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Annual Report 2012 Boral Limited
Cover
Trevor Dickens heavy vehicle tipper
operator for Boral Logistics.
BORAl lIMITED
ABN 13 008 421 761
Boral Limited is an international
building and construction materials
group, headquartered in Sydney,
Australia. With leading market
positions, Boral’s core businesses
are Cement and Construction
Materials in Australia; Plasterboard
in Australia and Asia; and Bricks and
Roof Tiles in Australia and the USA.
CONTENTS
2012 Overview
Financial Results
Chairman’s Review
Chief Executive’s Review
Group Executives
Boral’s Growth Strategy
Improving Performance
Positioned for Cycle Upturns
Group Overview
Construction Materials
Cement
Building Products
USA
Plasterboard Asia
Sustainability
Environment
Community Partnerships
Customers and Products
Our People
Health and Safety
Financial Review
Board of Directors
Corporate Governance Statement
Directors’ Report
2012 Remuneration Report
Financial Statements
Shareholder Information
Financial History
Financial Calendar
1
2
4
6
8
10
12
13
14
16
18
20
22
24
26
27
28
29
30
31
32
36
38
46
51
65
137
140
IBC
2012 overview
•
•
•
•
•
•
•
•
Full year revenue up by 6% to $5.01 billion, reflecting Boral’s acquisition
of Lafarge’s 50% of LBGA
Full year EBITDA1 down 9% to $473 million
Full year EBIT1 down 28% to $200 million
Group profit after tax1 down 42% to $101 million
Reported net profit after tax up 5% to $177 million
Net debt $1.52 billion, up from $505 million last year
Full year dividend of 11.0 cents per share, fully franked
External market factors in Australia, including a significant second
half housing decline, weaker non-residential demand and sustained
wet weather had a major impact on earnings, offsetting price increases
•
Boral has responded to the changed environment in Australia:
–
–
37% reduction in installed brick capacity and 20% reduction
in roof tile capacity
closure and subsequent divestment of the Galong Lime operations
for $25 million
•
•
•
•
EBIT contribution from Asian and US operations was in line with
expectations
Boral remains committed to its strategy announced in 2010,
demonstrated by:
–
–
–
gaining management control of one of the world’s leading
plasterboard businesses, following acquisition of Lafarge’s 50%
interest in LBGA for $530 million2
acquisition of Wagners Construction Materials assets and
Sunshine Coast Quarries for $163 million2 and $81.5 million2 to
strengthen Boral’s Australian Construction Materials position
divestment of the non-core Indonesian Construction Materials
operations for an enterprise value of US$135 million2 and the north
Queensland and Colorado (USA) masonry assets
Business improvement plans are focused on maximising cash flow and
reducing costs including by leveraging Boral’s LEAN strategy across
all operations
Our improvement goals and Boral’s reshaped portfolio position the
business well to profitably leverage recoveries in Australia and the USA
•
Boral’s Asian plasterboard position provides an exciting growth platform
1
2
Excluding significant items. Profit before significant items is a non-IFRS measure reported to provide a greater understanding of the
underlying business performance of the Group. Full details of significant items are contained in Note 4 of the Financial Statements.
Before completion adjustments.
Financial
results
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eBitDA2
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Volume
An approximate $120m EBIT decline was due
to lower volumes in Australia, with around
$80m in Building Products, as a result of the
severe decline in housing activity. Volume
declines in Western Australia and South
Australia particularly impacted Construction
Materials and the closure of BlueScope Steel’s
Port Kembla furnace had a net $6m EBIT
impact in Boral Cement.
Price
Stronger prices across most Australian
businesses resulted in increased EBIT of
around $140m. Building Products prices were
2-3% higher (except softwood and woodchips),
concrete prices were up 7%, and quarry prices
were up 11% on average. Cement prices were
steady, constrained by the high AUD.
1
Includes revenue from Plasterboard in Asia
from 9 December 2011.
2 Excluding significant items.
2 Boral Limited Annual report 2012
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Australia
%
change
6
(9)
(28)
(39)
(48)
(42)
5
(4)
10
resuLts At A gLAnce
YEAR ENDED 30 JUNE (A$ MIllIoN)
Revenue
EBITDA1
EBIT1
Net interest
Profit before tax1
Tax1
Non-controlling interests
Profit after tax1
Net significant items
Net profit after tax
Cash flow from operating activities
Gross assets
Funds employed
liabilities
Net debt
Stay-in-business capital expenditure
Growth capital expenditure
Acquisition capital expenditure2
Depreciation and amortisation
Employees3
Revenue per employee, $ million
Net tangible asset backing, $ per share
EBITDA margin on revenue1, %
EBIT margin on revenue1, %
EBIT return on funds employed1, %
Return on equity1,%
Gearing
Net debt/equity, %
Net debt/net debt + equity, %
Interest cover1, times
Earnings per share1, ¢
Dividend per share, ¢
Safety4, per million hours worked
lost time injury frequency rate
Recordable injury frequency rate
2012
5,010
2011
4,711
473
200
(88)
111
(9)
(1)
101
75
177
133
6,500
4,921
3,096
1,518
192
222
701
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14,740
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3,662
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21.4
Costs
Net cost escalations of approximately
$125m in Australia were a result
of operational inefficiencies from
sustained rainfall, higher costs of
working in regional markets, underlying
inflationary cost increases, and an
extra $7m of distribution costs while
commissioning the Port Melbourne
Plasterboard plant. Cost increases were
only partially offset by cost savings
from restructuring and other initiatives.
Property
EBIT contribution from Property
reduced by $16m compared with
the prior year.
Asia
A $24m increase in EBIT from Asia
reflects the part year consolidation
of earnings from Boral Gypsum Asia
and increased underlying earnings.
USA
USA EBIT losses decreased by $15m,
reflecting a 20% lift in housing starts
and a reduction in plant and overhead
costs following further restructuring.
Discontinued operations
Discontinued operations, which
include Masonry east and Asian
Construction Materials, had a
negative $7m impact on EBIT.
Fy2012 kEy ANNOUNCEMENTS
17 AUGUST 2011
Boral announced
a profit after tax
excluding significant
items of $173 million
and a net profit after
tax of $166 million
for the year ended
30 June 2011.
28 FEBRUARy 2012
Boral announced a
Group profit after tax
of $67 million (excluding
significant items) and
a net profit after tax
of $153 million for
the half year ended
31 December 2011.
20 APRIL 2012
Boral announced a
trading update.
22 MAy 2012
Boral announced that
its Chief Executive
Mark Selway had
stepped down from
his role, and that Ross
Batstone, previously
Divisional Managing
Director, Boral
Building Products
had been appointed
Chief Executive
Officer on an interim
basis pending an
international search
for a permanent CEO.
7 JUNE 2012
Boral announced the
contract arrangements
for Boral’s new Chief
Executive Officer, Mr
Ross Batstone.
27 JUNE 2012
Boral announced a
trading update.
18 OCTOBER 2011
Boral announced it
had received ACCC
clearance to acquire
the quarry and concrete
assets of Sunshine
Coast Quarries for
$81.5 million.
8 NOVEMBER 2011
Boral announced it had
received clearance
from the ACCC for the
acquisition of Wagners
Construction Materials
assets in Queensland
for $163 million.
8 DECEMBER 2011
Boral announced
the completion of
the acquisition of
Wagners Construction
Materials assets in
Queensland following
ACCC clearance for
the transaction.
9 DECEMBER 2011
Boral announced it
had completed the
acquisition of Lafarge’s
interest in Lafarge
Boral Gypsum Asia.
1 FEBRUARy 2012
Boral announced that it
had reached agreement
to sell the Indonesian
construction materials
business for an
enterprise value of
US$135 million to
Siam Cement Group.
Figures relate to the total Group including continuing and
discontinued operations
1 Excluding significant items.
2 Net of $63 million cash acquired in BGA.
3
Includes 2,645 employees from acquisitions
during FY2012.
Includes employees and contractors combined.
4
3
chairman’s
review
The Board believes the next phase
for Boral is one of consolidation
to ensure the benefits of recent
portfolio restructures and changes
implemented in the past two years
can be realised as markets recover.
the past year has been a difficult one
for the company as it continued to face
tough trading conditions at the same time
as dealing with significant business and
organisational change.
Further adjustments to Boral’s business
portfolio were made throughout the year
in response to economic conditions
and industry changes. Divestments of
non-core and under-performing assets
continued while a number of acquisitions
were made to strengthen Boral’s
core market positions. this will deliver
considerable value when markets recover.
CEO Succession
A change in leadership took place towards
the end of the financial year. mark selway
stood down as chief executive in may
2012 after joining the group in January
2010. mark drove valuable change
management and process improvements
through the organisation and implemented
portfolio restructuring through
divestments and acquisitions.
ross Batstone, who was then the
Divisional managing Director of Boral
Building products, was appointed as
Boral’s chief executive officer. ross, who
was planning to retire, agreed to extend
that time period to July 2013 to make
4 Boral Limited Annual report 2012
Dr Bob every, Ao Chairman
sure we had sufficient time to do a thorough search both internally
and externally for Boral’s chief executive officer.
in september 2012, the Board announced the appointment
of mike kane to the position of chief executive officer and
managing Director, effective 1 october 2012.
with two and a half years of executive experience with Boral
running the us business under extremely difficult market
conditions, mike has proven leadership and business improvement
skills, knowledge of the organisation and commitment to Boral’s
strategy. previously chief executive officer at calstar products
and pioneer usA, mike has extensive industry experience in
the usA, europe and Asia having also spent 24 years in senior
executive roles at us gypsum, Hanson Building materials,
Johns-manville corp and Holcim.
on behalf of the Board, i acknowledge the critical role played by
ross Batstone during the chief executive transition process and
thank him for his unflagging support and the professionalism he
has demonstrated throughout. with extensive senior executive
experience managing Boral’s businesses and the necessary
leadership skills, ross has done an excellent job harmonising
the changes that have taken place over the past two years. i look
forward to ross’ continued support in coming months before his
planned retirement in July 2013.
Financial Performance
Boral’s revenue for Fy2012 of $5.0b compares with $4.7 billion in
the prior year. excluding the impact of the acquisition of Lafarge’s
50% of the Asian plasterboard business in December 2011, when
Boral began consolidating revenue and earnings, revenues of
$4.7b were broadly flat.
Boral’s earnings before interest and tax (eBit) of $200m before
significant items declined by $77m on last year. the severe
decline in Australian residential activity in the second half,
combined with weather-related delays, significantly reduced sales
volumes of building products, increased the cost of production
and caused an adverse shift in Boral’s sales mix. property
earnings of $12m were $16m lower than last year as an anticipated
sale did not occur prior to 30 June 2012.
Depreciation of $273m was $28m higher than the prior
year. Boral’s earnings before interest, tax, depreciation and
amortisation (eBitDA) of $473m before significant items was $49m
or 9% below last year, reflecting strength in Boral’s underlying
trading cash flows. operating cash flow of $133m however, was
$218m below last year due to higher interest payments, prior year
tax refunds and higher acquisition and restructuring costs.
Boral’s profit after tax before significant items of $101m was 42%
below last year. there were a number of significant items totalling
$75m in Fy2012, which brought Boral’s net profit after tax and
significant items to $177m, a 5% increase on the prior year.
underlying earnings per share before significant items reduced to
13.6 cents from 24.4 cents in Fy2011. the Board has resolved to pay
a final dividend of 3.5 cents per share, bringing the full year dividend
to 11 cents per share (fully franked) compared to 14.5 cents in Fy2011.
Strategy & Structure
Boral remains committed to its strategy announced in 2010 to focus
on markets with higher returns and where Boral has the realistic
potential to lead and grow. Following the divestments, acquisitions
and process improvements made in the past two years, Boral’s
reshaped portfolio is significantly enhanced and more focused.
in December 2011, the $530m1 acquisition of Lafarge’s 50% share
of the Asian plasterboard business, now known as Boral gypsum
in Asia (BgA), was completed. BgA commands leadership
positions throughout Asia and includes 20 modern, well
equipped manufacturing facilities operating in eight countries.
During the year Boral also completed the $163m1 acquisition
of wagners concrete & Quarries and the $81.5m1 acquisition of
sunshine coast Quarries, to strengthen Boral’s leading southern
Queensland materials position.
During the year, we announced the divestment of the non-
core indonesian construction materials operations for an
enterprise value of us$135m1 and our intention to divest thailand
construction materials. As lime and limestone volumes declined
following the permanent closure of Bluescope steel’s blast
furnace at port kembla, we closed and subsequently divested
the galong Lime operations for $25m.
in response to changed market conditions, we permanently
closed or mothballed considerable capacity in building products
in Australia resulting in a 37% reduction in installed brick capacity
and a 20% reduction in roof tile capacity. A 70% reduction in
masonry production capacity will be delivered following the
planned divestment of the east coast masonry operations.
we are now consolidating the benefits of recent acquisitions
and restructuring and continuing a group wide performance
improvement plan to maximise cash flow from existing assets.
these improvement initiatives will strengthen Boral’s strategic
business positions by better aligning overhead costs in Australia
1. Before completion adjustments.
with Boral’s adjusted portfolio, reducing
physical inventories and exiting remaining
underperforming or marginal positions in
low growth markets.
The Board
Beyond changes to the chief executive
role, the composition of the Board
remained unchanged in 2011/12. At the
2011 Annual general meeting, Brian clark
and paul rayner were re-elected to the
Board. John marlay and catherine Brenner
will stand for re-election at this year’s
Annual general meeting.
People
Bryan tisher was appointed as Divisional
managing Director of Boral Building
products in may 2012. with 14 years of
executive experience with Boral, Bryan
was previously the executive general
manager of timber and before that
he held the position of Boral general
manager corporate Development for
seven years.
with the appointment of mike kane to the
chief executive officer position, Al Borm
has been appointed as president Boral
usA, effective 1 october 2012. Al joined
Boral in July 2010 as the president Boral
roofing in the usA and brings a depth
of knowledge of the us building and
construction industry and extensive
experience in logistics, marketing, sales,
business development and general
management. He has previously worked
at us gypsum, Hanson Building products
America and oldcastle Apg.
while there has been considerable change
in the organisation over the past two
years, the Board remains confident in the
depth of talent and experience of Boral’s
senior executive team and employees
more broadly.
the Board recognises that cost
reductions, restructuring, divestments
and plant closures are necessary actions
but are not always easy to implement,
especially when it affects the people in
our businesses. on behalf of the Board,
i thank Boral’s senior executive team and
all of Boral’s employees for their patience,
persistent focus and hard work through
these tough times.
Dr Bob Every, AO
Chairman
5
chief executive’s
review
After 21 years with Boral, I was
privileged to be asked to take over
as Boral’s Chief Executive Officer
in May 2012. In the role, I have been
working closely with the Board
while supporting Boral’s people
to continue extracting the benefits
from our reshaped portfolio and
current initiatives.
Boral continues to face considerable
external pressures, and there is a great
deal to do to deliver improved results.
my personal goal has been to ensure
that the company is well placed to
leverage its assets and market positions
to maximise earnings as markets return
to more normalised levels.
Australian market and economic
factors impacted returns in Fy2012
in the second half of Fy2012, Boral’s
business in Australia experienced a
harsh combination of external market
conditions. Dwelling starts were much
weaker than expected, reaching an
annualised rate of 112,000 starts in the
march 2012 quarter (compared with
165,500 in Fy2010 and 157,500 in Fy2011),
non-residential activity was down 8% year
on year, and extraordinary periods of rain
in the eastern states delayed activity and
added costs.
Although rain impacted infrastructure
project timing and cost of deliveries,
activity in roads, highways, subdivisions
and bridges was up 7%. Additional
infrastructure volumes were
underpinned by resource and liquefied
natural gas (Lng) projects.
6 Boral Limited Annual report 2012
ross Batstone Chief Executive Officer
the stronger Australian dollar made imports more competitive,
suppressing pricing and reducing margins in cement and
softwoods as a result of the inability to recover inflationary costs.
Improved trading conditions in Asia and the USA
in Asia, our plasterboard business benefited from continued market
growth and penetration into the residential market, with particularly
strong growth in indonesia. thailand benefited from considerable
post-flood reconstruction work in Bangkok.
in the united states, there are positive signs of increasing activity,
with Fy2012 housing starts 20% above the prior year. Housing
activity, however, remained at close to historically low levels at
685,000 starts in Fy2012, well below the 50 year annual average
of 1.5 million starts.
Boral’s performance
Boral’s reported profit after tax (pAt)1 of $101m for the year ended
30 June 2012 was a 42% decrease on the prior year. Boral’s net
profit after tax (npAt) of $177m, after significant items of $75m,
was 5% higher than last year.
Boral’s sales revenue of $5.0b was 6% ahead of the prior
year, reflecting Boral’s acquisition of Lafarge’s 50% interest
in the Asian plasterboard business. excluding the impact of
the BgA acquisition, revenues of $4.7b were broadly steady.
price gains across our Australian businesses, contribution from
acquisitions and increased volumes in the usA offset Australian
volume declines.
Boral’s earnings before interest and tax (eBit)1 from Australia of
$263m was $110m below the prior year. Building products, with the
highest exposure to new housing construction, contributed $62m
or 56% of this Australian eBit1 decline. property sales contributed
a further $16m or 15% of the decline, with one of the two property
sales referred to in Boral’s June trading update not occurring.
the remaining $32m or 29% of the Australian eBit decline was
split between construction materials and cement, where the
impact of weaker building and construction markets and the
loss of lime sales was partially offset by increased demand from
infrastructure and Lng projects and stronger sales in regional
Queensland markets.
eBit1 losses in the usA reduced by A$15m to A$84m due
to a modest increase in demand, and restructuring to reduce
costs. in Asia, Boral gypsum Asia performed well, contributing
A$41m of eBit2.
Boral has responded to the changed environment in Australia
our challenge has been to respond quickly to the “cycle low”
sales volumes without compromising our ability to supply the market
when demand returns to more normal levels.
in our Building products business, we have permanently closed 10%
of our national brick capacity or 60 million standard brick equivalents
(sBe) of capacity with a further 27% of Boral’s capacity taken out
of service until markets recover. we have closed Boral’s roof tile
manufacturing plant in Queensland and streamlined overheads.
in construction materials, we increased Boral’s exposure to regional
asphalt, concrete and aggregate markets and resource projects
to help offset the impact of a cyclically low residential market,
particularly in south east Queensland.
we closed and subsequently sold our lime plant at galong
in new south wales, following the loss of Bluescope steel volumes.
we focused on optimising cash flow through tight management of
working capital and stay-in-business capital expenditure, particularly
in the second half of the year. our cash flow from operations together
with proceeds from the sale of non-core businesses contained year-
end net debt and gearing in the second half.
Good progress made in the area of safety
our safety target is Zero Harm in all of our work places. to achieve
this goal, new behaviour-based programs have been implemented
in Australia and the usA, with Asia now underway. A single safety
management system is currently being rolled out in Australia,
initially in new south wales and south Australia. in Fy2012, Boral’s
Lost time injury Frequency rate (LtiFr) of 1.8 hours per million
hours worked improved from 2.0 in the prior year and is the lowest
LtiFr for employees and contractors that we have reported.
Progressing Boral’s strategy and improvement programs
progress has been made to deliver Boral’s growth strategy
that was outlined to the market in July 2010.
through our acquisitions and capital projects over the past
two years, we have reshaped and strengthened Boral’s portfolio.
we are continuing to embed LeAn manufacturing processes and
a program of sales and marketing excellence throughout the
business. the substantial process changes associated with these
programs are now being prioritised throughout the business, and
greater benefits will be delivered as markets improve.
while we are still facing challenging market conditions, we have
accelerated a Boral-wide improvement plan to maximise cash
flow and deliver additional cost savings.
this initiative will align overhead costs in
Australia with Boral’s adjusted portfolio,
reduce physical inventories by leveraging
the principles of LeAn manufacturing,
and further strengthen Boral’s strategic
business positions by exiting remaining
underperforming assets.
our improvement goals, together with
Boral’s reshaped global portfolio,
position the business well to profitably
leverage market growth in Australia and
the usA and in plasterboard in Asia.
Continuing challenging conditions
are expected in Fy2013
in Australia, we expect continued buoyant
activity in major infrastructure and
resources projects but ongoing weak
residential and non-residential markets.
continued weak housing demand,
particularly for the first half of Fy2013, will
prove challenging for Building products.
the pricing environment for cement will
remain difficult due to the high Australian
dollar and low sea freight prices.
in Asia, continued growth in construction
activity is expected, together with further
penetration by plasterboard.
in the usA, we expect housing starts
to increase in Fy2013, biased towards
the second half year.
overall, Fy2013 will be a year of
consolidating recent portfolio changes
while driving forward with Boral’s
improvement goals. given ongoing
market uncertainty in Australia, a trading
update will be provided at Boral’s Annual
general meeting in november 2012.
i remain confident in the ability of our
people to take our company forward to
achieve our goals. i thank them for their
persistence and hard work.
At the end of september, it will be my
pleasure to hand over to mike kane and to
provide him, his leadership team and the
Board with my ongoing support to ensure
a stable and seamless transition. Having
worked with mike since early 2010, i know
that with his experience, commitment
and leadership approach, he is the ideal
person to lead Boral into the future.
1
2
Excluding significant items.
Includes 50% equity accounted share of lBGA post tax earnings to 9 December 2011
and 100% consolidated EBIT earnings since 9 December 2011.
Ross Batstone
Chief Executive Officer
7
group executives
MURRAy READ
Divisional Managing
Director, Boral
Construction Materials
Murray is 50 and was
appointed Divisional
Managing Director of
Boral Construction
Materials in July 2010.
He was previously
Queensland Regional
Manager for Boral
Construction Materials
from 2001-2010. Murray
has been with Boral for
28 years, holding roles in
the Plasterboard division
in Australia and Asia.
He holds a Bachelor
of Business degree,
majoring in Accounting,
from the Queensland
Institute of Technology.
BRyAN TIShER
Divisional Managing
Director, Boral Building
Products
Bryan is 49 and was
appointed Divisional
Managing Director,
Boral Building Products
in June 2012, prior to
which he was Executive
General Manager,
Timber (2007-2012)
and General Manager
Corporate Development
(2000-2007). Before
joining Boral, he held a
variety of positions at
Rio Tinto from 1985-
1998. These included
roles in project finance,
engineering design and
construction in a variety
of locations including
Australia, the USA,
Africa and Indonesia.
He holds a civil
engineering degree (First
Class Honours) from
Monash University and
an MBA from Harvard
Business School.
MIkE kANE
President, Boral USA
Mike is 61 and was
appointed President
of Boral USA in
February 2010. He
was previously Chief
Executive officer
of Calstar Products
and Pioneer USA
and has extensive
experience in
the building and
construction industry.
He has worked for
US Gypsum, Hanson,
Johns-Manville
and Holcim. Mike
has a Masters and
Juris Doctorate
(law) degree.
MIkE BEARDSELL
Divisional Managing
Director, Boral Cement
Mike is 54 and was
appointed Divisional
Managing Director of
the Cement division in
April 2009. Mike joined
Boral in 2001 and had
been National General
Manager of Blue Circle
Southern Cement since
2004. Before joining
Boral, Mike 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 and
a Master of Science
in industrial forestry
operations.
ROSS BATSTONE
Chief Executive officer
Ross is 64 and was
appointed Chief
Executive officer in
May 2012. He was
previously the Divisional
Managing Director, Boral
Building Products from
2010-2012. He has held
the roles of Executive
General Manager,
Plasterboard from
2000-2010 and prior
to that was Divisional
General Manager,
Plasterboard Australia
from 1996-2000. Ross
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 the University
of Queensland.
8 Boral Limited Annual report 2012
ROBIN TOWN
Group Human
Resources Director
Robin is 60 and has
been Boral’s Group
Human Resources
Director 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.
MARGARET TAyLOR
Group General Counsel
and Company Secretary
Margaret is 52 and
was appointed Group
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 and is a
Fellow of the Institute of
Chartered Secretaries.
MATT COREN
Group Strategy and
M&A Director
Matt is 42 and joined
Boral as Group
Strategy and M&A
Director in December
2010 following a
15 year career in
investment banking.
In his previous roles
with global investment
banks, Matt focused
on advising clients
in industrial sectors
on strategy, M&A
and capital markets
transactions. Matt
holds honours degrees
in commerce and law
from the University of
Queensland.
ANDREW POULTER
Chief Financial officer
Andrew is 57 and
was appointed Chief
Financial officer in May
2010 following seven
years with Adelaide
Brighton. He has
previously held senior
finance roles with
leading construction
materials and building
products firms including
lafarge and Blue Circle
Industries in the UK
and the USA. He is a
Chartered Accountant
and holds an Honours
degree in Chemical
Engineering and Fuel
Technology.
FREDERIC DE
ROUGEMONT
Chief Executive officer,
Boral Gypsum Asia
Frederic is 53 and
was appointed Chief
Executive officer of
Boral Gypsum Asia
in December 2011
following Boral’s
acquisition of lafarge’s
interest in lafarge Boral
Gypsum Asia (lBGA).
He was previously Chief
Executive officer of
lBGA from 2009-2011.
Prior to this, Frederic
held a number of senior
roles in his 22 year
career with lafarge,
including managing the
Cement Ready Mix and
Aggregates business
in South Africa and
the Cement business
in South Korea. He
was also responsible
for Research and
Development for the
lafarge Group. Prior to
joining lafarge, he was
a scientific researcher
for the French National
Research Centre
and a post-doctorate
researcher with IBM
Research labs in the
USA. He holds a PhD in
Physical Sciences from
University of orsay.
9
Boral’s growth strategy
GROWING A LEADING
GLOBAL SCALE
PLASTERBOARD POSITION
IN ThE ASIA PACIFIC REGION
AsiA
Purchased Lafarge’s
50% interest in
Lafarge Boral
Gypsum Asia
(now BGA) for $530m,
establishing Boral’s
leading plasterboard
position in the Asia
Pacific region
Acquired 35 million m2
capacity plasterboard
plant in Shandong
(China), which
together with
90 million m2 of
recent and current
plasterboard
capacity expansions
in Chongqing (China),
Cilegon (Indonesia)
and ho Chi Minh
City (Vietnam),
enhances Boral’s
ability to supply
growth markets
Following Construction
Materials businesses in
Indonesia and Thailand
being identified as non-
core, the divestment of
assets in Indonesia for
an enterprise value of
$135m was completed
in August 2012
MODERNISING
BORAL’S AUSTRALIAN
PLASTERBOARD
INFRASTRUCTURE
STRENGThENING
BORAL’S
CONSTRUCTION
MATERIALS
POSITION
Reshaping the portfolio
and strengthening
the core
Over the past two years, Boral’s portfolio
has been reshaped
In 2010, Plasterboard in Australia and Asia, Bricks
and Roof Tiles in Australia and the USA, and
Construction Materials and Cement in Australia
were identified as attractive markets where Boral
has a strong ability to compete.
Since then, through strategic acquisitions and
capital investment projects, we have reshaped and
strengthened Boral’s portfolio. We have created an
industry leading, global scale plasterboard position
for Boral in the high growth Asia Pacific region.
We have strengthened Boral’s exterior cladding
business in the USA, enhanced Boral’s concrete
network in Queensland, and strengthened Boral’s
consented aggregate and sand reserves in
New South Wales and Queensland.
We identified Boral’s non-core businesses, and
our divestment program is well progressed, with
divestments over the past two years generating
approximately $170m in cash.
10 Boral Limited Annual report 2012
ExPANDING BORAL’S
ExTERIOR CLADDING
OFFER IN ThE USA
RESTRUCTURING AND
INTEGRATING CLAy AND
CONCRETE ROOF TILES
UNDER ThE BANNER OF
BORAL ROOFING
usA
Following Boral’s
move to 100%
ownership of
MonierLifetile in
Fy2011, Boral’s USA
concrete and clay
roof tile operations
were restructured
and integrated under
the banner of Boral
Roofing, reducing
overheads and
improving channels
to market
Acquired an initial
50% interest in
the market leading
Cultured Stone
operations from
Owens Corning
in Fy2011, now
integrated into Boral’s
exterior cladding
offer in the USA
Divested Masonry assets
in Colorado in June 2012
Boral’s strategy to strengthen the core
is progressing well
Two years ago, we commenced the introduction
of structured programs of operational excellence,
and sales and marketing excellence to maximise
the potential of Boral’s core businesses. Boral’s
Sales and Marketing Excellence program remains
a key focus across the Group and operational
Excellence is also a key priority, with lEAN
manufacturing processes and principles now
embedded into most of Boral’s Australian and
USA based operating sites. The roll-out of lEAN
in Asia is underway. The full benefits of these
programs are being captured in improvement
plans and should be delivered when market
volumes return.
To further focus and improve assets where
Boral can be market leader, we have been exiting
underperforming and marginally performing
businesses in low growth markets. We have
also taken decisive action to more effectively
align Boral’s production capacity with changed
market conditions, through permanent plant
closures and mothballing of capacity.
11
Boral’s plasterboard
operation at Port
Melbourne (Victoria)
was upgraded in
Fy2012, completing
the modernisation
of Boral’s Australian
plasterboard
infrastructure,
providing
appropriately scaled,
low cost capacity
Closed and subsequently
sold the Galong lime
operation in New South
Wales for $25m following
a significant decline in
lime demand as a result
of BlueScope Steel closing
its Port kembla furnace
Responding to changed
market conditions, plant
closures and mothballing
have reduced Boral’s
brick capacity in Australia
by 37% (with 10%
permanently closed), and
roof tile operations in
Queensland were closed
SECURING LONG TERM
RESOURCE POSITIONS
AustrALiA
Boral’s $200m
Peppertree Quarry
investment in NSW
will be completed in
Cy2013, providing
long term aggregate
supply to service the
greater Sydney region
Boral’s resource
and concrete
positions have been
strengthened in South
East Queensland
with the acquisitions
of Sunshine Coast
Quarries for $81.5m
and the construction
materials assets of
Wagners for $163m,
in late 2011
Identified East Coast
Masonry operations as
non-core and divested
North Queensland Masonry
assets in early 2012; Boral’s
Masonry capacity will
reduce by 70% following
remaining divestments
improving
performance
Given continuing challenging
conditions, our focus is on
accelerating a Group-wide
performance improvement
plan to maximise cash flow
from existing assets.
Focused on leveraging lEAN tools to improve profit, operating cash
flow and return on assets, the improvement plan will further strengthen
Boral’s strategic business positions by:
• better aligning overhead costs in Australia with Boral’s adjusted
portfolio;
• reducing physical inventories by leveraging lEAN; and
• exiting remaining underperforming or marginal positions in low
growth markets.
Divestments of non-core assets made over the past two years have
returned approximately $170m of cash. over the next two years, further
non-core divestments and property sales targeting $200–$300m will be
actively pursued, with the proceeds to be applied to reducing debt.
However, we will not sell assets below their fair value.
The Boral Production System (BPS), or lEAN program, will be leveraged
to further reduce inventories through ongoing improvements in
matching of production output with true customer demand. lEAN tools
are also increasingly being applied to drive operational efficiency across
other functions in the businesses, which will facilitate further overhead
cost reductions. As markets improve and demand increases, enhanced
operational efficiency outcomes will also allow capacity to be increased
without the need to expand site facilities.
other areas of focus will be tightly managing capital expenditure and
achieving effective pricing. In FY2013, the Group’s capital expenditure
will be lower than in FY2012, even allowing for the balance of capital
expenditure to complete the Sydney aggregates project at Peppertree
Quarry near Marulan in New South Wales. Effective pricing, which
includes full recovery of carbon scheme costs in Australia, remains
a key priority, given the escalating cost of energy and other inputs
such as raw materials and labour.
our improvement goals, together with Boral’s substantially reshaped
global portfolio, position the business well to profitably leverage market
growth in Australia and the USA and in plasterboard in Asia.
HigHLigHts
PULL SySTEM REDUCING INVENTORIES
in 2012, we introduced puLL systems into a
number of manufacturing facilities across our
cement, Building products and construction
materials divisions. puLL is a means of matching
production output to true customer demand. the
pilot programs have been very successful and
resulted in significant improvement in physical
stock turns and inventory value.
For example, introducing puLL at Boral’s pinkenba
plasterboard plant and our masonry plant at
pooraka in south Australia, resulted in inventory
levels reducing by more than half, significantly
reducing costs in the distribution system.
LEVERAGING LEAN TO REDUCE COSTS
using LeAn principles, Boral’s marulan Lime
plant has implemented an environmentally friendly
solution that eliminates waste and saves an
estimated $250,000 in costs annually.
in the process of manufacturing hydrated lime,
dust is produced which needs to be contained
and removed through a process known as
“scrubbing”. By identifying LeAn wastes in the
process, the team proposed to replace the existing
“wet scrubbing” process which was fraught with
problems, with a “dry scrubber”. As a result,
$250,000 in cost savings were achieved through
improved energy efficiency, reduced cleaning
and water usage and repairs and maintenance.
in addition, the increased production capacity of
saleable product has a potential revenue benefit
to Boral of around $1.2m annually.
12 Boral Limited Annual report 2012
positioned for
cycle upturns
The strategic acquisitions and
capital investment projects made
over the past two years place
Boral in a strong position once
markets recover.
In Australia, the long term average level of demand is in the range of
150,000 to 155,000 housing starts per annum, while levels as low as
112,000 annualised starts were experienced in the March 2012 quarter.
In the USA, FY2012 housing starts of 685,000 compare with the 50 year
average annual level of 1.5 million starts.
The historical level of annual dwelling starts is a measure of future demand
and Boral is well positioned to leverage a return to such normal “mid-cycle”
levels of housing activity in both the USA and Australia. Boral is also well
placed to grow through its new plasterboard position in Asia.
In the USA, Boral will see strong future earnings leverage from a lift in
new house construction in the USA – refer to the accompanying chart and
case study.
on balance, management believes that Boral is positioned to earn EBIT
levels from Building Products in Australia of at least that achieved in
FY2011 as building activity returns to long term average mid-cycle levels –
refer to the accompanying chart and case study.
Boral’s Construction Materials business in Australia has leading,
consented aggregate positions in metro markets and in high growth
regional markets exposed to the resource sector, now strengthened in
South East Queensland and New South Wales. These positions are well
integrated with extensive concrete batching and delivery networks and
asphalt operations. The return to long term average mid-cycle building
and infrastructure activity should result in the business earning the EBIT
levels achieved in FY2011, before taking into account the impact of recent
acquisitions and benefits from improvement plans, including lEAN.
Boral’s Cement business in Australia faces continued EBIT pressure.
Flat prices due to the strong Australian dollar and imports are expected
while manufacturing costs in Australia rise, including the impact of the
price on carbon. The return to long term building activity levels combined
with stronger infrastructure activity alone will likely not see earnings
return to historical levels, without a significant reduction in costs through
more flexible cement supply, options for which are under review.
In Asia, Boral is focused on and is well positioned to drive further
penetration of plasterboard internal wall partition and ceiling solutions.
Growth in existing plasterboard capacity which will be achieved through
lEAN, as well as the 75 million m2 of capacity expansion underway and
delivered through existing distribution infrastructure, will service future
sales volume growth. In the medium term, management believes that this
should result in revenue and earnings growth at levels that compare with
the annual average growth achieved by the business over the last 10 years.
US hOUSING STARTS3
VERSUS BORAL USA EBIT1
Boral USA
in Fy2007 when housing starts of 1.55m were close
to the 50 year average, Boral usA made us$75m in
eBit; this compares to a loss of us$87m in Fy2012
with starts at 685,000.
comparing Fy2009 and Fy2012, when housing starts
were running at similarly low levels of around 55%
below mid-cycle levels, Boral’s eBit losses have
reduced by around us$25m, demonstrating the
considerable uplift in the underlying business.
Looking forward, the usA business has significantly
better leverage in exterior claddings than it did in
Fy2007, providing increased upside as the housing
market recovers. we have lower structural fixed costs,
inventories and capital expenditure requirements, and
we acquired and integrated cultured stone, the leading
usA manufactured stone business, and the remaining
50% share of monierLifetile.
0
3
0
,
2
9
3
1
8
4
5
1,
5
7
LONG TERM AVERAGE
HOUSING STARTS
8
3
,1
1
Boral USA
EBIT US$m
USA housing
starts (’000)
)
5
2
(
9
5
6
2
9
5
0
7
5
5
8
6
)
1
8
(
)
1
9
(
)
7
8
(
)
9
9
(
6
0
Y
F
7
0
Y
F
8
0
Y
F
9
0
Y
F
0
1
Y
F
1
1
Y
F
2
1
Y
F
AUSTRALIAN hOUSING STARTS
VERSUS BUILDING PRODUCTS EBIT1
Australian Building Products
Building products in Australia delivered eBit
of $81m in Fy2011 when housing starts were just
above long term average levels of 150,000–155,000.
improvements made to Building products in Fy2012
should have a positive impact on future earnings.
these include:
•
the modernisation of our Port Melbourne
plasterboard plant;
• the closure of higher cost brick capacity;
the exit from loss making Masonry and
•
Queensland roofing businesses; and
the associated reductions in overhead costs,
together with the benefits of LeAn.
•
Boral is positioned to earn eBit levels of at least
that achieved in Fy2011 as building activity
returns to mid-cycle starts.
LONG TERM AVERAGE
HOUSING STARTS
8
1
1
4
1
1
9
9
7
18
8
2
5
1
2
5
1
9
5
1
0
4
6
6
1
2
3
1
8
5
1
6
3
1
0
2
6
0
Y
F
7
0
Y
F
8
0
Y
F
9
0
Y
F
0
1
Y
F
1
1
Y
F
2
1
Y
F
Building Products
EBIT A$m
Australian housing
starts (’000)
1
5
1
2
5
2
2
1
H
1
1
2
1
4
1
2
2
1
H
2
1 Excluding significant items.
2
EBIT for 1H2012 and 2H2012 has been
annualised for comparison purposes.
Source: original data USA census.
3
13
13
construction mAteriALs
cement
CORE BUSINESS
Boral construction materials (Bcm) is
an integrated business supplying quarry
materials, concrete and asphalt. Bcm
also manages a property operation and
an integrated transport business.
CORE BUSINESS
Boral’s cement division is a leading
supplier of cement, lime and fly ash
in Australia, and of concrete placing
services in new south wales through
De martin & gasparini (Dmg).
Share of external sales
Share of external sales
group
overview
Boral’s segment
reporting aligns
with Boral’s
new divisional
structure.
Concrete
Quarries
Asphalt
Other
Cement & Lime
Concrete and placing
Main markets
over 50% of BCM’s business is
undertaken in the Australian engineering
and infrastructure segments, with the
majority in the roads, highways, bridges
and sub-divisions segment. BCM’s
remaining revenues are derived from
the Australian dwelling and non-dwelling
building segments.
Performance
BCM achieved record revenues through
increased participation in major projects
and flood recovery activity, price gains, and
revenue from the acquisitions of Wagners
and Sunshine Coast Quarries. EBIT before
property sales was down 8%, reflecting
lower volumes in key markets, higher costs
of working in regional areas and increased
operating costs due to adverse weather,
offsetting benefits of higher prices.
Strategic priorities
Key priorities are margin improvements and
building low cost quarry positions in high
growth markets, including commissioning
the $200m Peppertree Quarry investment
in New South Wales and progressing
the development of a new Gold Coast
quarry. Improvement efforts will focus on
price discipline, reducing fixed costs and
working capital, lEAN efficiencies and
rationalising underperforming sites.
Main markets
The Cement division derives two thirds
of its revenues from the non-dwelling
and infrastructure markets, with the
remainder from the residential market.
lime is sold to the steel, mining and
water treatment industries.
Performance
Revenue was below last year’s due to
lower demand from civil projects and
the steel industry, constrained cement
pricing and reduced concrete supply and
placement package work in DMG. EBIT
was down 21% with the loss of lime and
limestone volumes to BlueScope Steel
reducing EBIT by a net $6m. The business
rationalised assets made redundant
through changing market conditions and
achieved kiln efficiency improvement.
Strategic priorities
Focus continues to be on operational
efficiencies and safety outcomes through
implementing lEAN initiatives. other
priorities are to lower the cost of domestic
supply and maximise the utilisation of
fixed assets.
2
7
4
,
2
5
7
2
,
2
1
1
Y
F
2
1
Y
F
4
0
2
4
7
1
1
1
Y
F
2
1
Y
F
)
m
$
(
e
u
n
e
v
e
r
l
s
e
a
S
2
4
4
0
3
4
7
8
9
6
)
m
$
(
1
1
Y
F
2
1
Y
F
I
1
T
B
E
1
1
Y
F
2
1
Y
F
)
m
$
(
I
T
B
E
)
m
$
(
1 Before significant items.
2
Prior to December 2011, Boral’s share
of lBGA post-tax earnings was equity
accounted; post December 2011 BGA
revenues and EBIT were consolidated
in Boral’s accounts.
e
u
n
e
v
e
r
l
s
e
a
S
14 Boral Limited Annual report 2012
BuiLDing proDucts
pLAsterBoArD AsiA
usA
CORE BUSINESS
Boral Building products is a leading supplier
of plasterboard, bricks, clay and concrete
roof tiles, timber and aluminium windows in
Australia and masonry products in western
Australia and south Australia. Boral’s
windows business, Dowell windows, is
now managed under Building products.
CORE BUSINESS
Boral gypsum Asia (BgA) is the
leading supplier of plasterboard and
internal lining products across Asia,
with manufacturing operations in
eight countries.
CORE BUSINESS
Boral has the number one position in clay
bricks and manufactured stone veneer
(cladding), and in clay and concrete roof
tiles (roofing) in the usA, has strong
market positions in construction materials
in oklahoma and colorado, and operates
a fly ash business on a national basis.
Share of external sales
Share of external sales
Share of external sales
Plasterboard
Timber
Clay and Concrete
Windows
Korea
Thailand
China
Indonesia
Other
Cladding
Roofing
Main markets
over 60% of the division’s revenues are
derived from new housing construction
in Australia, with over 20% from
alterations and additions. The remaining
part of the business is reliant on
non-residential activity and exports.
Performance
Building Products was impacted by
a further decline in Australian dwelling
construction activity, which was particularly
marked in the second half of the year.
Bricks, Roofing and Masonry businesses
were rationalised to align production with
reduced demand through plant closures
and capacity reductions. The upgrade of
the plasterboard plant at Port Melbourne,
Victoria was commissioned, securing
Boral’s long term position as a low cost
producer on the east coast.
Strategic priorities
Following reductions in brick and roofing
capacity in FY2012, Boral will focus on
delivering improvements in operating
efficiency through lEAN manufacturing
initiatives. Maximising cost reductions and
network improvements in plasterboard
following the upgrade in Victoria will also
be a priority.
Main markets
Around 50% of BGA’s revenue is from
Korea and Thailand. Across BGA’s four
key markets, more than 50% of revenues
are derived from the residential building
market, with the remainder attributable
to the non-residential market.
Performance
Revenue and EBIT for BGA have been
consolidated from 9 December 2011,
following the acquisition of lafarge’s
50% interest in lBGA; prior to that EBIT
reflects a post-tax equity contribution. EBIT
of $41m also reflects improved volumes
and sustained margins. During the year,
BGA acquired a 35 million m2 capacity
plant in Shandong, China, and completed a
plant expansion in Chongqing, China, with
further expansion projects underway in
China, Indonesia and Vietnam.
Strategic priorities
Maximising the potential of 100%
ownership of BGA is a strategic priority.
Focus will also be on leveraging
capacity expansions and implementing
lEAN improvement plans to maximise
productivity.
Construction Materials and Fly Ash
Main markets
About two thirds of USA revenues are
derived from the residential building
market, with the remainder attributable
to commercial markets and infrastructure
construction activity.
Performance
Despite continuing market challenges,
the operational performance of Cladding,
Roofing and Construction Materials
and Fly Ash improved over the prior
year. FY2012 results benefited from
modest growth in the housing market
and continued cost reduction initiatives
including plant rationalisations.
Strategic priorities
Boral will continue to position the USA
business in preparation for market recovery
and growth, including leveraging lEAN
processes. Boral Cladding and Roofing
plan to deliver benefits from a ‘one Boral’
strategy while focusing on the successful
commercialisation of new, innovative
products.
7
9
1
,
1
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15
construction materials
murray read Divisional Managing Director
Boral Construction Materials is one of
Australia’s leading integrated quarry, concrete
and asphalt manufacturing businesses, with
outstanding long term resource positions in
attractive, high growth regions.
External revenue
At a glance
Revenue
EBIT
Employees
Capital expenditure1
$2,472m
$174m
4,649
$195m
Concrete
Quarries
Asphalt
Other
1 Excluding acquisitions.
16 Boral Limited Annual report 2012
wHAt we Do
QUARRIES
Boral is Australia’s
leading quarry operator,
with 100 operating
quarries, sand pits
and gravel operations
producing concrete
aggregates, crushed
rock, asphalt, road
base materials, sands
and gravels for the
Australian construction
materials industry.
CONCRETE
Boral’s market leading
network of 240 premix
concrete plants
produces a wide range
of specialist concrete
mixes throughout
Australia. The Group’s
geographic cover and
responsiveness to
customer needs provide
a strong, sustainable
competitive advantage.
ASPhALT
Boral is a leading
full service supplier
of asphalt and
technical materials
for the surfacing and
maintenance of road
networks. The division
has plants throughout
Australia and is a
leading supplier to road
building and critical
public and private
construction projects.
LOGISTICS
Construction Materials’
logistics operations
include an integrated
fleet of company-owned
and contracted vehicles.
Performance
Construction Materials achieved record revenues of $2.47b,
up 9% compared to the prior year. Strong pricing outcomes,
supply to major infrastructure projects, Queensland flood recovery
work and contributions from Wagners and Sunshine Coast Quarries
offset weak residential and commercial markets. Excluding property
sales, EBIT of $162m was 8% below last year. Underlying national
quarry and concrete volumes were both down 2% on the prior year,
while quarry prices increased by an average 11% and concrete
prices by 7%. Earnings were negatively impacted by lower volumes in
key markets and operational inefficiencies from extended periods of wet
weather across the east coast in the second half. Property contributed
$12m of EBIT in FY2012, which was below expectation and $16m
below the prior year.
Significantly lower residential demand and reductions in major metro
projects and regional mobile plant work in Western Australia resulted
in a combined $14m lower EBIT contribution from Western Australia
and South Australia. Earnings from South East Queensland also fell
as higher margin sales volumes, down from weaker housing and
non-residential markets, were replaced by lower margin infrastructure
projects in South East Queensland (SEQ). Boral also commenced
supply to lNG projects at Gladstone, although supply was at a lower
pace than expected, with benefits to be more pronounced from FY2013.
Revenue was in line with forecast, but EBIT was lower due to wet
weather impacting operating efficiency in the second half of the year.
Revenue from the Asphalt business improved year on year although
wet weather severely impacted productivity. Strong outcomes were
achieved in regional Queensland (road reconstruction activity),
Melbourne (Peninsula link and the Calder and M80 interchanges)
and regional New South Wales (Ballina Bypass), and offset a decline
in infrastructure activity in SEQ.
The Sunshine Coast Quarries and Wagners businesses, acquired in
october and December 2011 respectively, have been successfully
integrated into the underlying business.
The result for Property reflects the sale of surplus land at Donnybrook in
Victoria, but anticipated sales elsewhere did not occur prior to 30 June.
Safety results for the year were disappointing, with the full year
lost Time Injury Frequency Rate increasing from 2.8 to 3.1.
National programs are in place to enhance safety systems and
training, with a key focus on improving safety behaviours at all
levels of the organisation.
Market review and outlook
In the year ahead, continued buoyant activity in major infrastructure and
lNG projects is expected to be dampened by ongoing weak residential
and commercial markets. Construction Materials will benefit from
the Queensland lNG projects for the full year, but significant volumes
from the Wheatstone Western Australian lNG project will not occur
until FY2014.
Widespread improvement programs continue to be implemented
within Construction Materials. Implementation of lEAN processes
has resulted in increasing efficiencies. Improved price disciplines and
processes to reduce margin leakage will continue to impact positively
on pricing outcomes. A major program of rationalising underperforming
sites is underway to lower costs and enhance portfolio returns.
The business is focused on cash generation, margin growth,
improving return on assets and building low cost quarry resource
positions in high growth markets.
HigHLigHts
ACQUISITIONS
the wagners and sunshine coast Quarries
acquisitions were completed at the end of calendar
year 2011, strengthening Boral’s construction
materials business in southern Queensland.
these acquisitions provide substantial reserves
in high growth areas and synergies with our
existing operations, and will benefit from
development associated with the surat Basin
gas infrastructure project.
FLOOD RECOVERy ACTIVITy
construction materials has an extensive network
of quarry resource positions throughout Australia.
several of these are intermittently operated
dependent on demand. Following the flooding
of significant parts of Queensland in early 2011,
demand to supply product to the flood recovery
programs in regional Queensland increased markedly.
consented resource positions, combined with our
capacity to quickly mobilise crushing capacity,
facilitated strong participation in this project work.
LIQUEFIED NATURAL GAS PROJECTS
During the year the division commissioned six high
capacity concrete plants to supply Lng projects
on curtis island near gladstone, in Queensland.
milestone timelines within budget were achieved for
the plants. construction materials also commenced
mobilisation for the wheatstone Lng project in
northwest western Australia.
17
wHAt we Do
CEMENT
Boral has cement
manufacturing
operations at Berrima
in New South Wales
and Waurn Ponds in
Victoria, and owns 50%
of Sunstate Cement
in Queensland. Boral
supplies bulk cements
and cement blends,
bagged cements and
dry mixes. Quality
control, innovation and
an ongoing program for
continuous improvement
have led Boral Cement
to a leading position
in the Australian
cement industry.
LIME
Following the closure
and sale of the
Galong Lime plant
in New South Wales,
Boral will be servicing
lime demand from its
substantial reserves
and manufacturing
facility at Marulan in
New South Wales.
DE MARTIN &
GASPARINI
De Martin & Gasparini
is a specialist concrete
placing business which
has been servicing the
construction industry,
predominantly in the
Sydney market, for over
50 years. It has a strong
reputation built on its
expertise in large pours,
detailed formwork
design and high
strength concrete.
cement
mike Beardsell Divisional Managing Director
Boral Cement is a leading supplier of cement,
lime and fly ash in Australia and of concrete
placing services in the New South Wales
market through De Martin & Gasparini.
In Fy2012 the division was reshaped, with Asian Construction Materials
being classified as discontinued operations and De Martin & Gasparini
now being managed within the Cement division.
External revenue
At a glance
Revenue
EBIT
Employees
Capital expenditure
$430m
$69m
852
$47m
Cement and Lime
Concrete Placing
18 Boral Limited Annual report 2012
Performance
Boral Cement faced challenging market conditions during the year.
Cement revenue of $430m was 3% below that of last year’s $442m.
lime and limestone sales fell by 40%, although average prices
increased, while cement volumes were marginally lower with prices
broadly flat when compared to the prior year. Revenue from De Martin
& Gasparini was down despite flat volumes, reflecting a reduction in the
proportion of concrete and placing package work.
EBIT of $69m was 21% below last year due to lower lime and limestone
volumes, increases in cement input costs and a shift to lower margin
segments. other cost impacts were contained through improvements
in operating effectiveness as well as cost reduction projects.
The significant decline in lime sales was due to the closure of
BlueScope’s Port Kembla No. 6 blast furnace. Boral responded to
this changed market condition by closing and subsequently selling
its Galong lime plant. The completion of large infrastructure projects
in New South Wales resulted in an adverse shift in cement volumes
to lower margin segments. Cement margins were also impacted by
increases in input costs, particularly electricity and fuel, and import
parity pricing that was capped by the high Australian dollar.
An intensive program to improve safety in the Boral Cement business
is continuing. The lost Time Injury Frequency Rate of 1.3 compares
with 0.9 in the prior year, which remains better than Boral’s overall
performance of 1.8.
Market review and outlook
The outlook for Boral Cement volumes is flat, with housing driven
demand improvements in New South Wales offset by weakness
in Victoria and continued low volumes in South East Queensland.
The pricing environment will remain challenging due to actual and
threatened imports, driven by the high Australian dollar and low
sea freight prices. Price increases were implemented to recover the
impact of the carbon price which came into effect from 1 July 2012.
The return to long term building activity levels combined with stronger
infrastructure alone is unlikely to result in earnings returning to historical
levels. options are under review for significantly reducing costs through
more flexible cement supply.
De Martin & Gasparini began the new year with a strong order book,
including a backlog of projects delayed by rain in FY2012.
Discontinued operations
The Asian Construction Materials activities are reported as
discontinued operations following the announcement of the sale of
the Indonesian operations and the intention to divest its Thailand
Construction Materials business. Divestment of the Asian Construction
Materials businesses is part of Boral’s strategy to re-focus on its core
product portfolio.
The Indonesia Construction Materials business performed well prior to
its sale in March 2012. Thailand Construction Materials returned to solid
profitability during the year, continuing its improvement in performance
over the past three years, and better positioning the business for sale.
HigHLigHts
DEMOLITION PROJECT
Boral cement’s engineering services team
and site personnel completed the demolition of
obsolete plant on all major sites, removing a legacy
of up to 50 years. the project addressed a future
liability for the business as well as removing
potential chemical and structural risks associated
with the redundant plant.
GREENhOUSE GAS REDUCTION
multiple innovation initiatives were undertaken
aimed at reducing greenhouse gas emissions during
the year. Blast furnace slag was utilised in the
manufacture of off-white cement clinker, increasing
the level of limestone substitution in grey cements.
commercial trials of Boral’s low carbon cement
were undertaken on the Hume Highway and the
Barangaroo projects.
ASSET RATIONALISATION
the indonesian construction materials business
was sold in march 2012 for an enterprise value of
us$135m. the thailand construction materials
business continued the turnaround of the past three
years, better positioning it for sale. the galong Lime
plant was sold for $25m following the closure of
Bluescope’s port kembla blast furnace.
19
Building products
Bryan tisher Divisional Managing Director
Boral Building Products is a leading supplier
of plasterboard, bricks, roofing, hardwood
and softwood timber products, and
aluminium windows in Australia.
Boral’s now wholly owned Asian plasterboard business, Boral Gypsum
Asia, is now a separate division, while Masonry East is no longer part of the
division and Dowell Windows is now managed under Building Products.
External revenue
At a glance
Revenue
EBIT
Employees
Capital expenditure
$1,012m
$20m
2,654
$105m
wHAt we Do
CLAy & CONCRETE
Boral is one of
Australia’s leading
suppliers of clay and
concrete bricks, blocks,
pavers and roof tiles.
The Group’s continuing
operations include
13 production plants
across Australia.
PLASTERBOARD
Boral is a leading
integrated supplier
of plasterboard
and operates four
production plants and
50 distribution centres
across Australia. Boral
owns 50% of Gypsum
Resources Australia
(GRA) and 50% of Rondo
Building Systems.
TIMBER
Boral operates wholly
owned hardwood
businesses on the
east coast of Australia
and a 50% share
of highland Pine, a
leading New South
Wales-based softwood
manufacturer. Boral
exports small quantities
of woodchips processed
from waste, residues
and plantation stock.
WINDOWS
Boral’s windows
business operates
under the Dowell
Windows brand and is
a leading supplier of
aluminium windows and
doors in the Australian
detached housing
market. The business
operates nationally
through nine window
fabrication businesses.
Clay & Concrete
Plasterboard
Timber
Windows
PhOTO
Boral’s Escura bricks were used
in the Australian Hearing Hub at
Macquarie University in NSW.
20 Boral Limited Annual report 2012
Performance
Boral Building Products faced difficult market conditions in FY2012 due
to a significant decline in Australian new housing activity, particularly
in the second half of the year, coupled with sustained wet weather
on the East Coast. In the March 2012 quarter, new dwelling starts,
which account for over 60% of Building Products’ revenues, fell to
an annualised 112,000 starts compared to 165,500 in FY2010 and
157,500 in FY2011. The high Australian dollar also reduced volumes
and prices for our softwood businesses through increased competition
from imports.
Building Products revenue of $1.01b was down 15% on the prior
year. Revenue for most products declined in line with the reduction in
residential construction demand, with Timber revenues also impacted
by the closure of the plywood business and a strong Australian
dollar. Compared to the prior year, sales volumes declined by 14%
in Plasterboard and Roofing, 16% in Bricks and 15% in Masonry (West).
The volume decline was most pronounced in Queensland, South
Australia and Western Australia. Hardwood and Softwood volumes
declined 14-15% and Woodchip volumes were 26% lower due to
weaker exports. Sales volumes in most product groups have fallen
by 25% or more since December 2010.
Price increases, which averaged around 2-3% nationally except for
Softwood and Woodchips where prices were softer, were insufficient
to offset the significant impact of lower volumes across all products.
EBIT of $20m was $62m or 76% below last year. of that decline, $80m
reflected lower sales volumes, particularly in the second half of FY2012.
This volume impact on EBIT largely arose from the associated fall in
contribution margins incurred before mitigation actions to lower fixed
costs of production, distribution and overheads. Inventory reductions
to lift cash flow also reduced earnings by $11m, which will also impact
FY2013. A one-off cost of $7m in extra distribution expenses to
transport plasterboard from Queensland to southern states during
the Port Melbourne plasterboard plant upgrade was reported. These
factors were partially offset by higher prices and cost savings.
The businesses responded to the reduction in demand by undertaking
significant closures in the Brick and Roof Tile businesses and reducing
inventories to optimise cash flow. Brick capacity was reduced by 37%
with the closure of Darra Kiln 3 in Queensland, mothballing of Midland
Kilns 7 and 8 in Western Australia and mothballing of the Badgery’s
Creek plant in New South Wales. Roof tile capacity was reduced with
the closure of Carol Park in Queensland. The Plywood operation at
Ipswich closed in mid-2011 and the masonry operations in Cairns and
Mackay have been sold. While the costs of restructuring had an impact
during the year, the savings from these actions have not yet been fully
delivered. After the current program of plant and business closures,
employee numbers in Building Products will reduce by around 800
or 23%. There will also be substantial reductions in labour hire and
contractor numbers.
The employee lost Time Injury Frequency rate improved significantly,
dropping to 1.2 in FY2012 from 1.7 in FY2011.
Market review and outlook
Continued weak housing demand, particularly in the first half of
FY2013, will prove challenging for Building Products. Further interest
rate reductions and/or improved consumer sentiment are required for
demand to lift in the six months ending June 2013.
In the difficult trading environment, we will continue to focus on lifting
performance through improving operating efficiency from lEAN
initiatives, maximising cost reductions and network improvements
in Plasterboard following the Port Melbourne plant upgrade, and in
Windows following site closures.
HigHLigHts
PORT MELBOURNE
PLASTERBOARD UPGRADE
the major upgrade of the plasterboard plant at
port melbourne, victoria was successfully completed
in the June quarter. the plant is on track to deliver
substantially reduced operating costs, improved
energy efficiency and enhanced waste recycling
capacity, and provides capacity for future growth.
SAFETy IMPROVEMENT IN TIMBER
safety performance across the timber business
has improved significantly during the year with
Lost time injury Frequency rate (LtiFr) declining
to nil from 3.8 in Fy2011. in an industry typically
exposed to extensive manual handling, non
standard processes and heavy and awkward raw
materials the improvement in safety performance
is a key achievement.
PORTFOLIO RATIONALISATION
in response to difficult market conditions, Boral
has rationalised its Building products businesses
by taking 230m sBe of national brick capacity
out of service, closing roof tiles in Queensland,
restructuring east coast windows and streamlining
overheads. Full year benefits of these changes will
be realised in Fy2013.
21
usA
mike kane President, Boral Industries
Boral USA has industry leading positions in
clay bricks, concrete and clay roof tiles, and
manufactured stone veneer for residential
and mid-rise commercial buildings. The
construction materials business has strong
market positions in Oklahoma and Colorado,
and the fly ash processing and distribution
business operates on a national basis.
External revenue
At a glance
Revenue
EBIT
Employees
Capital expenditure1
$499m
($84m)
2,336
$31m
wHAt we Do
BORAL CLADDING
With 12 clay brick
manufacturing sites,
Boral has industry
leading clay brick and
cultured stone positions
complemented by the
launch of the Boral
Trim product and an
enhanced commercial
focus of the Boral
Building Products
distribution business.
BORAL ROOFING
Boral’s high end roofing
solutions consist of a
market leading range
of concrete and clay
roof tile products.
Following Boral’s move
to 100% ownership
of MonierLifetile in
Fy2011, the business
was integrated under
Boral Roofing, providing
synergies and market
opportunities.
CONSTRUCTION
MATERIALS AND
FLy ASh
Boral has regional
concrete and aggregate
offerings in Colorado
and Oklahoma, together
with a national fly ash
business. Fly ash is used
as a cement substitute.
TEChNOLOGy
Boral’s US Innovation
program enhances
product development
opportunities across
all businesses while
reducing the time to
commercialisation. The
development of green
sustainable products
continues to be a focus.
Cladding
Roofing
Construction Materials and Fly Ash
PhOTO
Boral’s cultured stone product is
being used in both residential and
commercial projects.
1 Before acquisitions.
22 Boral Limited Annual report 2012
Performance
The USA housing market continued to experience significant challenges
although a modest improvement in conditions appeared for the first
time in five years. Housing starts increased by 20% to 685,000, which
remains well below the 50 year average of 1.5 million starts. Single
family housing starts, which account for over 90% of our USA Cladding
and Roofing revenue, were up a more modest 11% to 475,000 starts.
This is also well below the 50 year annual average of over 1.0 million
starts for single family housing.
The USA operations reported revenue of A$499m, 16% above last
year, reflecting the full year inclusion of the Cultured Stone joint venture
acquired in December 2010, and the increase in market volumes.
At the EBIT level, the USA reported a loss of A$84m compared to a
A$99m loss last year. US dollar losses decreased to US$87m against
US$99m in FY2011. The year on year improvement was due to the
modest improvement in the housing market, together with continued
cost reductions through lower head count, lEAN benefits, further plant
rationalisations and other cost containments.
Revenue from Cladding was up 34% to US$239m, due to full year
Cultured Stone revenues as well as an 8% increase in Bricks volumes
and an underlying increase in Cultured Stone volumes. Underlying
performance improved, but results continue to be impacted by low plant
utilisation, averaging 26% in FY2012.
Roofing revenues of US$101m increased 14% from last year, due to
a 12% increase in volumes. EBIT improved on the prior year, but was
partially offset by the Ione clay tile plant commissioning costs.
Construction Materials and Fly Ash revenues increased 7% to
US$176m due to a 16% increase in concrete volumes, flat aggregate
volumes and lower prices. The termination and settlement of a fly ash
contract also contributed to improved results.
The lost Time Injury Frequency Rate remained low at 0.7. The
US division has embedded a system-wide lEAN 5S (Sort, Set in
order, Shine, Standardise and Sustain) capability, personalised
safety interventions by business unit, and a behaviour-based safety
observation program across all operations.
Market review and outlook
A continued increase in housing starts in FY2013 is expected,
biased towards the second half. The business is well positioned to
take advantage of market recovery through lEAN and Sales and
Marketing Excellence, combined with the restructured Roof Tile and
Cultured Stone business positions, and the further rationalisation of
operating positions.
Boral USA generated US$75m of EBIT in FY2007 when housing starts
of 1.55 million were close to the 50 year average, compared to the
EBIT loss of US$87m in FY2012 at 685,000 starts. Comparing Boral’s
like-for-like brick and roof tile businesses in FY2009 and FY2012, when
housing starts were running at similarly low levels of around 55% below
mid-cycle levels, EBIT losses have reduced by US$25m, demonstrating
the considerable uplift in the underlying business. Boral will see strong
future earnings leverage from an increase in new house construction
in the USA.
HigHLigHts
CULTURED STONE INTEGRATION
Boral usA has integrated its 50% interest in
the nation’s leading manufactured veneer stone
business, cultured stone, into its portfolio and
achieved synergies exceeding expectations.
“ONE BORAL” BRAND
Boral usA is presenting a unified look and feel
across all businesses to position Boral usA as
a leader in innovative and sustainable building
products. Boral participated in Disney’s vision
House in innoventions at epcot center in Florida,
which highlighted Boral’s dedication to eco-friendly
high performance building solutions.
MONTERREy ShAkE
Boral’s newly developed monterrey shake tile has
been commercialised with the commissioning of the
ione, california clay tile plant. monterrey shake is
a flat clay tile with shake aesthetics that enhances
Boral roofing’s portfolio with its high end, re-roof
market focus. it is helping to embrace customers
in new market segments and geographies.
23
plasterboard Asia
Frederic de rougemont Chief Executive Officer, Boral Gypsum Asia
Boral’s plasterboard business in Asia
operates as Boral Gypsum Asia (BGA),
and is the leading supplier of plasterboard
and internal linings products across Asia.
BGA operates 20 manufacturing sites in
eight countries, trades in a further two,
and exports to more than 30 countries.
External revenue
At a glance
Revenue
EBIT
Employees
Capital expenditure
$304m
$41m
2,405
$20m
our Businesses
kOREA
BGA has a strong
market position in
korea, with a market
share of around
45%. The business
operates three low cost
manufacturing plants
totalling 153 million m2
in capacity.
ThAILAND
In Thailand BGA has
the leading market
position, a market share
of around 55%, with
capacity across three
plants of 105 million m2.
ChINA
In China, BGA has
regional positions with
over 25% market share
in target segments in
three main provinces
of Shanghai, Chongqing
and Chengdu. Six plants
with total capacity of
140 million m2 supply
its target markets.
INDONESIA
With leading market
share in Indonesia,
BGA has 35 million m2
of capacity across its
two plants at Cilegon
and Gresik.
OThER
BGA has 30 million m2
capacity across Vietnam,
Malaysia and India,
with leading market
positions in these
countries as well as
the Philippines and the
United Arab Emirates
where BGA product
is distributed.
Korea
Thailand
China
Indonesia
Other
PhOTO
Boral’s Dangjin plasterboard
plant in Korea has been
operating since 2002.
24 Boral Limited Annual report 2012
Performance
Boral completed the acquisition of lafarge’s 50% interest in lafarge
Boral Gypsum Asia (lBGA) in December 2011, positioning Boral as the
leading producer of plasterboard and related internal linings solutions
in the Asia Pacific region. Integration and rebranding of the businesses
across the region was completed prior to financial year end.
BGA’s revenue of $304m incorporates 100% of revenue since
9 December 2011. Revenues in Indonesia grew strongly on the prior year
due to favourable economic conditions. Thailand also delivered revenue
growth, reflecting organic growth and volumes associated with post-
flood reconstruction work in Bangkok. In China, revenues grew less
than expected due to a slow-down in construction activity, but benefited
from BGA’s newly acquired plant in Shandong. In Korea, revenues
increased on plasterboard penetration in the residential sector, despite
some share loss following price competition in the last six months.
Underlying EBIT increased from improved volumes and sustained
margins. The market factors outlined above in China and Korea and
“one-off” costs of integrating the Shandong (China) acquisition are
not expected to have a sustained impact on earnings growth.
BGA continued to benefit from increasing capacity, both through
acquisition and through organic expansion. BGA’s acquisition of the
new plant in Shandong in China in December 2011 added 35 million m2
of capacity. The plant provides an increased market share in Beijing and
Tianjing, as well as creating new positions in the high end segments of
some key cities in Shandong. At our plant in Chongqing, China, the first
stage of a capacity expansion was completed in March 2012, which
will see capacity increase from 13 to 43 million m2 by october 2012.
In Indonesia, the more than doubling of capacity at BGA’s Cilegon plant
should be completed in early 2013 and will enable Boral to increase
supply to the Jakarta market. The more than doubling of capacity at the
Ho Chi Minh plant in Vietnam to 30 million m2 is progressing in line with
expectations.
The business’ strategy of promoting a full system offering continues
to be successful, with sales growth of metal studs, compounds and
ceiling tiles surpassing plasterboard sales. Boral’s Sales and Marketing
Excellence program is focused on engaging more effectively with
specifiers and designers to strengthen sales in high end projects,
increasing penetration of plasterboard solutions.
The introduction of lEAN across BGA will provide efficiency
improvements and cost reductions in FY2013 and facilitate further
capacity increases at all plants with minimal investment.
The lost Time Injury Frequency Rate of 0.4 in FY2012 compares well
with Boral’s group result of 1.8. Safety training programs focused on risk
assessment and prevention and Boral’s Safety Management system are
expected to underpin continued improvements in safety performance.
Market review and outlook
Continued strong growth in construction activity is expected in FY2013,
as well as increased market penetration by plasterboard.
Boral is well positioned to drive further penetration of plasterboard
internal wall partition and ceiling solutions. Growth in existing
plasterboard capacity which will be achieved through lEAN, as well as
the 75 million m2 of capacity expansion underway, will service future
sales growth. In the medium term, management believes that this
should result in revenue and earnings growth at levels that compare
with the annual average growth achieved by the business over the
last 10 years.
Although residential construction activity remains soft in China, our
plant in Shandong will see volume growth in new high end markets
in Beijing, Tianjing and Shandong.
HigHLigHts
ShANDONG PLANT ACQUISITION
BgA acquired a 35 million m2 capacity plasterboard
plant in shandong, china, in December 2011.
the plant provides BgA with a significant market
share in Beijing and tianjing as well as some key
cities in shandong.
LEAN MANUFACTURING
Boral introduced its LeAn program of operational
excellence across its Asian plasterboard
operations following the acquisition of Lafarge’s
50% interest in LBgA. improvement action plans
have been completed and are expected to deliver
significant operational improvements in Fy2013.
ENhANCED FOCUS ON INNOVATION
Focus on innovative product solutions will be
enhanced with the establishment of a research
and development centre in kuala Lumpur, malaysia
which should be ready in Fy2014. product
developments to date have included an ultra-light
board in malaysia, gyptex ceiling tiles in korea,
and a new water resistant product particularly
suitable for eave applications in thailand.
25
sustainability
cAse stuDy
CELEBRATING 10 yEARS OF PARTNERShIP
WITh BANGARRA DANCE ThEATRE
Boral has assisted with the employment of a new
trainee dancer for Bangarra, Luke currie richardson.
During this year’s melbourne season, Luke and
some other dancers took some time out to meet
with Boral employees at the port melbourne
offices and plasterboard plant.
Boral’s sustainability initiatives
are prioritised to direct resources
where the greatest value can be
delivered for our shareholders,
customers, employees and
communities. Focus is on
delivering best practice safety
management, responsible
environmental management,
sustainable product development
and value-creating partnerships.
PhOTO
Boral has worked with the
local community to rehabilitate
the upper reaches of the
Pimpama River which runs
alongside the Boral Ormeau
Quarry in Queensland.
26 Boral Limited Annual report 2012
environment
Energy use and GhG emissions
Boral’s operations consume a significant amount of energy, and some
businesses are particularly emissions intensive. In FY2012, greenhouse
gas (GHG) emissions from Boral’s fully owned businesses in Australia,
the USA and Asia totalled 3.5 million tonnes of Co2, which was in
line with the prior year on a comparable basis. The increase in GHG
emissions relative to the 3.2 million tonnes of Co2 reported in FY2011
reflects the acquisition of lafarge’s 50% share in Boral Gypsum Asia as
well as the acquisition of Wagners Construction Materials and Sunshine
Coast Quarries.
Emissions from Boral’s US operations were down by around 3%
on a comparable basis, reflecting more efficient production, plant
rationalisations and lower production in some businesses. In Australia,
emissions were down 2%, with lower production in Building Products
offset by additional emissions in Construction Materials from higher
production in regional areas. In Asia, Boral’s GHG emissions were
up 16% on the prior year, reflecting plant expansions and increased
production.
During FY2012, Boral incurred seven Penalty Infringement Notices
(PINs) related to environmental contraventions in Australia (resulting
in $10,750 in fines). Three PINs were issued in Queensland and three
in New South Wales, all resulting from inadequate controls to prevent
localised water contamination with fine solids. one infringement was
issued in Western Australia due to a failure to have a level testing gauge
on a cement silo. There were no infringements in the USA or Asia.
Water management
Boral’s operations consume water for manufacturing and maintenance
processes. Mains water is Boral’s most significant water source, with
a total of 3,500 million litres of mains water used in our wholly owned
businesses in Australia, the USA and Asia in FY2012.
Mains water use increased by 1,370 million litres on the prior year
largely due to the inclusion of Boral Gypsum Asia, now a wholly owned
business, under Boral’s management control. With plasterboard production
being highly water-intensive, Boral’s Camellia Plasterboard plant has
been substituting some 4.5 million litres per month of mains water
with recycled water supplied by Sydney Water, since october 2011.
Boral Timber and biodiversity
Boral’s Environmental Policy includes a commitment to protect
biodiversity. The majority of timber for Boral’s Timber business is
supplied by Forests NSW, which is certified to meet the Australian
Forestry Standard (AFS), an independently audited forest management
standard. All products made by Boral Timber are also certified to
the AFS Australian Chain of Custody standard, which traces Boral’s
production back to its source of supply. This provides Boral’s
customers with certainty that its products come from legal and
sustainable sources.
In 2011, Boral received some logs for its hardwood timber business
from the Boambee State Forest, which is a mix of plantations and
native regrowth forests. There has been selective timber harvesting in
the Boambee State Forest every 10 years or so since the early 1900s,
with 10% of the area subject to harvesting in 2011. Prior to harvesting,
surveys were carried out in accordance with the Threatened Species
licence by NSW State Forest for a range of potential threatened
species, including koalas. Harvesting is therefore selective within
the harvestable area and ensures trees are retained for habitat of
threatened species and forest regeneration.
cAse stuDy
RECyCLING INNOVATION
Bricks, concrete and other demolition waste are
used for landfill and specialised products, but
typically much more is produced than can be
recycled. now, in what is believed to be a first in
the Australian capital territory, Boral is sorting
and crushing demolition wastes and blending them
with virgin quarry material to create a revolutionary
recycled road base that is stronger and
more sustainable.
Boral’s Australian GHG emissions
Calcination
Electricity
Coal
Natural gas
Diesel and liquid fuels
Other
At a glance
39%
17%
18%
13%
9%
4%
gHg emissions (million t co2e)
Australia
USA
Asia
Total
Fy2012
Fy20111
2.9
0.2
0.4
3.5
3.0
0.2
0.41
3.6
mains water (million litres)
3,500
2,130
1
FY2011 GHG emissions data include 100% of BGA, Wagners and Sunshine Coast
Quarries. FY2011 water data exclude 50% of BGA previously owned by lafarge,
Wagners and Sunshine Coast Quarries.
pins
Number
Fines
7
5
$10,750
$12,473
27
community partnerships
Boral is making a valued and
sustainable contribution to
the communities in which it
operates through its community
partnership program.
This year we partnered with two additional charities: Redkite and Touched
by olivia Foundation, bringing our total number to seven key corporate
partnerships.
A thorough selection process takes place to identify the most appropriate
and meaningful partnerships for Boral. The organisations we partner with
must be well-run, reputable and share similar values to Boral.
In FY2012, Boral contributed a total of $366,944 to its corporate Community
Partnerships. In addition, a further $94,880 was donated to the Juvenile
Diabetes Research Foundation (JDRF) including a $25,000 corporate donation
with the remaining funds raised through employee fundraising efforts
throughout Australia.
In addition to the Group’s corporate partnerships, Boral’s local businesses
support local community activities, including charities, emergency services,
sporting and environmental groups.
As a matter of policy, the Group does not participate in or donate to any
political or politically associated organisations.
Redkite
Redkite provides a range of essential support services to families dealing
with cancer. Boral is the Supporting Partner of Redkite’s Financial Assistance
program, ensuring that the charity can continue to meet families’ needs by
assisting them with everyday expenses such as putting petrol in the car to
get a child to treatment and buying groceries. More than 50 families across
Australia have already been supported.
Touched by Olivia Foundation
Through this partnership Boral will help the Foundation realise its national
strategy to create state-of-the-art inclusive playgrounds at 42 sites
across Australia.
An all-abilities playground is one that at a minimum caters for vision, hearing
and mobility impairment as well as spectrum disorders. These playgrounds
allow children and parents of varying abilities and ages to play side-by-side
on the same equipment, ensuring the integration of children and families with
special needs.
28 Boral Limited Annual report 2012
Conservation Volunteers Australia (CVA)
Boral has been working with CVA for 24 years.
Through a reconfigured partnership, we will
now work with CVA to develop Biodiversity
Classrooms in schools across Australia. Up to 45
practical conservation projects will be conducted
on school grounds or close by selected schools
in New South Wales, Victoria and south east
Queensland. These may include creating
vegetable or bush food gardens, maintaining
rainforest habitat or creating frog-friendly
environments.
Bangarra Dance Theatre
Boral and the Bangarra Dance Theatre celebrate
10 years in partnership this year. Bangarra is
Australia’s leading Indigenous dance group
and an internationally acclaimed contemporary
dance company. During the year over 300 Boral
employees, customers and suppliers enjoyed
Bangarra performances in regional centres and
capital cities throughout Australia. Boral is the
Sydney season sponsor and has also contributed
towards the salary of a new trainee dancer for
the Company.
Taronga Conservation Society
Boral has partnered with the Taronga
Conservation Society Australia since 2003 and
is currently the main sponsor of Youth at the Zoo
(YATZ). Employees can access Zoo passes to
visit Taronga and Western Plains Zoos, attend
Boral’s Family Day event and participate in the
annual Boral YATZ Eco Fair. The Zoo’s Twilight at
Taronga Concert program is a unique customer
hospitality opportunity for Boral with over
140 guests attending the 2012 concert series.
Juvenile Diabetes Research Foundation
Boral has supported the Juvenile Diabetes
Research Foundation (JDRF) since 2001 and
has contributed over $2.9 million in that time.
A substantial percentage of this came from
employee fundraising in Australia and the USA.
homeAid
Boral continued its partnership, initially
established in 2006, with HomeAid in the United
States with contributions of cash and product
to provide shelter for the homeless. Through this
program Boral works with customers, showcases
our products and engages employees.
Outward Bound
After nine years and the participation of over
100 Boral families we sent our final seven Boral
families on outward Bound Family Re-discovery
Programs in New South Wales, Victoria and
Western Australia in 2012.
Boral will now assist disadvantaged youth
to experience outward Bound through a
contribution to the Australian outward Bound
Development Fund to assist Youth in Need.
The first program was held in May in South East
New South Wales and involved 100 high school
students from Bega and the surrounding districts
who could not otherwise have taken part in such
a program.
outward Bound’s Building Resilient Families
program is open to public enrolments if Boral
employees wish to continue to participate.
customers
and products
With excellence in sales and
marketing remaining a key priority
for Boral, our efforts to leverage
sales effectiveness and customer
relations across the Group are
delivering solid results.
Collaboration
The roll-out of new Boral-wide branding and marketing standards has
helped to support improved cross-divisional collaboration while the
introduction of a single Customer Relationship Management system for
all Australian businesses is enabling us to better understand and support
our customers. The enhancements in collaboration and sales reporting
have led to a significant increase in interdivisional sales leads.
Building capabilities
With each sales and marketing team being benchmarked against a set of
defined Boral-wide capabilities, we have a robust process of continuous
improvement in place as we work towards sector best performance.
Commercial focus
During the year, Boral’s new Sales leadership Program was launched,
with all of our sales leaders to be trained in the key areas of Commercial
Focus and Coaching.
Customer and product focus
Boral is playing an increasingly important role in the provision of more
environmentally sustainable solutions, and is working hard to engage
with key players and influence the way the industry works to deliver
better outcomes.
We are doing this by developing “better products” and systems, which
are designed in collaboration with our customers, driven by their
needs and priorities. Boral’s products are warrantied, environmentally
certified where appropriate, and backed by excellent technical and
support services.
With a focus on affordability, we are committed to delivering “unrivalled
value” and helping our customers do more for less. Cutting waste and
focusing on efficiency saves time and reduces costs, which is good for
Boral and for our customers.
We have been “investing for growth” to develop the next generation of
materials and technologies. In the USA, for example, we commenced
commercial production of Boral Trim, an innovative product
manufactured from fly ash and other recycled materials. This investment
in innovation is essential to help understand future opportunities.
We are committed to developing “lifelong solutions” for our customers,
including: helping customers to deliver better thermal performance and
reduce household energy use; reducing waste through recycling; using
certified timber from sustainably managed resources; using lifecycle
inventory (lCI) data to develop lifecycle analysis (lCA) models; providing
better thermally performing windows; and powering our trucks with
compressed natural gas.
our overarching service goal is to have “delighted customers”. We have
a reputation for successful long term customer relationships, which is
underpinned by our actions of listening to customers and making it easy
to do business with Boral. For example, our customised website makes
product selection easier, our streamlined “one Boral” approach provides
consistency and certainty for our customers, and our range of electronic
services reduces administration costs and time.
HigHLigHts
VISION hOUSE IN INNOVENTIONS
in the usA, Boral is partnering with Disney on the
vision House in innoventions at the epcot center
in Florida. the house highlights major themes of
sustainable innovation and features a variety of
eco-conscious Boral building materials including
Boralpure® smog eating roof tiles, Boral Bricks
and pavers, Boral stone products and Boral
truexterior® trim.
BORAL DESIGN AWARDS
the Boral Design Awards encourage architects and
designers to submit design concepts that not only
use Boral materials but encourage their use in a
sustainable way. with around 100 entries received
from professional designers and students, the 2012
Awards focused on “adaptable re-use” and providing
sustainable, affordable and healthy inner city living.
AUSTRALIAN hEARING hUB
Boral is supplying product to the Australian Hearing
Hub under construction at macquarie university in
new south wales. this purpose-designed facility
will bring together government, corporate and
not-for-profit organisations to undertake research
and implantations.
Boral has supplied plasterboard, concrete, bricks
and masonry to the project. over 10,000 sheets
of Boral Firestop, recessed edge and perforated
echo stop plasterboard have been supplied to the
project via our customer, Foxville, the plasterboard
contractor for the site.
29
our people
As at 30 June 2012, Boral had 14,740 full-time
equivalent (FTE) employees and around 6,300
contractors working across its global operations.
The number of FTE employees decreased by
4% on the prior year, reflecting the net impact
of organisational changes and site closures in
response to declining markets, the sale of the
Indonesian construction materials business and
the acquisition of the remaining 50% interest in
Boral Gypsum Asia (BGA). In addition, there are
approximately 890 FTE employees working in
joint ventures. The majority of previously reported
joint venture employees transferred to Boral upon
BGA becoming a wholly owned subsidiary.
The average length of service of a Boral
employee in Australia is approximately 8.1 years,
which has marginally declined from 8.6 years in
the prior year. For the USA, the average length
of service has remained constant at 7.5 years.
Asia’s average length of service has increased to
6.4 years and reflects the integration of the Asian
plasterboard businesses into Boral.
Employee turnover in Australia was 20% in
FY2012, which is in line with the prior year. In the
USA, staff turnover of 19% was higher than in
the prior year. In Asia, we are currently rolling out
Boral’s human resources reporting system within
the BGA businesses to facilitate reporting on
employee turnover.
Diversity
Boral encourages gender diversity within the
workforce. In 2012, Boral’s diversity objectives
focused on women’s representation in key roles
as well as continuing gender-specific programs
covering training, paid parental leave and pay
equity for women employees. Boral is applying
its resources to recruitment and development
activities aimed at improving our gender diversity.
Boral continues to actively support and
promote its Indigenous employment strategy.
Under the Indigenous Employment Plan, which
the Company entered into in 2011 with the
Department of Education, Employment and
Workplace Relations (DEEWR), Boral has
employed 42 Indigenous employees. The Group
continues to achieve a high level of retention of
its Indigenous employees, with 97% of those
employed over the last three years still working
in the Australian operations.
Training and development
An important part of Boral’s people strategy is
to ensure that our people have the right skills
and capabilities to perform their jobs effectively
and develop their careers. We provide a range
of methods to train and develop our people,
ranging from on-the-job training through to
leadership development programs.
A principal tool in producing a framework for
employee development is the annual Personal
Development Process and mid year employee
interview. The objective is to clearly identify
performance expectations and map out plans to
help employees achieve their maximum potential
for their benefit and the benefit of Boral.
Boral’s corporate values of
Excellence, Integrity, Collaboration
and Endurance are the essential
principles that guide our decision
making and actions. Our Code of
Conduct requires employees to
observe both the letter and the spirit
of the law, adhere to high standards
of business conduct and strive for
best practice.
our people
FTE employees
JV employees
FTE contractors
Average length of service
Australia
USA
Asia
Women in Boral
Women in management
Women on the Board
30 Boral Limited Annual report 2012
Fy2012
14,740
~890
~6,300
Fy2011
15,227
~4,900
~5,600
8.1 years
8.6 years
7.5 years
7.5 years
6.4 years
5.0 years
14%
9%
25%
13%
10%
25%
Health and safety
Boral’s safety target is to achieve zero harm in all of our workplaces.
During the year, Boral continued its commitment towards this goal by
implementing a new behaviour-based workplace improvement program
in Australia and the USA, with Asia currently underway. A single safety
system which standardises divisional systems is currently being rolled
out across Boral’s businesses in Australia.
Additional areas of focus for the Group during the year were: driver
training and education for heavy and light vehicle drivers, a whole of
business workplace health and safety audit system including peer
audits, improving the existing workplace health and safety data
management system, standardisation of personal protective equipment,
and improving “3 Points of Contact” practices.
Boral’s injury statistics for employees and contractors are aggregated
and reported as a single metric for both lag and lead indicators. Current
indicators include lost Time Injury Frequency Rate (lTIFR), Percentage
Hours lost, Recordable Injury Frequency Rate (RIFR), Near Misses, and
Hours Away on Rehabilitation or Transfer. These metrics are reported
to the Board on a monthly basis and reviewed in detail at Board Health,
Safety and Environment Committee meetings. Work continues on
developing a suite of metrics to ensure workplace health and safety
data are appropriately understood and acted on.
Performance
During FY2012, Boral’s lTIFR for employees and contractors combined
reduced to 1.8 from 2.0 in the prior year and represented a total of 86
lost time injuries. Percentage Hours lost for employees and contractors
combined reduced to 0.04 from 0.06.
The Group’s overarching strategy is to continually reduce our lTIFR and
Percentage Hours lost. In FY2012 our lTIFR of 1.8 for employees and
contractors combined represented an 11% improvement on the average
of the prior three years, and is the lowest lTIFR that Boral has reported.
The Percentage Hours lost of 0.04 for employees and contractors
combined represents a 20% improvement on the average of the last
three years.
Risk management and injury type
Boral uses statistical injury analysis to develop corrective action plans,
including training and process redesign, to address specific risks and
areas of concern. Four types of incidents made up more than 80%
of injuries in Boral’s Australian workplaces in FY2012. These were:
muscular stress (28%), hit by moving objects (22%), hitting objects with
part of the body (20%), and falls on same level (14%). of the incidents
that occurred during the year, the five areas of the body most affected
were hands/fingers (21%), back/neck (18%), leg/knee (14%), arm/elbow/
wrist (13%), and head/face/eyes (13%).
Actions continue to be taken to focus our oH&S efforts on the root
causes of these types of incidents going forward. Consistent with the
focus on driver training and education, vehicle incidents as a percentage
of all incidents decreased significantly throughout the year, and
consistent with the 3 Points of Contact intervention, falls from heights
also decreased significantly over the year.
Employee health and wellbeing
Boral requires its employees to be fit for work and equipped with
the required level of fitness to work safely. To ensure many of our
employees are physically able to perform the demands of the job,
pre-employment medical examinations as well as regular employment
medical examinations for high-risk roles are conducted.
Boral continues to be committed to supporting the health and
well-being of its employees. The BWell program, which has been
available to Australian employees for almost 10 years, provides
regular health assessments, wellbeing seminars and educational
information on health issues for employees and their families.
cAse stuDy
SETTING INDUSTRy STANDARDS
FOR hEAVy VEhICLE DRIVERS
to reduce the number of heavy vehicle incidents
across Boral’s fleet, Boral is aiming to have
all employed drivers qualified, or enrolled and
undertaking, a certificate iii in Heavy vehicle
Driving by the end of Fy2013, thereby setting
industry standards. in addition, a program is in
place to have 10% to 15% of heavy vehicle drivers
certificate iv qualified, and to train and assess
drivers on an ongoing basis. vehicle upgrades,
such as isolation switches and auto tyre inflation,
are also being made to reduce safety risks.
Mechanism of injury
Muscular stress
Hit by moving objects
Hitting objects with part of the body
Falls
Other
Employee and contractor lTIFR
d
e
k
r
o
w
s
r
u
o
h
n
o
i
l
l
i
m
2
.
3
2
2
.
0
2
.
0
2
.
8
1
.
r
e
p
R
F
T
L
I
3
8
0
0
Y
Y
F
F
4
9
0
0
Y
Y
F
F
5
0
0
1
Y
Y
F
F
6
1
0
1
Y
Y
F
F
7
2
0
1
Y
Y
F
F
8
0
Y
F
3
1
9
0
Y
F
.
5
3
1
0
1
Y
F
.
5
4
1
1
1
Y
F
2
1
Y
F
28%
22%
20%
14%
16%
31
Financial review
Andrew poulter Chief Financial Officer
32 Boral Limited Annual report 2012
The 42% decline in Boral’s net profit
after tax reflects a synchronised
downturn in the residential
construction sectors in the United
States and Australia and the impact
of adverse weather in the Australian
eastern states in the second half year.
These factors were partially mitigated
by actions taken to reduce brick and
roof tile capacity and structural costs.
Revenue
Revenue from continuing operations at $4.7b increased 9% over the
prior year and included the first time fully consolidated revenues for Boral
Gypsum Asia and the Wagners and Sunshine Coast Quarries acquisitions.
Normalising for the acquisitions, underlying Group sales revenues were level
with the prior year. The discontinued operations comprise the Indonesia
Construction Materials operations, which were sold on 31 March, and
the Thailand Construction Materials and Australian east coast Masonry
businesses which are classified as held for sale in the 30 June balance sheet.
Full year revenues were significantly impacted by three key factors: the
increase in United States housing activity, the continued decline in the
Australian residential sector and the acute wet weather experienced in
the Australian eastern states in the second half year. The weather both
suppressed housing starts and caused significant delays on infrastructure
projects in Queensland and Victoria.
Australian Construction Materials reported a 9% increase in revenues over
the prior year primarily due to the Wagners and Sunshine Coast Quarries
acquisitions. Underlying revenues were broadly level with the prior year as
weaker residential activity was offset by stronger infrastructure demand and
the first time contribution from shipments to the three Curtis Island lNG
projects in Queensland.
Cement revenues declined by 3% over the prior year as reduced demand
from the residential sector was partly offset by an increase in intra industry
cement sales. The closure of capacity in the New South Wales steel sector
caused a material reduction in lime demand and the subsequent closure of
the Galong lime plant.
Building Products bore the brunt of the continued weakening in Australian
housing activity, with revenues falling by 15% over the prior year. This decline
was most prevalent in the brick and roof tile sectors and resulted in the
closure of the Darra 3 brick plant and the Carole Park tile plant in Queensland
and the mothballing of three brick kilns in Western Australia and New
South Wales.
Plasterboard Asia revenues were consolidated from 9 December 2011
following the acquisition of the lafarge 50% stake in lBGA. like-for-like
revenues grew by 8% over the prior year due to the continued growth in most
south-east Asia markets.
United States revenues increased by 16% due to the recovery in residential
demand and the first time, full year consolidation of Cultured Stone revenues.
After normalising for the latter, underlying revenues improved by 9% over the
prior year, primarily due to increased brick and tile demand.
Income Statement
For the year ended 30 June
$ million
sales revenue
EBITDA1
EBIT/(Loss)1
Interest
Income Tax Expense1
Non-Controlling Interests
Profit/(Loss) after tax1
Net Significant Items
Net Profit/(Loss) after tax
Earnings Per Share1 (cents)
Earnings Per Share (cents)
1. Excluding significant items.
2012
2011
group
Discontinued
operations
continuing
operations
group
Discontinued
operations
continuing
operations
5,010.3
473.0
199.6
(88.4)
(8.9)
(1.1)
101.2
75.4
176.6
13.6
23.8
294.1
12.0
(1.3)
(3.5)
0.7
(0.3)
(4.4)
(28.7)
(33.1)
4,716.2
4,710.5
461.0
200.9
(84.9)
(9.6)
(0.8)
105.6
104.1
209.7
522.2
277.2
(63.7)
(40.4)
2.3
175.4
(7.7)
167.7
24.4
23.3
364.8
19.4
5.4
(4.0)
(0.4)
(0.6)
0.4
(12.4)
(12.0)
4,345.7
502.8
271.8
(59.7)
(40.0)
2.9
175.0
4.7
179.7
Earnings
Net profit after tax before significant items from continuing operations was $105.6m, a 40% reduction over the prior year,
predominantly due to a $70.9m decline in earnings before interest and tax (EBIT), a $25.2m increase in interest expense and
a $30.4m reduction in income tax expense.
EBIT from continuing operations at $200.9m was 26% below the prior year, primarily due to the weaker Australian residential
market and the acute second half weather impact, partly offset by the first time fully consolidated results for Plasterboard Asia
and a reduction in the losses from the United States.
Construction Materials, including Property Group, reported an EBIT of $173.9m, a 15% decrease over the prior year, as a result
of weaker residential demand, an adverse sales mix towards lower margin metro infrastructure work and higher operating costs.
Property earnings at $12m were $16m below the prior year; normalising for this impact, underlying Construction Materials EBIT
declined by 8%. Second half EBIT, however, declined by 23% to $84.6m, reflecting the impact of adverse weather upon both
sales and operating costs. Asphalt revenues were most adversely impacted by the east coast rain in the second half year, but still
achieved a 10% increase to $783m over the prior year, reflecting the strength of road infrastructure activity and Queensland flood
damage repairs.
The Cement division reported a 21% reduction in EBIT to $68.9m due to the change in sales mix to lower margin industry
sales and the loss of the Galong lime volumes. Early action was taken to mitigate these losses by the closure and sale of the
Galong plant. Cement pricing continues to be constrained by the strong Australian dollar, together with the under-recovery
inflationary cost increases weakening EBIT margins to 16% versus 20% in the prior year.
The segmental half year EBIT comparisons show the impact of the two year decline in the Australian housing sector upon the
Building Products division, which returned a $6.5m loss in the second half of 2012. The latter, however, included $7m of one-off
costs relating to the Port Melbourne plasterboard plant upgrade, taking the underlying trading position to break-even. The division
continues to reduce fixed costs through plant closures and mothballing and is on track to exceed its $10.0m overhead cost
reduction target following the restructuring enabled by the divestment of the east coast Masonry business.
Segment Earnings
$ million
Construction Materials
Cement Division
Building Products
Plasterboard Asia
United States of America
Unallocated
Continuing operations
Discontinued operations
Group
six mths
Dec 10
$m
six mths
Jun 11
$m
92.6
50.6
52.9
9.3
(47.2)
(11.0)
147.2
2.0
149.2
111.3
36.3
28.5
7.6
(51.8)
(7.3)
124.6
3.4
128.0
Fy2011
$m
203.9
86.9
81.4
16.9
(99.0)
(18.3)
271.8
5.4
277.2
six mths
Dec 11
$m
six mths
Jun 12
$m
89.3
40.7
26.2
12.4
(51.5)
(12.4)
104.7
3.9
108.6
84.6
28.2
(6.5)
28.5
(32.2)
(6.4)
96.2
(5.2)
91.0
Fy2012
$m
173.9
68.9
19.7
40.9
(83.7)
(18.8)
200.9
(1.3)
199.6
33
Financial review
The 2012 result includes the first time fully
consolidated earnings from Plasterboard Asia;
the $28.5m second half EBIT being added to
the first half equity accounted net profit after
tax of $10.1m and initial $2.3m consolidated
EBIT, resulting in a reported segmental profit of
$40.9m for the full year. Earnings are weighted
towards the first half of the financial year due
to religious and festive holidays and seasonal
weather constraints in the second half year.
The Plasterboard Asia division is performing
close to the acquisition assumptions, although
the second half EBIT was adversely impacted
by the delay in the commissioning of the
Shandong plant in China and a short term loss
in Korean market share due to pricing issues.
The United States reduced EBIT losses by 15%
to ($83.7m) primarily due to the improvement in
housing sector demand, where brick revenues
increased by 12% over the prior year, broadly
in line with the 11% increase in single family
housing starts in the brick states. likewise, roof
tile revenues grew by 14% as a result of a 17%
increase in single family housing starts in the
tile states. Second half EBIT losses, however,
reduced to $32.2m as a result of the increase in
housing construction activity; the second half
year taking benefit from the customary increase
in spring sales.
Brick capacity was further optimised during the
year, reducing the permanent manufacturing
base to 12 plants and 1.3 billion standard
brick equivalents versus 24 plants and
1.9 billion capacity at the peak of the last
cycle. The Cultured Stone operations continue
to make good progress in terms of both
increased sales revenues supported by the
Boral bricks distribution channels and lower
production costs through the adoption of
lEAN manufacturing.
While the United States operations are projected to break even at around
950,000 housing starts, the break-even for Cultured Stone is projected at
circa 850,000 starts as a result of the recent improvement in production
efficiencies together with the ongoing automation of the Chester plant.
The Group reported net profit after tax of $176.6m after recognising
$75.4m of significant items after tax, which are summarised in the
table below. Underlying net profit after tax of $101.2m declined by 42%
over the prior year.
Four significant item profits were recognised during the year.
The first is a $158.1m gain upon the revaluation of Boral’s existing 50%
shareholding in Plasterboard Asia (formerly lBGA) following the purchase
of the remaining 50% from lafarge SA.
The second is $26.4m with regard to the remeasurement of the Cultured
Stone purchase price. Upon acquisition of the initial 50% of Cultured Stone
in December 2010, a liability was raised for the purchase of the remaining
50% at a multiple of 2013 calendar year earnings. Due to the delay in the
recovery of the United States housing market, this multiple will not now
be met and the purchase obligation has been reduced to the minimum
contractual obligation of US$45m.
The third is a $34.2m gain upon the divestment of the Indonesia
Construction Materials business which was sold in March 2012.
A further $6.0m gain was recognised upon the beneficial settlement of an
onerous take or pay contract in the United States which had been provided
for in full in the 2009 accounts.
offsetting these significant item profits were one-off costs of $28.8m
relating to the legal, advisory and transaction costs, including stamp duty,
of the three acquisitions made in the first half year and restructuring costs
of $38.2m in the United States and $134.1m in Australia.
The United States costs relate to the closure of two brick plants and
the impairment of goodwill on the Construction Materials businesses
in Denver and oklahoma. The Australian costs are made up of the
impairment of the east coast Masonry operations held for sale at 30 June
2012, the redundancy costs associated with the restructuring of the Clay
and Concrete and Corporate operations and the impairment of the Galong
lime plant which was closed in october 2011.
Reconciliation of Underlying Fy2012 Results to Reported Results
$ million
Underlying results
Significant items
Gain on fair value of initial lBGA shareholding
Acquisition and integration expenditure
Restructure and reshaping in Australia
Restructure and reshaping in USA
Settlement of USA fly ash contractual obligation
Remeasurement of Cultured Stone purchase price
Gain on sale of Indonesian Construction Materials
Tax
Total significant items
Reported results
34 Boral Limited Annual report 2012
eBit
interest
tax
interests profit after tax
199.6
(88.4)
(8.9)
(1.1)
101.2
non-
controlling
158.1
(28.8)
(134.1)
(38.2)
6.0
26.4
34.2
23.6
223.2
51.8
51.8
42.9
(88.4)
158.1
(28.8)
(134.1)
(38.2)
6.0
26.4
34.2
51.8
75.4
(1.1)
176.6
Cash Flow and Borrowings
operating cash flow was $133m versus $351m in the prior year.
This reduction was due to an $89m increase in tax and interest payments;
the prior year took benefit from a one-off $50m tax refund. Interest
expense increased due to the additional borrowings required to fund
the three acquisitions made during the first half year.
Cash outflows relating to the payment of acquisition and restructuring
costs increased by $64m to $91m. These cash outflows related to the plant
closures and restructuring in the Building Products division, acquisition
costs including stamp duty and the successful termination of a take or
pay contract in the United States.
Free cash flow showed a net outflow of $852m due to a $68m increase
in capital expenditure and the $701m acquisition investment for lafarge’s
50% shareholding in lBGA and the Wagners and Sunshine Coast Quarry
businesses in Queensland. Proceeds from divestments increased to
$130m, predominantly from the divestment of the Indonesia Construction
Materials business and the Galong lime plant.
Capital expenditure of $414m included $192m of stay-in-business
expenditure, representing 70% of depreciation. Growth expenditure
included the New South Wales Peppertree aggregates quarry, now
midway through construction; the completion of the Port Melbourne
plasterboard plant upgrade; the investment in mobile concrete plants
for the three Curtis Island lNG projects; and fixed and mobile asphalt
plant investments.
Net debt increased by $1,013m to $1,518m from $505m at June 2011
due to the planned acquisition and capital expenditure investments made
during the year. Gearing, net debt to net debt plus equity, increased to
30.8% versus 13.8% in the prior year; the latter was abnormally low due
to the positive cash balances held following the July 2010 equity raising.
Gearing is, however, still toward the lower end of the 28% to 37% range
reported over the prior 10 years.
The Group continues to focus on debt reduction through the management
of working capital, principally finished goods inventories and the
divestment of non-core businesses and properties.
In November 2011, the Group secured an additional $500m four year
syndicated debt facility with its existing banking group, increasing its
syndicated banking facilities to $1.2b. The Group continues to operate
comfortably within its banking covenants.
Senior notes
Bank debt
Debt maturity profile
500
400
300
200
100
m
$
A
3
1
Y
F
4
1
Y
F
5
1
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
The Group’s debt profile continues to be
well placed, with the weighted average debt
maturity at just under four years. In May this
year, $152.5m of US Private Placement debt
matured and was replaced with less expensive,
short term US$ debt drawn down from our
syndicated Australian facilities. The weighted
average cost of debt was reduced to 6.8%
versus 7.3% in the prior year.
Earnings per share, before significant items,
decreased to 13.6 cents from 24.4 cents; the
final dividend of 3.5 cents per share brought
the full year dividend to 11.0 cents per share
versus 14.5 cents in FY2011.
35
Board of Directors
Together,
the Board
members have
a broad range
of financial and
other skills,
extensive
experience
and knowledge
necessary to
oversee Boral’s
business.
36 Boral Limited Annual report 2012
BOB EVERy
Non-executive Chairman
Age 67
Dr Bob Every (Ao) joined the
Boral Board in September
2007 and became Chairman
of Directors on 1 June
2010. He is the Chairman
of Wesfarmers limited. He
is also a Director of o’Connell
Street Associates Pty
limited, oCA Services Pty
ltd and Chairman of Redkite.
He was Managing Director of
Tubemakers of Australia and
held senior executive positions
with BHP limited before
becoming 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. In 2012,
he was appointed an officer
of the order of Australia for
his distinguished service
to business, particularly
through leadership roles in
the Australian steel industry,
as an advocate for corporate
social responsibility, and to
the community as a contributor
to educational, charitable and
cultural organisations.
Dr Every is a member of the
Remuneration & Nomination
Committee and of the
Health, Safety & Environment
Committee.
CAThERINE BRENNER
Non-executive Director
Age 41
Catherine Brenner was
appointed to the Boral Board
on 15 September 2010.
Ms Brenner is a Director
of Coca-Cola Amatil limited
and AMP limited. Ms Brenner
was previously a Director of
Centennial Coal limited and
the Australian Brandenburg
orchestra.
Ms Brenner is a member
of the Takeovers Panel and a
Trustee of the Sydney opera
House Trust. She has extensive
experience in corporate finance
and capital markets, previously
holding the position of
Managing Director, Investment
Banking of ABN Amro Australia.
She holds an MBA from the
Australian Graduate School
of Management, and a Bachelor
of laws and Bachelor of
Economics from Macquarie
University.
Ms Brenner is a member of
the Audit Committee and of
the Remuneration & Nomination
Committee.
BRIAN CLARk
Non-executive Director
Age 63
Dr Brian Clark joined the Boral
Board in May 2007. He has
experience as a 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.
Dr Clark is Chairman of the
Remuneration & Nomination
Committee.
EILEEN DOyLE
Non-executive Director
Age 57
Dr Eileen Doyle joined the Boral
Board in March 2010. She is a
board member of the CSIRo
and a Director of GPT Group
limited and Bradken limited.
She is also Chairman of Hunter
Valley Research Foundation
and Director of Hunter
Founders Forum, which are
two non-profit organisations.
Dr Doyle was previously a
Director of oneSteel limited
and Ross Human Directions
limited. Dr Doyle’s career
in the materials and water
industries in Australia has
included five years in senior
operational roles with
CSR limited. Prior to that,
Dr Doyle spent 13 years
with BHP limited in various
senior operational, marketing
and planning roles and four
years with Hunter Water with
responsibilities for planning and
policy development. She has a
PhD in Applied Statistics from
the University of Newcastle, is
a Fulbright Scholar and has an
Executive MBA from Columbia
University Business School.
She is a Fellow of the Australian
Institute of Company Directors.
Dr Doyle is Chairman of the
Health, Safety & Environment
Committee and a member
of the Audit Committee.
JOhN MARLAy
Non-executive Director
Age 63
John Marlay joined the Boral
Board in December 2009.
He is a Director of Incitec
Pivot limited, Chairman of
Cardno limited, a Director of
Alesco Corporation limited
and a member of the board of
the Climate Change Authority
(a Government Statutory
Authority). He was the
Chief Executive officer and
Managing Director of Alumina
limited from December 2002
until his retirement from that
position in 2008. Previously,
he held senior executive
positions and directorships
with Esso Australia limited,
James Hardie Industries
limited, Pioneer International
Group Holdings and Hanson
plc. He has a Bachelor of
Science degree from the
University of Queensland
and a Graduate Diploma from
the Australian Institute of
Company Directors. He is a
Fellow of the Australian Institute
of Company Directors.
Mr Marlay is a member of the
Remuneration & Nomination
Committee and of the
Health, Safety & Environment
Committee.
RIChARD LONGES
Non-executive Director
Age 67
Richard longes joined the
Boral Board in 2004. He is
the Chairman of Austbrokers
Holdings limited and a
Director of Investec Bank
(Australia) limited and Voyages
Indigenous Tourism Australia
Pty ltd. He was previously a
Director of Metcash limited,
of Investec Bank, a principal
of Wentworth Associates, the
corporate advisory and private
equity group, and a partner of
the law firm Freehills. He has
arts and law degrees from the
University of Sydney and an
MBA from the University of
New South Wales.
Mr longes is a member of
the Audit Committee.
PAUL RAyNER
Non-executive Director
Age 58
Paul Rayner joined the Boral
Board in 2008. He is a Director
of Qantas Airways limited,
Chairman of Treasury Wine
Estates limited and a Director
of Centrica plc, a UK listed
company. He is also a member
of the Rotary Aboriginal and
Torres Strait Islander Tertiary
Scholarship Advisory Board.
He has held senior executive
positions in finance and
operations in Australia including
Executive Director-Finance and
Administration of Rothmans
Holdings limited and 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.
Mr Rayner is Chairman of
the Audit Committee.
37
Corporate Governance Statement
• monitoring Board composition, processes and
performance; and
• monitoring the effectiveness of systems in place for keeping
the market informed, including shareholder and community
relations.
Non-executive Directors spend approximately 35 days each
year on Board business and activities including Board and
Committee meetings, meetings 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 Boral’s sites
in Australia, including concrete operations at Artarmon in
Northern Sydney and Boral’s Waurn Ponds cement plant in
Victoria. The Directors also undertook a tour of the Group’s
(now wholly owned) plasterboard operations in Thailand and
China. The Board also undertook a tour of certain of the
Group’s brick and stone plants in the United States.
Delegation to management
The Board has delegated to the Chief Executive and, through
the Chief Executive, 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 Chief Executive 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 Chief Executive 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 & Nomination
Committee and subsequently the Board formally review the
performance of the Chief Executive. The criteria assessed
are both qualitative and quantitative and include profit
performance, other financial measures, safety performance
and strategic actions.
The Chief Executive annually reviews the performance of
each of Boral’s senior executives, being members of the
Operations Executive, using criteria consistent with those
used for reviewing the Chief Executive. The Chief Executive
reports to the Board through the Remuneration & Nomination
Committee on the outcome of those reviews.
Further details on the assessment criteria for Chief Executive
and senior executive remuneration (including equity-based
plans) are set out in the Remuneration Report which forms
part of the Annual Report.
Introduction
This section of the Annual Report 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 Group to enhance shareholder value.
Throughout FY2012, Boral’s governance arrangements
were consistent with the Corporate Governance Principles
and Recommendations published by the ASX Corporate
Governance Council.
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/article/corporate_governance.asp.
Principle 1: Lay solid foundations for management
and oversight
Responsibilities of the Board and management
The Board
Directors are accountable to the shareholders for the
Company’s performance and governance. Management is
responsible for implementing the Company’s strategy and
objectives, and for carrying out the day-to-day management
and control of the Company’s affairs.
The Board has adopted a Board Charter which sets out
those functions reserved for the Board and those delegated
to management.
The Company’s Board Charter and Constitution are available
on Boral’s website.
The Board’s responsibilities, as set out in the Board Charter,
include:
• oversight of the Company including its control and
accountability systems;
• appointing, rewarding and determining the duration of
the appointment of the Chief Executive and ratifying the
appointments of senior executives including the Chief
Financial Officer and the Company Secretary;
• reviewing and approving overall financial goals for the
Company;
• monitoring implementation of strategy, business
performance and results and ensuring that appropriate
resources are available;
• approving the Company’s financial statements and annual
budget, and monitoring financial performance against the
approved budget;
• reviewing, ratifying and monitoring systems of risk
management and internal control, codes of conduct
and legal compliance (including in respect of matters of
sustainability, safety, health and environment);
• considering and making decisions about key management
recommendations (such as major capital expenditure,
acquisitions, divestments, restructuring and funding);
• determining dividend policy and the amount, nature and
timing of dividends to be paid;
38 Boral Limited Annual Report 2012
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, extensive experience and knowledge
necessary to oversee Boral’s business. The Board of
Directors comprises seven non-executive Directors
(including the Chairman) and, until 22 May 2012, also
included one executive Director, being the Chief Executive.
The roles of Chairman and Chief Executive are not exercised
by the same individual. The skills, experience and expertise
of each Director are set out on pages 36 and 37 of
the Annual Report.
The Constitution provides that there will be a minimum of
three Directors and a maximum of 12 Directors on the Board.
During FY2012, Mark Selway stepped down from the Board
(in May 2012).
The period of office held by each current Director is:
Richard Longes
Bob Every
Brian Clark
Paul Rayner
John Marlay
Catherine Brenner
Eileen Doyle
Appointed
Last Elected at an
Annual General Meeting
2004
2007
2007
2008
2009
2010
2010
4 November 2010
4 November 2010
3 November 2011
3 November 2011
4 November 2010
4 November 2010
4 November 2010
Details of the number of meetings attended by each Director
are set out on page 48 of the Directors’ Report.
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 Chief Executive
to review key issues and performance trends. He also
represents the Company in the wider community.
Committees
To assist the Board to carry out its responsibilities, the Board
has established an Audit Committee, a Remuneration &
Nomination Committee and a Health, Safety & Environment
Committee. The qualifications of each Committee member
are set out on pages 36 and 37, and the number of meetings
they attended during the reporting period is set out on
page 48 of the Directors’ Report.
These Committees review matters on behalf of the Board
and, as determined by the relevant Charter:
• refer matters to the Board for decision, with a
recommendation from the Committee; or
• determine matters (where the Committee acts with
delegated authority), which the Committee then reports
to the Board.
Board Committees are discussed further below under
Principle 4 (Audit Committee), Principle 7 (Health,
Safety & Environment Committee) and Principle 8
(Remuneration & Nomination Committee).
•
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.
•
•
•
It is considered that none of the interests of Directors with
other firms or companies having a business relationship
with Boral could materially interfere with the ability of those
Directors to act in Boral’s best interests. 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
Board succession planning, and the progressive and orderly
renewal of Board membership, are an important part of the
governance process.
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. The Board is also looking to maintain
gender diversity in its membership. Currently two of
the seven non-executive Directors on the Boral Board
are women.
As part of the appointment process, Directors consider
Board renewal and succession plans and whether the Board
is of a size and composition that is conducive to making
appropriate decisions.
39
Corporate Governance Statement
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 performance of the Board Committees
took place in FY2012 in accordance with the process
described above.
Conflicts of Interest
In accordance with Boral’s Constitution and the Corporations
Act 2001 (Cth) (Corporations Act), Directors are required
to declare the nature of any interest they have in business
to be dealt with by the Board. Except as permitted by the
Corporations Act, Directors 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. Directors also have
access to members of senior management at any time to
request relevant information.
The Company Secretary provides advice and support
to the Board and is responsible for Boral’s day-to-day
governance framework.
Under the Company’s Constitution and agreements with
Directors and to the extent permitted by law, the Company
indemnifies Directors and executive officers against liabilities
to third parties incurred in their capacity as officers of
the Company and against certain legal costs incurred in
defending an action for such a liability.
The appointment of Directors follows a process during
which the full Board assesses the necessary and desirable
competencies of potential candidates and considers a
number of names before deciding on the most suitable
candidate for appointment. The selection process includes
obtaining assistance from an external consultant, where
appropriate, to identify and assess suitable candidates.
Candidates identified as being suitable are interviewed
by a number of 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. All current Directors have been provided with a
letter confirming their terms of appointment.
The Remuneration & Nomination Committee has
responsibility for making recommendations to the Board on
matters such as succession plans for the Board, suitable
candidates for appointment to the Board, Board induction
and Board evaluation procedures.
Induction
Management, with the Board, provides an orientation
program for new Directors. The program includes
discussions with executives and management, 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 Board does not regard nominations for re-election as
being automatic but rather as being 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 performance
of Directors standing for re-election in the absence of
those Directors. Each Director’s suitability for re-election
is considered on a case-by-case basis, having regard to
individual performance. Tenure is just one of the many
factors that the Board takes into account when assessing
the independence and ongoing contribution of a Director.
40 Boral Limited Annual Report 2012
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 comply with best
practice. Boral’s management guidelines contain a Code
of Corporate Conduct and other guidelines and policies
which set out legal and ethical standards for employees.
As part of performance management, employees are
assessed against the Boral Values of excellence, integrity,
collaboration and endurance.
The Code and related guidelines and policies guide the
Directors, the Chief Executive, 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’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 day after the release
of Boral’s interim results;
the 30 day period beginning on the day after the release
of Boral’s full year results;
the 30 day period beginning on the 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.
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.
Diversity at Boral
Boral is committed to fostering an inclusive workplace which
embraces diversity and recognises that a diverse workplace
can:
• produce better business outcomes by leveraging the unique
•
experiences of people with diverse backgrounds; and
improve employee engagement and retention by fostering
a culture that promotes personal achievement and is
based on fair and equitable treatment of all employees,
irrespective of their individual backgrounds.
The Board, in conjunction with management, is responsible for
establishing policy and objectives aimed at improving diversity
within Boral’s workforce (in particular, gender diversity).
Boral’s Diversity Policy is available on Boral’s website.
Diversity at Boral is underpinned by the following principles:
• recruiting and promoting on merit;
• remunerating on a non-discriminatory basis;
• ensuring that development activities are available to all on
a non-discriminatory basis; and
• striving to increase the proportion of women in the
organisation, particularly in executive and senior
management roles.
As part of Boral’s commitment to gender diversity, the Board
has set the following measurable objectives:
• Establish monitoring and reporting mechanisms to track,
by gender, pay levels, selection, retention and promotion
trends across the business.
• Review the means by which Boral recruits graduates, and
set appropriate targets for female graduate intake for each
of the next five years, with progress to be reviewed and
tracked on an annual basis and the necessary actions to
achieve those targets to be identified and implemented.
• Achieve increased female participation in the Boral
•
Leadership Development Program and the Boral Emerging
Leaders Program.
Incorporate diversity-related KPIs as part of each senior
manager’s Personal Development Process, and track
progress against those objectives as part of their annual
performance appraisal.
• Establish partnership/sponsorship/membership with an
external body promoting a women’s leadership initiative
or female participation in the construction and building
materials sector.
41
Corporate Governance Statement
Progress toward achieving these objectives is summarised in the following table:
Measurable Objective
Progress
Reporting Mechanisms
Graduate Recruitment
Leadership Programs
Diversity-related KPIs
A six monthly reporting process has been developed and is in place to monitor, track and
report on key diversity measures. Reports are prepared for each Australian division and used
by divisional management as input for the Group’s performance management process.
A process to gather diversity data for the USA and Asia has been put in place.
The graduate program has undergone revision and a two-year structured program is under
development for the FY2013 intake, which will set intake targets for female graduates by
discipline and otherwise focus on attracting female graduates.
Female participation in key leadership programs is increasing in the three key leadership
programs. Female participation in FY2012 was as follows:
• Frontline Leadership Development Program – 29%
• Emerging Leaders Program – 25%
• Leadership Development Program – 18%
Diversity was included in the curriculum of all leadership programs.
One of the key attributes of the Group’s performance management process relates to
leadership in the area of the promotion of gender diversity. Personal objectives for managers
in relation to gender diversity have been developed as part of the FY2013 performance
management process.
Partnership with external body
Boral is a member of the Diversity Council and will be taking a more active role in utilising the
Council’s resources and expertise.
Management is responsible for implementing initiatives
throughout the businesses to achieve the Group’s diversity
objectives, and more generally to reinforce Boral’s
commitment to fostering an inclusive and supportive
workplace in accordance with the principles outlined in the
Diversity Policy.
In terms of the Group’s profile, currently two of the seven
non-executive Directors on the Boral Board are women.
Approximately 9% of employees in senior management
positions are women, including the Group General Counsel
and Company Secretary, the Group Finance Manager, the
CFO of Boral’s USA operations and the Regional General
Manager of Boral Construction Materials’ SA operations.
Overall 14% of the Boral workforce are women.
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
Eileen Doyle
Catherine Brenner
The Committee met five times during FY2012.
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;
•
42 Boral Limited Annual Report 2012
•
the systems and processes 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.
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 financial reports and other records are
accurate and reliable. Any new accounting policies are
reviewed by the Committee. Compliance with these
procedures and policies and limits of authority delegated
by the Board to management are subject to review by the
external and internal auditors.
When considering the yearly and half yearly financial reports,
the Audit Committee reviews the carrying value of assets,
provisions and other accounting issues.
Questionnaires completed by divisional management are
reviewed by the Committee half yearly.
As required by the Corporations Act for year end financial
reports, the Chief Executive 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’ Declaration accompanying the
financial reports be signed.
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 Chief Executive and the 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 full
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. In accordance
with this requirement, there was a change in audit partner in
the second half of FY2011.
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.
The Independence Declaration by the external auditor is set
out on page 50.
Internal audit
During FY2012, the internal audit function has been a co-
sourced arrangement consisting of a dedicated Boral team
and PricewaterhouseCoopers. 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
The Company appreciates the importance of timely and
adequate disclosure to the market, and 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 Chief Executive, the Chief Financial Officer and the
Group General Counsel and Company Secretary are
responsible for determining whether or not information is
required to be disclosed to the ASX.
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 activities.
Shareholders may elect to receive annual reports
electronically or to receive notifications via email when
reports are available online. Hardcopy annual reports are
provided to those shareholders who elect to receive them.
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.
All formal reporting and company announcements made to
the ASX are published on Boral’s website after confirmation
of lodgment has been received from the ASX. Furthermore,
Boral has an email list of investors, analysts and other
interested parties who are sent relevant announcements via
email alert after those announcements have been lodged
with the ASX. Announcements are also sent to major media
outlets and newswire services for broader dissemination.
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 are accompanied by explanatory notes
to provide shareholders with information to enable them
to decide whether to attend and how to vote upon 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.
Shareholders are invited, at the time of receiving the Notice
of Meeting, to put forward questions that they would like
addressed at the Annual General Meeting.
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 (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.
43
Corporate Governance Statement
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 (through the
Audit Committee) on the effectiveness of the management
of the material business risks faced by Boral during FY2012.
Risk management matters are analysed and discussed by
the Board at least twice yearly and more frequently if required.
Boral has numerous risk management systems and
policies that govern the management of risk. In addition
to maintaining appropriate insurance and other risk
management measures, identified risks are managed
through:
• established policies and procedures for the managing
of funding, foreign exchange and financial instruments
(including derivatives) including the prohibition of
speculative transactions; the Board has approved Treasury
policies regarding exposures to foreign currencies, interest
rates, commodity price, liquidity and counterparty risks
which include limits and authority levels; compliance with
these policies is reported to the Board at every Board
meeting and certified by Treasury management and the
Audit Committee twice yearly;
• material business risks being identified on a site, business
and divisional basis and rolled up on a Group-wide basis
and reported to the Directors;
• policies, standards and procedures in relation to health,
•
safety and environment matters;
training programs in relation to legal and compliance issues
such as competition law, intellectual property protection,
occupational health and safety and environment matters;
• 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 Boral’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.
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
Boral’s material business risks.
44 Boral Limited Annual Report 2012
Health, Safety & Environment Committee
The Board has also established a Health, Safety
& Environment Committee which comprises three
independent non-executive Directors.
The members of the Committee are:
Eileen Doyle (Chairman)
Bob Every
John Marlay
The Committee held its first meeting on 15 August 2011 and
met on four occasions during FY2012.
The Committee’s responsibilities include the review and
monitoring of:
•
the effectiveness of the Group’s policies, systems and
governance structure for identifying and managing health,
safety and environment risks which are material to the
Group;
the policies and systems within the Group for ensuring
compliance with applicable legal and regulatory
requirements associated with health, safety and
environment matters;
the performance of the Group, assessed by reference
to agreed targets and measures, in relation to health,
safety and environment matters, including the impact on
employees, third parties and the reputation of the Group;
the output of the Group’s audit performance in relation to
health, safety and environment matters;
the adequacy of the Group’s systems for reporting actual or
potential accidents, breaches and significant incidents, and
review of investigations and remedial actions in respect of
any significant incident; and
the Group’s reports which are prepared and lodged in
compliance with its statutory obligations concerning the
environment.
•
•
•
•
•
The Health, Safety & Environment Committee Charter is
available on Boral’s website.
Compliance
The Company has adopted policies requiring compliance
with occupational health, safety, environment, competition
and consumer laws.
There are also procedures providing employees with
alternative means to usual management communication
lines through which to raise concerns relating to suspected
illegal or unethical conduct. The Company acknowledges
that whistleblowing can be an appropriate means to protect
Boral and individuals and to ensure that operations and
businesses are conducted within the law.
There are ongoing programs for the audit of the large number
of Boral operating sites. Occupational health and safety,
environmental and other risks are covered by these audits.
Boral also has staff to monitor and advise on workplace
health and safety and environmental issues and in addition,
education programs provide training and information on
regulatory issues.
Remuneration of non-executive Directors
The remuneration of the non-executive Directors is fixed.
The non-executive Directors 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 64.
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, the
corporate governance framework of the Company will be
kept under review to take account of changing standards
and regulations.
Chief Executive and Chief Financial Officer declaration
The Chief Executive and the Chief Financial Officer have
provided the Directors with a declaration in accordance
with section 295A of the Corporations Act for FY2012.
The Board confirms that it has received assurance from
the Chief Executive and the Chief Financial Officer that the
above declaration 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 & Nomination Committee
The Board has a Remuneration & Nomination Committee
which comprises four independent non-executive Directors.
The members of the Committee are:
Brian Clark (Chairman)
Bob Every
John Marlay
Catherine Brenner (from 1 March 2012)
The Committee met on six occasions during FY2012.
The Remuneration & Nomination Committee has a
formal Charter which sets out its role and responsibilities,
composition, structure and membership requirements.
The Remuneration & Nomination Committee Charter
is available on Boral’s website.
The Committee makes recommendations to the full Board
on remuneration arrangements for the Chief Executive and
senior executives and, as appropriate, on other aspects
arising from its functions.
Part of the role of the Remuneration & Nomination
Committee is to advise the Board on the remuneration
policies and practices for Boral generally and the
remuneration arrangements for senior executives.
Boral’s remuneration policy and practices are designed to
attract, motivate and retain high quality people. The policy is
built around principles that:
• executive rewards be competitive in the markets in which
Boral operates;
• executive remuneration has an appropriate balance of fixed
and variable reward;
• remuneration be linked to Boral’s performance and the
creation of shareholder value;
• variable remuneration for executives has both short and
long term components;
• a significant proportion of executive reward be dependent
upon performance assessed against key business
measures.
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.
45
(7) Other information
Other than information in the Annual Report, there is no
information that shareholders 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 shareholders during the year were:
the final dividend of 7.0 cents per ordinary
share (fully franked at the 30% corporate tax
rate) for the year ended 30 June 2011 was paid
on 27 September 2011
the interim dividend of 7.5 cents per ordinary
share (fully franked at the 30% corporate tax rate)
for FY2012 was paid on 5 April 2012
Total
Dividend
$m
51.1
55.8
The Directors have resolved to pay a final dividend of
3.5 cents per ordinary share (fully franked at the 30%
corporate tax rate) for FY2012. The dividend will be paid
on 28 September 2012.
(9) Names of Directors
The names of persons who have been Directors of the
Company during or since the end of the year are:
Bob Every
Mark Selway
Catherine Brenner
Brian Clark
Eileen Doyle
Richard Longes
John Marlay
Paul Rayner
Ms Brenner, Dr Clark, Dr Doyle, Dr Every, Mr Longes,
Mr Marlay and Mr Rayner have been Directors at all times
during and since the end of the year. Mr Selway was a
Director from 1 July 2011 to 22 May 2012, on which date
he stepped down from the Board.
Directors’ Report
The Directors of Boral Limited (‘Company’) report on the
consolidated entity, being the Company and its controlled
entities (‘Group’ or ‘Boral’), for the financial year ended
30 June 2012:
(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 the Chief Executive’s Review on pages 4 to 7
of the Annual Report.
(2) State of affairs
The following significant changes in Boral’s state of affairs
occurred during the year:
• The acquisition of Lafarge’s 50% interest in the joint
venture Lafarge Boral Gypsum in Asia Sdn Bhd (LBGA)
was completed for consideration of €429m (A$598m) on
an enterprise value basis. After adjusting for net debt and
non-controlling interests, the acquisition equity value is
€380m (A$531m).
• On 22 May 2012, Mark Selway stepped down as Chief
Executive and Managing Director, and Ross Batstone was
appointed Chief Executive Officer.
• The Group reported net profit after tax of $176.6m after
recognising a net significant gain of $75.4m as detailed
in Note 4 to the financial statements.
(3) Principal activities and changes
Boral’s principal activities are the manufacture and supply
of building and construction materials in Australia, the USA
and Asia. There were no significant changes in the nature of
those activities during the year.
(4) Events after end of financial year
There are no matters or circumstances that have arisen since
the end of the year that have significantly affected, or may
significantly affect:
(a) Boral’s operations in future financial years; or
(b) the results of those operations in future financial years; or
(c) Boral’s state of affairs in future financial years,
other than the following:
• the Company announced on 10 September 2012 the
appointment of Mr Mike Kane as Chief Executive Officer
and Managing Director of the Company, effective
1 October 2012.
(5) Future developments and results
Other than matters referred to in the Chief Executive’s
Review on pages 6 and 7 of this Report, 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.
(6) Environmental performance
Details of Boral’s performance in relation to environmental
regulation are set out under Environment on page 27 of
this Report.
46 Boral Limited Annual Report 2012
(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:
Grant date
Expiry date
29/10/2004
31/10/2005
06/11/2006
06/11/2007
29/10/2011
31/10/2012
06/11/2013
06/11/2014
Exercise
price
Balance at
beginning
of year
Number
$6.55
$7.65
$7.27
$6.78
1,536,700
2,552,700
3,823,900
4,989,800
12,903,100
Options
issued
during
the year
Number
Options
lapsed
during
the year
Number
–
–
–
–
–
1,536,700
73,400
103,500
173,600
1,887,200
Shares issued
during the year
as a result of
exercise
of options
Options at
end of year
Options
exerciseable
Number
Number
Number
–
–
–
–
–
–
2,479,300
–
–
3,720,400
1,902,700
4,816,200
4,239,552
11,015,900
6,142,252
The options referred to above were held by 112 individuals.
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
During or since the end of the year, Boral has not given any
indemnity to a current or former officer or auditor against a
liability or made any agreement under which an officer or
auditor may be given any indemnity of the kind covered by
sub-section 199A (2) or (3) of the Corporations Act 2001 (Cth)
(Corporations Act).
During the year, Boral paid premiums in respect of
Directors’ and Officers’ Liability and Legal Expenses
insurance contracts for the year ended 30 June 2012 and
since the end of the year, Boral has paid, or agreed to pay,
premiums in respect of such contracts for the year ending
30 June 2013. The insurance contracts insure against
certain liability (subject to exclusions) in respect of persons
who are or have been Directors or officers of the Company
and controlled entities. A condition of the contracts is that
the nature of the liability indemnified and the premium
payable not be disclosed.
(12) Directors’ qualifications, experience and special
responsibilities and directorships of other listed
companies in the last three financial years
Each Director’s qualifications, experience and special
responsibilities are set out on pages 36 to 37 of the
Annual Report.
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 have been held are:
Bob Every
Iluka Resources Limited from March 2004 to May 2010
Wesfarmers Limited from February 2006 (current)
Mark Selway
Lend Lease Corporation Limited from June 2008 until
February 2010
Catherine Brenner
Coca-Cola Amatil Limited from April 2008 (current)
AMP Limited from June 2010 (current)
Centennial Coal Limited from October 2005 to September
2010
Brian Clark
AMP Limited from January 2008 (current)
Eileen Doyle
GPT Group Limited from March 2010 (current)
Bradken Limited from July 2011 (current)
Ross Human Directions Limited from July 2005 to December
2010
OneSteel Limited from October 2000 to November 2010
Richard Longes
Austbrokers Holdings Limited from November 2005 (current)
Metcash Limited from April 2005 to August 2012
John Marlay
Incitec Pivot Limited from December 2006 (current)
Cardno Limited from November 2011 (current)
Alesco Corporation Limited from November 2011 (current)
Paul Rayner
Centrica plc from September 2004 (current)
Qantas Airways Limited from July 2008 (current)
Treasury Wine Estates Limited from May 2011 (current)
47
Directors’ Report
(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 are set out below:
Board of
Directors
Audit
Committee
Remuneration &
Nomination
Committee
Health, Safety &
Environmental
Committee
Meetings held
while a
Director
Meetings
attended
Meetings held
while a
member
Meetings
attended
Meetings held
while a
member
Meetings
attended
Meetings held
while a
member
Meetings
attended
Catherine Brenner
Brian Clark
Eileen Doyle
Bob Every
Richard Longes
John Marlay
Mark Selway
Paul Rayner
15
15
15
15
15
15
13
15
15
15
15
15
13*
15
13
15
5
–
5
–
5
–
5
5
–
5
–
5
–
5
1
6
–
6
–
6
–
1
6
–
6
–
6
–
–
–
4
4
–
4
–
–
–
–
4
4
–
4
–
–
* The two Board Meetings that Mr Longes was unable to attend were unscheduled meetings.
Bob Every is not a member of the Audit Committee but attended all of the meetings held by that Committee from 1 July 2011
to 30 June 2012.
(14) Company Secretary
Margaret Taylor 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, and is a Fellow of the Institute of Chartered Secretaries.
Dominic Millgate was appointed Assistant Company Secretary of Boral Limited in November 2010. He has previously been legal
counsel and company secretary for listed entities in Australia and Singapore, and has held legal roles in London and Sydney.
He is a Fellow of the Institute of Chartered Secretaries, and holds a finance degree from the University of New England and a
law degree from the University of Sydney.
(15) Directors’ shareholdings
Set out below are details of each Director’s relevant interests in the shares and other securities of the Company as at the date of
this report (or, in the case of Mark Selway, as at the date on which he ceased to be a Director):
Catherine Brenner
Brian Clark
Eileen Doyle
Bob Every
Richard Longes
John Marlay
Paul Rayner
Mark Selway
Non-executive
Directors’
Share Plan a
Share
Acquisition
Rights (SARs) b
Options
–
5,329
–
4,616
10,144
–
1,790
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,506,039 c
Shares
5,195
69,217
7,032
65,605
18,197
4,969
27,399
11,290
The shares are held in the name of the Director except in the case of:
• Brian Clark, 45,654 shares are held by MCG Wealth Management Australia Nominees Pty Limited –
and 21,827 shares are held by MCG Wealth Management Australia Nominees Pty Limited – JBC Investment Holdings Pty Ltd
;
• Eileen Doyle, 5,750 shares are held by Mr SE Doyle and Dr EJ Doyle for the S&E Doyle Super Fund A/C;
• Bob Every, 30,000 shares are held by RBC Dexia Investor Service Australia Nominees Pty Ltd ;
• Richard Longes, 12,000 shares are held by Gemnet Pty Limited for Richard Longes Superannuation Fund;
• John Marlay, 1,069 shares are held by The Marlay Superannuation Fund; and
• Paul Rayner, 26,098 shares are held by Yarradale Investments Pty Ltd.
48 Boral Limited Annual Report 2012
Shares or other securities with rights of conversion to equity
in the Company or in a related body corporate are not
otherwise held by any Directors of the Company.
a Shares in the Company allocated to the Director’s account
in the Non-Executive Directors’ Share Plan. Directors will
only be entitled to a transfer of the shares in accordance
with the terms and conditions of the Plan. No shares were
allocated to non-executive Directors during FY2012.
b The SARs are rights to acquire shares in the Company
under the Boral Senior Executive Performance Share
Plan. The SARs will vest only to the extent to which the
performance hurdle, which is measured by comparing
the TSR of the Company to the TSR of the companies
comprising the ASX 100 during the vesting period, is
satisfied.
c The SARs held by Mark Selway are as follows:
Number of SARs
Expiry Date
Also in accordance with advice from the Audit Committee,
Directors are satisfied that the provision of those non-audit
services during the year by the auditor did not compromise
the auditor independence requirements of the Corporations
Act because:
• Directors are not aware of any reason to question the
auditor’s independence declaration under section 307C
of the Corporations Act;
• the nature of the non-audit services provided is not
inconsistent with the requirements of the Corporations Act;
and
• provision of the non-audit services is consistent with the
processes in place for the Audit Committee to monitor the
independence of the auditor.
(18) Auditor’s Independence Declaration
The auditor’s independence declaration made under section
307C of the Corporations Act is set out on page 50 of the
Annual Report and forms part of this Report.
431,034
303,819
771,186
1 January 2017
12 November 2017
1 September 2018
(19) Remuneration Report
The Remuneration Report is set out on pages 51 to 64 of the
Annual Report and forms part of this Report.
Additional information regarding Mr Selway’s SARs is set out
under the heading “Implications of Mr Selway leaving Boral”
on page 58 of the Remuneration Report.
(16) No officers are former auditors
No officer of the Company has been a partner in an audit
firm, or a Director of an audit company, that is an auditor
of the Company during the year or was such a partner or
Director at a time when the audit firm or the audit company
undertook an audit of the Company.
(17) Non-Audit Services
Amounts paid or payable to Boral’s auditor, KPMG, for non-
audit services provided during the year by KPMG totalled
$937,000. These services consisted of:
(20) Proceedings on behalf of the Company
No application under section 237 of the Corporations Act
has been made in respect of the Company and there are no
proceedings that a person has brought or intervened in on
behalf of the Company under that section.
(21) Rounding of amounts
The Company is of a kind referred to in ASIC Class Order
98/100 and in accordance with that Class Order, amounts in
the financial report and Directors’ Report have been rounded
off to the nearest one hundred thousand dollars unless
otherwise indicated.
Signed in accordance with a resolution of the Directors.
Taxation compliance in Australia
Taxation compliance/due diligence related
services in jurisdictions other than in
Australia
$86,000
$292,000
Australian due diligence and other services
$559,000
Bob Every
Director
In accordance with advice from the Company’s Audit
Committee, Directors are satisfied that the provision of the
above non-audit services during the year by the auditor is
compatible with the general standard of independence for
auditors imposed by the Corporations Act.
Paul Rayner
Director
Sydney, 11 September 2012
49
Directors’ Report
Lead Auditor’s Independence Declaration
under section 307C of the Corporations Act 2001
To: the Directors of Boral Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2012
there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Greg Boydell
Partner
Sydney, 11 September 2012
50 Boral Limited Annual Report 2012
2012 Remuneration Report
The Board’s ongoing commitment is to ensure that Boral’s remuneration strategy and
practices are properly aligned with the creation of short and long term shareholder value
while at the same time appropriately attracting, motivating, rewarding and retaining executives.
Boral’s remuneration policies and practices have been designed to focus executives on
implementing business strategy and rewarding outcomes that address the specific challenges
that face companies operating in cyclical industries like the building and construction sector.
During the year, the Board continued to seek advice from PwC, its external remuneration
adviser. PwC has assisted with reviews and benchmarking of the Company’s Chief Executive
Officer’s remuneration and non-executive Director remuneration.
2012 Remuneration in Brief
The Board remains committed to clear and transparent
disclosure of the Company’s remuneration arrangements.
This remuneration snapshot sets out in brief the key details
regarding Director and senior executive remuneration for
FY2012. The full Remuneration Report provides greater detail.
Particular events and actions that impacted Boral’s
remuneration structure and outcomes for FY2012 were:
• The performance conditions for the Short Term Incentive
(STI) were refined to focus wholly on earnings before interest
and tax (EBIT);
• Difficult economic conditions in Australia and the USA
resulted in a decline in the Company’s financial outcome
relative to last year with many businesses’ lower than
budget performance resulting in a marked reduction in STI
awards across the Group;
• The transition to a new Chief Executive, Ross Batstone,
has resulted in higher than expected remuneration costs
for the outgoing Chief Executive, Mark Selway, including
termination payments and expensing of long term incentives
that remain afoot (and will only vest if existing performance
hurdles are satisfied); and
• A review of the structure of non-executive Director
remuneration including Chairman and Committee
Chairman fees.
Each of these matters is discussed in this snapshot and in
more detail in the full Remuneration Report.
Refined performance conditions for the Short Term
Incentive Plan
In FY2011, Boral realigned the STI performance measures
to focus entirely on earnings before interest and tax (EBIT)
and working capital performance. As foreshadowed in last
year’s report, the Company adopted EBIT as the sole STI
performance measure for the FY2012 year. The focus on
EBIT is considered appropriate in light of the current difficult
market conditions facing Boral, particularly in the USA and
Australia. The linking of EBIT to STI will result in a stronger
alignment between executive STI rewards and shareholder
value. Performance against non-financial measures such as
safety, manufacturing excellence and sales and marketing
excellence continues to be strongly managed through the
Company’s performance management process.
Financial performance and the STI outcome
For FY2012, Group EBIT (before significant items) of $199.6m
was lower than the previous year’s EBIT by 28% and was
below the internal budgeted level. As a consequence, STI
levels for FY2012 are 52% lower (on average) than those in
the previous year. Only one member of the senior executive
team received an STI award for FY2012. This was for the
USA business where, despite a very difficult housing market,
financial results exceeded budgeted expectations which
required significant improvement over the prior year.
Chief Executive Officer transition
In May 2012, the Board announced that Mark Selway would
step down from his role as Chief Executive. Mark remained
in employment until 31 July 2012 to assist with the transition
to Ross Batstone as the incoming Chief Executive. Ross
Batstone was appointed Chief Executive Officer on a flexible
one year contract pending the appointment of a permanent
CEO. Ross has been with the Boral Group for over 20 years
and most recently was Divisional Managing Director of the
Building Products Division. The terms of Mr Batstone’s
remuneration are set out on page 57 of this report.
Ross Batstone’s immediate priorities are to continue the current
strategic initiatives of Boral including LEAN Manufacturing,
Sales and Marketing Excellence and continued integration of
Boral Gypsum Asia.
The Board carried out an international search to identify
candidates for the role of Managing Director and CEO.
Internal and external candidates were considered.
Mr Mike Kane, currently President and CEO of Boral USA,
was appointed to the role and will commence on 1 October
2012. Sufficient flexibility was built into Mr Batstone’s
contract to allow for a smooth CEO transition.
In line with Mark Selway’s employment contract, details of
which were announced to the market in September 2009,
Mark received a termination payment equal to 12 months’
fixed remuneration. Mr Selway’s 12 month rolling contract
entitled him to retain rights granted under the terms of
Boral’s Long Term Incentive (LTI) plan. The outstanding
expense of these rights has been brought forward as
required under accounting standards and expensed in the
FY2012 financial statements. Whether Mr Selway derives any
value from these rights will depend on the extent to which
Boral’s market-based relative TSR hurdle is met on the test
dates during the remaining terms of the grants.
51
2012 Remuneration Report
Non-executive Director remuneration
After taking advice from its external remuneration adviser, the Board made minor changes to the structure of non-executive
Directors’ fees which involved setting the Chairman’s fees as a multiple of the base Director’s fee (in line with market practice).
The base Directors’ fees which had not been increased since 1 July 2008 were increased by 5.7% on 1 November 2011.
The Board has decided not to apply any fee increase for FY2013.
Remuneration outcomes for Chief Executive and senior executives
Details of the remuneration of the Chief Executive and senior executives, prepared in accordance with statutory obligations
and accounting standards, are contained on page 63 of the Remuneration Report.
The table below sets out the cash and other benefits received by the Chief Executive and senior executives who were key
management personnel in FY2012.
The amounts disclosed in the table, while not in accordance with accounting standards, are considered relevant in explaining
the actual remuneration received by executives during the year. The table has been subject to audit.
The STI awards made for FY2012 reflect achievement of the financial performance objectives against budgeted outcomes for
the Group and Boral businesses.
Cash and other benefits received by the current Chief Executive and senior executives in FY2012 are lower than the amounts
shown in the remuneration table on page 63 of the Remuneration Report. This is because the full remuneration table includes
amounts in respect of options and rights which are amortised over a five year period and may not have delivered value to
executives in FY2012. For example, it includes accounting values for current and prior years’ LTI grants which have not been and
may never be realised as they are dependent on the market-based performance hurdles being met in future years. The table below
includes the value of any LTI grants which actually vested to executives in FY2012.
A$’000s
Ross Batstone
Mike Beardsell
Mike Kane
Andrew Poulter
Murray Read
Former Executive
Mark Selway
Fixed
946.0
673.9
528.7
781.2
742.5
1,876.9
STI
0.0
0.0
196.4
0.0
0.0
0.0
LTIa
Other b
Total
35.7
7.0
0.0
0.0
15.3
33.1
30.1
30.3
12.7
10.9
1,014.8
711.0
755.4
793.9
768.7
0.0
1,930.6
3,807.5
a
For rights, the LTI value represents the value of rights vested during the year calculated using the market price of Boral shares on the date of vesting. For options,
the exercise price exceeded the market price of Boral shares on the exercise date and no options were exercised.
b Other includes parking and long service leave accruals and a termination payment for Mark Selway.
52 Boral Limited Annual Report 2012
Remuneration Report
Introduction
The Directors of Boral Limited present the Remuneration
Report for the Company and its controlled entities for
the year ended 30 June 2012. This Remuneration Report
forms part of the Directors’ Report and has been audited
in accordance with the Corporations Act 2001.
The Remuneration Report sets out remuneration information
for the Company’s non-executive Directors, the Chief
Executive and senior executives, who are the key people
accountable for planning, directing and controlling the affairs
of the Company and its controlled entities. The people in
these positions during the year ended 30 June 2012 are listed
in the table below.
Non-executive Directors
Bob Every
Chairman
Catherine Brenner
Brian Clark
Eileen Doyle
Richard Longes
John Marlay
Paul Rayner
Director
Director
Director
Director
Director
Director
Senior executives (including the Chief Executive)
Mark Selway
Ross Batstone
Mike Beardsell
Chief Executive (July 2011 to May
2012)
Chief Executive (May 2012 to
June 2012), previously Divisional
Managing Director, Building
Products
Divisional Managing Director,
Boral Cement
Mike Kane
President Boral Industries USA
Andrew Poulter
Chief Financial Officer
Murray Read
Divisional Managing Director,
Construction Materials
Business reorganisation and executive changes
Boral’s portfolio of businesses was reorganised following the
appointment of Ross Batstone as Chief Executive Officer.
These organisational changes took effect from 1 July 2012
and are detailed in the Annual Report.
Bryan Tisher was appointed Divisional Managing Director
of the Building Products Division. The Construction Related
Businesses ceased as a Division and its component
businesses were allocated across other divisions; Windows
into the Building Products Division and Concrete Placing into
the Cement Division. Boral Gypsum Asia (BGA) has become
a separate Division led by Frederic de Rougemont. The
Company continues to focus on key strategic initiatives such
as LEAN manufacturing, innovation, collaboration, sales and
marketing excellence and integration of BGA. The result of
these changes is simplification of reporting structure and a
more logical alignment of businesses.
Remuneration governance
The Remuneration & Nomination Committee of the Board
makes recommendations for approval by the full Board on
remuneration arrangements for the non-executive Directors,
the Chief Executive Officer and senior executives. This
includes recommendations relating to directors’ fees,
annual executive remuneration reviews, short and long
term incentives structure and grants, STI measures and
targets and LTI measures and targets. The Committee also
advises the Board on remuneration policies and practices
for Boral generally.
The Committee seeks advice from external specialist
remuneration advisers as well as from management.
The Committee comprises four independent non-executive
Directors: Brian Clark (Committee Chairman), Catherine
Brenner, Bob Every and John Marlay. Catherine Brenner
joined the Committee on 1 March 2012.
A Management Remuneration Committee reviews
remuneration matters for all Boral employees and provides
advice and makes recommendations to the Remuneration
& Nomination Committee.
The Board Committee typically meets quarterly while the
Management Committee meets monthly.
During FY2012, the Board adopted a protocol governing
the engagement of remuneration consultants and the
provision of “remuneration recommendations” (that is,
recommendations relating to the remuneration of Key
Management Personnel (KMP)). The purpose of this protocol
is to ensure that recommendations provided by consultants
are made free from influence by the KMP to whom the
recommendations relate.
The protocol provides that before Boral enters into a
contract to engage a consultant to provide remuneration
recommendations, the proposed consultant must be
approved by the Remuneration & Nomination Committee of
the Board or the non-executive Directors. The remuneration
consultant must report directly to the Board Committee
or the non-executive Directors. If a consultant makes a
recommendation concerning the remuneration of the KMP,
the recommendation must be provided directly to the Board
Committee or the non-executive Directors.
During FY2012, the non-executive Directors appointed
PwC as Boral’s external remuneration adviser. During
FY2012, PwC provided advice on non-executive director
remuneration and CEO remuneration including market
data and current practices. PwC made no “remuneration
recommendations” (that is, recommendations relating to the
remuneration of KMP) to the Board.
PwC also calculated the fair market valuation for the 2011
grant of rights under the Company’s LTI Plan.
53
Senior Executive Remuneration
Remuneration strategy
The Board has established a remuneration strategy that supports and drives the achievement of Boral’s strategic objectives
and a remuneration structure that motivates and rewards executives for achieving targets linked to Boral’s business objectives.
The Board is confident that its remuneration approach aligns Boral management with shareholders’ interests.
The diagram below illustrates how Boral’s remuneration strategy, and the structures the Board has put in place to achieve this
strategy, align with the Company’s business objectives.
Building something great – the strategic building blocks for growth
1
Laying the
foundations
2
Reinforcing
the core
3
Investing
for growth
4
Sector best
performance
Review and
respond, creating
a strong platform
for growth
Focus and improve
assets where
Boral can be
market leader
Expand and invest,
through acquisition
and innovation
worldwide
Realise Sector
Best Performance
and market leading
returns
Boral’s remuneration strategy
Attract and retain high calibre executives
Align executive rewards with Boral’s performance
•
•
reward competitively in the markets in which Boral operates
provide a balance of fixed and “at risk” remuneration
•
•
assess rewards against objective financial measures
make short term and long term components of remuneration
“at risk” based on performance
Remuneration components
Fixed Annual Remuneration
Short Term Incentive
Long Term Incentive
•
•
•
•
provides “predictable” base level
of reward
set at market median (for local
geographic market) using external
benchmark data
varies based on employee’s
experience, skills and performance
consideration given to both
external and internal relativities
•
•
entirely focused on financial
outcomes
financial targets linked to objective
measures at Group, division,
and business unit level, such as
budgeted profit and improvements in
working capital management
•
•
•
•
delivered in equity to align executives
with shareholder interests
tested three times after three, five
and seven years – reflecting the
typical building cycle
no value unless returns to
shareholders exceed market median
full vesting when Boral achieves top
quartile performance
54 Boral Limited Annual Report 2012
Principles underpinning Boral’s remuneration strategy
Executive remuneration structure
Standardised vs. tailored remuneration arrangements
Remuneration strategy and frameworks are consistent
across the executive and senior management group.
Limited tailoring may occur to take into account the unique
challenges and differences between roles.
Purpose of each element of remuneration
Fixed Annual Remuneration (FAR): Remunerate executives
in line with market benchmarks for effective completion
of Company objectives and behaviour in accordance with
Boral’s values.
Short Term Incentives (STI): Reward executives for achieving
annual targets measured at business unit, divisional and/or
Boral levels.
Long Term Incentives (LTI): Reward senior executives
for delivering performance over the duration of the Boral
business cycle on the basis of Relative TSR versus a peer
group. This LTI structure provides a retention element, equity
exposure and alignment with shareholder reward.
The variable remuneration mix for the Chief Executive
and senior executives has a greater focus on long term
incentives and moves towards a shorter term focus for
lower job grades.
Benchmarking remuneration
The primary reference for remuneration benchmarking is
Australian listed companies in the Industrials and Materials
sector. For the Chief Executive and senior executives, pay
levels for comparable roles in appropriate international
jurisdictions are also considered as a secondary reference to
the Australian market data. Consideration is given to sizing
factors including market capitalisation and business unit
revenue. Complexity (such as number of employees and
geographies) is referenced through the job grading system.
Focus on market vs. internal relativities
Consideration is given to both market and internal relativities.
Market is the primary reference through its application to the
salary ranges attached to the job grading system.
The job grading system is applied to individual roles to
ensure appropriate internal relativities.
As required, specific position matches may be sought for any
jobs or functions where there is a high demand for talent or
where there are unique market considerations.
Market positioning
Executives’ fixed remuneration is referenced to the market
median. A range around the median provides flexibility to
recognise capability, contribution, value to the organisation,
performance and tenure of individuals.
Executives’ target total remuneration (fixed remuneration,
target short term plus long term incentives) is referenced to
the market median when setting remuneration elements. For
the STI element, achievement of stretch targets is intended
to provide reward at the 75th percentile of the market for
positions of similar size.
Remuneration mix
Boral’s executive remuneration is structured as a mix of
Fixed Annual Remuneration and variable remuneration,
through “at risk” short term and long term incentive
components. The mix of these components varies for
different management levels. For the current Chief Executive
and senior executives the proportions are:
Chief Executive1, 2
Fixed
FAR
50%
At risk
STI
50%
LTI
0%
Senior executives3
50–54%
22–25%
24–26%
1
2
3
The Chief Executive has no long term component for FY2013 due to his
anticipated retirement in July 2013.
The mix for M Selway was 33.3%, 33.3% and 33.3%.
Senior executive percentages vary between individuals.
While fixed remuneration is designed to provide a predictable
“base” level of remuneration, the short term and long term
incentive programs reward executives when pre-determined
performance conditions are met or exceeded. Both schemes
have minimum periods of employment that must also be met.
Fixed Annual Remuneration (FAR)
FAR includes base salary, non-cash benefits such as
provision of a vehicle (including any fringe benefits tax
charges) and superannuation contributions.
Remuneration levels are reviewed annually by the
Remuneration & Nomination Committee and the Board
through a process that ensures an executive’s fixed
remuneration remains competitive with the market and
reflects an employee’s skills, experience, accountability
and general performance.
External benchmark market data from Hay Group’s Industrial
and Service sector as well as market data from PwC is
used to determine remuneration midpoint levels of fixed
remuneration for senior executives and managers.
Short Term Incentive (STI)
The STI Plan is an “at risk” cash payment awarded annually
based on performance against pre-set financial objectives.
The STI Plan is provided to employees who have significant
influence over the annual financial outcomes of business
units. Approximately 6% of Boral employees participated in
the STI plan in FY2012.
The Board considers that the STI is an appropriate incentive,
and it has been designed to put a proportion of executive
remuneration at risk against meeting financial targets linked
to annual budget performance metrics.
Minimum, target and stretch performance conditions are set
for each financial year. These performance conditions have
been designed to motivate and reward high performance;
for example, if performance exceeds the already challenging
targets, the STI will deliver higher rewards to executives.
Conversely, if performance falls below a minimum level, no
reward is payable to executives.
55
Senior Executive Remuneration
If the Chief Executive, Ross Batstone, meets the target
performance conditions, then the STI reward will be payable
at 100% of fixed remuneration. If the stretch performance
conditions are met, the STI reward will be payable at 140%.
Similarly, if senior executives meet their target performance
conditions, their STI reward is set at 40–50% of fixed
remuneration. The STI reward for executives who achieve
stretch performance is set at double the target reward.
Stretch outcomes require results which significantly exceed
budget, and are only achieved in exceptional circumstances.
The STI performance conditions were modified for FY2011
to be wholly focused on the achievement of key financial
measures, earnings before interest and tax (EBIT) and
working capital performance. As foreshadowed in last
year’s report, in FY2012 EBIT was the sole financial
measure. The Board considers that financial measures
link directly to the creation of shareholder value and the
strategic direction of the Company. Performance against
important non-financial measures continues to be managed
separately from the STI Plan through the performance
management process.
Performance at the completion of the financial year is
measured against pre-determined EBIT targets that were
established as part of the Group annual budget process.
The Remuneration & Nomination Committee and the
Board assess the financial performance of the Group,
divisions and business units and approve the actual
STI rewards to be paid to the Chief Executive, his
direct reports and other senior executives.
Long Term Incentive (LTI)
The purpose of the LTI Plan is to promote the alignment
of senior executive decision making with the longer term
interests of shareholders, to attract and retain high quality
executives and to reward executives for the achievement of
performance conditions which underpin sustainable long
term growth.
The LTI is granted annually as rights and/or options over
ordinary Boral shares at the Board’s discretion. Note that
only rights have been granted since November 2007.
The participants in the LTI Plan include senior executives
who are deemed to have significant influence over the long
term outcomes of Boral. Only 1% of employees participate
in the LTI Plan.
The number of rights and/or options offered annually to
executives is limited. The total number of shares which would
be allocated on vesting of those rights and exercise of those
options, when aggregated with:
• the number of shares issued under any Boral employee
share scheme; and
• the number of shares that would be allocated on the vesting
of all outstanding rights and the exercise of all outstanding
options under any Boral employee share scheme
may not exceed 5% of the total number of shares on issue at
the time of the offer.
The value of an executive’s annual LTI grant is a set
percentage of the executive’s FAR. The LTI grant percentage
for senior executives is 45–50% of the executive’s FAR.
56 Boral Limited Annual Report 2012
The Chief Executive, Ross Batstone, will not participate
in the LTI grant for 2012. Mr Batstone has received grants
under the LTI plans in prior years in respect of other senior
executive roles he has held. The Company granted Ross
Batstone 135,135 Share Acquisition Rights (SAR) on
1 September 2011 as a retention incentive, in recognition
of his additional responsibilities as Divisional Managing
Director of Boral Building Products in establishing a new
Asian Plasterboard Division. The grant was made on terms
and conditions determined by the Board and linked to
service hurdles to be tested on 31 December 2012.
The number of rights and/or options granted to an
executive is determined by dividing the value of their
annual grant by the fair market value of the right or
option. PwC calculates the fair market value as at the
date of grant using a Monte Carlo simulation analysis in
accordance with accounting standards.
Participants in the LTI Plan will not derive any value from
their LTI grants unless pre-established performance
hurdles are achieved.
Each right or option granted under the LTI Plan is an
entitlement to a fully paid ordinary share in the Company on
terms and conditions determined by the Board, including
vesting conditions linked to service and performance
measured at three, five and seven years after grant. If the
vesting conditions are satisfied, the rights and options
vest and the underlying shares may be delivered to the
participating executive.
Rights and options are offered at no cost to the senior
executive at the time of the grant. No price is payable upon
vesting of rights; however, an exercise price (set at the time of
the grant) is payable upon exercise of an option. The exercise
price for options is determined at date of grant based on the
average closing price of Boral shares over the five trading
days prior to the grant date.
Rights and options granted as part of the LTI Plan do not
carry voting or dividend rights; however, shares allocated
upon vesting of rights and exercise of options will carry the
same rights as other ordinary shares. Boral does not pay
dividends on any unvested rights or options.
Directors, officers and senior executives must comply with
the Company’s Share Trading Policy, which prohibits them
from entering into hedge and other derivative transactions
regarding options or rights granted as LTIs. Shares allocated
to participants upon vesting of their LTIs may only be dealt
with in accordance with the Share Trading Policy. Any
contravention of this policy would result in disciplinary action.
Unvested options or rights lapse when an executive
leaves the Company except where the executive ceases
employment due to death, permanent disablement, bona
fide retirement, redundancy, sale of subsidiary or business
assets or when the Board at its sole discretion determines
otherwise. In these situations, a pro-rata proportion of rights
and/or options granted within the three year period prior to
termination will remain in place only until the next test date,
when they will lapse if they do not meet the performance
hurdle. Unvested rights and/or options granted more than
three years prior to the date of termination will lapse at the
next test date if the performance hurdle is not met.
The LTI Plan Rules allow for lapsing of unvested and vested
options and rights and forfeiture of shares in the event of
fraud, dishonesty or breach of obligations. The Board may
exercise its discretion to allow all or some unvested rights
and options to vest if a change of control event occurs.
The Board would have regard for the performance of the
Company during the vesting period up to the date of a
change of control event. A change of control event includes
a takeover bid being served on the Company, a Board
recommendation that shareholders accept a takeover bid, a
takeover bid that becomes unconditional, a Court approved
scheme of arrangement or other corporate action.
The performance hurdle for the LTI Plan is tied to the
Company’s relative total shareholder return (TSR). TSR
represents the change in capital value of a listed entity’s
share price over a period, plus reinvested dividends,
expressed as a percentage of the opening value. The
compound growth in the Company’s TSR over the
performance measurement period is compared with the TSR
performance of all other companies comprising the ASX 100
on the date of grant. The Board has discretion to adjust the
comparator group to take into account events including, but
not limited to, takeovers or mergers that might occur during
the performance period.
The Board believes that relative TSR is an appropriate
performance hurdle for the LTI Plan because it provides a
direct link between shareholder return and executive reward.
Executives will not derive any value from the LTI component
of their remuneration unless the Company’s performance is
at least at the median of the ASX 100.
The performance hurdle for the 2008 and subsequent grants
is measured on three test dates, reflecting performance
periods of three, five and seven years. This testing frequency
is designed to span a typical building industry cycle so
that executive incentive and reward are linked to delivery of
shareholder return across the business cycle. In assessing
whether the performance hurdles have been met, the
Company receives independent data which set out the
Company’s TSR growth and that of each company in the
comparator group. The level of TSR growth achieved by
the Company is given a percentile ranking, having regard
to its performance compared with the performance of
other companies in the comparator group (the highest
ranking company being ranked at the 100th percentile).
Opening and closing share prices are calculated using
the volume weighted average price over the 60 days up
to and including the first and last day of the performance
period (as applicable). This “smoothing” of TSR reduces
the impact of share price volatility.
The percentages of options and rights that vest will depend
on Boral’s relative TSR ranking over the measurement period,
as set out in the table below:
Boral’s TSR rank in ASX 100
% of options/rights that vest
Below 50th percentile
Nil
Between 50th
and 74th percentile
Progressive vesting from
50–98% (2% increase for
each higher percentile ranking)
At or above 75th percentile
100%
Any options and rights that do not vest, based on
performance over the initial three year measurement period,
will be available for vesting based on performance over
five year and seven year measurement periods. Options
and rights that have not vested following the seven year
measurement period automatically lapse.
Given that the Company’s comparative TSR performance is
tested over a minimum three year period, satisfaction of the
performance condition attaching to the rights granted for
FY2012 will not be measured until FY2015.
Employment contract details
Chief Executive remuneration structure and
contract terms
Mr Ross Batstone was appointed to the Chief Executive
role on 22 May 2012. His employment contract has been
structured in such a way as to account for the views of
shareholders, governance bodies and other stakeholders.
The basis of Mr Batstone’s fixed and variable remuneration
has been established taking into account the nature of
Mr Batstone’s role as Chief Executive while a global search
has been conducted for a new Chief Executive Officer.
The elements of his remuneration were benchmarked to a
comparator group which is closely aligned to Boral’s current
market position and was selected from similar companies
within a range of Boral’s market capitalisation. The group
includes companies from the Industrials and Materials
sectors of the ASX 200 with a 12 month moving average
market capitalisation and revenue of between 33% and
300% of Boral’s.
The duration of Mr Batstone’s contract is for a fixed period
until his intended retirement on 1 July 2013 allowing sufficient
flexibility for a smooth CEO transition.
57
Senior Executive Remuneration
At the 2009 Annual General Meeting, shareholders approved
an initial grant of share rights to Mr Selway equivalent to
100% of his FAR. At the 2010 Annual General Meeting,
shareholders approved a grant of share rights to Mr Selway
equivalent to 50% of his FAR and a grant of share rights
for 2011 and 2012 equivalent to 100% of Mr Selway’s FAR.
Mr Selway will not be eligible for the grant of share rights in
2012. Following Mr Selway’s termination of employment his
unvested share rights remain on foot, in accordance with
the terms of the grant and the terms of Mr Selway’s contract
of employment. These rights will vest only if the applicable
performance hurdles are met on the relevant test dates.
Contract terms for other executives
Key features of the employment arrangements for senior
executives include:
• employment continues until terminated by either the
executive or Boral;
• notice periods are typically six months, but reduce
where termination is for performance reasons; and
• termination by the Company for reasons other than
resignation or performance results in a termination
payment of one year’s fixed remuneration.
Senior executives’ entitlement to unvested options and
rights is dealt with under the LTI Plan rules and the specific
terms of grant (as outlined earlier in this report).
Mr Batstone’s FAR is $1,500,000 per annum. His annual
STI entitlement is 100% of fixed remuneration for
“target” performance with a maximum of 140% of fixed
remuneration for “stretch” performance. STI measures
for FY2013 are focused on achievement of financial
outcomes as well as business improvement outcomes.
If Mr Batstone’s employment ends due to his retirement
on 1 July 2013, he will be entitled to an STI for the year
ending 30 June 2013, conditional upon achievement of
the applicable performance measures.
Mr Batstone’s remuneration as Chief Executive Officer
will not include any grant under the Company’s LTI Plan.
Mr Batstone has received grants under the LTI Plan in the
form of options and share rights in prior years in respect of
other senior roles he has held in the Company. Details of
these prior grants are set out in the report on page 61. The
Board has determined that no portion of the rights granted
to Mr Batstone in 2010 or 2011 under the LTI Plan will lapse
on his retirement, but rather will remain on foot for their
full term. They will vest in due course only if the applicable
performance hurdles are met on the relevant test dates.
If Mr Batstone’s employment is terminated by reason of
illness or death prior to 1 July 2013, Mr Batstone will receive
a separation payment equal to nine months’ FAR. In such
circumstances, Mr Batstone will not be entitled to any STI in
respect of FY2013, i.e. the STI is not pro-rated.
Appointment of new Chief Executive
On 10 September 2012, the Company announced the
appointment of Mr Mike Kane as Chief Executive Officer
and Managing Director of Boral Limited. Mr Kane has been
President and CEO of Boral USA since 1 March 2010 and will
take up his new position on 1 October 2012.
The terms of his employment as CEO of Boral Limited were
released on 10 September 2012.
Implications of Mr Selway leaving Boral
Mr Selway stood down from the role of Chief Executive
Officer on 22 May 2012 and remained in employment until
31 July 2012 to assist with the transition arrangements.
At 22 May 2012 he ceased to be classified as one of Boral’s
key management personnel. On termination Mr Selway was
entitled to receive a separation payment equal to one year’s
FAR in accordance with his contract which was a 12 month
rolling contract. This separation payment was inclusive
of any payment in lieu of notice to which he was entitled.
Mr Selway did not receive a restraint payment as part of
any post-employment arrangements nor did he receive
any STI for FY2012 or FY2013.
58 Boral Limited Annual Report 2012
Company Performance and Remuneration Outcomes
Company performance
The chart below demonstrates how the Company’s TSR, which includes share price movements and dividends, has performed
relative to the ASX 100 Accumulation Index.
In the 10 years to 30 June 2012, Boral has achieved an annual TSR of 2.1%, which is lower than that of the companies in the ASX
100 over the same period (as represented by the ASX 100 Accumulation Index).
BLD TSR vs ASX 100 Accumulation Index
10 years to 30 June 2012
TSR
2.5
2.0
1.5
1.0
0.5
0.0
– 0.5
2
0
n
u
J
2
0
c
e
D
3
0
n
u
J
3
0
c
e
D
4
0
n
u
J
4
0
c
e
D
5
0
n
u
J
5
0
c
e
D
6
0
n
u
J
6
0
c
e
D
7
0
n
u
J
7
0
c
e
D
8
0
n
u
J
8
0
c
e
D
9
0
n
u
J
9
0
c
e
D
0
1
n
u
J
0
1
c
e
D
1
1
n
u
J
1
1
c
e
D
2
1
n
u
J
BLD TSR
ASX 100 Accumulation Index
The effect of the business cycle is demonstrated in the charts below, which reflect the Company’s earnings per share, return on
equity and full year dividends since FY2003. The year on year change from 2011 to 2012 is shown in percentage terms below.
EARNINGS PER SHARE1
Ü 44%
RETuRN ON EquITy1
Ü 46%
DIvIDENDS PER SHARE
Ü 24%
4
6
3
6
2
6
9
4
0
5
1
4
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
8
0
Y
F
2
2
9
0
Y
F
2
2
0
1
Y
F
4
2
1
1
Y
F
4
1
2
1
Y
F
)
s
t
n
e
c
(
1
e
r
a
h
s
r
e
p
s
g
n
n
r
a
E
i
7
.
5
1
4
.
5
1
2
.
3
1
2
.
3
1
0
.
0
1
5
.
8
8
.
4
0
.
5
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
1
Y
F
6
.
5
1
1
Y
F
0
.
3
2
1
Y
F
)
t
n
e
c
r
e
p
(
1
y
t
i
u
q
e
n
o
n
r
u
t
e
R
1 Excludes financial impact of significant items.
4
3
4
3
4
3
4
3
)
s
t
n
e
c
(
e
r
a
h
s
0
3
3
2
r
e
p
s
d
n
e
d
v
D
i
i
3
0
Y
F
4
0
Y
F
5
0
Y
F
6
0
Y
F
7
0
Y
F
8
0
Y
F
3
1
9
0
Y
F
5
.
3
1
0
1
Y
F
5
.
4
1
1
1
Y
F
1
1
2
1
Y
F
59
Company Performance and Remuneration Outcomes
Short term performance – FY2012
Boral’s sales revenue of $5.0b was 6% ahead of the prior year. Excluding the consolidated revenue of Boral’s Asian Plasterboard
business (BGA) from 9 December 2011, Group revenues of $4.7b were broadly steady. Price gains across Boral’s Australian
businesses, contributions from acquisitions and increased volumes in the USA offset volume declines across most businesses
in Australia.
Earnings before interest and tax of $200m (before significant items) decreased by 28% during the year. Severe declines in
the Australian residential market in the second half together with weather-related delays resulted in a significant fall in Building
Products’ sales volumes, an increase in the cost of production and a less favourable sales mix.
Profit after tax (before significant items) of $101m decreased by 42% on the prior year. Boral’s net profit after tax, after significant
items, of $177m was 5% higher than last year.
Depreciation and amortisation increased by $28m to $273m and net interest expense increased by $25m to $88m, reflecting
increased borrowings used to fund acquisitions and growth capital expenditure. The full year tax charge was much lower than last
year. Earnings per share (before significant items) for the year decreased to 13.6c compared with 24.4c last year.
Shareholder returns have reduced in FY2012. Boral’s remuneration strategy of linking executive reward to shareholder return has
meant that executives’ short term incentives were also significantly lower than the prior year – down by 52%. Only one senior
executive, Mike Kane – President Boral Industries USA, received an incentive payment due to a higher than budget EBIT outcome.
Short Term Incentive vested/forfeited
2012
2011
Cash bonus
A$’000s
%
vested
%
forfeited
Cash bonus
A$’000s
%
vested
%
forfeited
Executives
Ross Batstone
Mike Beardsell
Mike Kane
Andrew Poulter
Murray Read
Former Executive
Mark Selway
Total
0.0
0.0
196.4
0.0
0.0
0.0
196.4
0
0
42
0
0
0
100
100
58
100
100
100
0.0
143.8
220.4
34.1
145.8
182.0
726.1
0
28
49
5
23
7
100
72
51
95
77
93
Long term performance
Boral’s LTI grant in September 2011 was awarded in the form of rights. The primary conditions applying to Boral’s LTI grants
include a minimum vesting period of three years with a total life of seven years and a market-based performance hurdle which
measures Boral’s TSR relative to the TSR of companies that comprise the ASX 100 at grant date (the comparator group). Testing
against the hurdle is on three specific dates after performance periods of three, five and seven years.
When measured over the long term, Boral’s TSR performance has been satisfactory; however, economic conditions mostly
relating to the housing and construction cycle in recent years have resulted in Boral’s TSR underperforming the comparator group.
Boral’s relative TSR performance for the 2004 LTI grant reached the 52nd percentile of the ASX 100 companies, allowing partial
vesting of rights and options during the year. Rights have vested; however, no value has been derived from options granted as
the share price is well under the exercise price. The 2005, 2006 and 2007 grants did not improve their relative TSR performance
during the year. The 2008 grant reached its first test date during the year; however, the relative TSR performance was below the
50th percentile. Therefore, in FY2012, there was no further vesting for these grants.
The relative TSR performance and the vesting level for each LTI grant since October 2004 are set out in the table below.
Note that the 2004, 2006 and 2007 grants have reached or exceeded the minimum level required for vesting; however, the
relative TSR performance of the 2005 and 2008 grants are yet to reach the 50th percentile. The 2009, 2010 and 2011 grants
have not yet reached a measurement date.
The LTI grants from October 2005 are within the seven year life and the performance hurdle may still be reached before they lapse.
60 Boral Limited Annual Report 2012
The table below demonstrates the level of performance achieved thus far for each LTI grant up to 1 July 2012.
Grant date
Expiry date
Option
exercise price
Oct 04
Oct 05
Nov 06
Nov 07
Nov 08
Nov 09
Nov 10
Oct 11
Oct 12
Nov 13
Nov 14
Nov 15
Nov 16
Nov 17
Sept 11
Sept 18
$6.55
$7.65
$7.27
$6.78
N/A
N/A
N/A
N/A
Mix of options/rights
50% options 50% rights
50% options 50% rights
50% options 50% rights
50% options 50% rights
100% rights
100% rights
100% rights
100% rights
Relative TSR
performance
vesting level
52%
38%
50%
68%
28%
1st test date Nov 2012
1st test date Nov 2013
1st test date Sept 2014
54%
0%
50%
86%
0%
N/A
N/A
N/A
Long Term Incentives granted and movement during the year
Details of options and rights granted and the movement of options and rights held by the Chief Executive and the senior executives
during the year are:
Granted
during the
year as
remuneration a
Balance at
1 July 2011
Number
Number
value of
grantb
Exercised/
vested during
the year
$
–
Number
–
value of
options
and rights
exercised/
vestedd
$
–
–
321,978
940,950
(8,218)
35,745
–
–
–
–
(11,100)
129,280
305,100
(1,607)
6,990
(1,369)
Lapsed/
cancelled
during the
yearc
Number
(56,800)
(7,000)
–
–
–
–
value of
options
and rights
lapsed/
cancelled e
Balance at
30 June
2012
$
Number
56,800
26,110
11,100
5,106
–
–
–
–
240,700
659,142
102,000
309,050
–
181,002
–
188,205
99,000
354,703
–
–
–
–
–
–
–
–
–
–
Executives
Ross Batstone Options
Rights
Mike Beardsell Options
Mike Kane
Rights
Options
Rights
297,500
352,382
113,100
182,746
–
–
–
78,717
102,285
241,392
Andrew Poulter Options
–
–
–
Rights
21,701
166,504
392,950
Murray Read
Options
Rights
123,200
202,935
Former Executive
–
–
158,263
373,500
(3,507)
15,254
(24,200)
(2,988)
24,200
11,145
Mark Selway
Options
–
–
–
Rights
734,853
771,186
1,820,000
–
–
–
–
–
–
–
–
–
1,506,039
a
b
No options were granted to senior executives during the year. Rights were granted to senior executives on 1 September 2011, with the earliest vesting date on
1 September 2014 and the last vesting date (expiry date) of the rights on 1 September 2018.
The fair value of rights granted on 1 September 2011, calculated using a Monte Carlo simulation analysis, is $2.36 per right. The fair value of 135,135 rights granted to
Ross Batstone, as a retention incentive, on 1 September 2011 is $3.70 per right.
c One fully paid ordinary share was allocated in respect of each right that vested.
d
Calculated per right as the market price of Boral shares on the date of vesting. No exercise price is payable In respect of rights that vest. While there were also
options that vested during the year, no options were exercised by senior executives because the exercise price exceeded the market price for Boral shares.
e Value is calculated at fair market value of option or right on date of grant.
61
Company Performance and Remuneration Outcomes
The number of options and rights included in the balance at 30 June 2012 for the Chief Executive and the senior executives is as set
out below:
Executives
Ross Batstone
Mike Beardsell
Mike Kane
Andrew Poulter
Murray Read
Former Executive
Mark Selway
Options
Rights
Options
Rights
Options
Rights
Options
Rights
Options
Rights
Options
Rights
year of grant
2005
2006
2007
2008
2009
2010
2011
Balance at
30 June
2012
71,700
18,849
25,500
6,714
74,900
10,232
34,100
4,655
94,100
–
–
–
–
240,700
3,427
74,624
82,463
147,569
321,978
659,142
42,400
–
–
–
–
102,000
1,545
29,654
38,530
98,672
129,280
309,050
–
–
–
–
–
–
–
–
–
–
–
–
27,300
29,300
42,400
–
–
–
–
–
–
–
–
–
–
–
–
–
78,717
102,285
181,002
–
–
–
21,701
166,504
188,205
–
–
99,000
7,175
4,008
1,544
29,538
29,175
125,000
158,263
354,703
–
–
–
–
–
–
–
–
–
–
–
–
431,034
303,819
771,186 1,506,039
The unvested options and rights have a minimum value of zero, if they do not reach the 50th percentile relative TSR measure.
The maximum value of unvested rights is the sale price of Boral shares at the date of vesting while the maximum value of
unvested options is the sale price of Boral shares at the date of exercise less the applicable exercise price.
62 Boral Limited Annual Report 2012
Executive Remuneration Table
The following executive remuneration table has been prepared in accordance with the appropriate accounting standards and has
been audited. It differs from the actual remuneration table in the earlier “Remuneration in brief” section in that LTI payments in
the earlier table reflect the value of rights that actually vested during the year while the “share-based payments” below reflect the
fair market value of LTI grants made calculated in accordance with the accounting standard. These values align with the amounts
expensed in Boral’s financial statements.
Short term
Post
employ-
ment
Termination
benefit
Share-based
paymentsa
Other
long term
Total
Cash
salary
Short Term
Incentive
Non-
monetary
benefitsb
Super-
annuation
Options
Rights
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
818.9
729.3
658.1
634.6
462.1
440.9
765.4
741.0
642.5
625.2
0.0
0.0
0.0
143.8
196.4
220.4
0.0
34.1
0.0
145.8
19.4
19.0
19.1
19.0
30.3
37.1
0.0
0.0
0.2
0.0
127.1
120.7
15.8
15.2
66.6
74.2
15.8
15.2
100.0
94.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
28.9
48.5
13.1
21.3
0.0
0.0
0.0
0.0
12.6
20.2
953.5d
224.8
173.9
110.6
85.5
28.7
77.8
7.9
192.3
111.4
13.7
12.1
11.0
10.6
0.0
0.0
12.7
12.4
10.7
10.4
1,961.5
1,154.4
891.0
955.1
840.9
801.3
871.7
810.6
958.3
1,007.8
2012
2011
1,861.1
1,793.1
0.0
182.0
11.3
0.0
15.8
15.2
1,888.3e
0.0
0.0
0.0
3,541.5f
460.8
31.0
29.9
7,349.0
2,481.0
2012
2011
5,208.1
4,964.1
196.4
726.1
80.3
75.1
341.1
1,888.3
335.3
0.0
54.6
90.0
5,024.5
944.2
79.1 12,872.4
75.4
7,210.2
A$’000s
Executives
Ross Batstonec
Chief Executive
(from 22 May 2012)
Mike Beardsell
Divisional Managing
Director,
Boral Cement
Mike Kane
President,
Boral Industries USA
Andrew Poulter
Chief Financial Officer
Murray Read
Divisional Managing
Director,
Construction Materials
Former Executive
Mark Selway
Chief Executive
(from 1 July 2011
to 22 May 2012)
Total
Total
a
The fair value of the options and rights is calculated at the date of grant using the Monte Carlo simulation analysis. The value is allocated to each reporting
period evenly over the period of five years from the grant date. The value disclosed above is the portion of the fair value of the options and rights allocated to this
reporting period.
Includes parking for Australian executives, vehicle and medical costs for USA executives.
b
c Ross Batstone was Divisional Managing Director of the Building Products Division before being appointed as Chief Executive Officer on 22 May 2012.
d
e
f
Includes an expense for Mr Batstone for rights of $332,384 that would normally have been amortised over future years.
This amount constitutes a separation payment equal to one year’s FAR which was paid to Mr Selway upon his termination and is within the termination benefits cap.
Includes an expense for Mr Selway for rights of $2,714,204 that would normally have been amortised over future years. Mr Selway’s unvested share rights remain
intact and will only vest if the applicable performance hurdles are met on the relevant test dates.
Former executive Mark Selway stood down from the Chief Executive’s role on 22 May 2012. At that date he ceased to be classified
as one of Boral’s Key Management Personnel; however, he remained in employment until 31 July 2012.
Proportion of remuneration which consists of options/rights is Ross Batstone 50%, Mike Beardsell 21%, Mike Kane 10%,
Andrew Poulter 9%, Murray Read 21% and Mark Selway 48%.
Proportion of remuneration that is performance-based is Ross Batstone 50%, Mike Beardsell 21%, Mike Kane 34%,
Andrew Poulter 9%, Murray Read 21% and Mark Selway 48%.
63
Non-executive Directors’ Remuneration
The non-executive Directors receive fixed remuneration only, which includes base remuneration (Board fees) and Committee
fees. It is structured on a total remuneration basis which is paid in the form of cash and superannuation contributions. The
Directors do not receive any variable remuneration or other performance related incentives such as options or rights to shares,
and no retirement benefits are provided to non-executive Directors other than superannuation contributions.
The current aggregate fee limit of $1,550,000 per annum was approved at the Company’s Annual General Meeting in
November 2011.
Non-executive Directors’ remuneration is reviewed annually by the full Board. This review takes account of the
recommendations of the Remuneration & Nomination Committee and external benchmarking of comparable companies.
The Board took independent advice from PwC regarding non-executive Directors’ remuneration.
The Board determined that an increase of 5.7% in non-executive Directors’ base remuneration and Committee member fees
should occur on 1 November 2011. The last increase in Directors’ fees took place on 1 July 2008. The Chairman’s fee and the
Committee Chairman’s fee structure were also altered. The Chairman’s fee, including Committee fees, was set at three times the
base remuneration of a Director (previously it was 2.75 times the base remuneration of a Director plus Committee fees) and the
Committee Chairman’s fee was set at two times the base Committee fee. The establishment of the HSE Committee resulted in
additional fees of $39,600 in FY2012.
The Board has also determined that no increase in non-executive Directors’ fees or Committee fees will occur for FY2013.
The current remuneration of non-executive Directors is:
Position
Chairman
Committee Chairman
Director
Base remuneration
Committee fees
Total remuneration
$390,000
$130,000
$130,000
$0
$28,540
$14,270
$390,000
$158,540
$144,270
The total annual non-executive Director remuneration for the current Board of seven non-executive Directors for FY2012
was $1,299,905 including superannuation.
The remuneration of the non-executive Directors is set out in the following table.
Non-executive Directors’ total remuneration
A$’000s
Directors
Catherine Brennerb
Brian Clark
Eileen Doyle
Robert Every, Chairman
Richard Longes
John Marlay
Paul Rayner
Total
2012
2011
Short term
Board and
Committee feesa
Post
employment
superannuation
Total
remuneration
Short term
Board and
Committee fees
Post
employment
superannuation
Total
remuneration
134.3
140.8
153.6
366.0
130.0
142.8
140.8
1,208.3
12.1
12.7
13.8
15.8
11.7
12.9
12.6
91.6
146.4
153.5
167.4
381.8
141.7
155.7
153.4
99.6
131.4
125.2
336.6
125.2
125.2
131.4
1,299.9
1,074.6
9.0
11.8
11.3
15.2
11.3
11.3
11.8
81.7
108.6
143.2
136.5
351.8
136.5
136.5
143.2
1,156.3
The Health, Safety and Environment Committee was constituted with effect from 1 July 2011.
a
b Catherine Brenner was appointed on 15 September 2010.
Roland Williams was a Director for part of 2011 with a total remuneration of $47,600.
No share-based payments were made to non-executive Directors during 2011 or 2012.
64 Boral Limited Annual Report 2012
Financial Statements
Income Statement
Statement of Comprehensive Income
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
66
67
68
69
70
Notes to the Financial Statements
1
2
3
4
5
6
7
8
9
10
11
12
Significant accounting policies
Segments
Profit for the period
Significant items
Discontinued operations and assets held for sale
Income tax expense
Dividends
Earnings per share
Cash and cash equivalents
Receivables
Inventories
Investments accounted for using the equity method
13 Other financial assets
14
15
Property, plant and equipment
Intangible assets
16 Other assets
17
18
Payables
Loans and borrowings
19 Other financial liabilities
20 Current tax liabilities
21
22
23
24
Deferred tax assets and liabilities
Provisions
Issued capital
Reserves
25 Contingent liabilities
26 Commitments
27
28
29
30
31
32
Employee benefits
Loans and borrowings
Financial instruments
Key management personnel disclosures
Auditors’ remuneration
Acquisition/disposal of controlled entities
33 Controlled entities
34
Related party disclosures
35 Notes to cash flow statement
36
37
Parent entity disclosures
Deed of cross guarantee
Statutory Statements
71
77
79
81
83
85
86
87
88
88
89
90
91
92
94
95
96
96
96
96
97
99
101
102
103
104
105
110
111
119
122
122
127
130
131
132
133
135
65
Income Statement
Boral Limited and Controlled Entities
For the year ended 30 June
Continuing operations
Revenue
Cost of sales
Selling and distribution expenses
Administrative expenses
Other income
Other expenses
Share of net profit of associates
Profit before net financing costs and income tax expense
Financial income
Financial expenses
Net financing costs
Profit before income tax expense
Income tax benefit/(expense)
Profit from continuing operations
Discontinued operations
Loss from discontinued operations (net of income tax)
Net profit
Attributable to:
Members of the parent entity
Non-controlling interests
Net profit
Basic earnings per share
Diluted earnings per share
Continuing operations
Basic earnings per share
Diluted earnings per share
CONSOLIDATED
Note
2012
$ millions
2011
$ millions
3
4,716.2
4,345.7
(3,425.4)
(3,063.8)
(812.6)
(331.0)
(770.6)
(322.5)
(4,569.0)
(4,156.9)
3
3
12
3
3
6
5
8
8
8
8
207.5
(119.3)
30.8
266.2
14.6
(99.5)
(84.9)
181.3
29.2
210.5
75.5
(60.6)
42.0
245.7
23.6
(83.3)
(59.7)
186.0
(9.2)
176.8
(32.8)
177.7
(11.4)
165.4
176.6
1.1
177.7
23.8c
23.6c
28.2c
28.0c
167.7
(2.3)
165.4
23.3c
23.2c
25.0c
24.9c
The income statement should be read in conjunction with the accompanying notes which form an integral part of the financial statements.
66 Boral Limited Annual Report 2012
Statement of Comprehensive Income
Boral Limited and Controlled Entities
For the year ended 30 June
Net profit
Other comprehensive income
Actuarial gain/(loss) on defined benefit plans
Net exchange differences from translation of foreign operations taken to equity
Foreign currency translation reserve transferred to net profit on recognition
of LBGA as a subsidiary
Foreign currency translation reserve transferred to net profit on disposal
of controlled entities
Fair value adjustment on cash flow hedges
Income tax relating to other comprehensive income
Total comprehensive income
Total comprehensive income is attributable to:
Members of the parent entity
Non-controlling interests
Total comprehensive income
CONSOLIDATED
Note
2012
$ millions
2011
$ millions
177.7
165.4
27
24
24
24
(9.8)
(4.4)
30.5
18.6
(4.2)
5.5
2.8
(31.1)
–
–
1.0
(29.7)
213.9
108.4
210.7
3.2
213.9
113.7
(5.3)
108.4
The statement of comprehensive income should be read in conjunction with the accompanying notes which form an integral part of the financial statements.
67
Balance Sheet
Boral Limited and Controlled Entities
As at 30 June
CURRENT ASSETS
Cash and cash equivalents
Receivables
Inventories
Other financial assets
Other
Assets classified as held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
Inventories
Investments accounted for using the equity method
Property, plant and equipment
Intangible assets
Deferred tax assets
Other
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Payables
Loans and borrowings
Other financial liabilities
Current tax liabilities
Provisions
Liabilities classified as held for sale
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Payables
Loans and borrowings
Other financial liabilities
Deferred tax liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
Total parent entity interest
Non-controlling interests
TOTAL EQUITY
CONSOLIDATED
Note
2012
$ millions
2011
$ millions
9
10
11
13
16
5
10
11
12
14
15
21
16
17
18
19
20
22
5
17
18
19
21
22
205.7
809.6
656.1
0.2
69.0
62.9
561.2
784.1
596.1
7.5
85.6
–
1,803.5
2,034.5
17.8
104.9
36.6
10.3
93.5
240.2
3,566.7
2,894.9
820.1
101.2
48.3
4,695.6
6,499.1
255.9
88.2
50.5
3,633.5
5,668.0
732.2
148.3
7.1
22.8
187.8
44.6
702.8
163.4
7.5
123.8
218.6
–
1,142.8
1,216.1
10.9
1,575.1
72.4
182.5
112.0
1,952.9
3,095.7
3,403.4
12.5
903.2
112.2
161.1
106.5
1,295.5
2,511.6
3,156.4
23
24
2,368.4
2,261.3
(109.2)
(159.5)
1,069.9
3,329.1
74.3
1,007.0
3,108.8
47.6
3,403.4
3,156.4
The balance sheet should be read in conjunction with the accompanying notes which form an integral part of the financial statements.
68 Boral Limited Annual Report 2012
Statement of Changes in Equity
Boral Limited and Controlled Entities
For the year ended 30 June 2012
Balance at 1 July 2011
Net profit
Other comprehensive income
Translation of net assets of overseas controlled entities
Translation of long-term borrowings and foreign currency
forward contracts
Foreign currency translation reserve transferred
to net profit on recognition of LBGA as a subsidiary
Foreign currency translation reserve transferred
to net profit on disposal of controlled entities
Fair value adjustment on cash flow hedges
Actuarial gain/(loss) on defined benefit plans
Income tax relating to other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners
Shares issued under the Dividend Reinvestment Plan
Shares issued on vesting of rights
Dividends paid
Purchase of employee compensation shares
Share-based payments
Non-controlling interest acquired
Purchase of non-controlling interest
Non-controlling interest disposed
Contributions by non-controlling interests
Total transactions with owners in their capacity as owners
Balance at 30 June 2012
For the year ended 30 June 2011
Balance at 1 July 2010
Net profit/(loss)
Other comprehensive income
Translation of net assets of overseas controlled entities
Translation of long-term borrowings and foreign currency
forward contracts
Fair value adjustment on cash flow hedges
Actuarial gain/(loss) on defined benefit plans
Income tax relating to other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners
Shares issued under the Dividend Reinvestment Plan
Shares issued on vesting of rights
Dividends paid
Shares issued under capital raising net of costs
Purchase of employee compensation shares
Other – Cultured Stone (note 24)
Share-based payments
Income tax benefit on capital raising
Non-controlling interest acquired
Contributions by non-controlling interests
Total transactions with owners in their capacity as owners
Balance at 30 June 2011
CONSOLIDATED
Issued
capital
$ millions
Reserves
$ millions
Retained
earnings
$ millions
Total parent
entity
interest
$ millions
Non-
controlling
interests
$ millions
Total equity
$ millions
2,261.3
–
(159.5)
–
1,007.0
176.6
3,108.8
176.6
47.6
1.1
3,156.4
177.7
–
–
–
–
–
–
–
–
106.9
0.2
–
–
–
–
–
–
–
107.1
2,368.4
Issued
capital
$ millions
1,724.0
–
–
–
–
–
–
–
53.1
0.8
–
479.8
–
–
–
3.6
–
–
537.3
2,261.3
(1.5)
(5.0)
30.5
18.6
(4.2)
–
2.5
40.9
–
(0.2)
–
(1.0)
10.6
–
–
–
–
9.4
(109.2)
–
–
–
–
–
(9.8)
3.0
169.8
–
–
(106.9)
–
–
–
–
–
–
(106.9)
1,069.9
(1.5)
2.1
0.6
(5.0)
30.5
18.6
(4.2)
(9.8)
5.5
210.7
106.9
–
(106.9)
(1.0)
10.6
–
–
–
–
9.6
3,329.1
–
–
–
–
–
–
3.2
(5.0)
30.5
18.6
(4.2)
(9.8)
5.5
213.9
–
–
(1.0)
–
–
22.8
(0.8)
(2.9)
5.4
23.5
74.3
106.9
–
(107.9)
(1.0)
10.6
22.8
(0.8)
(2.9)
5.4
33.1
3,403.4
CONSOLIDATED
Retained
earnings
$ millions
Total parent
entity
interest
$ millions
Non-
controlling
interests
$ millions
Total equity
$ millions
Reserves
$ millions
(38.9)
–
938.4
167.7
2,623.5
167.7
2.6
(2.3)
2,626.1
165.4
(123.0)
–
(123.0)
(3.0)
(126.0)
94.9
1.0
–
(28.8)
(55.9)
–
(0.8)
–
–
(3.4)
(66.3)
5.8
–
–
–
–
–
2.8
(0.9)
169.6
–
–
(101.0)
–
–
–
–
–
–
–
(64.7)
(159.5)
(101.0)
1,007.0
94.9
1.0
2.8
(29.7)
113.7
53.1
–
(101.0)
479.8
(3.4)
(66.3)
5.8
3.6
–
–
371.6
3,108.8
–
–
–
–
(5.3)
–
–
–
–
–
–
–
–
44.3
6.0
50.3
47.6
94.9
1.0
2.8
(29.7)
108.4
53.1
–
(101.0)
479.8
(3.4)
(66.3)
5.8
3.6
44.3
6.0
421.9
3,156.4
69
The statement of changes in equity should be read in conjunction with the accompanying notes which form an integral part of the financial statements.
Cash Flow Statement
Boral Limited and Controlled Entities
For the year ended 30 June
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Borrowing costs paid
Income taxes paid
Acquisition costs, restructure costs and legal settlements paid
NET CASH PROVIDED BY OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Purchase of intangibles
Purchase of controlled entities and businesses (net of cash acquired)
Purchase of non-controlling interest
Loans to associates
Insurance proceeds applied to asset disposal
Proceeds on disposal of non-current assets
Proceeds on disposals of controlled entities and businesses
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from capital raising
Purchase of employee compensation shares
Dividends paid (net of dividends reinvested under the Dividend Reinvestment Plan
of $54.8 million (2011: $53.1 million))
Dividends paid to non-controlling interests
Contributions by non-controlling interests
Proceeds from borrowings
Repayment of borrowings
NET CASH PROVIDED BY FINANCING ACTIVITIES
NET CHANGE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the year
Effects of exchange rate fluctuations on the balances of cash and cash equivalents
held in foreign currencies
Cash and cash equivalents at the end of the year
35
The cash flow statement should be read in conjunction with the accompanying notes which form an integral part of the financial statements.
70 Boral Limited Annual Report 2012
CONSOLIDATED
Note
2012
$ millions
2011
$ millions
35
35
32
5
5,426.0
5,084.3
(5,069.4)
(4,669.6)
356.6
414.7
22.1
15.1
(99.7)
(69.7)
(91.1)
27.7
41.1
(84.7)
(21.5)
(26.6)
133.3
350.7
(408.8)
(5.6)
(700.5)
(0.8)
0.4
–
64.3
65.3
(345.0)
(0.8)
(146.0)
–
3.2
33.4
25.4
48.1
(985.7)
(381.7)
52.1
–
(1.0)
(52.1)
(1.0)
5.4
630.9
(162.2)
472.1
(380.3)
561.2
0.6
181.5
–
479.8
(3.4)
(47.9)
–
6.0
146.3
(136.6)
444.2
413.2
157.0
(9.0)
561.2
Notes to the Financial Statements
Boral Limited and Controlled Entities
1. Significant accounting policies
Boral Limited (the “Company”) is a company limited by shares
incorporated and domiciled in Australia whose shares are
publicly traded on the Australian Securities Exchange.
The consolidated financial statements for the year ended
30 June 2012 comprise Boral Limited and its controlled
entities (the “Group”).
The financial statements were authorised for issue by the
Directors on 11 September 2012.
The Group is a for-profit entity and is primarily involved in
the manufacturing and supply of building and construction
materials in Australia, Asia and the United States of America.
A. Basis of preparation
The financial statements are general purpose financial
statements which have been prepared in accordance with
Australian Accounting Standards adopted by the Australian
Accounting Standards Board (AASB) and the Corporations
Act 2001. The financial statements of the Group comply with
International Financial Reporting Standards (IFRS) adopted
by the International Accounting Standards Board.
The financial statements are presented in Australian dollars.
The functional currency is the principal currency in which
subsidiaries and associates operate.
The financial statements have been prepared on the basis
of historical cost, except for derivative financial assets and
financial assets classified as available for sale, which have
been measured at fair value. The carrying value of recognised
assets and liabilities that are hedged with fair value hedges are
adjusted to record changes in the fair value attributable to the
risks that are being hedged.
Significant accounting judgements, estimates and
assumptions: The preparation of financial statements in
conformity with Australian Accounting Standards requires
management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience
and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis
of making the judgements about carrying values of assets
and liabilities. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and
in any future periods affected.
In particular, information about significant areas of estimation,
uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the
amount recognised in the financial statements relate to the
following areas:
• Goodwill and intangibles: Judgements are made with
respect to identifying and valuing intangible assets on
acquisition of new businesses. The Group determines
whether goodwill and intangibles with indefinite useful
lives are impaired at each balance date. These calculations
involve an estimation of the recoverable amount of a cash
generating unit to which goodwill and intangibles with
indefinite useful lives are allocated.
• Provision for restoration and environmental
rehabilitation: Restoration and environmental rehabilitation
costs are part of the Group’s operations where natural
resources are extracted. Provisions represent estimates
of future costs associated with closure and rehabilitation
of various sites. The provision calculation requires
assumptions on closure dates, application of environmental
legislation, available technologies and consultant cost
estimates. The ultimate costs remain uncertain, and costs
may vary in response to a number of factors, including
changes to relevant legislation and ultimate use of the site.
• Income taxes: The Group is subject to income taxes in
Australia and other jurisdictions in which Boral operates.
Significant judgement is required in determining the Group’s
provision for income taxes. Judgement is also required in
assessing whether deferred tax assets and deferred tax
liabilities are recognised on the balance sheet. Assumptions
about the generation of future taxable profits depend on
management’s estimates of future cash flows. Changes in
circumstances will alter expectations, which may impact
the amount recognised on the balance sheet and the
amount of other tax losses and temporary differences
not yet recognised.
• Share-based payments: The Group measures the cost
of equity-settled transactions by reference to the fair value
of the equity instruments at the date at which they are
granted. The fair value is determined by an external valuer
using a Monte Carlo simulation option-pricing model.
• Estimation of useful lives of assets: Estimation of useful
lives of assets has been based on historical experience. In
addition, the condition of assets is assessed at least annually
and considered against the remaining useful life. Adjustments
to useful lives are made when considered necessary.
• Defined benefit plans: Various actuarial assumptions
are required when determining the Group’s pension
schemes and other post-employment benefit obligations.
These assumptions and the related carrying amounts are
disclosed in the employee benefits note.
Changes in accounting policies: The Group has adopted
all new and amended Australian Accounting Standards and
Australian Accounting Standards Board (AASB) interpretations
that are mandatory for the current reporting period and
relevant to the Group. Adoption of these standards and
interpretations has not resulted in any material changes to the
Group’s financial statements.
New accounting standards: Several new accounting
standards have been published that are not mandatory for this
reporting period. These are not expected to have a significant
impact on the Group’s financial statements. The impact of
changes for accounting standards AASB 9 Financial instruments
(2010), AASB 10 Consolidated Financial Statements and AASB
11 Joint Arrangements are still being fully assessed. However,
initial assessments indicate that there will be no significant
impact on the Group’s financial statements.
B. Principles of consolidation
Subsidiaries: Subsidiaries are entities controlled by the Group.
Control exists when the Group has the power, directly or
indirectly, to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. In assessing
control, potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of
subsidiaries are included in the financial statements from the
date that control commences until the date that control ceases.
71
1. Significant accounting policies (continued)
Associates: Associates are those entities for which the
Group has significant influence, but not control, over the
financial and operating policies. The financial statements
include the Group’s share of the total recognised gains and
losses of associates on an equity accounted basis, from the
date that significant influence commences until the date that
significant influence ceases. When the Group’s share of losses
exceeds its interest in an associate, the Group’s carrying
amount is reduced to nil, and recognition of further losses is
discontinued, except to the extent that the Group has incurred
legal or constructive obligations or made payments on behalf
of an associate.
Jointly controlled entities and assets: The interests of the
Group in unincorporated joint ventures and jointly controlled
assets are brought to account by recognising in its financial
statements the assets it controls and the liabilities that it incurs,
and the expenses it incurs and its share of income that it earns
from the sale of goods or services by the joint venture.
Transactions eliminated on consolidation: Intragroup
balances and transactions, and any unrealised gains and
losses arising from intragroup transactions, are eliminated in
preparing the consolidated financial statements. Unrealised
gains arising from transactions with associates and jointly
controlled entities are eliminated to the extent of the
Group’s interest in the entity. Unrealised losses arising from
transactions with associates are eliminated in the same way
as unrealised gains, but only to the extent that there is no
evidence of impairment.
Business combinations: The acquisition method of
accounting is used to account for all business combinations.
The consideration transferred for the acquisition of a subsidiary
comprises the fair values of the assets transferred, the
liabilities incurred and the equity interests issued by the Group.
The consideration transferred also includes the fair value of
any asset or liability resulting from a contingent consideration
arrangement and the fair value of any pre-existing equity
interest in the subsidiary.
Acquisition related costs are expensed as incurred. Identifiable
assets acquired and liabilities and contingent liabilities
assumed in a business combination are initially measured
at their fair values at the acquisition date.
On an acquisition-by-acquisition basis the Group recognises
any non-controlling interest in the acquiree either at fair value
or at the non-controlling interest’s proportionate share of the
acquiree’s net identifiable assets.
The excess of consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition
date fair value of any previous equity interest in the acquiree
over the fair value of the Group’s share of the net identifiable
assets acquired is recorded as goodwill. Where the excess is
negative, a bargain purchase gain is recognised immediately
in the Income Statement.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate
used is the entity’s incremental borrowing rate.
72 Boral Limited Annual Report 2012
Contingent consideration is classified either as equity or
a financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value with changes in
fair value recognised in the Income Statement.
C. Revenue recognition
Revenue is recognised at fair value of the consideration
received net of the amount of goods and services tax (GST).
Sale of goods revenue: Sale of goods revenue is recognised
(net of returns, discounts and allowances) when the significant
risks and rewards of ownership have been transferred to
the buyer.
Rendering of services revenue: Revenue from rendering
services is recognised in proportion to the stage of completion
of the contract when the stage of contract completion can be
reliably measured. An expected loss is recognised immediately
as an expense.
Land development projects: Revenue from the sale of land
development projects is recognised when all of the following
conditions have been met: contracts are exchanged; a
significant non-refundable deposit is received; and material
conditions contained within the contract are met.
Dividends: Revenue from dividends from other investments
is recognised once the right to payment is established.
D. Government grants
Grants from the government are recognised at their fair
value where there is reasonable assurance that the grant
will be received and the Group will comply with all attached
conditions.
Government grants relating to the purchase of property,
plant and equipment are included in non-current liabilities
as deferred income and are credited to the Income Statement
on a straight-line basis over the expected lives of the
related assets.
E. Income tax
Income tax disclosed in the Income Statement comprises
current and deferred tax. Income tax is recognised in the
Income Statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised
in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted
at the balance sheet date, and any adjustments to tax payable
in respect to previous years.
Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: goodwill
not deductible for tax purposes; the initial recognition of assets
or liabilities that affect neither accounting nor taxable profits;
and differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable
future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
Notes to the Financial StatementsBoral Limited and Controlled Entities 1. Significant accounting policies (continued)
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
Tax consolidation: Boral Limited and its wholly owned
Australian controlled entities have elected to enter into tax
consolidation effective 1 July 2002.
The head entity, Boral Limited, and its wholly owned Australian
controlled entities continue to account for their own current
and deferred tax amounts. These tax amounts are measured
as if each entity in the tax consolidated group continues to be
a standalone tax payer in its own right. Entities within the tax
consolidated group have entered into a tax sharing agreement
with the head entity. Under the terms of the tax sharing
agreement, each of the entities in the tax consolidated group
has agreed to pay to or receive from the head entity its current
year tax liability or tax asset. Such amounts are recorded in the
balance sheet of the head entity in amounts receivable from or
payable to controlled entities.
Taxation of financial arrangements (TOFA): The Tax Law
Amendment (Taxation of Financial Arrangements) Act 2009
(TOFA legislation) applies to certain financial arrangements
of a company for income years commencing on or after
1 July 2010. TOFA changes the tax treatment of financial
arrangements, including the treatment of hedging transactions.
The Group has not made any elections under the TOFA
legislation and as a result there is no material impact on the
financial statements.
F. Goods and services tax
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), except where the
amount of GST incurred is not recoverable from the Australian
Taxation Office (ATO). In these circumstances, the GST is
recognised as part of the cost of acquisition of the asset
or as part of the expense.
Receivables and payables are stated with the amount of GST
included. The net amount of GST recoverable from, or payable
to, the ATO is included as a current asset or liability in the
balance sheet.
Cash flows are included in the cash flow statement on a
gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from,
or payable to, the ATO are classified as operating cash flows.
G. Net financing costs
Financing costs include interest payable on borrowings
calculated using the effective interest rate method, finance
charges in respect of finance leases, exchange differences
arising from foreign currency borrowings to the extent that
they are regarded as an adjustment to interest costs and
differences relating to the unwinding of the discount of assets
and liabilities measured at amortised cost.
Financing costs are recognised as an expense in the period in
which they are incurred, unless they relate to a qualifying asset.
Financing costs incurred for the construction of any qualifying
asset are capitalised during the period of time that is required
to complete and prepare the asset for its intended use or sale.
Financial income is recognised as it accrues taking into
account the effective yield on the financial asset.
H. Foreign currencies
Transactions: Transactions in foreign currencies are
translated at the foreign exchange rate ruling at the date of
the transaction. Monetary assets and liabilities denominated
in foreign currencies at the balance sheet date are translated
to Australian dollars at the foreign exchange rate ruling at that
date. Foreign exchange differences arising on translation are
recognised in the Income Statement. Non-monetary assets
and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the
date of the transaction.
Translation: The financial statements of foreign operations are
translated to Australian dollars as follows:
• assets (including goodwill) and liabilities for each balance
sheet are translated at the closing rate at the date of that
balance sheet;
• all resulting exchange differences are recognised as a
separate component of equity (foreign currency translation
reserve); and
• income and expenses for each Income Statement are
translated at average exchange rates approximating the
rates prevailing on the transaction dates.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and
of borrowings and other currency instruments designated
as hedges of such investments, are taken to the foreign
currency translation reserve. When a foreign operation is
sold, a proportionate share of such exchange differences
is recognised in the Income Statement as part of the gain
or loss on sale.
I. Receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost, less allowance
for impairment. An allowance for impairment is established
when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms
of receivables. The amount of the allowance is the difference
between the asset’s carrying amount and the present value
of estimated future cash flows. The amount of the allowance
is recognised in the Income Statement.
J. Inventories
Inventories and work in progress are valued at the lower of cost
(including materials, labour and appropriate overheads) and net
realisable value. Cost is determined predominantly on the first-
in-first-out basis of valuation. Net realisable value is determined
on the basis of each entity’s normal selling pattern. Expenses of
marketing, selling and distribution to customers are estimated
and are deducted to establish net realisable value.
Land development projects: Land development projects
are stated at the lower of cost and net realisable value. Cost
includes the cost of acquisition, development and holding
costs during development. Costs incurred after completion
of development are expensed as incurred.
73
1. Significant accounting policies (continued)
K. Non-current assets held for sale and
discontinued operations
Non-current assets are classified as held for sale and stated
at the lower of their carrying amount and fair value less costs
to sell if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use.
An impairment loss is recognised for any initial or subsequent
write-down of the asset to fair value less costs to sell. A gain
is recognised for any subsequent increase in fair value less
costs to sell of an asset, but not in excess of any cumulative
impairment loss.
Non-current assets are not depreciated or amortised while
they are classified as held for sale.
A discontinued operation is a component of the entity that
has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical
area of operations, is part of a single coordinated plan to
dispose of such a line of business or area of operations, or is
a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately
on the face of the Income Statement.
L. Impairment
The carrying value of the Group’s assets, other than
inventories and deferred tax assets, are reviewed at each
balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the
asset’s recoverable amount is estimated. For goodwill, the
recoverable amount is assessed at each balance date.
An impairment loss is recognised whenever the carrying
amount of an asset or its cash generating unit exceeds its
recoverable amount. Impairment losses are recognised in
the Income Statement, unless the asset has previously been
revalued, in which case the impairment loss is recognised as
a reversal to the extent of that previous revaluation, with any
excess recognised through the Income Statement. Impairment
losses recognised in respect of cash generating units are
allocated first to reduce the carrying amount of any goodwill
allocated to the cash generating units (group of units) and then,
to reduce the carrying amount of the other assets in the unit
(group of units) on a pro rata basis.
The recoverable amount of other assets is the greater of their
fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted
to their present value of money using a pre-tax discount rate
that reflects current market assessments of the time value
of money and the risks specific to the asset. For an asset
that does not generate largely independent cash inflows,
the recoverable amount is determined for the cash generating
unit to which the asset belongs.
Reversals of impairment: An impairment loss in respect
of goodwill is not reversed. In respect of other assets, an
impairment loss is reversed if there is an indication that
the impairment loss may no longer exist and there has
been a change in the estimates used to determine the
recoverable amount.
An impairment loss is reversed only to the extent of the asset’s
carrying amount net of depreciation or amortisation, as if no
impairment loss has been recognised.
74 Boral Limited Annual Report 2012
M. Intangible assets
Goodwill: All business combinations are accounted for by
applying the purchase method. Goodwill represents the
difference between the cost of the acquisition and the fair
value of the net identifiable assets acquired.
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash generating units and is
not amortised, but is tested annually for impairment. In respect
of associates, the carrying amount of goodwill is included
in the carrying amount of the investment in the associate.
Negative goodwill arising on an acquisition is recognised
directly in the Income Statement.
Other intangible assets: Other intangible assets that are
acquired by the Group are stated at cost less accumulated
amortisation and impairment losses.
Amortisation: Amortisation is charged to the Income
Statement on a straight-line basis over the estimated useful
lives of intangible assets unless such lives are indefinite.
Goodwill and intangible assets with an indefinite useful life are
systematically tested for impairment at each annual balance
sheet date. Other intangible assets are amortised from the
date that they are available for use.
N. Deferred expenses
Expenditure is deferred to the extent that it is considered
probable that future economic benefits embodied in the
expenditure will eventuate and can be reliably measured.
Deferred expenses are amortised over the period in which
the related benefits are expected to be realised. The carrying
value of deferred expenditure is reviewed in accordance with
the policy set out under impairment.
O. Investments
All investments are initially recognised at cost being the fair
value of consideration given and include acquisition costs
associated with the investment.
After initial recognition, investments which are classified as
available for sale are measured at fair value. Gains and losses
on available for sale investments are recognised as a separate
component of equity until the investment is sold, or until the
investment is determined to be impaired, at which time the
cumulative gain or loss previously recognised in equity is
included in the Income Statement.
For investments that are actively traded in organised financial
markets, the fair value is determined by reference to the Stock
Exchange quoted market bid prices at the close of business at
the balance sheet date.
P. Property, plant and equipment
Owned assets: Items of property, plant and equipment are
stated at cost or deemed cost less accumulated depreciation
and impairment losses. The cost of self-constructed assets
includes the cost of materials, direct labour and an appropriate
proportion of production overheads. Assessment of impairment
loss is made in accordance with the impairment policy.
The cost of property, plant and equipment includes the cost
of decommissioning and restoration costs at the end of their
economic lives if a present legal or constructive obligation exists.
Notes to the Financial StatementsBoral Limited and Controlled Entities 1. Significant accounting policies (continued)
When an item of property, plant and equipment comprises major
components having different useful lives, they are accounted for
as separate items of property, plant and equipment.
Leased plant and equipment: Leases under which the Group
assumes substantially all the risk and rewards of ownership
are classified as finance leases. Other leases are classified as
operating leases. Finance leases are capitalised. A lease asset
and a lease liability equal to the present value of the minimum
lease payments are recorded at the inception of the lease.
Lease liabilities are reduced by repayments of principal. The
interest components of the lease payments are expensed.
Contingent rentals are expensed as incurred.
Operating leases are not capitalised and lease costs are
expensed.
Depreciation: Items of property, plant and equipment, including
buildings and leasehold property, but excluding freehold
land, are depreciated using the straight-line method over their
expected useful lives. Assets are depreciated from the date of
acquisition or, in respect of internally constructed assets, from
the time an asset is completed and held ready for use.
The depreciation and amortisation rates used for each class
of asset are as follows:
Buildings
Timber licences and mineral
reserves
Plant and equipment
2012
2011
1–10%
1–10%
1–5%
5–33.3%
1–5%
5–33.3%
Q. Payables
Trade payables and other accounts payable are recognised
when the Group becomes obliged to make future payments
resulting from the purchase of goods and services. Payables
are stated at their amortised cost.
R. Borrowings
Borrowings are initially recognised at fair value, net of transaction
costs incurred. Subsequent to initial recognition, borrowings are
stated at amortised cost, with any difference between cost and
redemption value being recognised in the Income Statement over
the period of the borrowings on an effective interest basis.
S. Employee benefits
Wages and salaries: The provision for employee entitlement
to wages and salaries represents the amount which the Group
has a present obligation to pay resulting from employees’
services provided up to the balance date.
Annual leave, long service leave and retirement benefits:
The provision for employee entitlements in respect of long
service leave and retirement benefits represents the present
value of the estimated future cash outflows to be made by the
employer resulting from employees’ services provided up to
the balance date.
Provisions for employee entitlements which are not expected
to be settled within 12 months are calculated using expected
future increases in wage and salary rates, including related
on-costs and expected settlement dates based on turnover
history and are discounted using the rates attached to national
government securities at balance date, which most closely
match the terms of maturity of the related liabilities.
Superannuation: The Group contributes to several defined
benefit and defined contribution superannuation plans.
Defined contribution plan obligations are recognised as
an expense in the Income Statement as incurred.
The Group’s net obligation in respect of defined benefit
pension plans is calculated separately for each plan by
estimating the amount of future benefit that employees have
earned in return for their service in the current and prior
periods; that benefit is discounted to determine the present
value, and the fair value of any plan assets is deducted.
All actuarial gains and losses that arise in calculating the
Group’s obligation in respect of the plan are recognised
directly in retained earnings.
When the calculation results in plan assets exceeding liabilities
for the Group, the recognised asset is limited to the present
value of any future refunds from the plan or reductions in future
contributions to the plan.
Share-based payments: The Group provides benefits
to senior executives in the form of share-based payment
transactions, whereby senior executives render services
in exchange for options and/or rights over shares.
The cost of the share-based payments with employees is
measured by reference to the fair value at the date at which
they are granted. The fair value is measured at grant date
and recognised as an expense over the expected vesting
period with a corresponding increase in equity. The amount
recognised is adjusted to reflect the actual number of options
that vest, except for those that fail to vest due to market
conditions not being achieved.
The fair value at grant date is independently determined using
a pricing model that takes into account the exercise price, the
terms of the share-based payment, the vesting and performance
criteria, the impact of dilution, the non-tradeable nature of the
payment, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and
the risk-free interest rate for the term of the share-based payment.
For shares issued under the Employee Share Plan, the
difference between the market value of shares and the discount
price issued to employees is recognised as an employee
benefits expense with a corresponding increase in equity.
T. Provisions
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of
a past event, and it is probable that an outflow of economic
benefits will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate,
the risks specific to the liability. Where discounting is applied,
increases in the balance of provisions attributable to the
passage of time are recognised as an interest expense.
Restoration and environmental rehabilitation: Provision is
made to recognise the fair value of the liability for restoration
and environmental rehabilitation of areas from which natural
resources are extracted. The associated asset retirement costs
are capitalised as part of the carrying amount of the related
long-lived asset and amortised over the life of the related
asset. At the end of each year, the liability is increased
75
1. Significant accounting policies (continued)
to reflect the passage of time and adjusted to reflect changes
in the estimated future cash flows underlying the initial fair
value measurement. Provisions are also made for the expected
cost of environmental rehabilitation of sites identified as being
contaminated as a result of prior activities at the time when
the exposure is identified and estimated clean up costs can
be reliably assessed.
Onerous contracts: An onerous contract is considered
to exist where the Group has a contract under which the
unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be
received under it. Present obligations arising under onerous
contracts are recognised and measured as a provision.
U. Derivative financial instruments
The Group is exposed to changes in interest rates, foreign
exchange rates and commodity prices from its activities.
The Group uses the following derivative financial instruments
to hedge these risks: interest rate swaps, forward rate
agreements, interest rate options, forward foreign exchange
contracts and futures commodity fixed price swap contracts.
The Group does not enter into derivative financial instrument
transactions for trading purposes. However, financial
instruments entered into to hedge an underlying exposure
which does not qualify for hedge accounting are accounted
for as trading instruments.
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value. The method of recognising the
resulting gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the
item being hedged. The Group designates certain derivatives
as either hedges of the fair value of recognised assets or
liabilities or a firm commitment (fair value hedge), hedges
of highly probable forecast transactions (cash flow hedge),
or hedges of net investment in foreign operations.
The Group documents at the inception of the transaction,
the relationship between hedging instruments and hedged
items, as well as its risk management objective and strategy
for undertaking various hedge transactions. The Group also
documents its assessment, both at hedge inception and on
an ongoing basis, of whether the derivatives that are used in
hedging transactions have been and will continue to be highly
effective in offsetting changes in fair values of cash flows or
hedged items.
Fair value hedge: Changes in the fair value of derivatives that
are designated and qualify as fair value hedges are recorded
in the Income Statement, together with any changes in the fair
value of the hedged asset or liability that are attributable to the
hedged risk.
Cash flow hedge: The effective portion of changes in the fair
value of derivatives that are designated and qualify as cash
flow hedges is recognised in equity in the hedging reserve.
The gain or loss relating to the ineffective portion is recognised
immediately in the Income Statement.
76 Boral Limited Annual Report 2012
Amounts accumulated in equity are recycled in the Income
Statement in the periods when the hedged item will affect
profit or loss. However, when the forecast transaction that
is hedged results in the recognition of a non-financial asset
or a non-financial liability, the gains and losses previously
deferred in equity are transferred from equity and included in
the measurement of the initial cost and carrying amount of the
asset or liability.
When a hedging instrument expires or is sold or terminated,
or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity
at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in the Income
Statement. When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to the Income Statement.
Hedge of net investment in a foreign operation: The portion
of the gain or loss on an instrument used to hedge a net
investment in a foreign operation that is determined to be an
effective hedge is recognised directly in equity. The ineffective
portion is recognised immediately in the Income Statement.
Derivatives that do not qualify for hedge accounting:
Certain derivative instruments do not qualify for hedge
accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting are
recognised immediately in the Income Statement.
V. Share capital
Issued and paid up capital is recognised at the fair value
of the consideration received by the Company. Transaction
costs directly attributable to the issue of ordinary shares
are recognised directly to equity, as a reduction of the share
proceeds received, net of any tax effects.
W. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the
net profit attributable to members of the parent entity for the
reporting period, by the weighted average number of ordinary
shares of Boral Limited, adjusted for any bonus issue.
Diluted EPS is calculated by dividing the basic EPS earnings,
adjusted by the effect on revenues and expenses of conversion
to ordinary shares associated with dilutive potential ordinary
shares, by the weighted average number of ordinary shares
and dilutive potential ordinary shares adjusted for any
bonus issue.
X. Comparative figures
Where necessary to facilitate comparison, comparative figures
have been adjusted to conform with changes in presentation in
the current financial year.
Y. Rounding of amounts to the nearest $100,000
Boral Limited is an entity of a kind referred to in ASIC Class
Order 98/100 dated 10 July 1998 and, in accordance with the
Class Order, amounts in the financial statements and Directors’
Report have been rounded off to the nearest one hundred
thousand dollars, unless otherwise stated.
Notes to the Financial StatementsBoral Limited and Controlled Entities 2. Segments
Operating segments are based on internal reporting to the Chief Executive in assessing performance and determining the allocation
of resources.
The following summary describes the operations of the Group’s reportable segments:
Boral Construction Materials
– Quarries, concrete, asphalt, transport and property development.
Cement Division
– Australian cement operations and concrete placing.
Boral Building Products
– Australian plasterboard, bricks, timber products, roof tiles, masonry and windows.
Plasterboard Asia*
United States of America
Discontinued Operations
– Asian plasterboard (Boral Gypsum Asia).
– Bricks, roof tiles, fly ash, concrete, quarries, masonry and cultured stone.
– Asian construction materials, east coast masonry and roofing Queensland.
(2011: includes scaffolding and precast panels).
Unallocated
– Non-trading operations and unallocated corporate costs.
* The results from Boral Gypsum Asia were equity accounted until 9 December 2011.
The major end use markets for Boral’s products include residential and non-residential construction and the engineering and
infrastructure markets.
Inter-segment pricing is determined on an arm’s length basis.
The Group has a large number of customers to which it provides products, with no single customer responsible for more than
10% of the Group’s revenue.
Segment results, assets and liabilities includes items directly attributable to a segment, as well as those that can be allocated on
a reasonable basis.
Reconciliations of reportable segment revenues and profits
External revenue
Less revenue from discontinued operations
Revenue from continuing operations
Profit before tax
CONSOLIDATED
2012
$ millions
2011
$ millions
5,010.3
4,710.5
(294.1)
(364.8)
4,716.2
4,345.7
Profit before net financing costs and income tax expense from reportable segments
223.2
234.4
Adjusted for:
(Profit)/loss from discontinued operations
Significant items applicable to discontinued operations
Profit before net financing costs and income tax expense from continuing operations
Net financing costs – continuing operations
Profit before tax from continuing operations
1.3
41.7
266.2
(84.9)
181.3
(5.4)
16.7
245.7
(59.7)
186.0
77
TOTAL REVENUE
INTERNAL REVENUE
EXTERNAL REVENUE
2012
$ millions
2011
$ millions
2012
$ millions
2011
$ millions
2012
$ millions
2011
$ millions
2,620.2
2,420.2
628.4
634.9
1,015.0
1,200.9
303.6
499.4
295.7
–
431.2
369.2
148.3
198.6
2.8
–
0.7
1.6
144.8
192.7
2,471.9
2,275.4
429.8
442.2
4.0
1,012.2
1,196.9
–
–
4.4
303.6
498.7
294.1
–
431.2
364.8
5,362.3
5,056.4
352.0
345.9
5,010.3
4,710.5
OPERATING PROFIT
(EXCLUDING ASSOCIATES)
EQUITY ACCOUNTED
RESULTS OF ASSOCIATES
PROFIT BEFORE NET
FINANCING COSTS AND
INCOME TAX EXPENSE
2012
$ millions
2011
$ millions
2012
$ millions
2011
$ millions
2012
$ millions
2011
$ millions
172.6
57.5
11.0
30.8
(83.0)
(1.3)
(18.8)
168.8
23.6
192.4
201.0
73.6
71.5
–
(98.0)
5.4
(18.3)
235.2
(42.8)
192.4
1.3
11.4
8.7
10.1
(0.7)
–
–
30.8
–
30.8
2.9
13.3
9.9
16.9
(1.0)
–
–
42.0
–
42.0
173.9
203.9
68.9
19.7
40.9
(83.7)
(1.3)
(18.8)
199.6
23.6
223.2
86.9
81.4
16.9
(99.0)
5.4
(18.3)
277.2
(42.8)
234.4
SEGMENT ASSETS
(EXCLUDING INVESTMENTS
IN ASSOCIATES)
EQUITY ACCOUNTED
INVESTMENTS IN ASSOCIATES
TOTAL ASSETS
2012
$ millions
2011
$ millions
2012
$ millions
2011
$ millions
2012
$ millions
2011
$ millions
2,170.1
1,800.0
643.2
716.0
1,264.9
1,220.8
1,147.3
829.1
62.9
38.1
–
828.8
189.3
23.5
0.8
19.4
12.7
–
3.7
–
–
0.8
20.5
13.0
201.8
4.1
–
–
2,170.9
1,800.8
662.6
1,277.6
1,147.3
832.8
62.9
38.1
736.5
1,233.8
201.8
832.9
189.3
23.5
6,155.6
4,778.4
36.6
240.2
6,192.2
5,018.6
205.7
101.2
561.2
88.2
–
–
–
–
205.7
101.2
561.2
88.2
6,462.5
5,427.8
36.6
240.2
6,499.1
5,668.0
2. Segments (continued)
Boral Construction Materials
Cement Division
Boral Building Products
Plasterboard Asia
United States of America
Discontinued Operations
Boral Construction Materials
Cement Division
Boral Building Products
Plasterboard Asia
United States of America
Discontinued Operations
Unallocated
Significant items (refer to note 4)
Boral Construction Materials
Cement Division
Boral Building Products
Plasterboard Asia
United States of America
Discontinued Operations
Unallocated
Cash and cash equivalents
Tax assets
78 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 2. Segments (continued)
Boral Construction Materials
Cement Division
Boral Building Products
Plasterboard Asia
United States of America
Discontinued Operations
Unallocated
Loans and borrowings
Tax liabilities
LIABILITIES
ACQUISITION OF
SEGMENT ASSETS*
DEPRECIATION AND
AMORTISATION
2012
$ millions
2011
$ millions
2012
$ millions
2011
$ millions
2012
$ millions
2011
$ millions
414.4
92.4
202.7
109.1
117.4
44.6
186.4
1,167.0
1,723.4
205.3
3,095.7
416.7
103.4
212.5
–
139.4
58.6
229.5
1,160.1
1,066.6
284.9
2,511.6
194.9
46.6
105.3
19.9
30.8
11.0
5.9
160.0
44.3
73.5
–
43.3
23.8
0.9
105.0
49.0
51.7
11.3
42.4
13.3
0.7
90.4
47.3
50.5
–
41.9
14.0
0.9
414.4
345.8
273.4
245.0
–
–
–
–
–
–
–
–
414.4
345.8
273.4
245.0
* Excludes amounts attributable to the acquisition of controlled entities and businesses as detailed in note 32.
Geographical information
For the year ended 30 June 2012, the Group’s trading revenue from external customers in Australia amounted to $3,913.9 million
(2011: $3,914.5 million), with $303.6 million (2011: Nil) from the Plasterboard Asia operations, $498.7 million (2011: $431.2 million)
relating to operations in the USA and $294.1 million (2011: $364.8 million) relating to discontinued operations. The Group’s
non-current assets (excluding deferred tax assets and other financial assets) in Australia amounted to $3,467.4 million
(2011: $2,624.8 million), with $499.2 million (2011: $269.3 million) in Asia and $627.8 million (2011: $651.2 million) in the USA.
3. Profit for the period
For the year ended 30 June
REVENUE FROM CONTINUING OPERATIONS
Sale of goods
Rendering of services
Revenue from continuing operations
OTHER INCOME FROM CONTINUING OPERATIONS
Significant items
Net profit on sale of assets
Other income
Other income from continuing operations
OTHER EXPENSES FROM CONTINUING OPERATIONS
Significant items
Net foreign exchange loss
Other expenses from continuing operations
DEPRECIATION AND AMORTISATION EXPENSES
Land and buildings
Plant and equipment
Timber licences and mineral reserves
Other intangibles
Less depreciation and amortisation expenses from discontinued operations
CONSOLIDATED
Note
2012
$ millions
2011
$ millions
4,627.6
4,282.8
88.6
62.9
4,716.2
4,345.7
4
4
184.5
15.0
8.0
207.5
119.2
0.1
119.3
18.2
250.2
1.6
3.4
273.4
(13.3)
260.1
33.4
25.8
16.3
75.5
59.5
1.1
60.6
18.4
223.2
1.5
1.9
245.0
(14.0)
231.0
79
3. Profit for the period (continued)
For the year ended 30 June
NET FINANCING COSTS
Interest income received or receivable from:
Associated entities
Other parties (cash at bank and bank short-term deposits)
Interest expense paid or payable to:
Other parties (bank overdrafts, bank loans and other loans)*
Unwinding of discount
Net financing costs from continuing operations
CONSOLIDATED
2012
$ millions
2011
$ millions
0.6
14.0
14.6
95.9
3.6
99.5
(84.9)
0.9
22.7
23.6
79.2
4.1
83.3
(59.7)
*
In addition, interest of $4.1 million (2011: $0.4 million) was paid to other parties and capitalised in respect of qualifying assets. The capitalisation rate used was 6.0%
(2011: 6.0%).
OTHER CHARGES
Employee benefits expense*
Operating lease rental charges
Bad and doubtful debts expense
1,091.7
1,056.1
119.6
4.7
118.4
8.3
*
Employee benefits expense includes salaries and wages, defined benefit and defined contribution expenses together with share-based payments and
other entitlements.
80 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 4. Significant items
Net profit includes the following items whose disclosure is relevant in explaining the financial performance of the Group:
For the year ended 30 June
Continuing operations
CONSOLIDATED
Note
2012
$ millions
2011
$ millions
Gain on fair value remeasurement of initial LBGA shareholding
Gain on fair value of purchase price commitment for Cultured Stone
(i)
(ii)
158.1
26.4
Closure of plywood operations
Net insurance proceeds
Impairment of assets
Closure costs
Excess of insurance proceeds over asset carrying values
Acquisition and integration costs
Impairment of assets, businesses and restructuring costs
Goodwill
Property, plant and equipment
Inventory
Restructure and closure costs
Loss on sale of Best Block business – USA
Resolution of onerous fly ash contract – USA
Summary of significant items from continuing operations
Profit/(loss) before tax
Income tax benefit
Income tax benefit – amended returns
Net significant items from continuing operations
Discontinued operations
Gain on disposal of Indonesian Construction Materials businesses
Profit on sale of Masonry North Queensland business
Impairment of assets, businesses and restructuring costs
Property, plant and equipment
Inventory
Restructure and closure costs
Summary of significant items from discontinued operations
Loss before tax
Income tax benefit
Net significant items from discontinued operations
Summary of significant items
Profit/(loss) before tax
Income tax benefit
Income tax benefit – amended returns
Net significant items
–
–
–
–
(iii)
(28.8)
(iv)
(v)
(20.0)
(38.7)
(11.6)
(23.8)
(94.1)
(2.3)
6.0
65.3
38.8
–
104.1
34.2
3.4
(37.2)
(15.0)
(27.1)
(79.3)
(41.7)
13.0
(28.7)
23.6
51.8
–
75.4
–
–
33.4
(9.6)
(4.2)
19.6
(9.3)
–
(28.9)
(1.2)
(6.3)
(36.4)
–
–
(26.1)
12.8
18.0
4.7
–
–
(9.9)
(2.4)
(4.4)
(16.7)
(16.7)
4.3
(12.4)
(42.8)
17.1
18.0
(7.7)
81
4. Significant items (continued)
2012 Significant items
(i) Gain on fair value remeasurement of initial LBGA shareholding
On 9 December 2011, the Group acquired the remaining 50% shareholding in Lafarge Boral Gypsum in Asia Sdn Bhd (LBGA). On
acquisition of the remaining 50% interest in LBGA, this initial investment was remeasured to fair value in accordance with Australian
Accounting Standard AASB 3 Business Combinations, which resulted in a gain to the Group. The gain is net of the derecognition of
the foreign currency reserve of $30.5 million associated with this initial investment.
(ii) Gain on fair value of purchase price commitment for Cultured Stone
The present value of the future purchase price commitment in respect of the remaining 50% interest in the USA Cultured Stone
business has been remeasured to fair value as at 30 June 2012, based on current and expected operating results, resulting in a
gain of $26.4 million.
(iii) Acquisition and integration costs
During the year, the Group incurred costs (including stamp duty), associated with the acquisition and integration of the Asian
Plasterboard operations, Wagners’ Construction Material concrete and quarry assets, and Sunshine Coast Quarries’ concrete
assets and quarries (refer note 32). The acquisition costs are included in other expenses in the Income Statement for the period.
(iv) Impairment of assets, businesses and restructuring costs – continuing operations
Deterioration in returns from a number of businesses resulted in a reassessment of long-term manufacturing capacity requirements
in both Australia and the USA.
In the USA, this resulted in a charge of $15.9 million in respect of two USA brick plants and in light of ongoing depressed trading
conditions in the USA construction materials markets in Oklahoma and Denver, the goodwill associated with the USA construction
materials businesses was reassessed, resulting in a $20.0 million impairment charge reflecting lower margins and increased competition.
In Australia, this resulted in a charge of $37.0 million in respect of the Galong lime plant that was closed and subsequently sold
during the year and $21.2 million of restructure costs, predominantly redundancies associated with closing manufacturing capacity
in the Australian Building Products businesses of $13.8 million, together with Corporate restructure costs of $7.4 million.
(v) Impairment of assets, businesses and restructuring costs – discontinued operations
On 28 February 2012, the Group announced the closure of its Roofing manufacturing and distribution operations in Queensland
following a review of the long-term financial performance and low industry capacity utilisation. In addition, the Group announced
that it proposed to divest its East Coast Masonry business and focus the Australian Building Products division on those areas with
market leadership positions in high growth markets. This resulted in impairment of assets of $52.2 million together with closure
and restructure costs of $27.1 million.
2011 Significant items
Insurance recoveries
During January 2011, significant flooding occurred in Queensland and Northern New South Wales, which impacted a number of
the Group’s businesses, with the most severe impact occurring at the Group’s Plywood operation. Following an extensive review
of the feasibility of rebuilding the plant, a decision was taken in June 2011 to close the Plywood operation, resulting in the write-off
of assets and recognition of closure costs.
Manufacturing capacity rationalisation and impairment of assets
In 2011, deterioration in returns from a number of businesses resulted in a reassessment of manufacturing capacity in several of the
Group’s businesses. As a result of this review, closure of a number of manufacturing lines was announced relating predominantly
to the Clay and Concrete East Coast Bricks and Masonry operations, together with rationalisation of Brick plants in the USA and
closure of a number of small Country New South Wales Concrete and Quarry operations.
Tax benefit
In 2011, the Group received amended assessments from the Australian Taxation Office, resulting in the recognition of benefits
relating predominantly to research and development activity.
Summary of significant items before interest and tax
Boral Construction Materials
Cement Division
Boral Building Products
Plasterboard Asia
United States of America
Discontinued Operations
Unallocated
82 Boral Limited Annual Report 2012
CONSOLIDATED
2012
$ millions
2011
$ millions
–
(37.0)
(13.8)
158.1
(5.8)
(41.7)
(36.2)
23.6
(4.6)
–
(3.9)
–
(8.3)
(16.7)
(9.3)
(42.8)
Notes to the Financial StatementsBoral Limited and Controlled Entities 5. Discontinued operations and assets held for sale
During the year, the Group sold its Indonesian Construction Materials business and its North Queensland masonry business.
The Group also undertook an active program to divest its Thailand Construction Materials and east coast masonry operations
and closed its Roofing Queensland businesses, resulting in the businesses being classified as “Held for Sale” at 30 June 2012.
The results for the current and comparative periods have been reclassified to “Discontinued”.
The comparatives include the discontinued operations relating to Scaffolding and Panels businesses.
Results of discontinued operations
Revenue
Expenses
Impairment of assets, businesses and restructuring costs
Gain on sale of discontinued operations
Profit/(loss) before net financing costs and income tax expense
Net financing costs
Profit/(loss) before income tax expense
Income tax (expense)/benefit
Net profit/(loss)
Attributable to:
Members of the parent entity
Non-controlling interest
Net profit/(loss)
Basic and diluted earnings/(loss) per share
Cash flows from/(used in) discontinued operations
Net cash from/(used in) operating activities
Net cash from/(used in) investing activities
Net cash from/(used in) discontinued operations
Assets and liabilities classified as held for sale
Property, plant and equipment
Intangible assets
Inventories
Trade and other receivables
Other assets
Assets classified as held for sale
Payables
Provisions
Liabilities classified as held for sale
Net assets
CONSOLIDATED
Note
2012
$ millions
2011
$ millions
294.1
(295.4)
364.8
(363.3)
4
4
6
(1.3)
(79.3)
37.6
(43.0)
(3.5)
(46.5)
13.7
(32.8)
(33.1)
0.3
(32.8)
(4.4c)
12.5
54.1
66.6
15.1
0.9
11.2
32.3
3.4
62.9
18.8
25.8
44.6
18.3
1.5
(16.7)
3.9
(11.3)
(4.0)
(15.3)
3.9
(11.4)
(12.0)
0.6
(11.4)
(1.6c)
16.4
24.8
41.2
–
–
–
–
–
–
–
–
–
–
83
5. Discontinued operations and assets held for sale (continued)
Effect of disposal on the financial position of the Group
Consideration
Property, plant and equipment
Intangible assets
Inventories
Trade and other receivables
Other assets
Deferred taxes
Payables
Provisions
Net assets disposed
Foreign currency translation reserve transferred to net profit on disposal of controlled entities
Non-controlling interest
Gain on disposal of discontinued operations before income tax expense
Consideration
Less: Deferred consideration to be received
Consideration (net of disposal costs)
CONSOLIDATED
2012
$ millions
2011
$ millions
97.2
(35.3)
–
(7.6)
(20.2)
(10.8)
(0.9)
17.5
13.4
(43.9)
(18.6)
2.9
37.6
97.2
(31.9)
65.3
48.1
(33.6)
(8.2)
(7.6)
(12.5)
(0.4)
(0.2)
12.4
5.9
(44.2)
–
–
3.9
48.1
–
48.1
84 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 6. Income tax expense
For the year ended 30 June
(i) Income tax expense
Current income tax expense/(benefit)
Deferred income tax expense/(benefit)
Over provision for tax in previous years
Income tax expense/(benefit) attributable to profit
(ii) Reconciliation of income tax expense to prima facie tax
Income tax expense/(benefit) on profit:
– at Australian tax rate 30% (2011: 30%)
– adjustment for difference between Australian and overseas tax rates
Income tax expense/(benefit) on pre-tax profit at standard rates
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Tax losses not recognised
Non-deductible depreciation and amortisation
Capital gains/(losses) brought to account
Non-assessable fair value gains
Share of associates’ net profit and franked dividends (excluding significant items)
Other items
Income tax benefit – amended returns
Income tax expense/(benefit) on profit
Over provision for tax in previous years
Income tax expense/(benefit) attributable to profit
Income tax expense/(benefit) from continuing operations
Income tax expense/(benefit) excluding significant items
Income tax expense/(benefit) relating to significant items
Income tax expense/(benefit) from discontinued operations
Income tax expense/(benefit) excluding significant items
Income tax expense/(benefit) relating to significant items
(iii) Tax amounts recognised directly in equity
The following deferred tax amounts were charged/(credited) directly to equity during the year
in respect of:
Actuarial adjustment on defined benefit plans
Net exchange differences taken to equity
Fair value adjustment on cash flow hedges
Recognised in comprehensive income
Share issue expenses
Recognised directly in equity
CONSOLIDATED
Note
2012
$ millions
2011
$ millions
(31.7)
(3.8)
(7.4)
(42.9)
40.4
(9.3)
31.1
2.7
1.5
(5.8)
(56.6)
(9.2)
0.8
–
(35.5)
(7.4)
(42.9)
9.6
(38.8)
(29.2)
(0.7)
(13.0)
(13.7)
(42.9)
(3.0)
(1.5)
(1.0)
(5.5)
–
(5.5)
4
4
4
5
49.5
(40.6)
(3.6)
5.3
51.2
(11.7)
39.5
1.0
2.1
(5.2)
–
(12.7)
2.2
(18.0)
8.9
(3.6)
5.3
40.0
(30.8)
9.2
0.4
(4.3)
(3.9)
5.3
0.9
28.5
0.3
29.7
(3.6)
26.1
85
7. Dividends
Dividends recognised by the Group are:
2012
2011 final – ordinary
2012 interim – ordinary
Total
2011
2010 final – ordinary
2011 interim – ordinary
Total
Amount per
share
Total amount
$ millions
Franked
amount
per share
Date of payment
7.0 cents
7.5 cents
51.1
7.0 cents
27 September 2011
55.8
7.5 cents
5 April 2012
6.5 cents
7.5 cents
106.9
46.7
54.3
101.0
6.5 cents
7.5 cents
28 September 2010
24 March 2011
Subsequent event
Since the end of the financial year, the Directors declared the following dividend:
2012 final – ordinary
3.5 cents
26.6
3.5 cents
28 September 2012
The financial effect of the final dividend for the year ended 30 June 2012 has not been brought to account in the financial statements
for the year but will be recognised in subsequent financial reports.
Dividend franking account
The balance of the franking account of Boral Limited as at 30 June 2012 is $70.8 million (2011: $124.4 million) after adjusting for
franking credits/(debits) that will arise from:
• the payment/refund of the amount of the current tax liability;
• the receipt of dividends recognised as receivables at year end;
and before taking into account the franking credits associated with payment of the final dividend declared subsequent to year end.
The impact on the franking account of the dividend recommended by the Directors since year end, but not recognised as a liability
at year end, will be a reduction in the franking account of $11.4 million (2011: $21.9 million).
Dividend Reinvestment Plan
The Group’s Dividend Reinvestment Plan will operate in respect of the payment of the final dividend and the last date for the receipt
of an election notice for participation in the plan is 3 September 2012.
86 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 8. Earnings per share
Classification of securities as ordinary shares
Only ordinary shares have been included in basic earnings per share.
Classification of securities as potential ordinary shares
Options outstanding under the Executive Share Option Plan and Share Performance Rights have been classified as potential
ordinary shares and are included in diluted earnings per share only.
Earnings reconciliation
Net profit before significant items and non-controlling interests
Loss/(profit) attributable to non-controlling interests
Net profit excluding significant items
Net significant items
Net profit attributable to members of the parent entity
Earnings reconciliation – continuing operations
Net profit before significant items and non-controlling interests
Loss/(profit) attributable to non-controlling interests
Net profit excluding significant items
Net significant items
Net profit attributable to members of the parent entity – continuing operations
Weighted average number of ordinary shares used as the denominator
Number for basic earnings per share
Effect of potential ordinary shares
Number for diluted earnings per share
Basic earnings per share
Diluted earnings per share
Basic earnings per share (excluding significant items)
Diluted earnings per share (excluding significant items)
Basic earnings per share (continuing operations)
Diluted earnings per share (continuing operations)
CONSOLIDATED
2012
$ millions
2011
$ millions
102.3
(1.1)
101.2
75.4
176.6
106.4
(0.8)
105.6
104.1
209.7
173.1
2.3
175.4
(7.7)
167.7
172.1
2.9
175.0
4.7
179.7
CONSOLIDATED
2012
2011
743,487,487 718,726,833
6,101,791
4,069,322
749,589,278 722,796,155
23.8c
23.6c
13.6c
13.5c
28.2c
28.0c
23.3c
23.2c
24.4c
24.3c
25.0c
24.9c
The average market value of the Company’s shares for the purpose of calculating the dilutive effect of share options was based on
quoted market prices for the period that the options were outstanding.
87
9. Cash and cash equivalents
Cash at bank and on hand
Bank short-term deposits
CONSOLIDATED
2012
$ millions
2011
$ millions
106.9
98.8
205.7
127.0
434.2
561.2
The bank short-term deposits mature within 90 days and pay interest at a weighted average interest rate of 3.47% (2011: 5.25%).
10. Receivables
Current
Trade receivables
Associated entities
Less: Allowance for impairment
Other receivables
Less: Allowance for impairment
The Group requires all customers to pay in accordance with agreed payment terms. Included in the
Group’s trade receivables are debtors with a carrying value of $78.3 million (2011: $112.3 million), which
are past due but not impaired. These relate to a number of debtors with no significant change in credit
quality or history of default. The ageing analysis is as follows:
Trade receivables – past due 0–60 days
Trade receivables – past due > 60 days
Allowance for impairment
An allowance for impairment of trade receivables is raised when there is objective evidence that an
individual receivable is impaired. Indicators of impairment would include significant financial difficulties
of the debtor, the probability that the debtor will enter bankruptcy or financial reorganisation and default
or delinquency in payments.
The movement in the allowance for impairment in respect to trade receivables during the year was
as follows:
Balance at the beginning of the year
Amounts written off during the year
Increase recognised in income statement
Acquisitions of entities or operations
Disposals of entities or operations
Transferred to assets held for sale
Net foreign currency exchange differences
Balance at the end of the year
Non-current
Loans to associated entities
Other receivables
No amounts owing by associates or included in other receivables were past due as at 30 June 2012.
88 Boral Limited Annual Report 2012
CONSOLIDATED
2012
$ millions
2011
$ millions
706.1
19.5
725.6
(12.8)
712.8
100.2
(3.4)
96.8
809.6
720.5
27.6
748.1
(18.9)
729.2
58.4
(3.5)
54.9
784.1
73.3
5.0
98.4
13.9
(18.9)
7.9
(4.7)
(3.5)
2.7
4.0
(0.3)
(12.8)
8.3
9.5
17.8
(23.5)
10.1
(8.3)
–
–
–
2.8
(18.9)
0.6
9.7
10.3
Notes to the Financial StatementsBoral Limited and Controlled Entities 11. Inventories
Current
Raw materials and consumable stores
Work in progress
Finished goods
Land development projects
Non-current
Land development projects
Land development projects comprises:
Cost of acquisition
Development costs capitalised
CONSOLIDATED
2012
$ millions
2011
$ millions
186.5
62.3
390.3
17.0
656.1
176.8
57.6
346.3
15.4
596.1
104.9
93.5
21.6
100.3
121.9
23.4
85.5
108.9
89
12. Investments accounted for using the equity method
Name
Principal
activity
Country of
incorporation
Balance
date
2012
%
2011
%
2012
$ millions
2011
$ millions
CONSOLIDATED
OWNERSHIP
INTEREST
INVESTMENT
CARRYING AMOUNT
Details of investments in associates
Bitumen Importers Australia Pty Ltd
Bitumen importer
Australia
Caribbean Roof Tile Company Limited
Roof tiles
Flyash Australia Pty Ltd
Fly ash collection
Gypsum Resources Australia Pty Ltd
Gypsum mining
Highland Pine Products Pty Ltd
Timber
Trinidad
Australia
Australia
Australia
30-Jun
31-Dec
31-Dec
30-Jun
30-Jun
Lafarge Boral Gypsum in Asia Sdn Bhd*
Plasterboard
Malaysia
31-Dec
Penrith Lakes Development Corporation Ltd Quarrying
Rondo Building Services Pty Ltd
Rollform systems
South East Asphalt Pty Ltd
Asphalt
Australia
Australia
Australia
Sunstate Cement Ltd
US Tile LLC
TOTAL
Cement manufacturer Australia
Roof tiles
USA
30-Jun
30-Jun
30-Jun
30-Jun
31-Dec
* Lafarge Boral Gypsum in Asia Sdn Bhd became a controlled entity during the year.
50
50
50
50
50
–
40
50
50
50
50
Movements in carrying value of associates
Balance at the beginning of the year
Associates becoming controlled entities during the year
Share of associates’ net profit
Dividends from associates
Results from associates recognised against non-current receivables/provisions
Share of associates’ movement in currency reserve
Effect of exchange rate and other changes
Balance at the end of the year
50
50
50
50
50
50
40
50
50
50
50
–
3.7
2.9
–
–
–
–
12.7
0.8
16.5
–
–
4.1
2.6
–
–
201.8
–
13.0
0.8
17.9
–
36.6
240.2
CONSOLIDATED
2012
$ millions
2011
$ millions
240.2
(209.9)
30.8
(22.1)
(0.6)
(13.4)
11.6
36.6
294.1
(36.2)
42.0
(27.7)
(2.9)
18.0
(47.1)
240.2
When the Group’s share of losses from an associate exceed the Group’s investment in the relevant associate, the losses are taken
against any long-term receivables relating to the associate and if the Group’s obligation for losses exceeds this amount, they are
recorded as a provision in the Group’s financial statements to the extent that the Group has an obligation to fund the liability.
90 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 12. Investments accounted for using the equity method (continued)
Summary of performance and financial position of associates*
The Group’s share of aggregate revenue, profits, assets and liabilities of associates is as follows:
Share of associates’ revenue
Share of associates’ profit before income tax expense
Share of associates’ income tax expense
Share of associates’ non-controlling interest
Share of associates’ net profit – equity accounted
CONSOLIDATED
2012
$ millions
2011
$ millions
301.2
429.4
44.1
(12.4)
(0.9)
30.8
60.3
(15.8)
(2.5)
42.0
* Results from Lafarge Boral Gypsum in Asia Sdn Bhd were equity accounted until 9 December 2011 when the entity became a controlled entity.
Share of associates’ net assets
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Share of associates’ commitments
Share of associates’ capital expenditure commitments contracted but not provided for:
Not later than one year
Share of associates’ operating lease commitments payable:
Not later than one year
Later than one year but not later than five years
Later than five years
13. Other financial assets
Current
Derivative financial assets
55.3
89.1
144.4
47.2
60.6
107.8
36.6
158.6
333.1
491.7
109.6
141.9
251.5
240.2
0.1
1.3
3.7
9.4
4.5
17.6
3.8
9.6
6.8
20.2
CONSOLIDATED
2012
$ millions
2011
$ millions
0.2
7.5
91
14. Property, plant and equipment
Land and buildings
At cost
Less: Accumulated depreciation, amortisation and impairment
Timber licences and mineral reserves
At cost
Less: Accumulated amortisation and impairment
Plant and equipment
At cost
Less: Accumulated depreciation and impairment
Leased plant and equipment capitalised
Less: Accumulated amortisation
Total
Reconciliations
Land and buildings
CONSOLIDATED
2012
$ millions
2011
$ millions
1,377.5
1,170.8
(146.3)
(134.9)
1,231.2
1,035.9
150.3
(14.6)
135.7
93.7
(19.3)
74.4
4,607.9
4,258.5
(2,408.2)
(2,475.3)
2,199.7
1,783.2
0.5
(0.4)
0.1
1.6
(0.2)
1.4
2,199.8
3,566.7
1,784.6
2,894.9
Balance at the beginning of the year
1,035.9
1,009.9
Additions
Disposals
Acquisitions of entities or operations
Disposals of entities or operations
Transferred from other property, plant and equipment
Impairment disclosed as significant items
Transferred to assets held for sale
Transfer (to)/from other assets or liabilities
Depreciation expense
Net foreign currency exchange differences
Balance at the end of the year
Timber licences and mineral reserves
Balance at the beginning of the year
Disposals
Acquisitions of entities or operations
Transferred from other property, plant and equipment
Amortisation expense
Net foreign currency exchange differences
Balance at the end of the year
92 Boral Limited Annual Report 2012
4.3
(11.1)
202.8
(0.3)
43.6
(27.3)
(9.9)
–
(18.2)
11.4
20.4
(9.6)
70.9
–
33.8
(16.7)
–
(1.2)
(18.4)
(53.2)
1,231.2
1,035.9
74.4
(6.2)
67.6
0.4
(1.6)
1.1
135.7
81.0
–
–
–
(1.5)
(5.1)
74.4
Notes to the Financial StatementsBoral Limited and Controlled Entities 14. Property, plant and equipment (continued)
Plant and equipment
Balance at the beginning of the year
Additions
Disposals
Acquisitions of entities or operations
Disposals of entities or operations
Transferred to other property, plant and equipment
Impairment disclosed as significant items
Transferred to assets held for sale
Transfer (to)/from other assets or liabilities
Depreciation expense
Net foreign currency exchange differences
Balance at the end of the year
CONSOLIDATED
2012
$ millions
2011
$ millions
1,784.6
1,694.2
404.5
(31.7)
410.1
(35.0)
(44.0)
(48.6)
(5.2)
0.8
(250.2)
14.5
324.6
(9.4)
137.6
–
(33.8)
(31.7)
–
1.0
(223.2)
(74.7)
2,199.8
1,784.6
93
15. Intangible assets
Goodwill
Other intangible assets
Less: Accumulated amortisation
Reconciliation of movements in goodwill
Balance at the beginning of the year
Acquisitions of entities or operations
Impairment disclosed as significant items
Goodwill disposed
Net foreign currency exchange differences
Balance at the end of the year
CONSOLIDATED
2012
$ millions
2011
$ millions
797.3
54.6
(31.8)
820.1
243.7
572.3
(20.0)
(4.1)
5.4
797.3
243.7
40.8
(28.6)
255.9
275.0
1.8
–
–
(33.1)
243.7
Impairment tests for goodwill
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation but are tested annually
for impairment. Goodwill is allocated to the Group’s Cash Generating Units (CGUs) identified according to business type and
geographical span of operation.
Key assumptions
The recoverable amount of CGUs is the higher of the asset’s fair value less costs to sell and its value in use. Value in use calculations
use pre-tax cash flow projections based on financial budgets and plans approved by management. Recognising that the Group
operates in cyclical markets, cash flow projections covering periods of up to 10 years are used where this period more appropriately
reflects a full business cycle. Cash flows beyond the projection period are extrapolated using growth rates of between 0.8% and
2.5%, which do not exceed the long-term average growth rate for the industry in which the CGU operates.
The Group’s weighted cost of capital is used as a starting point for determining the discount rate with appropriate adjustments for
the risk profile relating to the relevant segments and the countries in which they operate. The discount rates applied to pre-tax cash
flows range from 12% to 14%.
The key assumptions relate to:
• housing starts and market share for the building products businesses in the USA and Australia;
• concrete demand and economic activity in the construction materials businesses in the USA and Australia; and
• plasterboard demand, plasterboard intensity and economic activity in the Asian plasterboard business.
These assumptions have been determined with reference to current performance and taking into account external forecasts.
Housing starts and concrete demand forecasts utilised in the cash flow projections are based on historical experiences in the
relevant geographies.
The recoverable amount of CGUs exceeds their carrying values as at 30 June 2012. A reduction in long term forecast concrete
demand would reduce the recoverable amount of the US construction materials businesses to below their carrying value.
Management believes no other reasonable changes in the key assumptions on which the estimates are based below would cause
the aggregate carrying amount to exceed the recoverable amount of these CGUs.
Segment summary of goodwill
Boral Construction Materials
Cement Division
Boral Building Products
Plasterboard Asia
United States of America
94 Boral Limited Annual Report 2012
CONSOLIDATED
2012
$ millions
2011
$ millions
67.9
2.3
45.2
571.2
110.7
797.3
67.9
2.3
45.2
–
128.3
243.7
Notes to the Financial StatementsBoral Limited and Controlled Entities 15. Intangible assets (continued)
Reconciliation of movements in other intangible assets
Balance at the beginning of the year
Additions
Acquisitions of entities or operations
Amortisation expense
Transferred to assets held for sale
Transfer from other assets
Net foreign currency exchange differences
Balance at the end of the year
CONSOLIDATED
2012
$ millions
2011
$ millions
12.2
5.6
6.6
(3.4)
(0.9)
1.0
1.7
22.8
2.6
0.8
11.4
(1.9)
–
–
(0.7)
12.2
Other intangible assets
Other intangible assets relate predominantly to brand names, technology and software development and are amortised at rates
from 5% to 20%. Amortisation expense is included in “depreciation and amortisation” as disclosed in note 3.
16. Other assets
Current
Deferred expenses
Less: Accumulated amortisation
Deposits and prepayments
Non-current
Deferred expenses
CONSOLIDATED
2012
$ millions
2011
$ millions
116.7
(84.7)
32.0
37.0
69.0
145.0
(106.4)
38.6
47.0
85.6
48.3
50.5
Amortisation rates
Deferred expenses are generally amortised at rates between 20% and 60%, although some minor amounts of deferred expenses,
including development of quarry infrastructure, are amortised at rates between 5% and 10%.
95
CONSOLIDATED
2012
$ millions
2011
$ millions
726.6
5.6
732.2
697.8
5.0
702.8
10.9
12.5
24.2
120.6
3.2
0.3
148.3
668.5
906.0
0.6
–
16.4
146.8
0.2
163.4
49.2
854.0
–
1,575.1
903.2
7.1
7.5
29.6
42.8
72.4
48.3
63.9
112.2
22.8
123.8
17. Payables
Current
Trade creditors
Due to associated entities
Non-current
Deferred income
18. Loans and borrowings
Current
Bank overdrafts – unsecured
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities
Non-current
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities
For more information about the Group’s financing arrangements, refer to note 28.
19. Other financial liabilities
Current
Derivative financial liabilities
Non-current
Derivative financial liabilities
Future purchase liability – Cultured Stone
20. Current tax liabilities
Current
Current tax liability
96 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 21. Deferred tax assets and liabilities
Recognised deferred tax balances
Deferred tax asset
Deferred tax liability
Unrecognised deferred tax assets
Deferred tax assets not recognised:
CONSOLIDATED
2012
$ millions
2011
$ millions
101.2
(182.5)
(81.3)
88.2
(161.1)
(72.9)
The potential deferred tax asset has not been taken into account
in respect of tax losses where recovery is not probable*
93.0
47.9
* The potential benefit of the deferred tax asset will only be obtained if:
(i) the relevant entities derive future assessable income of a nature and an amount sufficient to enable the benefit to be realised,
or the benefit can be utilised by another company in the Group in accordance with tax law in the jurisdiction in which the
company operates;
(ii) the relevant Group entities continue to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the relevant entities in realising the asset.
The gross amount of capital and revenue tax losses carried forward that have not been recognised and the range of expiry dates
for recovery by tax jurisdiction are as follows:
Tax jurisdiction
Australia*
China
Germany
India
Singapore
Thailand
United Kingdom*
United States of America*
United States of America
Vietnam
* Unbooked capital losses.
CONSOLIDATED
Expiry date
2012
$ millions
2011
$ millions
No restriction
31 Dec 2012–31 Dec 2016
No restriction
31 Mar 2012–31 Mar 2019
No restriction
30 Jun 2013–30 Jun 2017
No restriction
30 Jun 2016
30 Jun 2029–30 Jun 2032
31 Dec 2012–31 Dec 2014
32.5
11.1
44.8
11.5
–
4.3
35.8
6.3
133.4
2.1
53.9
–
50.0
–
1.8
18.0
34.9
6.0
–
–
97
21. Deferred tax assets and liabilities (continued)
Movement in temporary differences during the year
CONSOLIDATED
Balance at
the beginning
of the year
$ millions
Recognised
in income
$ millions
Recognised
in equity
$ millions
Other
movements
$ millions
Balance at
the end
of the year
$ millions
5.8
(32.6)
(144.9)
(21.8)
5.4
0.2
108.1
(22.3)
(107.1)
136.3
(72.9)
(0.5)
4.6
11.7
8.6
(1.5)
(0.5)
(13.4)
(4.6)
(5.2)
4.6
3.8
–
–
–
–
–
1.0
–
3.0
1.5
–
5.5
0.1
–
(24.2)
(1.1)
–
(0.5)
0.3
(0.2)
(0.4)
8.3
(17.7)
5.4
(28.0)
(157.4)
(14.3)
3.9
0.2
95.0
(24.1)
(111.2)
149.2
(81.3)
CONSOLIDATED
Balance at
the beginning
of the year
$ millions
Recognised
in income
$ millions
Recognised
in equity
$ millions
Other
movements
$ millions
Balance at
the end
of the year
$ millions
7.1
(32.3)
(162.3)
(21.4)
8.0
1.0
117.3
(17.2)
(74.8)
99.0
(75.6)
(1.0)
(0.3)
(1.9)
(5.1)
(2.4)
(0.5)
(2.8)
(3.4)
(3.7)
61.7
40.6
–
–
–
–
–
(0.3)
–
2.7
(28.5)
–
(26.1)
(0.3)
–
19.3
4.7
(0.2)
–
(6.4)
(4.4)
(0.1)
(24.4)
(11.8)
5.8
(32.6)
(144.9)
(21.8)
5.4
0.2
108.1
(22.3)
(107.1)
136.3
(72.9)
As at 30 June 2012
Receivables
Inventories
Property, plant and equipment
Intangible assets
Payables
Loans and borrowings
Provisions
Other
Unrealised foreign exchange
Tax losses carried forward
As at 30 June 2011
Receivables
Inventories
Property, plant and equipment
Intangible assets
Payables
Loans and borrowings
Provisions
Other
Unrealised foreign exchange
Tax losses carried forward
98 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 22. Provisions
Current
Employee benefits
Rationalisation and restructuring
Claims
Restoration and environmental rehabilitation
Other
Non-current
Employee benefits
Claims
Restoration and environmental rehabilitation
Other
CONSOLIDATED
2012
$ millions
2011
$ millions
137.7
153.4
7.7
9.4
23.3
9.7
187.8
38.5
3.7
44.3
25.5
9.0
7.9
33.2
15.1
218.6
20.4
3.7
40.8
41.6
112.0
106.5
Rationalisation and restructuring
Provisions for rationalisation and restructuring are recognised when a detailed plan has been approved and the restructuring has
either commenced or been publicly announced, or firm contracts related to the restructuring have been entered into. Costs related
to ongoing activities are not provided for.
Claims
Provisions are raised for liabilities arising from the ordinary course of business, in relation to claims against the Group, including
insurance, legal and other claims. Where recoveries are expected in respect of such claims, these are included in other receivables.
Restoration and environmental rehabilitation
Provisions are made for the fair value of the liability for restoration and rehabilitation of areas from which natural resources
are extracted. The basis for accounting is set out in note 1. Provisions are also made for the expected cost of environmental
rehabilitation of sites identified as being contaminated as a result of prior activities. The liability is recognised when the
environmental exposure is identified and the estimated clean-up costs can be reliably assessed.
Other
Other includes provision for onerous contracts and the Group’s share of an associate’s equity accounted losses.
Reconciliations
Rationalisation and restructuring – current
Balance at the beginning of the year
Provisions made during the year
Transfer to liabilities held for sale
Payments made during the year
Balance at the end of the year
CONSOLIDATED
2012
$ millions
2011
$ millions
9.0
9.2
(4.2)
(6.3)
7.7
14.1
5.4
–
(10.5)
9.0
99
22. Provisions (continued)
Reconciliations (continued)
Claims – current
Balance at the beginning of the year
Provisions made during the year
Remeasurement of provision
Increase through acquisition of entity
Payments made during the year
Net foreign currency exchange differences
Balance at the end of the year
Claims – non-current
Balance at the beginning of the year
Provisions made/(released) during the year
Increase through acquisition of entity
Net foreign currency exchange differences
Balance at the end of the year
Restoration and environmental rehabilitation – current
Balance at the beginning of the year
Provisions made during the year
Transfer to liabilities held for sale
Payments made during the year
Net foreign currency exchange differences
Balance at the end of the year
Restoration and environmental rehabilitation – non-current
Balance at the beginning of the year
Provisions made during the year
Unwind of discount
Balance at the end of the year
Other – current
Balance at the beginning of the year
Provisions made during the year
Transfer to liabilities held for sale
Payments made during the year
Transfer from non-current provisions
Net foreign currency exchange differences
Balance at the end of the year
Other – non-current
Balance at the beginning of the year
Provisions (released)/made during the year
Unwind of discount
Payments made during the year
Transfer to current provisions
Transferred (to)/from investments accounted for using the equity method
Net foreign currency exchange differences
Balance at the end of the year
100 Boral Limited Annual Report 2012
CONSOLIDATED
2012
$ millions
2011
$ millions
7.9
2.3
–
–
(0.9)
0.1
9.4
3.7
–
–
–
3.7
33.2
4.0
(3.3)
(10.6)
–
23.3
40.8
2.1
1.4
44.3
15.1
18.7
(13.7)
(22.3)
11.5
0.4
9.7
41.6
(5.3)
–
(0.4)
(11.5)
0.4
0.7
25.5
5.0
5.2
0.2
0.5
(2.6)
(0.4)
7.9
2.4
0.1
1.5
(0.3)
3.7
34.9
7.8
–
(8.7)
(0.8)
33.2
33.6
5.7
1.5
40.8
15.9
3.3
–
(10.1)
8.9
(2.9)
15.1
44.7
11.0
1.5
(0.2)
(8.9)
(2.6)
(3.9)
41.6
Notes to the Financial StatementsBoral Limited and Controlled Entities 23. Issued capital
Issued and paid up capital
CONSOLIDATED
2012
$ millions
2011
$ millions
758,572,140 (2011: 729,925,990) ordinary shares, fully paid
2,368.4
2,261.3
Movements in ordinary issued capital
Balance at the beginning of the year
14,626,401 (2011: 10,899,457) shares issued under the Dividend Reinvestment Plan
13,971,102 (2011: Nil) shares issued under the Dividend Reinvestment Plan underwriting agreement
48,647 (2011: 172,916) shares issued on vesting of rights
Nil (2011: 119,900,619) shares issued under capital raising net of costs
Income tax benefit on capital raising
Balance at the end of the year
2,261.3
1,724.0
54.8
52.1
0.2
–
–
53.1
–
0.8
479.8
3.6
2,368.4
2,261.3
During the prior year, the Group undertook a capital raising of $479.8 million net of transaction costs
of $11.8 million. The capital raising consisted of a 1 for 5 accelerated renounceable entitlement offer
at an offer price of $4.10 per share. The capital raising resulted in the issue of 68,332,173 ordinary
shares under the Institutional Entitlement offer and 51,568,446 ordinary shares under the Retail
Entitlement offer.
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at shareholders’ meetings.
In the event of a winding up of Boral Limited, ordinary shareholders rank after creditors and are
fully entitled to any proceeds of liquidation.
Movements in employee compensation shares
Balance at the beginning of the year
228,625 (2011: 670,873) shares vested and transferred from share-based payments reserve
228,625 (2011: 670,873) shares purchased on-market
Balance at the end of the year
–
1.0
(1.0)
–
–
3.4
(3.4)
–
The employee equity compensation account represents the balance of Boral shares held by the Group which as at the end of
the year have not vested to Group employees and therefore are controlled by the Group. These shares relate to the Boral Senior
Executive Performance Share Plan.
101
24. Reserves
Foreign currency translation reserve
Hedging reserve – cash flow hedges
Other reserve
Share-based payments reserve
Reconciliations
Foreign currency translation reserve
Balance at the beginning of the year
Net loss on translation of assets and liabilities of overseas entities
Foreign currency translation reserve transferred to net profit on recognition of LBGA as a subsidiary
Foreign currency translation reserve transferred to net profit on disposal of controlled entities
Net gain on translation of long-term borrowings and foreign currency forward contracts net
of tax benefit/(expense) $1.5 million (2011: ($28.5 million))
Balance at the end of the year
Hedging reserve
Balance at the beginning of the year
Transferred to the income statement
Transferred to initial carrying amount of hedged item
Gains/(losses) taken directly to equity
Tax benefit/(expense)
Balance at the end of the year
Other reserve
Balance at the beginning of the year
Cultured Stone acquisition
Balance at the end of the year
Share-based payments reserve
Balance at the beginning of the year
Option/rights expense
Purchase of employee compensation shares
Transfer to share capital on vesting of rights
Balance at the end of the year
Nature and purpose of reserves
CONSOLIDATED
2012
$ millions
2011
$ millions
(87.5)
(3.6)
(66.3)
48.2
(131.6)
(0.4)
(66.3)
38.8
(109.2)
(159.5)
(131.6)
(1.5)
30.5
18.6
(3.5)
(87.5)
(0.4)
1.2
0.1
(5.5)
1.0
(3.6)
(66.3)
–
(66.3)
38.8
10.6
(1.0)
(0.2)
48.2
(75.0)
(123.0)
–
–
66.4
(131.6)
(1.1)
0.2
2.8
(2.0)
(0.3)
(0.4)
–
(66.3)
(66.3)
37.2
5.8
(3.4)
(0.8)
38.8
Foreign currency translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign
operations where their functional currency is different to the presentation currency of the Group, together with foreign exchange
differences from the translation of liabilities that hedge the Group’s net investment in a foreign subsidiary.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
related to hedged transactions that have not yet occurred.
Other reserve
The other reserve relates to the Cultured Stone acquisition.
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options and rights issued.
102 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 25. Contingent liabilities
Details of contingent liabilities and contingent assets where the probability of future payments/receipts is not considered remote are
set out below.
Unsecured contingent liabilities:
Bank guarantees
Other items
CONSOLIDATED
2012
$ millions
2011
$ millions
5.6
1.6
7.2
3.9
1.6
5.5
The Company has given to its bankers, letters of responsibility in respect of accommodation provided from time to time by
the banks to controlled entities.
A number of sites within the Group and its associates have been identified as contaminated, generally as a result of prior
activities conducted at the sites, and review and appropriate implementation of clean-up requirements for these is ongoing.
For sites where the requirements can be assessed, estimated clean-up costs have been expensed or provided for. For some
sites, the requirements cannot be reliably assessed at this stage.
Certain entities within the Group are subject to various lawsuits and claims in the ordinary course of business.
Consistent with other companies of the size and diversity of Boral, the Group is the subject of periodic information requests,
investigations and audit activity by the Australian Taxation Office (ATO) and taxation authorities in other jurisdictions in which
Boral operates.
The Group has considered all of the above claims and, where appropriate, sought independent advice and believes it holds
appropriate provisions.
Deed of Cross Guarantee
Under the terms of ASIC Class Order 98/1418, certain wholly owned controlled entities have been granted relief from the
requirement to prepare audited financial reports. Boral Limited has entered into an approved deed of indemnity for the
cross-guarantee of liabilities with those controlled entities identified in note 33.
The consolidated statement of comprehensive income and consolidated balance sheet, comprising Boral Limited and controlled
entities which are a party to the Deed of Cross Guarantee, after eliminating all transactions between parties to the Deed, at 30 June
2012, are set out in note 37.
103
26. Commitments
Capital expenditure commitments
Contracted but not provided for are payable as follows:
Not later than one year
Later than one year but not later than five years
The capital expenditure commitments are in respect of the purchase of plant and equipment.
Finance leases
Lease commitments in respect of finance leases are payable as follows:
Not later than one year
Later than one year but not later than five years
Less: Future finance charges and executory costs
Operating leases
Lease commitments in respect of operating leases are payable as follows:
Not later than one year
Later than one year but not later than five years
Later than five years
CONSOLIDATED
2012
$ millions
2011
$ millions
129.1
26.7
155.8
32.6
–
32.6
0.3
0.7
1.0
(0.1)
0.9
0.2
–
0.2
–
0.2
91.9
187.8
55.4
335.1
83.2
168.2
30.5
281.9
The Group leases property, equipment and vehicles under operating leases expiring from one to 15 years. Leases generally
provide the consolidated entity with a right of renewal at which time all terms are renegotiated. Some leases involve lease
payments comprising a base amount plus an incremental contingent rental. Contingent rentals are based on the Consumer
Price Index or operating criteria.
104 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 27. Employee benefits
Boral Senior Executive Option Plan
The Boral Senior Executive Option Plan provides for executives to receive options over ordinary shares.
Each option entitles the holder to subscribe for one fully paid ordinary share in the capital of the Company.
Certain further details of the options granted are given in the Directors’ Report.
The options are only exercisable to the extent to which the exercise hurdle is satisfied. Different exercise hurdles apply to the various
tranches of options and satisfaction of these hurdles is dependent on increases in the Boral share price and dividends which affect
the Boral Total Shareholder Return (TSR). The performance of the TSR of Boral Limited is compared to the TSR of a reference group
of companies from time to time comprising the ASX Top 100 to determine how many options are exercisable.
Set out below are summaries of options granted under the plan.
Tranche
Grant date
Expiry date
Consolidated – 2012
Exercise
price*
Balance at
beginning
of the year
Issued
during
the year
Cancelled
during
the year
Exercised
during
the year
Balance
at end of
the year
Vested and
exercisable
Number
Number
Number
Number
Number
Number
29/10/2004
29/10/2011
$6.55 1,536,700
– (1,536,700)
–
–
(xiv)
(xv)
(xvi)
(xvii)
31/10/2005
31/10/2012
$7.65 2,552,700
6/11/2006
6/11/2013
$7.27 3,823,900
6/11/2007
6/11/2014
$6.78 4,989,800
–
–
–
(73,400)
(103,500)
(173,600)
–
–
– 2,479,300
– 3,720,400
1,902,700
– 4,816,200
4,239,552
12,903,100
– (1,887,200)
– 11,015,900
6,142,252
Consolidated – 2011
(xiii)
(xiv)
(xv)
(xvi)
(xvii)
29/10/2003
29/10/2010
$5.52 2,269,010
29/10/2004
29/10/2011
$6.55
1,742,200
31/10/2005
31/10/2012
$7.65 2,905,600
6/11/2006
6/11/2007
6/11/2013
6/11/2014
$7.27
4,229,100
$6.78 5,538,100
16,684,010
–
–
–
–
–
–
(2,269,010)
(205,500)
(352,900)
(405,200)
(548,300)
–
–
–
–
1,536,700
2,552,700
–
–
–
– 3,823,900
1,911,950
– 4,989,800
4,291,228
(3,780,910)
– 12,903,100
6,203,178
*
In the prior year, the exercise price of options issued in respect of tranches (xiii) to (xvii) have been amended in accordance with the terms of the Boral Senior
Executive Option Plan to allow for the impact of the capital raising undertaken during 2011, which resulted in a five cent reduction in the exercise price.
There were no options exercised or shares issued to employees on the exercise of options during the financial year or in the
preceding financial year.
105
27. Employee benefits (continued)
Share Acquisition Rights
Share Acquisition Rights (SARs) were introduced in October 2004 to provide an alternative Long Term Incentive (LTI) to options.
SARs are granted to executives following similar principles to those of the Option Plan. SARs can be granted in lieu of options, with
the number granted calculated in the same way, i.e. based on a percentage of fixed remuneration and the fair market value of a SAR.
During the current year, SARs were issued under the Boral Long Term Incentive Plan. The SARs issued during the year were
each valued at $2.36 using a Monte Carlo simulation option-pricing formula. The value of SARs awarded has been independently
determined at grant date after considering the likelihood of meeting performance hurdles.
The following represents the inputs to the pricing model used in estimating fair value:
Grant date share price
Risk-free rate
Dividend yield
Volatility factor
2012
2011
$3.70
4.01–4.28%
4.39%
30%
$4.30
5.26%
3.67%
30%
Set out below are summaries of share acquisition rights granted under the plans.
Tranche
Grant date
Expiry date
Consolidated – 2012
Exercise
price
Balance at
beginning
of the year
Issued
during
the year
Cancelled
during
the year
Exercised
during
the year
Balance
at end of
the year
Vested and
exercisable
Number
Number
Number
Number
Number
Number
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(160,849)
(277,272)
–
29/10/2004
29/10/2011
31/10/2005
31/10/2012
6/11/2006
6/11/2013
6/11/2007
6/11/2014
$0.00
$0.00
$0.00
$0.00
438,121
671,039
237,776
83,594
3/11/2008
3/11/2015
$0.00 1,586,280
5/11/2009
5/11/2016
$0.00 2,176,056
12/11/2010
12/11/2017
$0.00 2,994,226
–
–
–
–
–
–
–
(19,295)
(14,151)
(6,317)
(112,269)
(102,022)
(152,450)
1/9/2011
1/9/2011
1/9/2018
31/12/2012*
$0.00
$0.00
– 4,680,635
(158,485)
–
135,135
–
–
–
–
–
651,744
223,625
77,277
1,474,011
– 2,074,034
– 2,841,776
– 4,522,150
–
135,135
Consolidated – 2011
8,187,092
4,815,770
(725,838)
(277,272) 11,999,752
29/10/2004
29/10/2011
31/10/2005
31/10/2012
6/11/2006
6/11/2007
3/11/2008
5/11/2009
6/11/2013
6/11/2014
3/11/2015
5/11/2016
$0.00
$0.00
$0.00
$0.00
493,201
763,765
586,277
739,734
$0.00 2,058,591
$0.00
2,679,078
–
–
–
–
–
–
(55,080)
(92,726)
–
–
438,121
671,039
(87,725)
(260,776)
237,776
(73,127)
(583,013)
83,594
(472,311)
(503,022)
–
–
–
1,586,280
2,176,056
2,994,226
12/11/2010
12/11/2017
$0.00
–
2,994,226
–
7,320,646
2,994,226
(1,283,991)
(843,789)
8,187,092
–
*
The Company granted Ross Batstone 135,135 SARs on 1 September 2011 as a retention incentive, in recognition of his additional responsibilities as Divisional
Managing Director of Boral Building Products in establishing a new Asian Plasterboard Division. The grant was made on terms and conditions determined by the
Board and linked to service hurdles to be tested on 31 December 2012.
In the prior year, executives who held rights were unable to participate in the capital raising. So as to take account of the impact of
the capital raising on those rights, the Company made a payment of five cents per right to the holder of rights which vested during
the year. The intention of the payment was to “keep whole” the executives in respect of rights which vested.
During the year ended 30 June 2012, the consolidated entity recognised an expense of $10.6 million (2011: $5.8 million) in relation
to share-based payments.
106 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 27. Employee benefits (continued)
Superannuation
At 30 June 2012, there were in existence a number of superannuation plans in Australia and overseas established by the Group,
or in which the Group participates, for the benefit of employees.
The Boral Industries Inc. Pension Plan is a defined benefit plan. Boral Super is a sub-plan of the Plum Superannuation Fund;
it has a defined benefit plan and an accumulation plan.
The principal types of benefit provided for under the Plans are lump sums payable on retirement, termination, death or total
disability. Contributions to the Plans by both employees and entities in the Group are based on percentages of the salaries
or wages of employees. Entities in the Group contribute to the Plans in accordance with the governing Trust Deeds subject
to certain rights to vary, suspend or terminate such contributions and thus are not legally obliged to contribute to those Plans.
In the case of the two defined benefit plans, employer contributions are based on the advice of the plans’ actuaries.
The Group makes contributions to defined contribution plans. The amount recognised as an expense for the year ended
30 June 2012 was $47.9 million (2011: $46.5 million).
The following sets out details in respect of the defined benefit plan only.
The amounts recognised in the balance sheet are determined as follows:
Net liability for defined benefit obligation at the beginning of the year
Expense recognised in the income statement
Actuarial gains/(losses) recognised in retained earnings
Employer contributions
Net foreign currency exchange differences
Net liability for defined benefit obligation at the end of the year
CONSOLIDATED
2012
$ millions
2011
$ millions
(7.3)
(4.7)
(9.8)
4.7
(0.1)
(17.2)
(13.4)
(2.6)
2.8
5.5
0.4
(7.3)
The accrued benefits, fund assets and vested benefits have been determined based on amounts calculated by the actuary
projected forward to 30 June 2012.
Contributions to the Boral Super sub-plan and the Boral Industries Inc. plan have been based on actuarial advice. Taking into
account these contribution levels, and based on the actuarial assessments and the market values of assets after meeting liabilities,
funds are expected to be available to satisfy all benefits that become vested under each of the major plans in the event of:
(i) termination of the plan;
(ii) voluntary termination of the employment of each employee on the initiative of that employee; or
(iii) compulsory termination of the employment of each employee by an entity in the Group.
107
27. Employee benefits (continued)
Superannuation (continued)
Reconciliation of the net asset recognised in the balance sheet
Defined benefit obligation
Fair value of plan assets
Net liability
Movements in the present value of the defined benefit obligation
Balance at the beginning of the year
Current service cost
Interest cost
Contributions by plan participants
Actuarial (gains)/losses
Benefits paid
Net foreign currency exchange differences
Balance at the end of the year
Movements in the fair value of plan assets
Balance at the beginning of the year
Expected return on plan assets
Actuarial gains/(losses)
Employer contributions
Contributions by plan participants
Benefits paid
Net foreign currency exchange differences
Balance at the end of the year
Expense recognised in the income statement
Current service cost
Interest cost
Expected return on plan assets
Defined benefit superannuation expense
Cumulative amounts recognised in equity before tax
Balance at beginning of the year
Actuarial gains/(losses)
Net foreign currency exchange differences
Cumulative actuarial losses
Actual return on plan assets
108 Boral Limited Annual Report 2012
CONSOLIDATED
2012
$ millions
2011
$ millions
(76.6)
59.4
(17.2)
73.0
5.0
2.6
0.2
8.8
(13.6)
0.6
76.6
(73.0)
65.7
(7.3)
82.5
3.9
3.0
0.3
(0.7)
(13.2)
(2.8)
73.0
65.7
69.1
2.9
(1.0)
4.7
0.2
(13.6)
0.5
59.4
5.0
2.6
(2.9)
4.7
(22.1)
(9.8)
(0.3)
(32.2)
1.9
4.3
2.1
5.5
0.3
(13.2)
(2.4)
65.7
3.9
3.0
(4.3)
2.6
(26.4)
2.8
1.5
(22.1)
6.4
Notes to the Financial StatementsBoral Limited and Controlled Entities 27. Employee benefits (continued)
Superannuation (continued)
Plan assets
The percentage invested in each class of the plan assets was:
Equity securities
Debt securities
Property securities
Other securities
BORAL SUPER
SUB-PLAN
BORAL INDUSTRIES
INC. PLAN
2012
–
100.0%
–
–
2011
2012
2011
66.7%
29.1%
4.2%
–
10.9%
89.1%
–
–
62.4%
37.6%
–
–
There are no amounts included in the fair value of plan assets relating to Boral Limited’s own financial instruments, or any property
occupied by, or other assets used by the Group.
Total employer contributions expected to be paid by the Group for the year ending 30 June 2013 are $4.7 million.
Principal actuarial assumptions at the balance sheet date
Discount rate
Expected rate of return on plan assets
Expected salary increase rate
BORAL SUPER
SUB-PLAN
BORAL INDUSTRIES
INC. PLAN
2012
2011
2012
2011
2.7%
2.7%
4.0%
4.3%
4.5%
4.0%
5.3%
6.0%
3.0%
5.3%
7.5%
3.0%
The expected return on assets assumption is determined by weighting the expected long-term return for each asset class by
the target allocation of assets to each asset class. The returns used for each class are net of investment tax and investment fees.
The above calculations are performed by a qualified actuary using the projected unit credit method.
Historical information
Present value of defined benefit obligation
Fair value of plan assets
Net asset/(liability)
Experience adjustments on plan assets – gain/(loss)
Experience adjustments on plan liabilities – gain/(loss)
CONSOLIDATED
2012
$ millions
2011
$ millions
2010
$ millions
2009
$ millions
2008
$ millions
(76.6)
59.4
(17.2)
(1.0)
(8.8)
(73.0)
65.7
(7.3)
2.1
0.7
(82.5)
69.1
(13.4)
4.4
(6.0)
(83.8)
67.3
(16.5)
(20.4)
(2.2)
(79.1)
81.3
2.2
(12.0)
(0.4)
109
28. Loans and borrowings
TERM AND DEBT REPAYMENT SCHEDULE
Terms and conditions of outstanding loans were as follows:
CONSOLIDATED
30 June 2012
30 June 2011
Effective
interest rate
2012
Calendar year
of maturity
Carrying
amount
$ millions
Fair value
$ millions
Carrying
amount
$ millions
Fair value
$ millions
Currency
Multi
USD
USD
THB
Multi
AUD
Multi
6.13%
2012–2013
6.35%
1.44%
5.25%
2012
2012
2012
3.94%
2012–2013
–
2013
8.75%
2012–2013
24.2
2.8
9.8
50.1
60.7
0.4
0.3
24.2
2.8
9.8
50.1
60.7
0.4
0.3
–
–
146.4
149.5
9.3
7.1
–
0.4
0.2
9.3
7.1
–
0.4
0.2
148.3
148.3
163.4
166.5
Current
Bank overdrafts – BGA* –
unsecured
US senior notes – unsecured
Bank loans – unsecured
Bank loans – unsecured
Bank loans – BGA* – unsecured
Other loans – unsecured1
Finance lease liabilities
Non-current
US senior notes – unsecured
USD
6.35%
2014–2020
905.7
1,003.5
853.3
916.2
Syndicated term credit facility –
unsecured
Syndicated loan facility –
unsecured
Bank loans – unsecured
Bank loans – BGA* – unsecured
Other loans – unsecured1
Finance lease liabilities
Total
USD
2.39%
2015
150.0
150.0
AUD
THB
Multi
AUD
Multi
5.51%
–
2015
–
6.24%
2013–2016
–
2014
9.04%
2013–2017
461.3
461.3
–
57.2
0.3
0.6
–
57.4
0.3
0.6
–
–
–
–
49.2
49.3
–
0.7
–
–
0.7
–
1,575.1
1,723.4
1,673.1
1,821.4
903.2
966.2
1,066.6
1,132.7
* BGA – Boral Gypsum Asia.
1 Vendor loan covering the purchase of plant and equipment where instalment repayments by the Boral Group do not include an interest component.
US SENIOR NOTES – UNSECURED
Borrower
Boral USA
Boral USA
Boral USA
Boral USA
Boral USA
Boral Limited
Boral Limited
Total
BANK FACILITIES
Notional
amount
US$ millions
Issue date
Interest rate
Maturity date
AUD equivalent
$ millions
52.0
200.0
53.5
30.0
76.2
200.0
276.0
887.7
05/2002
05/2005
05/2002
04/2008
04/2008
05/2005
04/2008
7.01%
5.42%
7.11%
7.12%
7.22%
5.52%
7.12%
05/2014
05/2015
05/2017
04/2018
04/2020
05/2017
04/2018
51.1
196.6
52.6
29.5
74.9
229.2
274.6
908.5
Syndicated term credit facility
A committed US$195 million and A$500 million (aggregate equivalent A$692 million) syndicated term credit facility was established
on 14 February 2011 for general corporate purposes. The maturity date of the facility is 13 February 2015.
110 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 28. Loans and borrowings (continued)
Syndicated loan facility
A committed A$500 million multi-currency syndicated loan facility was established on 24 November 2011 to provide liquidity for
general corporate purposes. The maturity date of the facility is 23 November 2015.
Bi-lateral loan facilities
A committed THB1,600 million (equivalent A$50.1 million) credit facility is available to Boral Concrete (Thailand) Limited and Boral
Concrete & Quarry Limited (formerly known as Boral Quarry Products (Thailand) Limited). The primary purpose of this facility is to
provide Boral’s Thailand operations with funding for general corporate purposes. The maturity date for this facility is 30 August 2012
with an extension to 28 February 2013 currently being negotiated.
Approximately US$192.5 million (equivalent A$189.2 million) of committed and uncommitted facilities from a number of banks
in various currencies have been provided to Boral Gypsum Asia (BGA) and its subsidiaries for general corporate purposes.
Bank overdraft, lease liabilities and other
The Group operates unsecured bank overdraft facility arrangements in Australia and Asia that have combined limits of
A$93.0 million. The facilities within Australia are conducted on a set-off basis. All facilities are subject to annual review where
repayment can occur on demand by the lending bank. Finance leases within Australia and Asia are subject to lease terms of
various maturities.
For each of the above named facilities, the Group has complied with the respective borrowing covenants throughout the year
ended 30 June 2012.
29. Financial instruments
FINANCIAL RISK MANAGEMENT
Boral’s Treasury operates as a service centre, providing funding, risk management and specialist Treasury advice to the Group
with the objective of ensuring Boral’s strategic and operational objectives are met. The Group’s business activities are exposed
to a variety of financial risks, including credit, liquidity, foreign currency, interest rate and commodity price risks. Derivative
instruments are used to manage these financial risks. The Group does not use derivative or financial instruments for trading
or speculative purposes.
The use of financial derivatives is controlled by policies approved by Boral’s Board of Directors. The policies provide specific
direction in relation to financial risk management, including foreign currency, interest rate, commodity price, credit and liquidity risk.
FAIR VALUE
Certain estimates and judgements are required to calculate the fair values. The fair value amounts shown below are not necessarily
indicative of the amounts that the Group would realise upon disposal nor do they indicate the Group’s intent or ability to dispose the
financial instrument.
The following describes the methodology adopted to derive fair values:
Cash flow and fair value hedges
Commodity swaps and options: the fair value is derived using conventional market formulae based on the closing market price
applicable to the respective commodity.
Forward exchange contracts and foreign currency swaps: the fair value is derived using conventional market formulae based
on the closing market price applicable to the respective currency.
Interest rate swaps: the present value of expected cash flows has been used to determine fair value using yield curves derived
from market sources that accurately reflect their term to maturity.
Cash, deposits, loans and receivables, payables and short-term borrowings
The carrying value of these financial instruments approximate fair value.
Long-term borrowings
The present value of expected cash flows has been adopted to determine fair value using interest rates derived from market sources
that accurately reflect their term to maturity.
CREDIT RISK
Exposure to credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are
performed on significant customers structured on delegated limits of authority.
Credit risk relating to cash at bank and derivative contracts is minimised by using financial counterparties that have a long-term
credit rating greater than A–/A3 although allowance is given for up to 10% of total cash or A$20.0 million (whichever is lower) to be
deposited with financial counterparties with a rating below A–/A3. Additionally, no more than 40% of Boral’s total credit exposure
is to be with any individual eligible counterparty.
111
29. Financial instruments (continued)
CREDIT RISK (continued)
The carrying amount of non-derivative financial assets represents the maximum credit exposure and at the reporting date the
maximum exposure was:
Loans to and receivables from associates
Trade and other receivables
Cash and cash equivalents
CONSOLIDATED
Carrying
amount
2012
$ millions
27.8
799.6
205.7
Fair value
2012
$ millions
27.8
799.6
205.7
Carrying
amount
2011
$ millions
28.2
766.2
561.2
Fair value
2011
$ millions
28.2
766.2
561.2
1,033.1
1,033.1
1,355.6
1,355.6
The following table indicates maximum credit exposure, the periods in which the cash flows associated with derivative financial
assets are expected to occur and the impact on profit or loss:
30 June 2012
Derivative financial assets
Foreign exchange contracts
designated as cash flow hedges
30 June 2011
Derivative financial assets
Commodity swaps/options
designated as cash flow hedges
Interest rate swaps designated as
fair value hedges
Carrying
amount
$ millions
Fair value
$ millions
Contractual
cash flows
$ millions
6 months
or less
$ millions
6–12 months
$ millions
1–2 years
$ millions
2–5 years
$ millions
More than
5 years
$ millions
CONSOLIDATED
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
–
–
–
–
–
–
–
–
Carrying
amount
$ millions
Fair value
$ millions
Contractual
cash flows
$ millions
6 months
or less
$ millions
6–12 months
$ millions
1–2 years
$ millions
2–5 years
$ millions
More than
5 years
$ millions
CONSOLIDATED
3.2
3.2
3.2
4.3
7.5
4.3
7.5
4.5
7.7
2.4
2.1
4.5
0.8
2.4
3.2
–
–
–
–
–
–
–
–
–
112 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 29. Financial instruments (continued)
LIQUIDITY RISK
Liquidity risk is the risk that the Company has insufficient funds to meet its financial obligations when they fall due. It is also
associated with planning for unforeseen events or business disruptions that may cause pressure on liquidity. The Group manages
this risk by ensuring that: (i) Boral has a well spread debt maturity profile with a target of > 4 years; (ii) Short term debt (< 1 year) is
not to exceed 20% of the sum of Total Debt plus Committed Undrawn Facilities > 1 year; (iii) Committed Facilities to Net Debt is
> 1.5x. The following are the contractual maturities of financial liabilities, including estimated interest payments, but excluding the
impact of netting agreements:
CONSOLIDATED
Carrying
amount
$ millions
Contractual
cash flows
$ millions
6 months
or less
$ millions
6–12 months
$ millions
1–2 years
$ millions
2–5 years
$ millions
More than
5 years
$ millions
30 June 2012
Non-derivative financial liabilities
US senior notes – unsecured
Bank overdrafts – unsecured
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities
Future purchase liability – Cultured Stone
Trade and other payables
Derivative financial liabilities
Foreign exchange contracts designated
as cash flow hedges
Commodity swaps designated as
cash flow hedges
Cross currency swaps designated as
cash flow hedges
Cross currency swaps designated as
fair value hedges
Interest rate swaps designated as cash
flow hedges
30 June 2011
Non-derivative financial liabilities
US senior notes – unsecured
Bank loans – unsecured
Other loans – unsecured
Finance lease liabilities
Future purchase liability – Cultured Stone
Trade and other payables
Derivative financial liabilities
Foreign exchange contracts designated
as cash flow hedges
Commodity swaps designated as
cash flow hedges
Cross currency swaps designated as
cash flow hedges
Cross currency swaps designated as
fair value hedges
Interest rate swaps not designated as hedges
for accounting purposes
908.5
24.2
789.1
0.7
0.9
42.8
732.2
(1,156.3)
(25.0)
(889.7)
(0.7)
(1.0)
(44.2)
(732.2)
(27.9)
(5.0)
(89.0)
(0.2)
(0.2)
–
(732.2)
(27.9)
(20.0)
(65.9)
(0.2)
(0.1)
–
–
(106.7)
(580.5)
(413.3)
–
(48.3)
(0.3)
(0.2)
(44.2)
–
–
–
(686.5)
–
(0.5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.3
7.2
(1.3)
(1.1)
(0.2)
(7.4)
(4.1)
(2.2)
(1.1)
3.2
(3.6)
(0.3)
(0.4)
(0.8)
(2.1)
23.3
(36.0)
0.5
1.3
2.7
(40.5)
1.7
2,535.1
(1.7)
(2,899.1)
(0.2)
(859.7)
(0.4)
(116.0)
(0.7)
(199.6)
(0.4)
(1,310.5)
–
(413.3)
CONSOLIDATED
Carrying
amount
$ millions
Contractual
cash flows
$ millions
6 months
or less
$ millions
6–12 months
$ millions
1–2 years
$ millions
2–5 years
$ millions
More than
5 years
$ millions
999.7
65.6
1.1
0.2
63.9
702.8
(1,301.3)
(67.6)
(1.1)
(0.2)
(69.5)
(702.8)
(31.3)
(10.7)
(0.2)
(0.1)
–
(702.8)
(173.5)
(8.2)
(0.2)
(0.1)
–
–
(52.7)
(48.7)
(0.4)
–
–
–
(376.4)
(667.4)
–
(0.3)
–
(69.5)
–
–
–
–
–
–
–
–
–
–
(3.6)
(3.0)
(0.5)
(0.1)
(0.1)
(0.2)
–
0.1
3.6
0.1
3.9
(4.4)
(0.3)
(0.4)
(0.8)
(2.2)
(0.7)
48.0
(64.8)
(1.3)
(1.5)
(3.0)
(18.1)
(40.9)
0.2
1,889.1
(0.2)
(2,215.6)
(0.2)
(750.1)
–
–
–
(184.4)
(105.6)
(466.5)
–
(709.0)
113
29. Financial instruments (continued)
LIQUIDITY RISK (continued)
Capital risk management
The capital management objectives of the Group are directed towards ensuring that the Group continues as a financial going
concern together with returns to shareholders by the adoption of an appropriate capital structure.
On an ongoing basis, the capital structure is reviewed to ensure that the capital components comprising equity and debt are balanced
through payments of dividends, new share issuance, share buy-backs and issue of new debt or redemption of existing debt.
MARKET RISK
Currency risk
The Group is exposed to foreign currency risk. This occurs as a result of purchase of raw materials, interest expense related to
non-AUD borrowings, imported plant and equipment, some export related receivables and the translation of its investment in
overseas assets.
The Group adopts policies that ensure exposures to:
(a) forecast purchases of materials and sale of products denominated in foreign currencies having an aggregate half yearly value
in excess of equivalent A$0.5 million are at a minimum 50% hedged;
(b) forecast purchases of plant and equipment denominated in foreign currencies having a value in excess of equivalent A$0.5 million
are 100% hedged; and
(c) net investments, including net intercompany loans, in overseas domiciled investments are hedged, regulatory conditions and
available hedge instruments permitting.
The Group uses forward exchange contracts to hedge foreign exchange risk. Most of the forward exchange contracts have
maturities of less than one year. Where necessary, and in accordance with policy compliance, forward exchange contracts can
be rolled over at maturity.
The Group primarily uses external foreign currency denominated borrowings, cross currency swaps and forward exchange
contracts to hedge the Group’s net investment in overseas domiciled assets. The related exchange gains/losses on foreign currency
movements are taken primarily to the Foreign Currency Translation Reserve.
The Group’s foreign currency exposure for overseas assets at balance date was as follows, based on notional amounts:
Currency
30 June 2012
Balance sheet
Net investment in overseas domiciled
Boral subsidiaries
Forward exchange contracts
Foreign currency borrowings
Cross currency swaps
CONSOLIDATED
USD
Euro
GBP
NZD
THB
Multi*
Equivalent to A$ millions
391.1
9.8
(650.3)
253.8
4.4
1.6
(1.7)
1.6
(17.3)
940.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.6
(1.7)
1.6
(17.3)
940.0
* Exposure relates to net assets of BGA, which are denominated in multiple currencies.
Currency
30 June 2011
Balance sheet
Net investment in overseas domiciled
Boral subsidiaries
Forward exchange contracts
Foreign currency borrowings
Cross currency swaps
114 Boral Limited Annual Report 2012
CONSOLIDATED
USD
Euro
GBP
NZD
THB
IDR
Equivalent to A$ millions
162.4
76.4
(466.1)
232.1
4.8
2.1
(1.6)
2.8
(23.3)
58.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.1
(1.6)
2.8
(23.3)
58.1
Notes to the Financial StatementsBoral Limited and Controlled Entities
29. Financial instruments (continued)
MARKET RISK (continued)
Based on notional amounts, the forward exchange contracts taken out to hedge foreign exchange risk at balance date were as follows:
NOTIONAL AMOUNTS AUD
AVERAGE EXCHANGE RATE
2012
$ millions
2011
$ millions
2012
2011
US dollars
Buy US dollars/sell Australian dollars
One year or less
One year to two years
Sell US dollars/buy Australian dollars
One year or less
Buy US dollars/sell MYR
One year or less
Euros
Buy Euros/sell Australian dollars
One year or less
Buy Euros/sell US dollars
One year or less
JPY
Buy JPY/sell Australian dollars
One year or less
THB
Sell US dollars/buy THB
One year or less
Sell SGD/buy THB
One year or less
KRW
Buy US dollars/sell KRW
One year or less
Sell US dollars/buy KRW
One year or less
14.6
–
21.2
5.9
6.4
–
1.1
7.4
1.2
6.7
10.0
56.5
1.5
–
–
7.2
0.9
–
–
–
–
–
0.9968
–
1.0348
–
1.0003
0.9469
–
–
0.7434
0.6802
–
81.9100
–
–
–
–
–
–
–
–
–
–
The forward exchange contracts are considered to be highly effective hedges as they are matched against underlying interest
payments, purchases and sales. Any gains or losses on the forward contracts attributed to the hedged risk are taken directly to
equity. When goods and services are delivered, the amount recognised in equity is adjusted to the interest expense, inventory,
plant and equipment accounts. There was no significant cash flow hedge ineffectiveness in the current or prior year.
As at balance date, the Group’s foreign currency interest payables were hedged using forward exchange contracts. Other foreign
currency cash, payables and receivables were A$13.3 million at 30 June 2012 (2011: A$13.4 million). The related exchange gains/
losses on foreign currency movements are taken primarily to the income statement.
Sensitivity
At 30 June 2012, had the Australian dollar weakened/strengthened by 10% against the respective foreign currencies where all other
variables remain constant, the Group’s pre-tax change to earnings would have been a (loss)/gain respectively of around equivalent
A$1.2 million (2011: equivalent A$1.1 million) and equity would have increased/decreased respectively by around equivalent
A$97.6 million (2011: equivalent A$11.4 million).
The following significant exchange rates applied during the year:
USD
Euro
GBP
NZD
THB
IDR
AVERAGE RATE
REPORTING DATE SPOT RATE
2012
2011
2012
2011
1.0347
0.7742
0.6529
1.2752
31.9775
9,286
1.0002
0.7272
0.6276
1.3064
30.3567
8,776
1.0175
0.8075
0.6496
1.2739
32.3460
9,481
1.0728
0.7404
0.6667
1.2953
32.9900
9,219
115
29. Financial instruments (continued)
INTEREST RATE RISK
The Group adopts a policy that ensures between 35% and 75% of its borrowings are subject to interest rates based on fixed rates
greater than six months in duration. Implementation of interest rate derivative instruments provides the Group with the flexibility to raise
term borrowings at fixed or variable interest rates where subsequently these borrowings can be converted to either variable or fixed
rates of interest. This achieves fixed interest rate borrowings consistent with the target range of between 35% and 75% of borrowings.
Interest rate swaps denominated in AUD, USD and THB, and cross currency swaps denominated in AUD and USD, have been
transacted to assist with achieving an appropriate mix of fixed and floating interest rate borrowings. The interest rate derivative
instruments mature progressively over the next five years. The duration applicable to the interest rate and cross currency swaps
is consistent with maturities applicable to the underlying borrowings.
At the reporting date, the interest rate profile of the Group’s interest bearing financial instruments was:
Fixed rate instruments
US senior notes – unsecured1
Other loans – unsecured
Finance lease liabilities
Variable rate instruments
Bank overdrafts – unsecured
Bank loans – unsecured2
Bank loans – BGA – unsecured3
CONSOLIDATED
2012
Carrying
amount
$ millions
2011
Carrying
amount
$ millions
908.5
999.7
0.7
0.9
1.1
0.2
910.1
1,001.0
24.2
671.2
117.9
813.3
–
65.6
–
65.6
1,723.4
1,066.6
1
2
3
US$225 million (equivalent A$253.8 million) fixed rate senior notes due May 2015 and May 2017 have been swapped to AUD floating rates via cross currency swaps.
A$200 million of floating rate debt drawn under the A$500 million syndicated term credit facility has been swapped to fixed rates via interest rate swaps.
US$20 million (equivalent A$19.7 million) and THB226 million (equivalent A$7.0 million) floating rate bank loans have been swapped to fixed rate via interest
rate swaps.
Interest rate derivatives
Pay fixed interest rate derivatives
Pay fixed against A$ BBSY
Pay fixed against US$ LIBOR
Pay variable interest rate derivatives
Pay floating against US$ LIBOR
Cross currency swap pay floating US$ LIBOR
0.7
1.0
1.7
–
26.5
26.5
–
0.2
0.2
(4.3)
51.9
47.6
Sensitivity
At 30 June 2012, if interest rates had changed by +/– 1% p.a. from the year end rates with all other variables held constant, the
Group’s pre-tax profit for the year would have been A$0.3 million higher/lower (2011: A$0.4 million) and the change in equity
would have been A$2.7 million (2011: A$0.1 million) mainly as a result of a higher interest cost applying to interest rate derivatives.
116 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities
29. Financial instruments (continued)
INTEREST RATE RISK (continued)
INTEREST RATES USED FOR DETERMINING FAIR VALUE
Where appropriate, the Group uses BBSW, LIBOR and Treasury Bond yield curves as of 30 June 2012 plus an adequate credit
spread to discount financial instruments. The interest rates used are as follows:
Derivatives
Interest bearing loans and borrowings
Finance leases
2012
% pa
2011
% pa
0.47–5.22
0.25–5.69
0.00–12.70
0.00–7.22
3.14–14.78
9.31
COMMODITY PRICE RISK
The Group is exposed to commodity price risk that is associated with the purchase of petroleum, natural gas and aluminium
purchases under variable price contract arrangements. The Group adopts a policy that seeks to hedge at least 50% of the price
risk exposure covering the forthcoming six months’ purchases where the underlying commodity purchase exceeds an annualised
amount of equivalent A$10 million.
The Group uses commodity swaps to hedge commodity price risk. All of the commodity swaps have maturities of less than
two years.
Commodities hedging activities
Notional value of commodity derivative instruments at year end is as follows:
Singapore gasoil 0.5%
Natural gas (NYMEX)
Aluminium – LME
Details of balance sheet carrying value/fair value of instruments hedging commodities price risk:
Assets
Commodity swaps/options designated as cash flow hedges
Liabilities
Commodity swaps designated as cash flow hedges
CONSOLIDATED
2012
$ millions
2011
$ millions
68.7
–
–
–
(7.2)
(7.2)
33.6
0.9
2.8
3.2
(0.1)
3.1
The commodity swaps are considered to be highly effective hedges as they are matched against forward commodity purchases.
The ineffective portion of the hedges transferred to the income statement was A$0.1 million in 2012 (2011: A$0.1 million).
Sensitivity
At 30 June 2012, if the commodity price had changed by +/– 10% from the year end prices with all other variables held constant,
the Group’s pre-tax earnings for the year would be unchanged (2011: unchanged) and the change in equity would have been
A$6.1 million (2011: A$3.9 million).
117
29. Financial instruments (continued)
THE FAIR VALUE HIERARCHY
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined
as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 – Inputs for the asset or liability that are not based on observable market data.
The Group’s financial instruments that are measured and recognised at fair value include:
• financial assets, including derivatives used for hedging (forward exchange contracts);
• financial liabilities, including derivatives used for hedging (forward exchange contracts, commodity swaps, interest rate swaps,
cross currency swaps).
The following table presents the Group’s financial assets and liabilities that are measured at fair value:
30 June 2012
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
30 June 2011
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives at fair value through profit or loss
Derivatives used for hedging
Total liabilities
Level 1
Level 2
Level 3
Total
$ millions
$ millions
$ millions
$ millions
–
–
–
–
0.2
0.2
36.7
36.7
–
–
–
–
0.2
0.2
36.7
36.7
Level 1
Level 2
Level 3
Total
$ millions
$ millions
$ millions
$ millions
–
–
–
–
–
7.5
7.5
0.2
55.6
55.8
–
–
–
–
–
7.5
7.5
0.2
55.6
55.8
118 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 30. Key management personnel disclosures
The following were key management personnel of the Group during the reporting period and unless otherwise indicated for the
entire period:
DIRECTORS
Catherine Brenner
Non-Executive Director
Brian Clark
Eileen Doyle
Robert Every
Non-Executive Director
Non-Executive Director
Chairman and Non-Executive Director
Richard Longes
Non-Executive Director
John Marlay
Paul Rayner
Non-Executive Director
Non-Executive Director
Former Director
Mark Selway held the position of Chief Executive until 22 May 2012 on which date he stood down from the Board.
EXECUTIVES
Ross Batstone*
Mike Beardsell
Mike Kane
Andrew Poulter
Murray Read
Chief Executive (appointed 22 May 2012)
Divisional Managing Director – Boral Cement
President and CEO Boral USA
Chief Financial Officer
Divisional Managing Director – Boral Construction Materials
* Ross Batstone held the position of Divisional Managing Director – Boral Building Products until 22 May 2012, on which date he was appointed as Chief Executive.
KEY MANAGEMENT PERSONNEL COMPENSATION
The key management personnel compensation included in “employee benefits expense” in note 3 is as follows:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Long-term employee benefits
CONSOLIDATED
2012
$’000
2011
$’000
6,693.1
6,883.6
432.7
1,888.3
5,079.1
79.1
420.9
–
1,034.2
75.4
14,172.3
8,414.1
June 2011 comparatives include key management personnel for that year.
INDIVIDUAL DIRECTORS’ AND EXECUTIVES’ COMPENSATION DISCLOSURES
Information regarding individual Directors’ and executives’ compensation is provided in the Remuneration Report section
of the Directors’ Report.
LOANS TO KEY MANAGEMENT PERSONNEL
There were no loans made or outstanding to key management personnel.
119
30. Key management personnel disclosures (continued)
EQUITY INSTRUMENTS
(i) Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions
of the options, can be found in the Remuneration Report that forms part of the Directors’ Report.
(ii) Option holdings
The number of options (being executive options) over ordinary shares in Boral Limited held during the financial year by each Director
of Boral Limited and each of the key management personnel of the Group are set out below:
Former Director
Mark Selwaya
Current Executives
Ross Batstone
Mike Beardsell
Mike Kane
Andrew Poulter
Murray Read
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
Balance at
the beginning
of the year
Granted during
the year as
remuneration
Exercised
during the year
Lapsed/
cancelled
during the year
Balance at the
end of the year
Vested and
exercisable
at the end
of the year
Number
Number
Number
Number
Number
Number
–
–
297,500
351,470
113,100
131,500
–
–
–
–
123,200
146,400
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(56,800)
(53,970)
(11,100)
(18,400)
–
–
–
–
(24,200)
(23,200)
240,700
297,500
102,000
113,100
–
–
–
–
99,000
123,200
118,376
118,376
53,514
53,514
–
–
–
–
51,114
51,114
a Option holding at the date of ceasing to be a Director.
Shares provided on exercise of options
During the financial year, there were no shares issued on the exercise of options granted as compensation.
(iii) Share Acquisition Rights
The number of Share Acquisition Rights (SARs) in Boral Limited held during the financial year by each Director of Boral Limited and
each of the key management personnel of the Group are set out below:
Balance at
the beginning
of the year
Rights granted
during the year
Exercised
during the year
Lapsed/
cancelled
during the year
Balance at the
end of the year
Vested and
exercisable
at the end
of the year
Number
Number
Number
Number
Number
Number
Former Director
Mark Selwaya
Current Executives
Ross Batstone
Mike Beardsell
Mike Kane
Andrew Poulter
Murray Read
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
734,853
431,034
771,186
303,819
–
–
–
–
1,506,039
734,853
352,382
236,100
182,746
98,218
78,717
–
21,701
–
202,935
91,430
321,978
147,569
129,280
98,672
102,285
78,717
166,504
21,701
158,263
125,000
(8,218)
(31,287)
(1,607)
(14,144)
–
–
–
–
(7,000)
–
(1,369)
–
–
–
–
–
(3,507)
(13,495)
(2,988)
–
659,142
352,382
309,050
182,746
181,002
78,717
188,205
21,701
354,703
202,935
–
–
–
–
–
–
–
–
–
–
–
–
a Final rights holding at the date of ceasing to be a Director.
120 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 30. Key management personnel disclosures (continued)
EQUITY INSTRUMENTS (continued)
(iv) Shareholdings
The number of shares held in Boral Limited during the financial year by each Director of Boral Limited and each of the key
management personnel of the Group, including their personally related entities, are set out below:
Current Directors
Catherine Brenner
Brian Clark
Eileen Doyle
Robert Every
Richard Longes
John Marlay
Paul Rayner
Former Director
Mark Selwayb
Balance at
the beginning
of the year
Received
during the year
on the exercise
of options/
SARs
Allocation in
Non-Executive
Directors’ Share
Plan a
Other changes
during the year
Balance at the
end of the year
Number
Number
Number
Number
Number
5,000
–
71,937
64,621
1,234
1,000
70,221
41,851
27,725
22,735
4,781
2,000
28,156
10,345
21,864
8,800
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
195
5,000
2,609
7,316
48
234
–
28,370
616
4,990
188
2,781
1,033
17,811
5,195
5,000
74,546
71,937
1,282
1,234
70,221
70,221
28,341
27,725
4,969
4,781
29,189
28,156
(10,574)
13,064
11,290
21,864
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
a Directors will only be entitled to a transfer of the shares in accordance with the terms and conditions of the plan.
b Shareholding at the date of ceasing to be a Director.
Current Executives
Ross Batstone
Mike Beardsell
Mike Kane
Andrew Poulter
Murray Read
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
Balance at
the beginning
of the year
Received
during the year
on the exercise
of options/
SARs
Other changes
during the year
Balance at the
end of the year
Number
Number
Number
Number
705,677
561,991
86,966
60,685
–
–
10,000
–
231,289
181,495
8,218
31,287
1,607
14,144
–
713,895
112,399
705,677
–
12,137
88,573
86,966
–
–
–
–
–
–
–
–
186
10,000
10,186
10,000
3,507
13,495
(20,000)
214,796
36,299
231,289
121
31. Auditors’ remuneration
Audit services:
KPMG Australia – audit and review of financial reports
KPMG Overseas firms – audit and review of financial reports
KPMG Australia – other assurance services
Other auditors – audit and review of financial reports
Other services:
KPMG Australia – taxation services
KPMG Australia – due diligence
KPMG Australia – advisory
KPMG Australia – other
KPMG Overseas firms – due diligence
KPMG Overseas firms – taxation services
32. Acquisition/disposal of controlled entities
The following controlled entities were acquired or disposed of during the financial year ended 30 June 2012:
Entities acquired
Lafarge Boral Gypsum in Asia Sdn Bhd
Wagners – concrete and quarry
Sunshine Coast quarries
Less: Net cash acquired
Less: Cash paid – deposit in prior year
Total purchase consideration
CONSOLIDATED
2012
$’000
2011
$’000
1,431
1,428
539
103
649
445
90
–
2,722
1,963
86
513
35
11
130
162
937
3,659
115
530
–
8
1,127
95
1,875
3,838
CONSOLIDATED
2012
$ millions
531.4
166.2
83.0
(62.8)
(17.3)
700.5
Acquisition-related costs in respect of these acquisitions of $28.8 million are included in other expenses in the Income Statement for
the current year.
(i) Lafarge Boral Gypsum in Asia Sdn Bhd acquisition
During August 2011, the Group announced that it had reached an agreement with Lafarge to acquire the remaining 50%
shareholding in Lafarge Boral Gypsum in Asia Sdn Bhd (LBGA). The acquisition was completed on 9 December 2011 and the results
have been consolidated into the Group’s financial report from that date. The acquisition positions Boral as the pre-eminent producer
of plasterboard and related internal lining solutions products in the Asia Pacific Region. The business has subsequently been
renamed Boral Gypsum Asia (BGA).
For the period from 1 July 2011 to 9 December 2011 and throughout the prior year, the Group held an initial 50% shareholding
in LBGA that was recorded as an equity accounted investment. On acquisition of the remaining 50% interest in LBGA, this initial
investment was remeasured to fair value in accordance with Australian Accounting Standards.
122 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 32. Acquisition/disposal of controlled entities (continued)
(i) Lafarge Boral Gypsum in Asia Sdn Bhd acquisition (continued)
Fair value of equity accounted investment as at acquisition date
Less:
Carrying value of equity accounted investment as at acquisition date
Translation reserve on equity accounted investment as at acquisition date
Gain on remeasurement to fair value
The acquisition had the following effect on the Group’s assets and liabilities:
Purchase consideration
Cash paid – purchase price
Equity accounted investment at fair value
Non-controlling interest
Less: Fair value of net identifiable assets acquired
Goodwill on acquisition
Assets and liabilities acquired are as follows:
CURRENT ASSETS
Cash and cash equivalents
Receivables
Inventories
Other assets
NON-CURRENT ASSETS
Receivables
Property, plant and equipment
Intangible assets
Deferred tax assets
Other
CURRENT LIABILITIES
Bank overdraft
Payables
Loans and borrowings
Current tax liabilities
Provisions
NON-CURRENT LIABILITIES
Loans and borrowings
Deferred tax liabilities
Provisions
Other
Net identifiable assets acquired
$ millions
398.6
(210.0)
(30.5)
158.1
$ millions
531.4
398.6
22.8
(380.5)
572.3
Acquiree’s
carrying
amount
$ millions
Fair value
$ millions
93.6
67.9
42.4
2.2
4.4
387.1
1.3
2.1
0.4
(30.8)
(96.5)
(15.5)
(5.0)
(6.0)
(86.9)
(10.4)
(7.1)
(0.9)
93.6
67.9
42.4
2.2
4.4
436.2
6.6
2.1
0.4
(30.8)
(96.4)
(15.5)
(5.0)
(6.0)
(86.9)
(26.7)
(7.1)
(0.9)
342.3
380.5
The amounts recognised on acquisition above represent provisional assessment of the fair values of assets and liabilities acquired.
During the period from acquisition to 30 June 2012, BGA has contributed to the Group, revenue of $303.6 million and earnings
before interest and tax of $30.8 million. Had the investment taken place on 1 July 2011, the Group would have consolidated 100%
of the revenue and results of BGA resulting in revenues of $559.2 million and earnings before interest and tax of $62.6 million, and
not recognised equity income of $10.1 million.
123
32. Acquisition/disposal of controlled entities (continued)
(ii) Wagners’ construction materials concrete and quarry assets
On 8 December 2011, the Group acquired certain construction materials assets of the Wagners Group. This acquisition includes
5 quarries and 19 concrete plants located throughout the Darling Downs, South East Queensland and Townsville regions and
enables the Group to expand its construction materials activities in the Queensland market.
The acquisition had the following effect on the Group’s assets and liabilities:
Purchase consideration
Cash paid – deposit in prior year
Cash paid – in current period
Total purchase consideration
Fair value of net identifiable assets acquired
Inventories
Property, plant and equipment
Other assets
Provisions
Total fair value of net identifiable assets acquired
$ millions
17.3
148.9
166.2
4.1
162.5
0.3
(0.7)
166.2
During the period from acquisition to 30 June 2012, the Wagners business contributed revenue of $46.2 million and earnings before
interest and tax of $1.0 million. The Group considers it impractical to determine the impact on the Group’s revenues or results had
this business acquisition taken place at 1 July 2011, as the entity’s accounting policies were not consistent with those adopted by
the Group.
(iii) Sunshine Coast Quarries acquisition
On 31 October 2011, the Group acquired the quarry and concrete assets of Sunshine Coast Quarries, including a large scale quarry
at Moy Pocket, a smaller quarry at Wondai and a concrete plant at Gympie. This acquisition enhances the Group’s construction
materials position in Queensland by securing long-term high quality quarry reserves.
The acquisition had the following effect on the Group’s assets and liabilities:
Purchase consideration
Cash paid – purchase price
Total purchase consideration
Fair value of net identifiable assets acquired
Inventories
Property, plant and equipment
Other liabilities
Provisions
Total fair value of net identifiable assets acquired
$ millions
83.0
83.0
1.4
81.8
(0.1)
(0.1)
83.0
The acquisition contributed revenue of $18.3 million and earnings before interest and tax of $1.4 million. The Group considers it
impractical to determine the impact on the Group’s revenues or results had this business acquisition taken place at 1 July 2011,
as the entity’s accounting policies were not consistent with those adopted by the Group.
124 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities
32. Acquisition/disposal of controlled entities (continued)
Entities disposed
Indonesian Construction Materials
Pt Jaya Readymix
PT Boral Pipe and Precast Indonesia
PT Boral Indonesia
Boral Best Block LLC
Entities deregistered
Boral Building Services Pte Ltd
Boral Asia Pacific Pte Ltd
United States Tile Co.
Boral Tile LLC
Boral Benefits Management Inc.
Boral Bricks of Texas LP
Boral Bricks Holdings Inc.
merged into Boral Bricks Holdings Inc.
merged into Boral Bricks Inc.
Boral Material Technologies of Texas LP
merged into BMT Holdings Inc.
BMT Holdings Inc.
merged into Boral Material Technologies Inc.
Date of
disposal
Mar 2012
Jun 2012
Date of loss
of control
Aug 2011
Nov 2011
Apr 2012
Apr 2012
Jun 2012
Jun 2012
Jun 2012
Jun 2012
Jun 2012
Name changes during the financial period
MonierLifetile LLC
MonierLifetile S.R.L. de C.V.
Boral Quarry Products (Thailand) Ltd
Lafarge Boral Gypsum in Asia Sdn Bhd
Lafarge Gypsum in Asia Limited
Lafarge Gypsum (Shanghai) Co Ltd
Lafarge Gypsum (Chengdu) Co Ltd
Lafarge Boral Gypsum India Private Ltd
Lafarge Boral Gypsum Vietnam Co Ltd
Lafarge Prestia Co Ltd
Lafarge Plasterboard System Co Ltd
Lafarge Gypsum Korea Co Ltd
West Gypsum (Chongqing) Co Ltd
Lafarge Plasterboard System (Shanghai) Co Ltd
Lafarge Gypsum (Shandong) Co Ltd
Lafarge Boral Management Services Shanghai Ltd
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
to
Boral Roofing LLC
Boral Roofing de Mexico S. de R.L. de C.V.
Boral Concrete & Quarry Limited
Boral Gypsum Asia Sdn Bhd
BGA Holdings Limited
Boral Plasterboard (Shanghai) Co Ltd
Boral Gypsum (Chengdu) Co Ltd
Boral Gypsum India Private Ltd
Boral Gypsum Vietnam Co Ltd
Boral Prestia Co Ltd
Boral Plasterboard System Co Ltd
Boral Gypsum Korea Co Ltd
Boral Gypsum (Chongqing) Co Ltd
Boral Gypsum (Shanghai) Co Ltd
Boral Gypsum (Shandong) Co Ltd
Boral Management Services (Shanghai) Co Ltd
125
32. Acquisition/disposal of controlled entities (continued)
The following controlled entities were acquired or disposed of during the financial year ended 30 June 2011:
2011
$ millions
88.3
44.2
17.3
2.4
(6.2)
146.0
Date of
disposal
Sep 2010
Date of loss
of control
Feb 2011
Feb 2011
to
to
to
to
to
to
Boral Cement Limited
Boral Precast Holdings Pty Ltd
Boral Construction Related Businesses Pty Ltd
Boral Bricks Western Australia Pty Ltd
Boral Stone Products LLC
Boral Timber Fibre Exports Pty Ltd
Entities acquired
MonierLifetile
Owens Corning Masonry Products LLC
Wagners’ deposit
Miscellaneous acquisitions
Less: Cash acquired
Total purchase consideration
Entities disposed
Boral Formwork and Scaffolding Pty Ltd
Entities deregistered
Leo N. Dunn & Sons Pty Ltd (in liquidation)
Concrite Holdings Pty Ltd (in liquidation)
Name changes during the financial period
Blue Circle Southern Cement Ltd
Girotto Precast Pty Ltd
Go Crete Pty Ltd
Midland Brick Company Pty Ltd
Owens Corning Masonry Products LLC
Sawmillers Exports Pty Ltd
126 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 33. Controlled entities
The financial statements of the following entities have been consolidated to determine the results of the consolidated entity.
Beneficial ownership by
Consolidated
entity
2012
%
Consolidated
entity
2011
%
Country of incorporation
Boral Limited
Boral Cement Limited > *
Barnu Pty Ltd *
Boral Building Materials Pty Ltd > *
Boral International Pty Ltd > *
PT Jaya Readymix ****
PT Pion Quarry Nusantara
PT Boral Pipe and Precast Indonesia ****
PT Boral Indonesia ****
MJI (Thailand) Ltd
Boral Concrete (Thailand) Ltd
Boral Concrete & Quarry Limited
Ratchiburi Enterprise Company Ltd
Boral USA <
Boral International Holdings Inc.
Boral Asia Pacific Pte Ltd **
Boral Building Services Pte Ltd **
Boral Construction Materials LLC
Ready Mixed Concrete Company
Boral Best Block LLC ****
Sprat-Platte Ranch Co. LLLP
Morton Lakes LLC
Aggregate Investments LLC
BCM Oklahoma LLC
McCanne Ditch and Reservoir Company
Boral Industries Inc.
Boral Finance Inc.
Boral Timber Inc.
Boral Lifetile Inc.
Boral Concrete Tile Inc.
Boral Roofing LLC
Australia
Australia
Australia
Australia
Australia
Indonesia
Indonesia
Indonesia
Indonesia
Thailand
Thailand
Thailand
Thailand
USA
USA
Singapore
Singapore
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
Boral Roofing de Mexico S. de R.L. de C.V.
Mexico
E.U.M. Teja de Concreto Servicio Compania S.R.L. de C.V. Mexico
Tile Service Company LLC
United States Tile Co. **
Boral Tile LLC **
Boral Bricks Inc.
Boral Bricks Holdings Inc. **
Boral Bricks of Texas LP **
Boral Benefits Management Inc. **
Dennis Brick Distributors
USA
USA
USA
USA
USA
USA
USA
USA
100
100
100
100
–
100
–
–
100
100
100
100
100
100
–
–
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
–
100
–
–
–
50
100
100
100
100
90
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
89.47
50
127
33. Controlled entities (continued)
Beneficial ownership by
Consolidated
entity
2012
%
Consolidated
entity
2011
%
Country of incorporation
Boral Composites Inc.
Boral Material Technologies Inc.
BMT Holdings Inc. **
Boral Material Technologies of Texas LP **
Boral Stone LLC
Boral Stone Products LLC
Boral (UK) Ltd
Boral Investments Ltd
Boral Investments BV
Boral Industrie GmbH
Boral Klinker GmbH
Boral Mecklenburger Ziegel GmbH
Boral Industries Ltd
Boral Building Products (NZ) Ltd
Boral Gypsum Asia Sdn Bhd ***
Boral Management Services Shanghai Co Ltd ***
Boral Building Materials (Malaysia) Sdn Bhd ***
Boral Plasterboard (Malaysia) Sdn Bhd ***
Boral Plasterboard (Marketing) Sdn Bhd ***
Siam Gypsum Industry Co Ltd ***
Siam Gypsum Industry (Saraburi) Co Ltd ***
Siam Gypsum Industry (Songkla) Co Ltd ***
Siam Gypsum Industry Development Co Ltd ***
Gypsum Business Limited ***
Boonyavajara Mining Co Ltd ***
Boral Prestia Co Ltd ***
Boral Middle East FZE ***
Boral Middle East (Dubai) LLC ***
PT Petrojaya Boral Plasterboard ***
BGA Holdings Limited ***
USA
USA
USA
USA
USA
USA
UK
Jersey
Netherlands
Germany
Germany
Germany
NZ
NZ
Malaysia
China
Malaysia
Malaysia
Malaysia
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
UAE
UAE
Indonesia
Labuan
China Plasterboard Corporation ***
British Virgin Islands
Boral Plasterboard (Shanghai) Co Ltd ***
Boral Gypsum (Chongqing) Co Ltd ***
Boral Gypsum (Chengdu) Co Ltd ***
Boral Gypsum (Shanghai) Co Ltd ***
Boral Gypsum (Shandong) Co Ltd ***
Boral Gypsum India Private Ltd ***
LBGA Trading (Singapore) Pte Ltd ***
Boral Gypsum Korea Co Ltd ***
South Korean Plasterboard Corporation ***
Boral Plasterboard System Co Ltd ***
Siamsum Corporation ***
China
China
China
China
China
India
Singapore
South Korea
Labuan
South Korea
Labuan
128 Boral Limited Annual Report 2012
100
100
–
–
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
71
71
71
71
100
100
100
100
49
100
100
100
96.8
100
100
100
100
100
60
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Notes to the Financial StatementsBoral Limited and Controlled Entities
33. Controlled entities (continued)
Boral Gypsum Vietnam Co Ltd ***
Boral Plasterboard Philippines Inc ***
Boral Australian Gypsum Ltd > *
Waratah Gypsum Pty Ltd (in liquidation)
Boral Plaster Fixing Pty Ltd *
Lympike Pty Ltd *
Boral Investments Pty Ltd > *
Boral Construction Materials Ltd > *
Boral Resources (WA) Ltd > *
Boral Contracting Pty Ltd *
Boral Construction Related Businesses Pty Ltd > *
Boral Resources (Vic) Pty Ltd > *
Bayview Quarries Pty Ltd *
Boral Resources (Qld) Pty Ltd > *
Allen’s Asphalt Pty Ltd > *
Boral Resources (NSW) Pty Ltd > *
Dunmore Sand & Soil Pty Ltd *
Boral Recycling Pty Ltd > *
De Martin & Gasparini Pty Ltd > *
De Martin & Gasparini Concrete Placers Pty Ltd *
De Martin & Gasparini Pumping Pty Ltd *
De Martin & Gasparini Contractors Pty Ltd *
Boral Precast Holdings Pty Ltd > *
Boral Construction Materials Group Ltd > *
Concrite Pty Ltd > *
Boral Resources (SA) Ltd > *
Bitumax Pty Ltd > *
Road Surfaces Group Pty Ltd > *
Alsafe Premix Concrete Pty Ltd > *
Boral Transport Ltd > *
Boral Corporate Services Pty Ltd
Bitupave Ltd > *
Boral Resources (Country) Pty Ltd > *
MLOP Pty Ltd (in liquidation)
Bayview Pty Ltd *
Dandenong Quarries Pty Ltd *
Boral Insurance Pty Ltd
Boral Johns Perry Ltd (in liquidation)
Allen Taylor & Company Ltd > *
Oberon Softwood Holdings Pty Ltd > *
Duncan’s Holdings Ltd > *
Boral Bricks Pty Ltd > *
Country of incorporation
Vietnam
Philippines
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Beneficial ownership by
Consolidated
entity
2012
%
Consolidated
entity
2011
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
129
33. Controlled entities (continued)
Beneficial ownership by
Consolidated
entity
2012
%
Consolidated
entity
2011
%
Country of incorporation
Boral Masonry Ltd > *
Boral Hollostone Masonry (South Aust) Pty Ltd > *
Boral Montoro Pty Ltd > *
Boral Windows Systems Ltd > *
Dowell Australia Ltd (in liquidation)
Boral Timber Fibre Exports Pty Ltd > *
Boral Shared Business Services Pty Ltd > *
Boral Building Products Ltd > *
Boral Bricks Western Australia Pty Ltd > *
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Granted relief by the Australian Securities and Investments Commission from specified accounting requirements in accordance with Class Order (refer to note 36).
>
* Entered into cross guarantee with Boral Limited (refer to note 37).
** Deregistered during the year.
*** Acquired during the year.
**** Disposed during the year.
< A Delaware general partnership.
All the shares held by Boral Limited in controlled entities are ordinary shares.
34. Related party disclosures
CONTROLLED ENTITIES
Interests held in controlled entities are set out in note 33.
ASSOCIATED ENTITIES
Interests held in associated entities are set out in note 12. The business activities of a number of these entities are conducted under
joint venture arrangements. Associated entities conduct business transactions with various controlled entities. Such transactions
include purchases and sales of certain products, dividends and interest. All such transactions are conducted on the basis of normal
commercial terms and conditions.
DIRECTOR TRANSACTIONS WITH THE GROUP
Transactions entered into during the year with Directors of Boral Limited and the Group are within normal employee, customer or
supplier relationships on terms and conditions no more favourable than dealings in the same circumstances on an arm’s length
basis and include:
• the receipt of dividends from Boral Limited;
• participation in the Boral Long Term Incentive Plan;
• terms and conditions of employment;
• reimbursement of expenses; and
• purchases of goods and services.
A number of Directors of the Company hold directorships in other entities. Several of these entities transacted with the Group
on terms and conditions no more favourable than those available on an arm’s length basis.
130 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities
35. Notes to cash flow statement
(i) Reconciliation of cash and cash equivalents:
Cash includes cash on hand, at bank and short-term deposits at call, net of
outstanding bank overdrafts. Cash as at the end of the year as shown in the cash
flow statement is reconciled to the related items in the balance sheet as follows:
Cash and cash equivalents
Bank overdrafts
(ii) Reconciliation of net profit to net cash provided by operating activities:
Net profit
Adjustments for non-cash items:
Depreciation and amortisation
Discount unwinding
Gain on sale of assets
Fair value adjustment
Impairment of assets, businesses and demolition costs
Net insurance proceeds
Share-based payment expense
Non-cash equity income
CONSOLIDATED
Note
2012
$ millions
2011
$ millions
9
18
205.7
(24.2)
181.5
561.2
–
561.2
177.7
165.4
273.4
3.6
(50.3)
(184.5)
196.2
–
10.6
(8.7)
245.0
4.1
(30.0)
–
73.9
(33.4)
5.8
(14.3)
Net cash provided by operating activities before change in assets and liabilities
418.0
416.5
Changes in assets and liabilities net of effects from acquisitions/disposals
– Receivables
– Inventories
– Payables
– Provisions
– Current and deferred taxes
– Other
Net cash provided by operating activities
16.9
(56.1)
(35.6)
(82.3)
(112.6)
(15.0)
133.3
(39.9)
(33.5)
58.9
(42.6)
(16.2)
7.5
350.7
(iii) The following non-cash financing and investing activities have not been included
in the cash flow statement:
Dividends reinvested under the Dividend Reinvestment Plan
54.8
53.1
(iv) Acquisition costs, restructure costs and legal settlements paid
During the year, the Group incurred costs associated with:
Acquisition and integration costs
Restructure and business closure costs
Legal settlements and associated costs
(v) Details of credit standby arrangements and loan facilities are included in note 28.
(35.3)
(36.9)
(18.9)
(91.1)
(4.8)
(21.8)
–
(26.6)
131
36. Parent entity disclosures
For the year ended 30 June
RESULT OF THE PARENT ENTITY
Profit after tax
Other comprehensive income after tax
Total comprehensive income for the period
FINANCIAL POSITION OF PARENT ENTITY
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Retained earnings
Total equity
PARENT ENTITY CONTINGENCIES
Details of contingent liabilities and contingent assets where the probability of future payments/receipts
is not considered remote are set out below.
Unsecured contingent liabilities:
Bank guarantees
BORAL LIMITED
2012
$ millions
2011
$ millions
1.1
(1.2)
(0.1)
111.8
0.1
111.9
7,124.3
6,858.2
505.4
7,629.7
3,073.1
1,269.5
4,342.6
553.5
7,411.7
3,628.5
505.6
4,134.1
3,287.1
3,277.6
2,368.4
2,261.3
51.0
867.7
38.3
978.0
3,287.1
3,277.6
5.2
3.9
The Company has given to its bankers, letters of responsibility in respect of accommodation provided from time to time by the
banks to controlled entities.
Certain entities within the Company are subject to various lawsuits and claims in the ordinary course of business.
Consistent with other companies of the size and diversity of Boral, the Company is the subject of periodic information requests,
investigations and audit activity by the Australian Taxation Office (ATO) and taxation authorities in other jurisdictions in which
Boral operates.
The Company has considered all of the above claims and, where appropriate, sought independent advice and believes it holds
appropriate provisions.
Parent entity guarantees in respect of debts of its subsidiaries
Under the terms of ASIC Class Order 98/1418, certain wholly owned controlled entities have been granted relief from the
requirement to prepare audited financial reports. The Company has entered into an approved deed of indemnity for the cross
guarantee of liabilities with those controlled entities identified in note 33.
Parent entity capital commitments
The parent entity does not have any capital commitments for acquisition of property, plant and equipment at 30 June 2012 (2011: Nil).
132 Boral Limited Annual Report 2012
Notes to the Financial StatementsBoral Limited and Controlled Entities 37. Deed of cross guarantee
The following consolidated statement of comprehensive income and balance sheet comprises Boral Limited and its controlled
entities which are party to the Deed of Cross Guarantee (refer to note 33), after eliminating all transactions between parties to
the Deed.
STATEMENT OF COMPREHENSIVE INCOME
Continuing operations
Revenue
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) from continuing operations
Discontinued operations
Profit/(loss) from discontinued operations (net of income tax)
Net profit/(loss)
Other comprehensive income
Actuarial gain on defined benefit plans
Exchange differences from translation of foreign operations taken to equity
Fair value adjustment on cash flow hedges
Income tax relating to components of other comprehensive income
Total comprehensive income
Attributable to:
Members of the parent entity
Non-controlling interest
Reconciliation of movements in retained earnings
Balance at the beginning of the year
Net profit attributable to members of the parent entity
Dividends recognised during the year
Actuarial gains on defined benefit plans, net of tax
Balance at the end of the year
CONSOLIDATED
2012
$ millions
2011
$ millions
3,907.0
3,907.3
(368.2)
(37.4)
(405.6)
(60.0)
(465.6)
(6.6)
29.1
(3.3)
3.0
520.6
(130.8)
389.8
(15.7)
374.1
1.8
(31.6)
1.1
(0.9)
(443.4)
344.5
(443.4)
344.5
–
–
(443.4)
344.5
1,639.9
1,365.5
(465.6)
(106.9)
(4.5)
374.1
(101.0)
1.3
1,062.9
1,639.9
133
37. Deed of cross guarantee (continued)
BALANCE SHEET
CURRENT ASSETS
Cash and cash equivalents
Receivables
Inventories
Other
Assets classified as held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
Inventories
Investments accounted for using the equity method
Other financial assets
Property, plant and equipment
Intangible assets
Other
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Payables
Loans and borrowings
Current tax liabilities
Provisions
Liabilities classified as held for sale
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Payables
Loans and borrowings
Deferred tax liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
134 Boral Limited Annual Report 2012
CONSOLIDATED
2012
$ millions
2011
$ millions
50.1
661.2
483.7
60.2
32.8
497.5
680.3
466.8
77.7
–
1,288.0
1,722.3
8.7
104.9
42.7
2,755.8
2,625.4
118.4
45.4
5,701.3
6,989.3
3.3
93.5
240.2
2,289.0
2,350.3
114.2
46.7
5,137.2
6,859.5
1,483.9
1,360.6
0.4
57.0
176.4
29.6
147.2
121.5
197.3
–
1,747.3
1,826.6
46.3
1,520.1
160.6
81.1
1,808.1
3,555.4
68.2
854.0
162.2
81.4
1,165.8
2,992.4
3,433.9
3,867.1
2,368.4
2,261.3
2.6
(34.1)
1,062.9
3,433.9
1,639.9
3,867.1
Notes to the Financial StatementsBoral Limited and Controlled Entities Statutory Statements
Boral Limited and Controlled Entities
Directors’ Declaration
1. In the opinion of the Directors of Boral Limited:
(a) the consolidated financial statements and notes set out on pages 66 to 134 and the Remuneration Report in the Directors’
Report, set out on pages 51 to 64, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2012 and of its performance for the financial year
ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due
and payable.
2. There are reasonable grounds to believe that Boral Limited and the controlled entities identified in note 33 will be able to meet
any obligations or liabilities to which they are or may become subject by virtue of the Deed of Cross Guarantee between Boral
Limited and those controlled entities pursuant to ASIC Class Order 98/1418.
3. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the chief executive
and chief financial officer for the financial year ended 30 June 2012.
4. The Directors draw attention to note 1 to the consolidated financial statements, which includes a statement of compliance with
International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Bob Every
Director
Paul Rayner
Director
Sydney, 11 September 2012
135
Statutory Statements
Boral Limited and Controlled Entities
Independent Auditor’s Report to the Members of Boral Limited
Report on the Financial Report
We have audited the accompanying financial report of Boral Limited (“the Company”), which comprises the consolidated balance
sheet as at 30 June 2012, and consolidated income statement and consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 37 comprising
a summary of significant accounting policies and other explanatory information and the Directors’ Declaration of the Group
comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is
necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error. In
note 1, the Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements,
that the financial statements of the Group comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating
to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
the Directors, as well as evaluating the overall presentation of the financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with
the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding
of the Group’s financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2012 and of its performance for the year ended
on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in clause 19 of the Directors’ Report for the year ended 30 June 2012. The
Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with
Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on
our audit conducted in accordance with auditing standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Boral Limited for the year ended 30 June 2012, complies with Section 300A of the
Corporations Act 2001.
KPMG
Sydney, 11 September 2012
136 Boral Limited Annual Report 2012
Greg Boydell
Partner
Shareholder Information
Boral Limited and Controlled Entities
Shareholder communications
Enquiries or notifications by shareholders regarding their
shareholdings or dividends should be directed to Boral’s
share registry:
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235 Australia
Hand deliveries to:
Level 12, 680 George Street
Sydney NSW 2000
Telephone (02) 8280 7133
International +61 2 8280 7133
Facsimile (02) 9287 0303
International +61 2 9287 0303
Shareholders can also send questions to the share
registry via email.
Internet
www.linkmarketservices.com.au
email
boral@linkmarketservices.com.au
Online services
You can access information and update information about your
holdings in Boral Limited via the internet by visiting Link Market
Services’ website www.linkmarketservices.com.au or Boral’s
website www.boral.com.au
Some of the services available online include: check
current and previous holding balances, choose your preferred
Annual Report option, update address details, update bank
details, confirm whether you have lodged your TFN, ABN or
exemption, check the share prices and graphs or download
a variety of forms.
Dividends
The final dividend for the 2011/12 year of 3.5 cents per share
will be paid by Boral on 28 September 2012. The dividend will
be fully franked.
Dividend Reinvestment Plan (DRP)
As an alternative to receiving cash dividends, shareholders
may elect to participate in the DRP. The DRP enables
shareholders to use cash dividends to acquire additional
fully paid Boral shares. If a shareholder wishes to participate
in the DRP or alter their participation, they must notify the
share registry in writing. DRP election forms can be obtained
by contacting Link Market Services. Features of the DRP
can be found on Boral’s website.
Dividend payments
As foreshadowed in Boral’s 2011 Annual Report, Boral
implemented direct credit as the preferred method for the
payment of cash dividends, effective from the interim dividend
paid on 5 April 2012.
For those shareholders with a registered address in Australia
or New Zealand, dividend payments will only be made by direct
credit to your nominated bank account (rather than by cheque
posted to your registered address). To provide or update your
bank account details, please contact the share registry or visit
its website at www.linkmarketservices.com.au
For those shareholders without a registered address
in Australia or New Zealand, if you wish your dividends to be
paid directly to a bank, building society or credit union account
in Australia or New Zealand, please contact the share registry
or visit its website at www.linkmarketservices.com.au for an
application form. The payments are electronically credited on
the dividend payment date and confirmed by payment advices
mailed to the shareholder’s registered address. All instructions
received remain in force until amended or cancelled in writing.
Shareholders are also reminded to bank dividend cheques as
soon as possible. Dividend cheques that are not banked are
required to be handed over to the Chief Commissioner of State
Revenue under the Unclaimed Money Act 1995 (NSW).
Tax File Number (TFN), Australian Business Number (ABN)
or exemption
You are strongly advised to lodge your TFN, ABN or exemption.
If you choose not to lodge these details with the share registry,
then Boral Limited is obliged to deduct tax at the highest
marginal rate (plus the Medicare levy) from the unfranked
portion of any dividend payment. Certain pensioners are
exempt from supplying their TFNs. You can confirm whether
you have lodged your TFN, ABN or exemption via the Internet
at www.linkmarketservices.com.au
Uncertificated forms of shareholding
Two forms of uncertificated holdings are available to Boral
shareholders:
Issuer Sponsored Holdings: This type of holding is
sponsored by Boral and provides shareholders with
the advantages of uncertificated holdings without the
need to be sponsored by any particular stockbroker.
Broker Sponsored Holdings (CHESS): Shareholders may
arrange to be sponsored by a stockbroker (or certain other
financial institutions) and are required to sign a sponsorship
agreement appointing the sponsor as their “controlling
participant” for the purposes of CHESS. This type of holding
is likely to attract regular stock market traders or those
shareholders who have their share portfolio managed by
a stockbroker.
Holding statements are issued to shareholders not later
than five business days after the end of any month in which
transactions alter the balance of a holding. Shareholders
requiring replacement holding statements should be directed
to their controlling participant.
Shareholders communicating with the share registry should
have to hand their Securityholder Reference Number (SRN)
or Holder Identification Number (HIN) as it appears on the
Issuer Sponsored/CHESS holding statements or dividend
advices. For security reasons, shareholders should keep
their Securityholder Reference Numbers confidential.
137
Shareholder Information
Boral Limited and Controlled Entities
Annual report mailing list
Share sale facility
A means for Issuer Sponsored shareholders, particularly
small shareholders, to sell their entire Boral shareholding
is to use the share registry’s sale facility by contacting Link
Market Services’ Share Sale Centre on (02) 8280 7133.
American depositary receipts (ADRs)
In the USA, Boral shares are traded in the over-the-counter
market in the form of ADRs issued by the depositary, The Bank
of New York. Each ADR represents four ordinary Boral shares.
Share information as at 24 August 2012
Substantial shareholders
National Australia Bank Limited, by a notice of change of
interests of substantial holder dated 27 July 2012, advised
that it and its associates were entitled to 46,017,069
ordinary shares.
Perpetual Limited, by a notice of initial substantial holder
dated 29 June 2012, advised that it and its associates were
entitled to 39,575,720 ordinary shares.
Commonwealth Bank of Australia, by a notice of change of
interests of substantial holder dated 3 May 2012, advised that it
and its associates were entitled to 88,514,055 ordinary shares.
Franklin Resources Inc., by a notice of change of interests of
substantial holder dated 15 February 2012, advised that it and
its associates were entitled to 49,647,610 ordinary shares.
Prudential plc, by a notice of change of interests of substantial
holder dated 19 October 2011, advised that it and its
associates were entitled to 44,427,035 ordinary shares.
Schroder Investment Management Australia Limited, by a
notice of initial substantial holder released 1 September 2011,
advised that it and its associates were entitled to 44,880,163
ordinary shares.
Ausbil Dexia Limited, by a notice of change of interests of
substantial holder dated 9 November 2010, advised that it and
its associates were entitled to 44,499,371 ordinary shares.
Shareholders (whether Issuer or Broker Sponsored) not wishing
to receive the Annual Report should advise the share registry
in writing so that their names can be removed from the mailing
list. Shareholders are also able to update their preference via the
Link Market Services or Boral websites, and can nominate to
receive email notification of the release of the Annual Report and
then access it via a link. The share registry can provide forms for
making annual report delivery elections.
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.
Change of address
Shareholders who are Issuer Sponsored should notify any
change of address to the share registry promptly. This can be
done via the Link Market Services website or in writing quoting
their Securityholder Reference Number, previous address
and new address. Application forms for Change of Address
are also available for download via the Link Market Services
or Boral websites. Broker Sponsored (CHESS) holders must
advise their sponsoring broker of the change.
Information on Boral
Boral has a comprehensive internet site featuring news items,
announcements, corporate information and a wide range of
product and service information. Boral’s Internet address is
www.boral.com.au
The Annual Report is the main source of information for
shareholders. Other sources of information include:
• February – the interim results announcement for
the December half year.
• August – the annual results announcement for
the year ended 30 June.
• November – the Annual General Meeting.
Requests for publications and other enquiries about
Boral’s affairs should be addressed to:
Corporate Affairs Manager
Boral Limited
GPO Box 910
Sydney NSW 2001
Enquiries can also be made via email: info@boral.com.au
or visit Boral’s website at www.boral.com.au
Share trading and price
Boral shares are traded on the Australian Securities Exchange
Limited (ASX). The stock code under which they are traded is
“BLD” and the details of trading activity are published in most
daily newspapers under that abbreviation.
138 Boral Limited Annual Report 2012
Distribution schedule of shareholders as at 24 August 2012
Size of shareholding
Number of shareholders
% of ordinary shares
(a) in the categories –
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
(b) holding less than a marketable parcel (146 shares)
27,032
28,496
5,118
3,087
129
63,862
2,109
1.85
8.70
4.79
8.50
76.16
100.00
0.02
Voting rights – ordinary shares
On a show of hands, every person present, who is a member or proxy, attorney or representative of a member, shall have one vote
and on a poll every member who is present in person or by proxy, attorney or representative shall have one vote for each share held
by him or her.
On-market buy-back
There is no current on-market buy-back of ordinary shares.
Twenty largest shareholders as at 24 August 2012
1 National Nominees Limited
2
J P Morgan Nominees Australia Limited
3 HSBC Custody Nominees (Australia) Limited
4 Citicorp Nominees Pty Limited
5 Cogent Nominees Pty Limited
6 RBC Dexia Investor Services Australia Nominees Pty Limited
7 BNP Paribas Nominees Pty Limited
8 Queensland Investment Corporation
9 Australian Foundation Investment Company Limited
10 The Senior Master of the Supreme Court (Common Fund No 3 A/C)
11 Argo Investments Limited
12 AMP Life Limited
13 UBS Wealth Management Australia Nominees Pty Limited
14 Equitas Nominees Pty Limited
15 ANZ Executors & Trustee Company Limited
16 Bond Street Custodians Limited
17 Milton Corporation Limited
18 Rodney Pearse
19 Invia Custodian Pty Limited
20 UBS Nominees Pty Ltd
Ordinary shares
% of ordinary shares
144,250,952
119,033,515
107,920,727
90,733,532
28,015,864
24,816,718
7,464,463
4,628,821
4,008,492
3,474,881
3,266,907
2,946,232
2,882,144
2,450,738
1,977,340
1,852,566
1,627,462
1,446,903
1,405,978
1,322,618
19.02
15.69
14.23
11.96
3.69
3.27
0.98
0.61
0.53
0.46
0.43
0.39
0.38
0.32
0.26
0.24
0.21
0.19
0.19
0.17
139
Financial History
Boral Limited and Controlled Entities
30 June
Revenue
Earnings before interest, tax, depreciation
and amortisation (EBITDA)1
Depreciation and amortisation
Earnings before interest and tax1
Net financing costs1
Profit before tax1
Income tax expense1
Non-controlling interests
Net profit after tax1
Significant items – net of tax
Net profit attributable to
members of Boral Limited
Total assets
Total liabilities
Net assets
Shareholders’ funds
Net debt
Funds employed
2012
$ millions
2011
$ millions
2010
$ millions
2009
$ millions
2008
$ millions
2007
$ millions
2006
$ millions
2005
$ millions
2004
$ millions
2003
$ millions
5,010
4,711
4,599
4,875
5,199
4,909
4,767
4,305
4,150
3,831
473
273
200
(88)
111
(9)
(1)
101
75
522
245
277
(64)
213
(40)
2
175
505
253
252
(97)
155
(22)
(1)
132
(8)
(222)
539
263
276
(127)
149
(17)
–
131
11
688
240
448
(112)
336
(90)
1
247
(4)
762
231
531
(111)
420
(122)
–
298
–
823
209
614
(98)
516
(153)
–
362
–
794
191
603
(71)
532
(162)
794
195
600
(66)
534
(163)
672
194
478
(68)
410
(126)
(1)
(1)
(1)
370
–
370
–
283
–
177
168
(91)
142
243
298
362
370
370
283
6,499
5,668
5,209
5,491
5,895
5,817
5,587
5,001
4,511
4,038
3,096
3,403
3,403
2,512
2,583
2,738
2,985
2,829
2,832
2,594
2,151
1,898
3,156
3,156
2,626
2,626
2,754
2,754
2,910
2,987
2,755
2,407
2,360
2,910
2,987
2,755
2,407
2,360
2,140
2,140
1,518
505
1,183
1,514
1,515
1,482
1,578
1,394
938
764
4,921
3,662
3,809
4,268
4,425
4,470
4,333
3,800
3,298
2,904
Dividends paid or declared
82
105
88
77
202
203
200
197
175
133
Statistics
Dividend per ordinary share
11.0c
14.5c
13.5c
13c
34c
34c
34c
34c
30c
23c
Dividend payout ratio1
Dividend cover1
81% 60% 67% 59% 82% 68% 55% 53% 47% 47%
1.2
1.7
1.5
1.7
1.2
1.5
1.8
1.9
2.1
2.1
Earnings per ordinary share1
13.6c
24.4c
22.1c
22.2c
41.4c
50.0c
61.7c
63.4c
63.8c
49.1c
Return on equity1
EBIT to sales1
EBIT to funds employed1
Net interest cover (times)1
Gearing (net debt to equity)
3.0% 5.6% 5.0% 4.8% 8.5% 10.0% 13.2% 15.4% 15.7% 13.2%
4.0% 5.9% 5.5% 5.7% 8.6% 10.8% 12.9% 14.0% 14.4% 12.5%
4.1% 7.6% 6.6% 6.5% 10.1% 11.9% 14.2% 15.9% 18.2% 16.4%
2.3
4.4
2.6
2.2
4.0
4.8
6.3
8.5
9.1
7.1
45% 16% 45% 55% 52% 50% 57% 58% 40% 36%
Gearing (net debt to net debt plus equity)
31% 14% 31% 35% 34% 33% 36% 37% 28% 26%
Net tangible asset backing per share
$3.31
$3.91
$3.92
$4.12
$4.41
$4.41
$4.07
$3.57
$3.65
$3.27
1 Excludes the impact of significant items in 2012, 2011, 2010, 2009 and 2008.
Results for the years ended 2005 to 2012 have been prepared under Australian equivalents to International Financial Reporting Standards (A-IFRS). The years prior to
June 2005 represent results under previous Australian Generally Accepted Accounting Principles (AGAAP).
Figures may not add due to roundings.
140 Boral Limited Annual Report 2012
The Annual General Meeting
of Boral Limited will be held
at the City Recital Hall, Angel
Place, Sydney, on Thursday
1 November 2012 at 10.30am.
FINANCIAl CAlENDAR
Ex dividend share trading commences
28 August 2012
Record date for final dividend
Final dividend payable
Annual General Meeting
Half year end
3 September 2012
28 September 2012
1 November 2012
31 December 2012
Half year profit announcement
13 February 2013*
Ex dividend share trading commences
19 February 2013*
Record date for interim dividend
25 February 2013*
Interim dividend payable
Year end
25 March 2013*
30 June 2013
precinct.com.au
* Timing of events is subject to change.
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: boral@linkmarketservices.com.au
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