Secretary provides
advice and support to the Board. Directors also have access to
members of senior management at any time to request relevant
information.
Under the Company’s Constitution and agreements with
Directors and to the extent permitted by law, the Company
indemnifies Directors 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 liabilities.
Principle 3: Promote ethical and responsible
decision-making
Conduct and ethics
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 strive for 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.
The Board’s policy and the Code guide the Directors, the CEO,
the Chief Financial Officer, 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 stakeholders.
Boral treats breaches of legal and ethical standards seriously.
During the 2008/09 financial year, 66 Boral employees were
dismissed for serious breaches of policy.
A copy of Boral’s Code of Corporate Conduct is available on
Boral’s website.
Dealings in Boral shares
Under Boral’s Share Trading Policy, trading in Boral shares by
Directors, senior executives and other designated employees
is restricted to the following trading windows:
•
the 30 day period beginning on the second day after the
release of Boral’s interim results;
the 30 day period beginning on the second day after the
release of Boral’s full year results;
the 30 day period beginning on the second day after the
Annual General Meeting, and
any other period designated by the Board (for example,
during a period of enhanced disclosure).
•
•
•
Trading in Boral shares at any time is of course subject to the
overriding prohibition on trading while in possession of inside
information.
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.
Under the Share Trading Policy, Directors and senior executives
are required to notify the Company Secretary (or, in the case of
trading by Directors, the Chairman) before and after trading.
Breaches of the Policy are treated seriously and may lead to
disciplinary action being taken against the executive, including
dismissal.
33
Boral Limited Annual Review 2009
Corporate Governance continued
A copy of Boral’s Share Trading Policy is available on
Boral’s website.
Share dealings by Directors are promptly notified to the ASX.
Directors must hold a minimum of 1,000 Boral shares.
Principle 4: Safeguard integrity in financial reporting
Audit Committee
Boral has an Audit Committee which assists the effective
operation of the Board. The Audit Committee comprises
only independent non-executive Directors. Its members are:
Paul Rayner (Chairman)
Richard Longes
Roland Williams
Elizabeth Alexander chaired this Committee until she retired
as a director in October 2008.
The Committee met five times during the 2008/09 financial
year, and attendance by members at these meetings is
shown on page 40 of the Annual Review.
The Audit Committee has a formal Charter which sets out
its role and responsibilities, composition, structure and
membership requirements. Its responsibilities include
review and oversight of:
•
the financial information provided to shareholders and
the public;
the integrity and quality of Boral’s financial statements
and disclosures;
the systems of internal financial controls that the Board and
management have established to identify and manage areas
of significant risk; and
Boral’s auditing, accounting and financial reporting
processes.
•
•
•
The Committee has the necessary power and resources to
meet its responsibilities under its Charter, including rights of
access to management and auditors (internal and external)
and to seek explanations and additional information.
A copy of the Audit Committee Charter is available on Boral’s
website.
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 2001 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.
34
At each scheduled meeting of the Committee, both external
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 the CEO and
Chief Financial Officer, at least twice during the year.
The Chairman of the Audit Committee reports to the full Board
after Committee Meetings. Minutes of Meetings of the Audit
Committee are included in the papers for the next Board
Meeting after each Committee Meeting.
External auditor
Boral’s external auditor is KPMG. The scope of the external
audit and the effectiveness, performance and independence of
the external auditor are reviewed by the Audit Committee.
If circumstances arise where it becomes necessary to replace
the external auditor, the Audit Committee will formalise a
process for the selection and appointment of a new auditor and
recommend to the Board the external auditor to be appointed to
fill the vacancy.
The Audit Committee monitors procedures to ensure the
rotation of external audit engagement partners every five
years as required by the Corporations Act 2001.
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” basis and where the external auditor would be required to
review their work as part of the audit.
An Independence Declaration by the external auditor forms
part of the Directors’ Report and is set out on page 42.
Internal audit
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.
Principle 5: Make timely and balanced disclosure
Boral is committed to making timely and balanced disclosure
of all material matters and to effective communication with its
shareholders and investors so as to give them ready access to
balanced and understandable information.
The Company complies with all relevant disclosure laws and
ASX Listing Rule requirements and has in place mechanisms
designed to ensure compliance with those requirements,
including the Continuous Disclosure Policy adopted by the
Board. These mechanisms also ensure accountability at a
senior executive level for that compliance.
The CEO, the Chief Financial Officer and the Company
Secretary are responsible for determining whether or
not information is required to be disclosed to the ASX, in
appropriate circumstances in consultation with the Chairman
and/or the Board.
A copy of Boral’s Continuous Disclosure Policy is available on
Boral’s website.
Principle 6: Respect the rights of shareholders
Communications with shareholders
The Company’s policy is to promote effective communication
with shareholders and other investors so that they understand
how to assess relevant information about Boral and its
corporate proposals.
The fundamental review of Boral’s remuneration policies
and practices undertaken by the Board, as detailed in the
Remuneration Report, provides an example of shareholder (and
other stakeholder) engagement during the reporting period.
As noted in the Remuneration Report, following the concerns
expressed by shareholders at the 2008 Annual General
Meeting, a comprehensive stakeholder engagement program
was undertaken, involving members of the Remuneration
Committee, other Directors and members of management
meeting with representatives of retail and institutional investors
and governance advisory firms. This process allowed a broad
range of views to be taken into consideration as part of the
review of Boral’s remuneration policies and practices.
Annual and half-yearly reports are provided to shareholders
(other than those who have requested that they not receive
copies). Shareholders may elect to receive annual reports
electronically or to receive notifications via email when reports
are available online. While companies are not required to send
annual reports to shareholders other than those who have
elected to receive them, any shareholder who has not made an
election is sent an easy-to-read summary of the Annual Report,
called the Shareholder Review.
Announcements to the market are placed on Boral’s website
after they are released to the ASX. These announcements
are retained on the website for at least three years. General
meetings and briefings to analysts following results and other
major announcements are webcast.
Boral encourages shareholders to attend and participate
in all general meetings including annual general meetings.
Shareholders are entitled to ask questions about the
management of the Company and of the auditor as to its
conduct of the audit and preparation of its reports.
Notices of Meeting for general meetings are accompanied by
explanatory notes to provide shareholders with information
to enable them to decide whether to attend and how to vote
on the business of the meeting. Full copies of Notices of
Meeting and explanatory notes are posted on Boral’s website.
If shareholders are unable to attend general meetings, they
may vote by appointing a proxy, using the form attached to the
Notice of Meeting or an online facility.
This year, shareholders will be invited, at the time of
receiving notice of the Annual General Meeting, to
put forward questions that they would like addressed at the
Annual General Meeting.
A copy of Boral’s policy on Communications with Shareholders
is available on Boral’s website.
Principle 7: Recognise and manage risk
Risk identification and management
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; and
systems are in place to assess, manage, monitor and report
on these risks.
•
Under the supervision of the Board, management is responsible
for designing and implementing risk management and internal
control systems to manage the Company’s material business
risks. Boral’s senior management has reported to the Board on
the effectiveness of the management of the material business
risks faced by Boral during the 2008/09 financial year.
Risk management 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 prices, 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 and the Audit Committee
twice yearly;
key business risks being identified on a Divisional basis and
on a corporate-wide basis and reported to the Directors as
part of the strategic planning process. Management was
assisted by a specialised risk management consultancy in
assessing risks corporate-wide during the 2008/09 financial
year and this process will provide a continuous approach to
risk management;
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, 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; and
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 Board has acknowledged that the material provided to
it on risks has enabled it to review the effectiveness of the
risk management and internal control system to manage the
Company’s material business risks.
35
Boral Limited Annual Review 2009
Corporate Governance continued
Compliance
The Company has adopted policies requiring compliance
with occupational health and safety, environmental and trade
practices laws.
The Chairman of the Remuneration Committee reports to the
full Board after Committee Meetings. Minutes of Meetings of
the Remuneration Committee are included in the papers for the
next Board Meeting after each Committee Meeting.
Boral’s remuneration policy and practices are designed to
attract, motivate and retain high quality people. The policy is
built around principles that:
•
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, and
a significant proportion of executive reward be dependent on
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.
Boral’s Share Trading Policy, which is referred to on pages 33
and 34 of this Statement under the sub-heading ‘Dealings in
Boral Shares’ under Principle 3, prohibits executives entering
into transactions or arrangements which limit the economic risk
of participating in unvested entitlements under Boral’s
equity-based remuneration schemes.
Remuneration of non-executive Directors
The remuneration of the non-executive Directors is fixed and
they do not receive any options, variable remuneration or other
performance-related incentives. Nor are there any schemes for
retirement benefits for non-executive Directors.
Further information relating to the remuneration of the
non-executive Directors is set out in the Remuneration Report
on page 59. This information includes a summary of the terms
of the Non-Executive Directors’ Share Plan.
Conclusion
While the Board is satisfied with its level of compliance with
governance requirements, it recognises that practices and
procedures can always be improved. Accordingly, Boral’s
corporate governance framework will be kept under review to
take account of changing standards and regulations.
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 Boral’s large number of
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 legislation.
CEO and Chief Financial Officer declaration
The CEO and the Chief Financial Officer have provided the
Directors with a declaration in accordance with section 295A
of the Corporations Act 2001 for the 2008/09 financial year,
including confirmation that the Company’s financial reports
present a true and fair view, in all material respects, of the
Company’s financial condition and operational results. The
Board confirms that it has received assurance from the CEO
and the Chief Financial Officer that the above statement was
founded on a sound system of risk management and internal
control, and that such system is operating effectively in all
material respects in relation to financial reporting risks.
Principle 8: Remunerate fairly and responsibly
Remuneration Committee
The Board has a Remuneration Committee which comprises
four independent non-executive Directors. The members of the
Committee are:
Brian Clark (Chairman from 27 July 2009)
John Cloney (Chairman until 27 July 2009)
Bob Every
Ken Moss
The Committee met on six occasions during the 2008/09
financial year, and attendance by members at these meetings is
shown on page 40 of the Annual Review.
The Remuneration Committee has a formal Charter which
sets out its role and responsibilities, composition structure and
membership requirements.
A copy of the Remuneration Committee Charter is available on
Boral’s website.
The Committee 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.
Part of the role of the Remuneration Committee is to advise
the Board on the remuneration policies and practices for Boral
generally and the remuneration arrangements for
senior executives.
36
ASX Corporate Governance Council’s Principles and
Recommendations (ASX CGC’s Recommendations)
– Boral’s Corporate Governance Statement 2009
Principle ASX CGC’s Recommendations
Page
Principle ASX CGC’s Recommendations
Page
1 Lay solid foundations for
management and oversight
1.1 Establish the functions reserved to the Board
and those delegated to senior executives and
disclose those functions.
1.2 Disclose the process for evaluating the
performance of senior executives.
1.3 Provide the information indicated in
Guide to reporting on Principle 1.
2 Structure the Board to add value
2.1 A majority of the Board should be
independent Directors.
Page 31
Page 31
Page 31
Page 32
2.2 The chair should be an independent Director.
2.3 The roles of chair and chief executive officer
Page 32
Page 32
should not be exercised by the same individual.
2.4 The Board should establish a nomination
committee.
2.5 Disclose the process for evaluating the
performance of the Board, its committees
and individual Directors.
Page 32
(not
adopted)
Page 33
2.6 Provide the information indicated in
Guide to reporting on Principle 2.
Pages
32-33
3 Promote ethical and responsible
decision-making
3.1 Establish a code of conduct and disclose the
Page 33
code or a summary of the code as to:
3.1.1 the practices necessary to maintain
confidence in the company’s integrity.
3.1.2 the practices necessary to take into
account their legal obligations and
the reasonable expectations of their
stakeholders.
3.1.3 the responsibility and accountability of
individuals for reporting and investigating
reports of unethical practices.
3.2 Establish a policy concerning trading in
company securities by Directors, senior
executives and employees, and disclose the
policy or a summary of that policy.
3.3 Provide the information indicated in
Guide to reporting on Principle 3.
Pages
33-34
Pages
33-34
4 Safeguard integrity in financial reporting
4.1 The Board should establish an audit committee. Page 34
Page 34
4.2 Structure the audit committee so that it:
•
•
consists only of Non-executive Directors;
consists of a majority of independent
Directors;
is chaired by an independent chair, who is
not chair of the Board; and
has at least three members.
4.3 The audit committee should have a
•
•
formal charter.
4.4 Provide the information indicated in
Guide to reporting on Principle 4.
5 Make timely and balanced disclosure
5.1 Establish written policies designed to ensure
compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a
senior executive level for that compliance and
disclose those policies or a summary of
those policies.
5.2 Provide the information indicated in
Guide to reporting on Principle 5.
6 Respect the rights of shareholders
6.1 Design a communications policy for promoting
effective communication with shareholders
and encouraging their participation at general
meetings and disclose their policy or a
summary of that policy.
Page 34
Page 34
Page 35
6.2 Provide the information indicated in
Guide to reporting on Principle 6.
Page 35
7 Recognise and manage risk
7.1 Establish policies for the oversight and
Page 35
management of material business risks and
disclose a summary of those policies.
7.2 The Board should require management to
design and implement the risk management
and internal control system to manage the
company’s material business risks and report
to it on whether those risks are being managed
effectively. The Board should disclose that
management has reported to it as to the
effectiveness of the company’s management of
its material business risks.
Pages
35-36
7.3 The Board should disclose whether it has
Page 36
received assurance from the chief executive
officer (or equivalent) and the chief financial
officer (or equivalent) that the declaration
provided in accordance with section 295A
of the Corporations Act 2001 is founded on
a sound system of risk management and
internal control and that the system is operating
effectively in all material respects in relation to
financial reporting risks.
7.4 Provide the information indicated in
Guide to reporting on Principle 7.
Pages
35-36
8 Remunerate fairly and responsibly
8.1 The Board should establish a remuneration
committee.
8.2 Clearly distinguish the structure of Non-
executive Directors’ remuneration from that of
executive Directors and senior executives.
8.3 Provide the information indicated in
Guide to reporting on Principle 8.
Page 36
Page 36
Page 36
Page 34
Page 34
37
Boral Limited Annual Review 2009
Directors’ Report
The Directors of Boral Limited (“Company”) report on the
consolidated entity, being the Company and its controlled
entities (“Boral”), for the financial year ended 30 June 2009:
(1) Review of operations
A review of the operations of Boral during the year and the
results of those operations are contained in the Chairman’s
Review and Managing Director’s Review on pages 4 to 8 of
the Annual Review.
•
•
(2) State of affairs
There were no significant changes in Boral’s state of affairs
during the year other than:
•
the Chief Executive Officer and Managing Director,
Mr Rodney T Pearse, announced his intention to retire at
the end of 2009;
the sale of Boral’s 17.6% shareholding in Adelaide Brighton
Limited (ABL) realising a profit of $38.3 million
($26.8 million after tax); and
significant items having a net after tax impact of
$10.8 million. The favourable items comprise the profit
on the sale of the ABL shares mentioned above and a
$64.3 million reduction in provisions as a result of the
resolution of a number of long standing tax disputes in
Australia and the USA. These amounts offset adverse items
totalling $80.4 million ($63.4 million after tax) comprising
impairment charges for goodwill in construction materials
operations in the USA, write-downs for idle brick production
assets in Australia and the USA and land and capitalised
project costs in Australia and Asia, and an expense of
$27.2 million ($16.9 million after tax) recognised in
connection with an onerous contract relating to the
purchase of fly ash in Florida.
(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.
(5) Future developments and results
Other than matters referred to under the heading “Outlook”
in the Managing Director’s Review on page 7 of the Annual
Review, the Directors have no comments to make on likely
developments in Boral’s operations in future financial years
and the expected results of those operations.
38
(6) Environmental performance
Details of Boral’s performance in relation to environmental
regulation are set out under Environment on pages 18 to 23
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 resolved to be paid
Dividends paid to members during the year were:
The final dividend of 17 cents per ordinary share
(fully franked at the 30% corporate tax rate) for
the year ended 30 June 2008 was paid on 18
September 2008
The interim dividend of 7.5 cents per ordinary
share (fully franked at the 30% corporate tax rate)
for the year was paid on 3 April 2009
Total dividend
$ million
99.6
44.0
The Directors have resolved to pay a final dividend of 5.5 cents
per ordinary share (fully franked at the 30% corporate tax rate)
for the year. The dividend will be paid on 28 September 2009.
(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
Robert L Every
Richard A Longes
Kenneth J Moss
Rodney T Pearse
Paul A Rayner
J Roland Williams
All of those persons, other than Mr Rayner and Ms Alexander,
have been Directors at all times during and since the end of the
year. Mr Rayner was appointed a Director on 5 September 2008
and has been a Director at all times since that date.
Ms Alexander was a Director from 1 July 2008 to 24 October
2008, on which date she retired from the Board of Directors.
(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 as follows:
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
(xii)
(xiii)
(xiv)
(xv)
(xvi)
04/11/2002
04/11/2009
29/10/2003
29/10/2010
29/10/2004
29/10/2011
31/10/2005
31/10/2012
06/11/2006
06/11/2013
$4.12
$5.57
$6.60
$7.70
$7.32
143,000
2,614,428
1,949,700
3,195,000
4,580,900
(xvii)
06/11/2007
06/11/2014
$6.83
5,938,700
18,421,728
The options referred to above were held by 169 persons.
Since the end of the year, the Company has issued a further
77,500 ordinary shares at the price of $4.12 each as a result
of the exercise of options in Tranche (xii).
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. Option holders 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
Under its Constitution, the Company indemnifies, to the extent
permitted by law, each Director and Secretary of the Company
against any liability (including the costs and expenses of
defending actions for an actual or alleged liability) incurred by
that person as an officer of the Company or a subsidiary of the
Company. The Directors listed on page 30 of the Annual Review
and the Company Secretary, Margaret Taylor, have the benefit
of the indemnity in the Constitution.
In addition, each of the Directors who held office during the
year has entered into a Deed of Indemnity, Insurance and
Access with the Company, as approved by the Board, which
provides for indemnification consistent with that provided under
the Constitution.
No amount has been paid under any of these indemnities during
the 2008/09 year or since then to the date of this Report.
–
–
–
–
–
–
143,000
143,000
149,456
21,692
2,443,280
625,371
55,400
81,000
94,900
84,300
465,056
–
–
–
–
1,894,300
3,114,000
4,486,000
5,854,400
–
–
–
–
21,692
17,934,980
768,371
(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 30 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 financial year and the period for which such directorships
has been held are:
Brian Clark
AMP Limited from January 2008 (current)
John Cloney
QBE Insurance Group Limited from 1981 (current)
Bob Every
Iluka Resources Limited from March 2004 (current)
Sims Group Limited from October 2005 to November 2007
Wesfarmers Limited from February 2006 (current)
Richard Longes
Austbrokers Holdings Limited from November 2005 (current)
Metcash Limited from April 2005 (current)
Viridis Investment Management Limited from September 2005
to August 2007
Ken Moss
Adsteam Marine Limited from 2001 to March 2007
Centennial Coal Limited from 2000 (current)
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 to September 2008
Paul Rayner
British American Tobacco plc from January 2002 to April 2008
Centrica plc from September 2004 (current)
Qantas Airways Limited from 2008 (current)
Rodney Pearse
Nil
Roland Williams
Origin Energy Limited from 2000 (current)
39
Boral Limited Annual Review 2009
Directors’ Report continued
(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:
Board of Directors
Audit Committee
Remuneration Committee
Meetings held while
Meetings held while
Meetings held while
a Director Meetings attended
a Member Meetings attended
a Member Meetings attended
Elizabeth Alexander
Brian Clark
John Cloney
Bob Every
Richard Longes
Kenneth Moss
Rodney Pearse
Paul Rayner
Roland Williams
3
11
11
11
11
11
11
9
11
3
11
8
11
11
11
11
9
10
2
5
–
–
–
–
–
3
5
2
–
–
–
4
–
–
3
5
–
6
6
6
–
6
–
–
–
–
5
6
6
–
6
–
–
–
Mr Pearse, the Managing Director, is not a member of the Audit and Remuneration Committees but attended all of the Meetings
held by those Committees.
(14) Company Secretary
The qualifications and experience of the Company Secretary, Margaret Taylor, are set out on page 9 of the Annual Review.
(15) Directors’ shareholdings
Details of each Director’s relevant interests in the shares and other securities of the Company are:
Brian Clark
John Cloney
Bob Every
Richard Longes
Kenneth Moss
Rodney Pearse
Paul Rayner
Roland Williams
Shares
59,473
14,614
13,004
13,994
31,000
4,103,555
6,179
52,512
Non-Executive
Directors’
Share Plana
Options and Share
Acquisition Rights
(SARs)
4,441
27,027
3,847
8,453
33,328
–
1,491
22,430
–
–
–
–
–
b
–
The shares are held in the name of the Director except in the case of:
•
Brian Clark, 40,096 shares are held by UBS Wealth Management Australia Nominees Pty Limited –
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