Annual Report 2012

Boral 

Limited
CONTENTS

2012 Overview 1

Financial Results 2

Chairman’s Review 4

Chief Executive’s Review 6

Group Executives 8

Boral’s Growth Strategy 10

Improving Performance 12

Positioned for Cycle Upturns 13

Group Overview 14

Construction Materials 16

Cement 18

Building Products 20

USA 22

Plasterboard Asia 24

Sustainability 26

Environment 27

Community Partnerships 28

Customers and Products 29

Our People 30

Health and Safety 31

Financial Review 32

Board of Directors 36

Corporate Governance Statement 38

Directors’ Report 46

2012 Remuneration Report 51

Financial Statements 65

Shareholder Information 137

Financial History 140

Financial Calendar IBC

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.

Cover

Trevor Dickens heavy vehicle tipper 

operator for Boral Logistics.
•	 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

2012 overview

1 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.

2 Before completion adjustments.
2 Boral Limited Annual Report 2012

Australian dwellings

Australian non-dwellings

Australian engineering and construction

USA dwellings

USA non-dwellings and engineering

Asia1

Other

Financial

Results

ebit2 variance analysis

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.

Sales revenue ($m)

FY11 4,711FY10 4,599FY09 4,875FY08 5,199FY07 4,909FY06 4,767FY05 4,305FY04 4,150FY12 5,010

sales revenue1

Profit after tax ($m)

FY11 175FY10 132FY09 131FY08 247FY07 298

FY06 362FY05 370FY04 370FY12 101

profit after tax2 EBITDA ($m)

FY11 522FY10 505FY09 539FY08 688FY07 762FY06 823FY05 794FY04 794FY12 473

EBITDA2

1 Includes revenue from Plasterboard in Asia 

from 9 December 2011.

2 Excluding significant items. Australia EBIT FY11 Volume Price Net cost escalation

Plasterboard

Asia

USA

Property

EBIT FY12

Other

Discontinued

operations

EBI

T variance analysis ($m) 

277120

140125

1216

24

15

7

200

Construction Materials

Cement

Building Products

Plasterboard Asia1

USA

Discontinued

external revenue 

by segment

external revenue 

by market

EBIT ($m)

FY11 277FY10 252FY09 276FY08 448FY07 531FY06 614FY05 603FY04 600FY12 200

EBIT2
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.

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.

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.

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.

results AT A GLANCE

3

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.

4 Includes employees and contractors combined.

FY2012 key announcements

Year ended 30 June (A$ million) 2012 2011 % 

change

Revenue 5,010 4,711 6

EBITDA1 473 522 (9)

EBIT1 200 277 (28)

Net interest (88) (64) (39)

Profit before tax1 111 213 (48)

Tax1 (9) (40)

Non-controlling interests (1) 2

Profit after tax1 101 175 (42)

Net significant items 75 (8)

Net profit after tax 177 168 5

Cash flow from operating activities 133 351

Gross assets 6,500 5,668

Funds employed 4,921 3,662

Liabilities 3,096 2,512

Net debt 1,518 505

Stay-in-business capital expenditure 192 235

Growth capital expenditure 222 111

Acquisition capital expenditure2 701 146

Depreciation and amortisation 273 245

Employees3 14,740 15,277 (4)

Revenue per employee, $ million 0.340 0.308 10

Net tangible asset backing, $ per share 3.31 3.91

EBITDA margin on revenue1

, % 9.4 11.1

EBIT margin on revenue1

, % 4.0 5.9

EBIT return on funds employed1

, % 4.1 7.6

Return on equity1

,% 3.0 5.6

Gearing 

Net debt/equity, % 45 16

Net debt/net debt + equity, % 31 14

Interest cover1

, times 2.3 4.4

Earnings per share1

, ¢ 13.6 24.4

Dividend per share, ¢ 11.0 14.5

Safety4

, per million hours worked

Lost time injury frequency rate 1.8 2.0

Recordable injury frequency rate 19.0 21.4
4 Boral Limited Annual Report 2012

Chairman’s

Review

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.

Dr Bob Every, AO Chairman

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 
5

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 noncore 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 

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

1. Before completion adjustments.
6 Boral Limited Annual Report 2012

Chief Executive’s 

Review

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 

Ross Batstone Chief Executive Officer

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.

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.
7

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 yearend 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.

Ross Batstone

Chief Executive Officer

1 Excluding significant items.

2 Includes 50% equity accounted share of LBGA post tax earnings to 9 December 2011 

and 100% consolidated EBIT earnings since 9 December 2011.
8 Boral Limited Annual Report 2012

Group Executives

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.

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. 

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. 

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.
9

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.

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.

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.

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.

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.
Boral’s Growth Strategy

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 noncore, the divestment of

assets in Indonesia for

an enterprise value of

$135m was completed

in August 2012

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. 

growing A leading 

global scale 

plasterboard position 

in the Asia Pacific region

modernising 

Boral’s Australian 

plasterboard 

infrastructure

strengthening 

boral’s 

construction 

materials 

position

10 Boral Limited Annual Report 2012
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

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

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

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. 

expanding boral’s 

exterior cladding 

offer in the USA

restructuring and 

integrating clay and 

concrete roof tiles 

under the banner of 

Boral Roofing

securing long term 

resource positions

11
Improving 

Performance

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

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. 

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.

Given continuing challenging

conditions, our focus is on

accelerating a Group‐wide

performance improvement

plan to maximise cash flow

from existing assets.

12 Boral Limited Annual Report 2012
13

Positioned for 

Cycle Upturns

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.

1 Excluding significant items.

2 EBIT for 1H2012 and 2H2012 has been 

annualised for comparison purposes.

3 Source: Original data USA census.

The strategic acquisitions and

capital investment projects made

over the past two years place

Boral in a strong position once

markets recover.

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. FY 10 FY 09

121

FY 08

158

FY 07

166

FY 06

132

159

152152

151

136 20

52

14

81

87

40

114

99

118

FY 12

1H 122

2H 122

FY 11

Building Products

EBIT A$m

LONG TERM AVERAGE 

HOUSING STARTS

Australian housing 

starts (’000)

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. 685 592 570659

1,138

1,548

2,030

Boral USA

EBIT US$m

LONG TERM AVERAGE 

HOUSING STARTS

USA housing 

starts (’000)

(87)

(99)

(91)

(81)

(25)

75

139

FY 10FY 09FY 08FY 07FY 06FY 12FY 11

13
14 Boral Limited Annual Report 2012

Group 

Overview

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.

CONSTRUCTION MATERIALS

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.

CEMENT

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).

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.

Boral’s segment

reporting aligns

with Boral’s

new divisional

structure.

Concrete

Quarries

Asphalt

Other

Sales revenue ($m)

FY12 2,472

FY11 2,275

EBIT ($m)

FY12 174FY11 204

Sales revenue ($m)

FY12 430

FY11 442

EBIT1 ($m)

FY12 69FY11 87

Cement & Lime

Concrete and placing

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.

Share of external sales Share of external sales
15

BUILDING PRODUCTS

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.

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. Sales revenue ($m)

FY12 1,012FY11 1,197

EBIT1 ($m)

FY12 20FY11 81

Plasterboard

Clay and Concrete

Timber

Windows

USA

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.

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. Sales revenue ($m)

FY12 499

FY11 431

EBIT1 ($m)

FY12 –84

FY11 –99

Cladding

Roofing

Construction Materials and Fly Ash

Share of external sales Share of external sales Share of external sales

plasterboard asia

Core business

Boral Gypsum Asia (BGA) is the 

leading supplier of plasterboard and 

internal lining products across Asia, 

with manufacturing operations in 

eight countries.

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. Sales revenue1,2 ($m)

FY12 304FY112

EBIT1,2 ($m)

FY12 41FY11 17

Korea

Thailand

China

Indonesia

Other
16 Boral Limited Annual Report 2012

Construction Materials

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.

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.

At a glance

Revenue $2,472m

EBIT $174m

Employees 4,649

Capital expenditure1 $195m

Murray Read Divisional Managing Director

1 Excluding acquisitions.

Concrete

Quarries

Asphalt

Other

External revenue
17

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.
18 Boral Limited Annual Report 2012

Cement

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.

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.

At a glance

Revenue $430m

EBIT $69m

Employees 852

Capital expenditure $47m

Mike Beardsell Divisional Managing Director

Cement and Lime

Concrete Placing

External revenue

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.
19

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.
20 Boral Limited Annual Report 2012

Building Products

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.

Boral Building Products is a leading supplier

of plasterboard, bricks, roofing, hardwood

and softwood timber products, and

aluminium windows in Australia.

At a glance

Revenue $1,012m

EBIT $20m

Employees 2,654

Capital expenditure $105m

Bryan Tisher Divisional Managing Director

photo

Boral’s Escura bricks were used 

in the Australian Hearing Hub at 

Macquarie University in NSW.

Clay & Concrete

Plasterboard

Timber

Windows

External revenue

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.
21

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.
22 Boral Limited Annual Report 2012

USA

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.

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.

At a glance

Revenue $499m

EBIT ($84m)

Employees 2,336

Capital expenditure1 $31m

Mike Kane President, Boral Industries

photo

Boral’s cultured stone product is 

being used in both residential and 

commercial projects.

Cladding

Roofing

Construction Materials and Fly Ash

External revenue

1 Before acquisitions.
23

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.
24 Boral Limited Annual Report 2012

Plasterboard Asia

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.

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.

At a glance

Revenue $304m

EBIT $41m

Employees 2,405

Capital expenditure $20m

Frederic de Rougemont Chief Executive Officer, Boral Gypsum Asia

photo

Boral’s Dangjin plasterboard 

plant in Korea has been 

operating since 2002.

Korea

Thailand

China

Indonesia

Other

External revenue
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 postflood 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. 

25

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. 
26 Boral Limited Annual Report 2012

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.

Sustainability

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.
27

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.

At a glance 

FY2012 FY20111

GHG emissions (million T CO2

e) 

Australia 2.9 3.0

USA 0.2 0.2

Asia 0.4 0.41

Total	 3.5	 3.6

Mains water (million litres) 3,500 2,130

PINs

Number 7 5

Fines $10,750 $12,473 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.

Boral’s Australian GHG emissions

Calcination

Electricity

Coal

Natural gas

Diesel and liquid fuels

Other

39%

17%

18%

13%

9%

4%
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.

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.

Boral is making a valued and

sustainable contribution to

the communities in which it

operates through its community

partnership program.

Community partnerships
29

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. 

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. 

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.
30 Boral Limited Annual Report 2012

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 

FY2012 FY2011

FTE employees 14,740 15,227

JV employees ~890 ~4,900

FTE contractors ~6,300 ~5,600

Average length of service

Australia 8.1 years 8.6 years

USA 7.5 years 7.5 years

Asia 6.4 years 5.0 years

Women in Boral 14% 13%

Women in management 9% 10%

Women on the Board 25% 25%
31

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.

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.

Employee and contractor LTIFR LTIFR per million hours worked

FY10 13.5FY09 13

FY08FY07FY06FY05FY04FY03

FY12FY11 14.5

3.2 FY08

2.0 FY09

2.2 FY10

2.0 FY11

1.8 FY12

Mechanism of injury

Muscular stress 28%

22%

20%

14%

16%

Hit by moving objects

Hitting objects with part of the body

Falls

Other
32 Boral Limited Annual Report 2012

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.

Financial Review

Andrew Poulter Chief Financial Officer

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.
33

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.

Income Statement

For the year ended 30 June 2012 2011

$ million Group

Discontinued 

operations

Continuing

 operations Group

Discontinued 

operations

Continuing 

operations

Sales Revenue 5,010.3 294.1 4,716.2 4,710.5 364.8 4,345.7 

EBITDA1 473.0 12.0 461.0 522.2 19.4 502.8 

EBIT/(Loss)1 199.6 (1.3) 200.9 277.2 5.4 271.8 

Interest (88.4) (3.5) (84.9) (63.7) (4.0) (59.7) 

Income Tax Expense1 (8.9) 0.7 (9.6) (40.4) (0.4) (40.0) 

Non-Controlling Interests (1.1) (0.3) (0.8) 2.3 (0.6) 2.9 

Profit/(Loss) after tax1 101.2 (4.4) 105.6 175.4 0.4 175.0 

Net Significant Items 75.4 (28.7) 104.1 (7.7) (12.4) 4.7 

Net Profit/(Loss) after tax 176.6 (33.1) 209.7 167.7 (12.0) 179.7 

Earnings Per Share1

 (cents) 13.6 24.4

Earnings Per Share (cents) 23.8 23.3 

1. Excluding significant items.

Segment Earnings

$ million

Six mths

Dec 10

$m

Six mths

Jun 11

$m

FY2011

$m

Six mths

Dec 11

$m

Six mths

Jun 12

$m

FY2012

$m

Construction Materials 92.6 111.3 203.9 89.3 84.6 173.9

Cement Division 50.6 36.3 86.9 40.7 28.2 68.9

Building Products 52.9 28.5 81.4 26.2 (6.5) 19.7

Plasterboard Asia 9.3 7.6 16.9 12.4 28.5 40.9

United States of America (47.2) (51.8) (99.0) (51.5) (32.2) (83.7)

Unallocated (11.0) (7.3) (18.3) (12.4) (6.4) (18.8)

Continuing operations 147.2 124.6 271.8 104.7 96.2 200.9

Discontinued operations 2.0 3.4 5.4 3.9 (5.2) (1.3)

Group 149.2 128.0 277.2 108.6 91.0 199.6
34 Boral Limited Annual Report 2012

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.

Reconciliation of Underlying FY2012 Results to Reported Results

$ million EBIT Interest Tax

Noncontrolling

interests Profit after tax

Underlying results 199.6 (88.4) (8.9) (1.1) 101.2

Significant items

Gain on fair value of initial LBGA shareholding 158.1 158.1 

Acquisition and integration expenditure (28.8) (28.8) 

Restructure and reshaping in Australia (134.1) (134.1) 

Restructure and reshaping in USA (38.2) (38.2) 

Settlement of USA fly ash contractual obligation 6.0 6.0 

Remeasurement of Cultured Stone purchase price 26.4 26.4 

Gain on sale of Indonesian Construction Materials 34.2 34.2 

Tax 51.8 51.8 

Total significant items 23.6 51.8 75.4

Reported results 223.2 (88.4) 42.9 (1.1) 176.6

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.

Financial Review
A$m

100

200

300

400

500

FY20FY19FY18FY17FY16FY15FY14FY13

Senior notes

Bank debt

35

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.

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.

Debt maturity profile
36 Boral Limited Annual Report 2012

Board of Directors

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.

Together,

the Board

members have

a broad range

of financial and

other skills,

extensive

experience

and knowledge

necessary to

oversee Boral’s

business.
37

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.

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.

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.

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.
38 Boral Limited Annual Report 2012

Corporate Governance Statement

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;

•	 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. 
39

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:

Appointed

Last Elected at an 

Annual General Meeting

Richard Longes 2004 4 November 2010

Bob Every 2007 4 November 2010

Brian Clark 2007 3 November 2011

Paul Rayner 2008 3 November 2011 

John Marlay 2009 4 November 2010

Catherine Brenner 2010 4 November 2010

Eileen Doyle 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.
40 Boral Limited Annual Report 2012

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.

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.

Corporate Governance Statement
41

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.
42 Boral Limited Annual Report 2012

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;

•	 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 

Progress toward achieving these objectives is summarised in the following table: 

Measurable Objective Progress

Reporting Mechanisms 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.

Graduate Recruitment 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.

Leadership Programs 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.

Diversity-related KPIs 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.

Corporate Governance Statement
43

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 cosourced 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.
44 Boral Limited Annual Report 2012

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.

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.

Corporate Governance Statement
45

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.

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 nonexecutive 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. 
46 Boral Limited Annual Report 2012

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.

(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:

Total 

Dividend

$m 

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

51.1

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

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 
47

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)

(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

Exercise 

price

Balance at 

beginning 

of year

Options 

issued 

during 

the year

Options 

lapsed 

during

the year

Shares issued 

during the year 

as a result of 

exercise 

of options

Options at

end of year

Options

exerciseable

Number Number Number Number Number Number

29/10/2004 29/10/2011 $6.55 1,536,700 – 1,536,700 – – –

31/10/2005 31/10/2012 $7.65 2,552,700 – 73,400 – 2,479,300 –

06/11/2006 06/11/2013 $7.27 3,823,900 – 103,500 – 3,720,400 1,902,700 

06/11/2007 06/11/2014 $6.78 4,989,800 – 173,600 – 4,816,200 4,239,552

 12,903,100 – 1,887,200 – 11,015,900 6,142,252

The options referred to above were held by 112 individuals.
48 Boral Limited Annual Report 2012

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 15 15 5 5 1 1 – –

Brian Clark 15 15 – – 6 6 – –

Eileen Doyle 15 15 5 5 – – 4 4

Bob Every 15 15 – – 6 6 4 4

Richard Longes 15 13* 5 5 – – – –

John Marlay 15 15 – – 6 6 4 4

Mark Selway 13 13 – –

Paul Rayner 15 15 5 5 – – – –

* 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):

Shares

Non-executive 

Directors’ 

Share Plana Options 

Share 

Acquisition 

Rights (SARs)b

Catherine Brenner 5,195 – – –

Brian Clark 69,217 5,329 – –

Eileen Doyle 7,032 – – –

Bob Every 65,605 4,616 – –

Richard Longes 18,197 10,144 – –

John Marlay 4,969 – – –

Paul Rayner 27,399 1,790 – –

Mark Selway 11,290 – – 1,506,039c

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 – <Brian & Sandra S/F A/C> 

and 21,827 shares are held by MCG Wealth Management Australia Nominees Pty Limited – JBC Investment Holdings Pty Ltd 

<Clark Family A/C>;

•	 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 <Robsher Super Fund A/C>;

•	 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.
49

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

431,034 1 January 2017 

303,819 12 November 2017 

771,186 1 September 2018

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 nonaudit services provided during the year by KPMG totalled 

$937,000. These services consisted of:

Taxation compliance in Australia $86,000

Taxation compliance/due diligence related 

services in jurisdictions other than in 

Australia

$292,000

Australian due diligence and other services $559,000

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. 

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.

(19) Remuneration Report

The Remuneration Report is set out on pages 51 to 64 of the 

Annual Report and forms part of this Report.

(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.

Bob Every

Director

Paul Rayner

Director

Sydney, 11 September 2012
50 Boral Limited Annual Report 2012

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

Directors’ Report
51

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.

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. 
52 Boral Limited Annual Report 2012

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 Fixed STI LTIa Otherb Total

Ross Batstone 946.0 0.0 35.7 33.1 1,014.8

Mike Beardsell 673.9 0.0 7.0 30.1 711.0

Mike Kane 528.7 196.4 0.0 30.3 755.4

Andrew Poulter 781.2 0.0 0.0 12.7 793.9

Murray Read 742.5 0.0 15.3 10.9 768.7

Former Executive

Mark Selway 1,876.9 0.0 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.

2012 Remuneration Report
53

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 Director

Brian Clark Director

Eileen Doyle Director

Richard Longes Director

John Marlay Director

Paul Rayner Director

Senior executives (including the Chief Executive)

Mark Selway Chief Executive (July 2011 to May 

2012)

Ross Batstone Chief Executive (May 2012 to 

June 2012), previously Divisional 

Managing Director, Building 

Products

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

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.

Remuneration Report
54 Boral Limited Annual Report 2012

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.

Senior Executive Remuneration

Remuneration components

Boral’s remuneration strategy

Building something great – the strategic building blocks for growth

Short Term Incentive

• 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

Fixed Annual Remuneration

• 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

Long Term Incentive

• 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

• assess rewards against objective financial measures

• make short term and long term components of remuneration 

“at risk” based on performance

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

Laying the

foundations

Sector best

performance

Investing

for growth

Reinforcing

the core

1 2 3 4

Review and 

respond, creating 

a strong platform 

for growth

Realise Sector 

Best Performance 

and market leading 

returns

Expand and invest, 

through acquisition 

and innovation 

worldwide

Focus and improve 

assets where 

Boral can be 

market leader
55

Principles underpinning Boral’s remuneration strategy

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.

Executive remuneration structure

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:

Fixed At risk

FAR STI LTI

Chief Executive1, 2 50% 50% 0%

Senior executives3 50–54% 22–25% 24–26%

1 The Chief Executive has no long term component for FY2013 due to his 

anticipated retirement in July 2013.

2 The mix for M Selway was 33.3%, 33.3% and 33.3%.

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.
56 Boral Limited Annual Report 2012

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.

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.

Senior Executive Remuneration
57

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.
58 Boral Limited Annual Report 2012

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.

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).

Senior Executive Remuneration
59

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

BLD TSR ASX 100 Accumulation Index

TSR

– 0.5

0.0

0.5

1.0

1.5

2.0

2.5

Jun 02

Dec 02

Jun 03

Dec 03

Jun 04

Dec 04

Jun 05

Dec 05

Jun 06

Dec 06

Jun 07

Dec 07

Jun 08

Dec 08

Jun 09

Dec 09

Jun 10

Dec 10

Jun 11

Dec 11

Jun 12

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.

Company Performance and Remuneration Outcomes Earnings per share1 (cents)

FY10 22FY09 22FY08 41FY07 50FY06 62FY05 63FY04 64

FY03 49FY12 14FY11 24

earnings per share1 Ü 44%

Dividends per share (cents)

FY10 13.5FY09 13FY08 34FY07 34

FY06 34FY05 34FY04 30FY03 23

FY12 11FY11 14.5

dividends per share Ü 24%

Return on equity1 (percent)

FY10 5.0FY09 4.8FY08 8.5FY07 10.0

FY06 13.2FY05 15.4FY04 15.7FY03 13.2

FY12 3.0FY11 5.6

return on equity1 Ü 46%

1 Excludes financial impact of significant items.
60 Boral Limited Annual Report 2012

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 0.0 0 100 0.0 0 100

Mike Beardsell 0.0 0 100 143.8 28 72

Mike Kane 196.4 42 58 220.4 49 51

Andrew Poulter 0.0 0 100 34.1 5 95

Murray Read 0.0 0 100 145.8 23 77

Former Executive

Mark Selway 0.0 0 100 182.0 7 93

Total 196.4 726.1

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.

Company Performance and Remuneration Outcomes
61

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 Mix of options/rights

Relative TSR

performance Vesting level

Oct 04 Oct 11 $6.55 50% options 50% rights 52% 54%

Oct 05 Oct 12 $7.65 50% options 50% rights 38% 0%

Nov 06 Nov 13 $7.27 50% options 50% rights 50% 50%

Nov 07 Nov 14 $6.78 50% options 50% rights 68% 86%

Nov 08 Nov 15 N/A 100% rights 28% 0%

Nov 09 Nov 16 N/A 100% rights 1st test date Nov 2012 N/A

Nov 10 Nov 17 N/A 100% rights 1st test date Nov 2013 N/A

Sept 11 Sept 18 N/A 100% rights 1st test date Sept 2014 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:

Balance at 

1 July 2011

Granted 

during the 

year as

remunerationa

Value of

grantb

Exercised/ 

vested during 

the year

Value of 

options 

and rights 

exercised/ 

vestedd

Lapsed/ 

cancelled 

during the

yearc

Value of 

options 

and rights 

lapsed/ 

cancellede

Balance at

30 June

2012

Number Number $ Number $ Number $ Number

Executives

Ross Batstone Options 297,500 – – – – (56,800) 56,800 240,700

Rights 352,382 321,978 940,950 (8,218) 35,745 (7,000) 26,110 659,142

Mike Beardsell Options 113,100 – – – – (11,100) 11,100 102,000

Rights 182,746 129,280 305,100 (1,607) 6,990 (1,369) 5,106 309,050

Mike Kane Options – – – – – – – –

Rights 78,717 102,285 241,392 – – – – 181,002

Andrew Poulter Options – – – – – – – –

Rights 21,701 166,504 392,950 – – – – 188,205

Murray Read Options 123,200 – – – – (24,200) 24,200 99,000

Rights 202,935 158,263 373,500 (3,507) 15,254 (2,988) 11,145 354,703

Former Executive

Mark Selway Options – – – – – – – –

Rights 734,853 771,186 1,820,000 – – – – 1,506,039

a 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.

b 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.
62 Boral Limited Annual Report 2012

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:

Year of grant

2005 2006 2007 2008 2009 2010 2011

Balance at

30 June

2012

Executives

Ross Batstone Options 71,700 74,900 94,100 – – – – 240,700

Rights 18,849 10,232 3,427 74,624 82,463 147,569 321,978 659,142

Mike Beardsell Options 25,500 34,100 42,400 – – – – 102,000

Rights 6,714 4,655 1,545 29,654 38,530 98,672 129,280 309,050

Mike Kane Options – – – – – – – –

Rights – – – – – 78,717 102,285 181,002

Andrew Poulter Options – – – – – – – –

Rights – – – – – 21,701 166,504 188,205

Murray Read Options 27,300 29,300 42,400 – – – – 99,000

Rights 7,175 4,008 1,544 29,538 29,175 125,000 158,263 354,703

Former Executive

Mark Selway Options – – – – – – – –

Rights – – – – 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.

Company Performance and Remuneration Outcomes
63

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 

employmentTermination

benefit

Share-based 

paymentsa

Other 

long term Total

A$’000s

Cash

salary

Short Term 

Incentive

Nonmonetary

benefitsb 

Superannuation Options Rights

Executives

Ross Batstonec 2012 818.9 0.0 19.4 127.1 0.0 28.9 953.5d 13.7 1,961.5

Chief Executive 

(from 22 May 2012)

2011 729.3 0.0 19.0 120.7 0.0 48.5 224.8 12.1 1,154.4

Mike Beardsell 2012 658.1 0.0 19.1 15.8 0.0 13.1 173.9 11.0 891.0

Divisional Managing 

Director,

Boral Cement

2011 634.6 143.8 19.0 15.2 0.0 21.3 110.6 10.6 955.1

Mike Kane 2012 462.1 196.4 30.3 66.6 0.0 0.0 85.5 0.0 840.9

President, 

Boral Industries USA

2011 440.9 220.4 37.1 74.2 0.0 0.0 28.7 0.0 801.3

Andrew Poulter 2012 765.4 0.0 0.0 15.8 0.0 0.0 77.8 12.7 871.7

Chief Financial Officer 2011 741.0 34.1 0.0 15.2 0.0 0.0 7.9 12.4 810.6

Murray Read 2012 642.5 0.0 0.2 100.0 0.0 12.6 192.3 10.7 958.3

Divisional Managing 

Director,

Construction Materials

2011 625.2 145.8 0.0 94.8 0.0 20.2 111.4 10.4 1,007.8

Former Executive

Mark Selway 2012 1,861.1 0.0 11.3 15.8 1,888.3e 0.0 3,541.5f 31.0 7,349.0

Chief Executive 

(from 1 July 2011 

to 22 May 2012)

2011 1,793.1 182.0 0.0 15.2 0.0 0.0 460.8 29.9 2,481.0

Total 2012 5,208.1 196.4 80.3 341.1 1,888.3 54.6 5,024.5 79.1 12,872.4

Total 2011 4,964.1 726.1 75.1 335.3 0.0 90.0 944.2 75.4 7,210.2

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.

b Includes parking for Australian executives, vehicle and medical costs for USA executives.

c Ross Batstone was Divisional Managing Director of the Building Products Division before being appointed as Chief Executive Officer on 22 May 2012.

d Includes an expense for Mr Batstone for rights of $332,384 that would normally have been amortised over future years.

e 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.

f 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%.

Executive Remuneration Table
64 Boral Limited Annual Report 2012

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 Base remuneration Committee fees Total remuneration

Chairman $390,000 $0 $390,000

Committee Chairman $130,000 $28,540 $158,540

Director $130,000 $14,270 $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

2012 2011

A$’000s

Short term 

Board and 

Committee feesa

Post 

employment 

superannuation

Total 

remuneration

Short term 

Board and

Committee fees

Post

employment 

superannuation

Total 

remuneration

Directors

Catherine Brennerb 134.3 12.1 146.4 99.6 9.0 108.6

Brian Clark 140.8 12.7 153.5 131.4 11.8 143.2

Eileen Doyle 153.6 13.8 167.4 125.2 11.3 136.5

Robert Every, Chairman 366.0 15.8 381.8 336.6 15.2 351.8

Richard Longes 130.0 11.7 141.7 125.2 11.3 136.5

John Marlay 142.8 12.9 155.7 125.2 11.3 136.5

Paul Rayner 140.8 12.6 153.4 131.4 11.8 143.2

Total 1,208.3 91.6 1,299.9 1,074.6 81.7 1,156.3

a The Health, Safety and Environment Committee was constituted with effect from 1 July 2011.

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.

Non-executive Directors’ Remuneration
65

Financial Statements

Income Statement 66

Statement of Comprehensive Income 67

Balance Sheet 68

Statement of Changes in Equity 69

Cash Flow Statement 70

Notes to the Financial Statements

1 Significant accounting policies 71

2 Segments 77

3 Profit for the period 79

4 Significant items 81

5 Discontinued operations and assets held for sale 83

6 Income tax expense 85

7 Dividends 86

8 Earnings per share 87

9 Cash and cash equivalents 88

10 Receivables 88

11 Inventories 89

12 Investments accounted for using the equity method 90

13 Other financial assets 91

14 Property, plant and equipment 92

15 Intangible assets 94

16 Other assets 95

17 Payables 96

18 Loans and borrowings 96

19 Other financial liabilities 96

20 Current tax liabilities 96

21 Deferred tax assets and liabilities 97

22 Provisions 99

23 Issued capital 101

24 Reserves 102

25 Contingent liabilities 103

26 Commitments 104

27 Employee benefits 105

28 Loans and borrowings 110

29 Financial instruments 111

30 Key management personnel disclosures 119

31 Auditors’ remuneration 122

32 Acquisition/disposal of controlled entities 122

33 Controlled entities 127

34 Related party disclosures 130

35 Notes to cash flow statement 131

36 Parent entity disclosures 132

37 Deed of cross guarantee 133

Statutory Statements 135
66 Boral Limited Annual Report 2012

Income Statement

Boral Limited and Controlled Entities

CONSOLIDATED

For the year ended 30 June Note

2012

$ millions

2011 

$ millions

Continuing operations

Revenue 3 4,716.2 4,345.7 

Cost of sales (3,425.4) (3,063.8) 

Selling and distribution expenses (812.6) (770.6) 

Administrative expenses (331.0) (322.5) 

(4,569.0) (4,156.9) 

Other income 3 207.5 75.5 

Other expenses 3 (119.3) (60.6) 

Share of net profit of associates 12 30.8 42.0 

Profit before net financing costs and income tax expense 266.2 245.7 

Financial income 3 14.6 23.6 

Financial expenses 3 (99.5) (83.3) 

Net financing costs (84.9) (59.7) 

Profit before income tax expense 181.3 186.0 

Income tax benefit/(expense) 6 29.2 (9.2) 

Profit from continuing operations 210.5 176.8 

Discontinued operations

Loss from discontinued operations (net of income tax) 5 (32.8) (11.4) 

Net profit 177.7 165.4 

Attributable to:

Members of the parent entity 176.6 167.7 

Non-controlling interests 1.1 (2.3) 

Net profit 177.7 165.4 

Basic earnings per share 8 23.8c 23.3c

Diluted earnings per share 8 23.6c 23.2c

Continuing operations

Basic earnings per share 8 28.2c 25.0c

Diluted earnings per share 8 28.0c 24.9c

The income statement should be read in conjunction with the accompanying notes which form an integral part of the financial statements.
67

Statement of Comprehensive Income

Boral Limited and Controlled Entities

CONSOLIDATED

For the year ended 30 June Note

2012

$ millions

2011 

$ millions

Net profit 177.7 165.4 

Other comprehensive income

Actuarial gain/(loss) on defined benefit plans 27 (9.8) 2.8 

Net exchange differences from translation of foreign operations taken to equity (4.4) (31.1) 

Foreign currency translation reserve transferred to net profit on recognition 

of LBGA as a subsidiary 24 30.5 –

Foreign currency translation reserve transferred to net profit on disposal 

of controlled entities 24 18.6 –

Fair value adjustment on cash flow hedges 24 (4.2) 1.0 

Income tax relating to other comprehensive income 5.5 (29.7) 

Total comprehensive income 213.9 108.4 

Total comprehensive income is attributable to:

Members of the parent entity 210.7 113.7 

Non-controlling interests 3.2 (5.3) 

Total comprehensive income 213.9 108.4

The statement of comprehensive income should be read in conjunction with the accompanying notes which form an integral part of the financial statements.
68 Boral Limited Annual Report 2012

CONSOLIDATED

As at 30 June Note

2012

$ millions

2011 

$ millions

CURRENT ASSETS

Cash and cash equivalents 9 205.7 561.2 

Receivables 10 809.6 784.1 

Inventories 11 656.1 596.1 

Other financial assets 13 0.2 7.5 

Other 16 69.0 85.6 

Assets classified as held for sale 5 62.9 –

TOTAL CURRENT ASSETS 1,803.5 2,034.5 

NON-CURRENT ASSETS

Receivables 10 17.8 10.3 

Inventories 11 104.9 93.5 

Investments accounted for using the equity method 12 36.6 240.2 

Property, plant and equipment 14 3,566.7 2,894.9 

Intangible assets 15 820.1 255.9 

Deferred tax assets 21 101.2 88.2 

Other 16 48.3 50.5 

TOTAL NON-CURRENT ASSETS 4,695.6 3,633.5 

TOTAL ASSETS 6,499.1 5,668.0 

CURRENT LIABILITIES

Payables 17 732.2 702.8 

Loans and borrowings 18 148.3 163.4 

Other financial liabilities 19 7.1 7.5 

Current tax liabilities 20 22.8 123.8 

Provisions 22 187.8 218.6 

Liabilities classified as held for sale 5 44.6 –

TOTAL CURRENT LIABILITIES 1,142.8 1,216.1 

NON-CURRENT LIABILITIES

Payables 17 10.9 12.5 

Loans and borrowings 18 1,575.1 903.2 

Other financial liabilities 19 72.4 112.2 

Deferred tax liabilities 21 182.5 161.1 

Provisions 22 112.0 106.5 

TOTAL NON-CURRENT LIABILITIES 1,952.9 1,295.5 

TOTAL LIABILITIES 3,095.7 2,511.6 

NET ASSETS 3,403.4 3,156.4 

EQUITY

Issued capital 23 2,368.4 2,261.3 

Reserves 24 (109.2) (159.5) 

Retained earnings 1,069.9 1,007.0 

Total parent entity interest 3,329.1 3,108.8 

Non-controlling interests 74.3 47.6 

TOTAL EQUITY 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.

Balance Sheet

Boral Limited and Controlled Entities
69

Statement of Changes in Equity

Boral Limited and Controlled Entities

CONSOLIDATED

For the year ended 30 June 2012

Issued 

capital

$ millions

Reserves

$ millions

Retained 

earnings

$ millions

Total parent 

entity 

interest

$ millions

Noncontrolling 

interests

$ millions

Total equity

$ millions

Balance at 1 July 2011 2,261.3 (159.5) 1,007.0 3,108.8 47.6 3,156.4 

Net profit – – 176.6 176.6 1.1 177.7 

Other comprehensive income

 Translation of net assets of overseas controlled entities – (1.5) – (1.5) 2.1 0.6 

 Translation of long-term borrowings and foreign currency 

forward contracts – (5.0) – (5.0) – (5.0) 

 Foreign currency translation reserve transferred 

to net profit on recognition of LBGA as a subsidiary – 30.5 – 30.5 – 30.5 

 Foreign currency translation reserve transferred 

to net profit on disposal of controlled entities – 18.6 – 18.6 – 18.6 

 Fair value adjustment on cash flow hedges – (4.2) – (4.2) – (4.2) 

 Actuarial gain/(loss) on defined benefit plans – – (9.8) (9.8) – (9.8) 

 Income tax relating to other comprehensive income – 2.5 3.0 5.5 – 5.5 

Total comprehensive income – 40.9 169.8 210.7 3.2 213.9 

Transactions with owners in their capacity as owners

 Shares issued under the Dividend Reinvestment Plan 106.9 – – 106.9 – 106.9 

 Shares issued on vesting of rights 0.2 (0.2) – – – –

 Dividends paid – – (106.9) (106.9) (1.0) (107.9) 

 Purchase of employee compensation shares – (1.0) – (1.0) – (1.0) 

 Share-based payments – 10.6 – 10.6 – 10.6 

 Non-controlling interest acquired – – – – 22.8 22.8 

 Purchase of non-controlling interest – – – – (0.8) (0.8) 

 Non-controlling interest disposed – – – – (2.9) (2.9) 

 Contributions by non-controlling interests – – – – 5.4 5.4 

Total transactions with owners in their capacity as owners 107.1 9.4 (106.9) 9.6 23.5 33.1 

Balance at 30 June 2012 2,368.4 (109.2) 1,069.9 3,329.1 74.3 3,403.4 

CONSOLIDATED

For the year ended 30 June 2011

Issued 

capital

$ millions

Reserves

$ millions

Retained 

earnings

$ millions

Total parent 

entity 

interest

$ millions

Noncontrolling 

interests

$ millions

Total equity

$ millions

Balance at 1 July 2010 1,724.0 (38.9) 938.4 2,623.5 2.6 2,626.1 

Net profit/(loss) – – 167.7 167.7 (2.3) 165.4 

Other comprehensive income

 Translation of net assets of overseas controlled entities – (123.0) – (123.0) (3.0) (126.0) 

 Translation of long-term borrowings and foreign currency 

forward contracts – 94.9 – 94.9 – 94.9 

 Fair value adjustment on cash flow hedges – 1.0 – 1.0 – 1.0 

 Actuarial gain/(loss) on defined benefit plans – – 2.8 2.8 – 2.8 

 Income tax relating to other comprehensive income – (28.8) (0.9) (29.7) – (29.7) 

Total comprehensive income – (55.9) 169.6 113.7 (5.3) 108.4 

Transactions with owners in their capacity as owners

 Shares issued under the Dividend Reinvestment Plan 53.1 – – 53.1 – 53.1 

 Shares issued on vesting of rights 0.8 (0.8) – – – –

 Dividends paid – – (101.0) (101.0) – (101.0) 

 Shares issued under capital raising net of costs 479.8 – – 479.8 – 479.8 

 Purchase of employee compensation shares – (3.4) – (3.4) – (3.4) 

 Other – Cultured Stone (note 24) – (66.3) – (66.3) – (66.3) 

 Share-based payments – 5.8 – 5.8 – 5.8 

 Income tax benefit on capital raising 3.6 – – 3.6 – 3.6 

 Non-controlling interest acquired – – – – 44.3 44.3 

 Contributions by non-controlling interests – – – – 6.0 6.0 

Total transactions with owners in their capacity as owners 537.3 (64.7) (101.0) 371.6 50.3 421.9 

Balance at 30 June 2011 2,261.3 (159.5) 1,007.0 3,108.8 47.6 3,156.4

The statement of changes in equity 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

For the year ended 30 June Note

2012

$ millions

2011 

$ millions

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers 5,426.0 5,084.3 

Payments to suppliers and employees (5,069.4) (4,669.6) 

 356.6 414.7 

Dividends received 22.1 27.7 

Interest received 15.1 41.1 

Borrowing costs paid (99.7) (84.7) 

Income taxes paid (69.7) (21.5) 

Acquisition costs, restructure costs and legal settlements paid 35 (91.1) (26.6) 

NET CASH PROVIDED BY OPERATING ACTIVITIES 35 133.3 350.7 

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (408.8) (345.0) 

Purchase of intangibles (5.6) (0.8) 

Purchase of controlled entities and businesses (net of cash acquired) 32 (700.5) (146.0) 

Purchase of non-controlling interest (0.8) –

Loans to associates 0.4 3.2 

Insurance proceeds applied to asset disposal – 33.4 

Proceeds on disposal of non-current assets 64.3 25.4 

Proceeds on disposals of controlled entities and businesses 5 65.3 48.1 

NET CASH USED IN INVESTING ACTIVITIES (985.7) (381.7) 

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of shares 52.1 –

Proceeds from capital raising – 479.8 

Purchase of employee compensation shares (1.0) (3.4) 

Dividends paid (net of dividends reinvested under the Dividend Reinvestment Plan 

of $54.8 million (2011: $53.1 million)) (52.1) (47.9) 

Dividends paid to non-controlling interests (1.0) –

Contributions by non-controlling interests 5.4 6.0 

Proceeds from borrowings 630.9 146.3 

Repayment of borrowings (162.2) (136.6) 

NET CASH PROVIDED BY FINANCING ACTIVITIES 472.1 444.2 

NET CHANGE IN CASH AND CASH EQUIVALENTS (380.3) 413.2 

Cash and cash equivalents at the beginning of the year 561.2 157.0 

Effects of exchange rate fluctuations on the balances of cash and cash equivalents 

held in foreign currencies 0.6 (9.0) 

Cash and cash equivalents at the end of the year 35 181.5 561.2

The cash flow statement 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
71

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.
72 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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.

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.
73

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 firstin-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.
74 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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.

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.
75

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:

2012 2011

Buildings 1–10% 1–10%

Timber licences and mineral 

reserves 1–5% 1–5%

Plant and equipment 5–33.3% 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 
76 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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.

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.
77

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* – Asian plasterboard (Boral Gypsum Asia). 

United States of America – Bricks, roof tiles, fly ash, concrete, quarries, masonry and cultured stone.

Discontinued Operations – 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.

CONSOLIDATED

2012 

$ millions

2011 

$ millions

Reconciliations of reportable segment revenues and profits

External revenue 5,010.3 4,710.5 

Less revenue from discontinued operations (294.1) (364.8) 

Revenue from continuing operations 4,716.2 4,345.7 

Profit before tax

Profit before net financing costs and income tax expense from reportable segments 223.2 234.4 

Adjusted for:

(Profit)/loss from discontinued operations 1.3 (5.4) 

Significant items applicable to discontinued operations 41.7 16.7 

Profit before net financing costs and income tax expense from continuing operations 266.2 245.7 

Net financing costs – continuing operations (84.9) (59.7) 

Profit before tax from continuing operations 181.3 186.0 
78 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

2. Segments (continued)

TOTAL REVENUE INTERNAL REVENUE EXTERNAL REVENUE

2012 

$ millions

2011 

$ millions

2012 

$ millions

2011 

$ millions

2012 

$ millions

2011 

$ millions

Boral Construction Materials 2,620.2 2,420.2 148.3 144.8 2,471.9 2,275.4 

Cement Division 628.4 634.9 198.6 192.7 429.8 442.2 

Boral Building Products 1,015.0 1,200.9 2.8 4.0 1,012.2 1,196.9 

Plasterboard Asia 303.6 – – – 303.6 –

United States of America 499.4 431.2 0.7 – 498.7 431.2 

Discontinued Operations 295.7 369.2 1.6 4.4 294.1 364.8 

 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

Boral Construction Materials 172.6 201.0 1.3 2.9 173.9 203.9 

Cement Division 57.5 73.6 11.4 13.3 68.9 86.9 

Boral Building Products 11.0 71.5 8.7 9.9 19.7 81.4 

Plasterboard Asia 30.8 – 10.1 16.9 40.9 16.9 

United States of America (83.0) (98.0) (0.7) (1.0) (83.7) (99.0) 

Discontinued Operations (1.3) 5.4 – – (1.3) 5.4 

Unallocated (18.8) (18.3) – – (18.8) (18.3) 

 168.8 235.2 30.8 42.0 199.6 277.2 

Significant items (refer to note 4) 23.6 (42.8) – – 23.6 (42.8) 

 192.4 192.4 30.8 42.0 223.2 234.4

 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

Boral Construction Materials 2,170.1 1,800.0 0.8 0.8 2,170.9 1,800.8 

Cement Division 643.2 716.0 19.4 20.5 662.6 736.5 

Boral Building Products 1,264.9 1,220.8 12.7 13.0 1,277.6 1,233.8 

Plasterboard Asia 1,147.3 – – 201.8 1,147.3 201.8 

United States of America 829.1 828.8 3.7 4.1 832.8 832.9 

Discontinued Operations 62.9 189.3 – – 62.9 189.3 

Unallocated 38.1 23.5 – – 38.1 23.5 

 6,155.6 4,778.4 36.6 240.2 6,192.2 5,018.6 

Cash and cash equivalents 205.7 561.2 – – 205.7 561.2 

Tax assets 101.2 88.2 – – 101.2 88.2 

 6,462.5 5,427.8 36.6 240.2 6,499.1 5,668.0
79

2. Segments (continued)

 LIABILITIES 

 ACQUISITION OF 

SEGMENT ASSETS* 

 DEPRECIATION AND 

AMORTISATION 

2012 

$ millions

2011 

$ millions

2012 

$ millions

2011 

$ millions

2012 

$ millions

2011 

$ millions

Boral Construction Materials 414.4 416.7 194.9 160.0 105.0 90.4 

Cement Division 92.4 103.4 46.6 44.3 49.0 47.3 

Boral Building Products 202.7 212.5 105.3 73.5 51.7 50.5 

Plasterboard Asia 109.1 – 19.9 – 11.3 –

United States of America 117.4 139.4 30.8 43.3 42.4 41.9 

Discontinued Operations 44.6 58.6 11.0 23.8 13.3 14.0 

Unallocated 186.4 229.5 5.9 0.9 0.7 0.9 

 1,167.0 1,160.1 414.4 345.8 273.4 245.0 

Loans and borrowings 1,723.4 1,066.6 – – – –

Tax liabilities 205.3 284.9 – – – –

 3,095.7 2,511.6 414.4 345.8 273.4 245.0

* 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

CONSOLIDATED

For the year ended 30 June Note

2012 

$ millions

2011 

$ millions

REVENUE FROM CONTINUING OPERATIONS

Sale of goods 4,627.6 4,282.8 

Rendering of services 88.6 62.9 

Revenue from continuing operations 4,716.2 4,345.7 

OTHER INCOME FROM CONTINUING OPERATIONS

Significant items 4 184.5 33.4 

Net profit on sale of assets 15.0 25.8 

Other income 8.0 16.3 

Other income from continuing operations 207.5 75.5 

OTHER EXPENSES FROM CONTINUING OPERATIONS

Significant items 4 119.2 59.5 

Net foreign exchange loss 0.1 1.1 

Other expenses from continuing operations 119.3 60.6 

DEPRECIATION AND AMORTISATION EXPENSES

Land and buildings 18.2 18.4 

Plant and equipment 250.2 223.2 

Timber licences and mineral reserves 1.6 1.5 

Other intangibles 3.4 1.9 

 273.4 245.0 

Less depreciation and amortisation expenses from discontinued operations (13.3) (14.0) 

 260.1 231.0
80 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

3. Profit for the period (continued)

CONSOLIDATED

For the year ended 30 June

2012 

$ millions

2011 

$ millions

NET FINANCING COSTS

Interest income received or receivable from:

Associated entities 0.6 0.9 

Other parties (cash at bank and bank short-term deposits) 14.0 22.7 

 14.6 23.6 

Interest expense paid or payable to:

Other parties (bank overdrafts, bank loans and other loans)* 95.9 79.2 

Unwinding of discount 3.6 4.1 

 99.5 83.3 

Net financing costs from continuing operations (84.9) (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* 1,091.7 1,056.1 

Operating lease rental charges 119.6 118.4 

Bad and doubtful debts expense 4.7 8.3

* Employee benefits expense includes salaries and wages, defined benefit and defined contribution expenses together with share-based payments and 

other entitlements.
81

4. Significant items

Net profit includes the following items whose disclosure is relevant in explaining the financial performance of the Group:

CONSOLIDATED

For the year ended 30 June Note

2012 

$ millions

2011 

$ millions

Continuing operations

Gain on fair value remeasurement of initial LBGA shareholding (i) 158.1 –

Gain on fair value of purchase price commitment for Cultured Stone (ii) 26.4 –

Closure of plywood operations

 Net insurance proceeds – 33.4 

 Impairment of assets – (9.6) 

 Closure costs – (4.2) 

Excess of insurance proceeds over asset carrying values – 19.6 

Acquisition and integration costs (iii) (28.8) (9.3) 

Impairment of assets, businesses and restructuring costs

 Goodwill (20.0) –

 Property, plant and equipment (38.7) (28.9) 

 Inventory (11.6) (1.2) 

 Restructure and closure costs (23.8) (6.3) 

(iv) (94.1) (36.4) 

Loss on sale of Best Block business – USA (2.3) –

Resolution of onerous fly ash contract – USA 6.0 –

Summary of significant items from continuing operations

Profit/(loss) before tax 65.3 (26.1) 

Income tax benefit 38.8 12.8 

Income tax benefit – amended returns – 18.0 

Net significant items from continuing operations 104.1 4.7 

Discontinued operations

Gain on disposal of Indonesian Construction Materials businesses 34.2 –

Profit on sale of Masonry North Queensland business 3.4 –

Impairment of assets, businesses and restructuring costs

 Property, plant and equipment (37.2) (9.9) 

 Inventory (15.0) (2.4) 

 Restructure and closure costs (27.1) (4.4) 

(v) (79.3) (16.7) 

Summary of significant items from discontinued operations

Loss before tax (41.7) (16.7) 

Income tax benefit 13.0 4.3 

Net significant items from discontinued operations (28.7) (12.4) 

Summary of significant items 

Profit/(loss) before tax 23.6 (42.8) 

Income tax benefit 51.8 17.1 

Income tax benefit – amended returns – 18.0 

Net significant items 75.4 (7.7) 
82 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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

CONSOLIDATED

2012

$ millions

2011

$ millions

Boral Construction Materials – (4.6) 

Cement Division (37.0) –

Boral Building Products (13.8) (3.9) 

Plasterboard Asia 158.1 –

United States of America (5.8) (8.3) 

Discontinued Operations (41.7) (16.7) 

Unallocated (36.2) (9.3) 

 23.6 (42.8) 
83

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.

CONSOLIDATED

Note

2012 

$ millions

2011 

$ millions

Results of discontinued operations

Revenue 294.1 364.8 

Expenses (295.4) (363.3) 

(1.3) 1.5 

Impairment of assets, businesses and restructuring costs 4 (79.3) (16.7) 

Gain on sale of discontinued operations 4 37.6 3.9 

Profit/(loss) before net financing costs and income tax expense (43.0) (11.3) 

Net financing costs (3.5) (4.0) 

Profit/(loss) before income tax expense (46.5) (15.3) 

Income tax (expense)/benefit 6 13.7 3.9 

Net profit/(loss) (32.8) (11.4) 

Attributable to:

Members of the parent entity (33.1) (12.0) 

Non-controlling interest 0.3 0.6 

Net profit/(loss) (32.8) (11.4) 

Basic and diluted earnings/(loss) per share (4.4c) (1.6c)

Cash flows from/(used in) discontinued operations

Net cash from/(used in) operating activities 12.5 16.4 

Net cash from/(used in) investing activities 54.1 24.8 

Net cash from/(used in) discontinued operations 66.6 41.2 

Assets and liabilities classified as held for sale

Property, plant and equipment 15.1 –

Intangible assets 0.9 –

Inventories 11.2 –

Trade and other receivables 32.3 –

Other assets 3.4 –

Assets classified as held for sale 62.9 –

Payables 18.8 –

Provisions 25.8 –

Liabilities classified as held for sale 44.6 –

Net assets 18.3 –
84 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

5. Discontinued operations and assets held for sale (continued)

CONSOLIDATED

2012 

$ millions

2011 

$ millions

Effect of disposal on the financial position of the Group

Consideration 97.2 48.1 

Property, plant and equipment (35.3) (33.6) 

Intangible assets – (8.2) 

Inventories (7.6) (7.6) 

Trade and other receivables (20.2) (12.5) 

Other assets (10.8) (0.4) 

Deferred taxes (0.9) (0.2) 

Payables 17.5 12.4 

Provisions 13.4 5.9 

Net assets disposed (43.9) (44.2) 

Foreign currency translation reserve transferred to net profit on disposal of controlled entities (18.6) –

Non-controlling interest 2.9 –

Gain on disposal of discontinued operations before income tax expense 37.6 3.9 

Consideration 97.2 48.1 

Less: Deferred consideration to be received (31.9) –

Consideration (net of disposal costs) 65.3 48.1 
85

6. Income tax expense

CONSOLIDATED

For the year ended 30 June Note

2012 

$ millions

2011 

$ millions

(i) Income tax expense

Current income tax expense/(benefit) (31.7) 49.5 

Deferred income tax expense/(benefit) (3.8) (40.6) 

Over provision for tax in previous years (7.4) (3.6) 

Income tax expense/(benefit) attributable to profit (42.9) 5.3 

(ii)Reconciliation of income tax expense to prima facie tax

Income tax expense/(benefit) on profit:

– at Australian tax rate 30% (2011: 30%) 40.4 51.2 

– adjustment for difference between Australian and overseas tax rates (9.3) (11.7) 

Income tax expense/(benefit) on pre-tax profit at standard rates 31.1 39.5 

Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:

Tax losses not recognised 2.7 1.0 

Non-deductible depreciation and amortisation 1.5 2.1 

Capital gains/(losses) brought to account (5.8) (5.2) 

Non-assessable fair value gains (56.6) –

Share of associates’ net profit and franked dividends (excluding significant items) (9.2) (12.7) 

Other items 0.8 2.2 

Income tax benefit – amended returns 4 – (18.0) 

Income tax expense/(benefit) on profit (35.5) 8.9 

Over provision for tax in previous years (7.4) (3.6) 

Income tax expense/(benefit) attributable to profit (42.9) 5.3 

Income tax expense/(benefit) from continuing operations

Income tax expense/(benefit) excluding significant items 9.6 40.0 

Income tax expense/(benefit) relating to significant items 4 (38.8) (30.8) 

(29.2) 9.2 

Income tax expense/(benefit) from discontinued operations

Income tax expense/(benefit) excluding significant items (0.7) 0.4 

Income tax expense/(benefit) relating to significant items 4 (13.0) (4.3) 

5 (13.7) (3.9) 

(42.9) 5.3 

(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 (3.0) 0.9 

Net exchange differences taken to equity (1.5) 28.5 

Fair value adjustment on cash flow hedges (1.0) 0.3 

Recognised in comprehensive income (5.5) 29.7 

Share issue expenses – (3.6) 

Recognised directly in equity (5.5) 26.1
86 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

7. Dividends

Dividends recognised by the Group are:

Amount per 

share

Total amount

$ millions

Franked 

amount

per share Date of payment

2012

2011 final – ordinary 7.0 cents 51.1 7.0 cents 27 September 2011

2012 interim – ordinary 7.5 cents 55.8 7.5 cents 5 April 2012

Total 106.9 

2011

2010 final – ordinary 6.5 cents 46.7 6.5 cents 28 September 2010

2011 interim – ordinary 7.5 cents 54.3 7.5 cents 24 March 2011

Total 101.0 

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.
87

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.

CONSOLIDATED

2012

$ millions

2011

$ millions

Earnings reconciliation

Net profit before significant items and non-controlling interests 102.3 173.1 

Loss/(profit) attributable to non-controlling interests (1.1) 2.3 

Net profit excluding significant items 101.2 175.4 

Net significant items 75.4 (7.7) 

Net profit attributable to members of the parent entity 176.6 167.7 

Earnings reconciliation – continuing operations

Net profit before significant items and non-controlling interests 106.4 172.1 

Loss/(profit) attributable to non-controlling interests (0.8) 2.9 

Net profit excluding significant items 105.6 175.0 

Net significant items 104.1 4.7 

Net profit attributable to members of the parent entity – continuing operations 209.7 179.7

CONSOLIDATED

2012 2011

Weighted average number of ordinary shares used as the denominator

Number for basic earnings per share 743,487,487 718,726,833

Effect of potential ordinary shares 6,101,791 4,069,322

Number for diluted earnings per share 749,589,278 722,796,155

Basic earnings per share 23.8c 23.3c

Diluted earnings per share 23.6c 23.2c

Basic earnings per share (excluding significant items) 13.6c 24.4c

Diluted earnings per share (excluding significant items) 13.5c 24.3c

Basic earnings per share (continuing operations) 28.2c 25.0c

Diluted earnings per share (continuing operations) 28.0c 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.
88 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

9. Cash and cash equivalents

CONSOLIDATED

2012

$ millions

2011

$ millions

Cash at bank and on hand 106.9 127.0 

Bank short-term deposits 98.8 434.2 

 205.7 561.2 

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

CONSOLIDATED

2012

$ millions

2011

$ millions

Current

Trade receivables 706.1 720.5 

Associated entities 19.5 27.6 

 725.6 748.1 

Less: Allowance for impairment (12.8) (18.9) 

 712.8 729.2 

Other receivables 100.2 58.4 

Less: Allowance for impairment (3.4) (3.5) 

 96.8 54.9 

 809.6 784.1 

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 73.3 98.4 

Trade receivables – past due > 60 days 5.0 13.9 

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 (18.9) (23.5) 

Amounts written off during the year 7.9 10.1 

Increase recognised in income statement (4.7) (8.3) 

Acquisitions of entities or operations (3.5) –

Disposals of entities or operations 2.7 –

Transferred to assets held for sale 4.0 –

Net foreign currency exchange differences (0.3) 2.8 

Balance at the end of the year (12.8) (18.9) 

Non-current

Loans to associated entities 8.3 0.6 

Other receivables 9.5 9.7 

 17.8 10.3 

No amounts owing by associates or included in other receivables were past due as at 30 June 2012.
89

11. Inventories

CONSOLIDATED

2012

$ millions

2011

$ millions

Current

Raw materials and consumable stores 186.5 176.8 

Work in progress 62.3 57.6 

Finished goods 390.3 346.3 

Land development projects 17.0 15.4 

 656.1 596.1 

Non-current

Land development projects 104.9 93.5 

Land development projects comprises:

Cost of acquisition 21.6 23.4 

Development costs capitalised 100.3 85.5 

 121.9 108.9
90 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

12. Investments accounted for using the equity method

CONSOLIDATED

OWNERSHIP

INTEREST

INVESTMENT

CARRYING AMOUNT

Name

Principal

activity

Country of

incorporation

Balance

date

2012

%

2011

%

2012 

$ millions

2011 

$ millions

Details of investments in associates

Bitumen Importers Australia Pty Ltd Bitumen importer Australia 30-Jun 50 50 – –

Caribbean Roof Tile Company Limited Roof tiles Trinidad 31-Dec 50 50 3.7 4.1 

Flyash Australia Pty Ltd Fly ash collection Australia 31-Dec 50 50 2.9 2.6 

Gypsum Resources Australia Pty Ltd Gypsum mining Australia 30-Jun 50 50 – –

Highland Pine Products Pty Ltd Timber Australia 30-Jun 50 50 – –

Lafarge Boral Gypsum in Asia Sdn Bhd* Plasterboard Malaysia 31-Dec – 50 – 201.8 

Penrith Lakes Development Corporation Ltd Quarrying Australia 30-Jun 40 40 – –

Rondo Building Services Pty Ltd Rollform systems Australia 30-Jun 50 50 12.7 13.0 

South East Asphalt Pty Ltd Asphalt Australia 30-Jun 50 50 0.8 0.8 

Sunstate Cement Ltd Cement manufacturer Australia 30-Jun 50 50 16.5 17.9 

US Tile LLC Roof tiles USA 31-Dec 50 50 – –

TOTAL 36.6 240.2 

* Lafarge Boral Gypsum in Asia Sdn Bhd became a controlled entity during the year.

CONSOLIDATED

2012

$ millions

2011

$ millions

Movements in carrying value of associates

Balance at the beginning of the year 240.2 294.1 

Associates becoming controlled entities during the year (209.9) (36.2) 

Share of associates’ net profit 30.8 42.0 

Dividends from associates (22.1) (27.7) 

Results from associates recognised against non-current receivables/provisions (0.6) (2.9) 

Share of associates’ movement in currency reserve (13.4) 18.0 

Effect of exchange rate and other changes 11.6 (47.1) 

Balance at the end of the year 36.6 240.2

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.
91

12. Investments accounted for using the equity method (continued)

CONSOLIDATED

2012

$ millions

2011

$ millions

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 301.2 429.4

Share of associates’ profit before income tax expense 44.1 60.3 

Share of associates’ income tax expense (12.4) (15.8) 

Share of associates’ non-controlling interest (0.9) (2.5) 

Share of associates’ net profit – equity accounted 30.8 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 55.3 158.6

Non-current assets 89.1 333.1

Total assets 144.4 491.7

Current liabilities 47.2 109.6

Non-current liabilities 60.6 141.9

Total liabilities 107.8 251.5

Net assets 36.6 240.2

Share of associates’ commitments

Share of associates’ capital expenditure commitments contracted but not provided for:

Not later than one year 0.1 1.3

Share of associates’ operating lease commitments payable:

Not later than one year 3.7 3.8

Later than one year but not later than five years 9.4 9.6

Later than five years 4.5 6.8

 17.6 20.2

13. Other financial assets

CONSOLIDATED

2012

$ millions

2011

$ millions

Current

Derivative financial assets 0.2 7.5
92 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

14. Property, plant and equipment

CONSOLIDATED

2012

$ millions

2011

$ millions

Land and buildings

At cost 1,377.5 1,170.8 

Less: Accumulated depreciation, amortisation and impairment (146.3) (134.9) 

 1,231.2 1,035.9 

Timber licences and mineral reserves

At cost 150.3 93.7 

Less: Accumulated amortisation and impairment (14.6) (19.3) 

 135.7 74.4 

Plant and equipment

At cost 4,607.9 4,258.5 

Less: Accumulated depreciation and impairment (2,408.2) (2,475.3) 

 2,199.7 1,783.2 

Leased plant and equipment capitalised 0.5 1.6 

Less: Accumulated amortisation (0.4) (0.2) 

 0.1 1.4 

 2,199.8 1,784.6 

Total 3,566.7 2,894.9 

Reconciliations

Land and buildings

Balance at the beginning of the year 1,035.9 1,009.9 

Additions 4.3 20.4 

Disposals (11.1) (9.6) 

Acquisitions of entities or operations 202.8 70.9 

Disposals of entities or operations (0.3) –

Transferred from other property, plant and equipment 43.6 33.8 

Impairment disclosed as significant items (27.3) (16.7) 

Transferred to assets held for sale (9.9) –

Transfer (to)/from other assets or liabilities – (1.2) 

Depreciation expense (18.2) (18.4) 

Net foreign currency exchange differences 11.4 (53.2) 

Balance at the end of the year 1,231.2 1,035.9 

Timber licences and mineral reserves

Balance at the beginning of the year 74.4 81.0 

Disposals (6.2) –

Acquisitions of entities or operations 67.6 –

Transferred from other property, plant and equipment 0.4 –

Amortisation expense (1.6) (1.5) 

Net foreign currency exchange differences 1.1 (5.1) 

Balance at the end of the year 135.7 74.4 
93

14. Property, plant and equipment (continued)

CONSOLIDATED

2012

$ millions

2011

$ millions

Plant and equipment

Balance at the beginning of the year 1,784.6 1,694.2 

Additions 404.5 324.6 

Disposals (31.7) (9.4) 

Acquisitions of entities or operations 410.1 137.6 

Disposals of entities or operations (35.0) –

Transferred to other property, plant and equipment (44.0) (33.8) 

Impairment disclosed as significant items (48.6) (31.7) 

Transferred to assets held for sale (5.2) –

Transfer (to)/from other assets or liabilities 0.8 1.0 

Depreciation expense (250.2) (223.2) 

Net foreign currency exchange differences 14.5 (74.7) 

Balance at the end of the year 2,199.8 1,784.6
94 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

15. Intangible assets

CONSOLIDATED

2012

$ millions

2011

$ millions

Goodwill 797.3 243.7 

Other intangible assets 54.6 40.8 

Less: Accumulated amortisation (31.8) (28.6) 

 820.1 255.9 

Reconciliation of movements in goodwill

Balance at the beginning of the year 243.7 275.0 

Acquisitions of entities or operations 572.3 1.8 

Impairment disclosed as significant items (20.0) –

Goodwill disposed (4.1) –

Net foreign currency exchange differences 5.4 (33.1) 

Balance at the end of the year 797.3 243.7

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

CONSOLIDATED

2012

$ millions

2011

$ millions

Boral Construction Materials 67.9 67.9 

Cement Division 2.3 2.3 

Boral Building Products 45.2 45.2 

Plasterboard Asia 571.2 –

United States of America 110.7 128.3 

 797.3 243.7
95

15. Intangible assets (continued)

CONSOLIDATED

2012

$ millions

2011

$ millions

Reconciliation of movements in other intangible assets

Balance at the beginning of the year 12.2 2.6 

Additions 5.6 0.8 

Acquisitions of entities or operations 6.6 11.4 

Amortisation expense (3.4) (1.9) 

Transferred to assets held for sale (0.9) –

Transfer from other assets 1.0 –

Net foreign currency exchange differences 1.7 (0.7) 

Balance at the end of the year 22.8 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

CONSOLIDATED

2012

$ millions

2011

$ millions

Current

Deferred expenses 116.7 145.0 

Less: Accumulated amortisation (84.7) (106.4) 

 32.0 38.6 

Deposits and prepayments 37.0 47.0 

 69.0 85.6 

Non-current

Deferred expenses 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%.
96 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

17. Payables

CONSOLIDATED

2012

$ millions

2011

$ millions

Current

Trade creditors 726.6 697.8 

Due to associated entities 5.6 5.0 

 732.2 702.8 

Non-current

Deferred income 10.9 12.5 

18. Loans and borrowings

Current

Bank overdrafts – unsecured 24.2 –

Bank loans – unsecured 120.6 16.4 

Other loans – unsecured 3.2 146.8 

Finance lease liabilities 0.3 0.2 

 148.3 163.4 

Non-current

Bank loans – unsecured 668.5 49.2 

Other loans – unsecured 906.0 854.0 

Finance lease liabilities 0.6 –

 1,575.1 903.2 

For more information about the Group’s financing arrangements, refer to note 28.

19. Other financial liabilities

Current

Derivative financial liabilities 7.1 7.5 

Non-current

Derivative financial liabilities 29.6 48.3 

Future purchase liability – Cultured Stone 42.8 63.9 

 72.4 112.2 

20. Current tax liabilities

Current

Current tax liability 22.8 123.8
97

21. Deferred tax assets and liabilities

CONSOLIDATED

2012

$ millions

2011

$ millions

Recognised deferred tax balances

Deferred tax asset 101.2 88.2 

Deferred tax liability (182.5) (161.1) 

(81.3) (72.9) 

Unrecognised deferred tax assets

Deferred tax assets not recognised:

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:

CONSOLIDATED

Tax jurisdiction Expiry date

2012

$ millions

2011 

$ millions

Australia* No restriction 32.5 53.9 

China 31 Dec 2012–31 Dec 2016 11.1 –

Germany No restriction 44.8 50.0 

India 31 Mar 2012–31 Mar 2019 11.5 –

Singapore No restriction – 1.8 

Thailand 30 Jun 2013–30 Jun 2017 4.3 18.0 

United Kingdom* No restriction 35.8 34.9 

United States of America* 30 Jun 2016 6.3 6.0 

United States of America 30 Jun 2029–30 Jun 2032 133.4 –

Vietnam 31 Dec 2012–31 Dec 2014 2.1 –

* Unbooked capital losses.
98 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

21. Deferred tax assets and liabilities (continued)

Movement in temporary differences during the year

CONSOLIDATED

As at 30 June 2012

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

Receivables 5.8 (0.5) – 0.1 5.4 

Inventories (32.6) 4.6 – – (28.0) 

Property, plant and equipment (144.9) 11.7 – (24.2) (157.4) 

Intangible assets (21.8) 8.6 – (1.1) (14.3) 

Payables 5.4 (1.5) – – 3.9 

Loans and borrowings 0.2 (0.5) 1.0 (0.5) 0.2 

Provisions 108.1 (13.4) – 0.3 95.0 

Other (22.3) (4.6) 3.0 (0.2) (24.1) 

Unrealised foreign exchange (107.1) (5.2) 1.5 (0.4) (111.2) 

Tax losses carried forward 136.3 4.6 – 8.3 149.2 

(72.9) 3.8 5.5 (17.7) (81.3)

CONSOLIDATED

As at 30 June 2011

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

Receivables 7.1 (1.0) – (0.3) 5.8 

Inventories (32.3) (0.3) – – (32.6) 

Property, plant and equipment (162.3) (1.9) – 19.3 (144.9) 

Intangible assets (21.4) (5.1) – 4.7 (21.8) 

Payables 8.0 (2.4) – (0.2) 5.4 

Loans and borrowings 1.0 (0.5) (0.3) – 0.2 

Provisions 117.3 (2.8) – (6.4) 108.1 

Other (17.2) (3.4) 2.7 (4.4) (22.3) 

Unrealised foreign exchange (74.8) (3.7) (28.5) (0.1) (107.1) 

Tax losses carried forward 99.0 61.7 – (24.4) 136.3 

(75.6) 40.6 (26.1) (11.8) (72.9)
99

22. Provisions

CONSOLIDATED

2012

$ millions

2011

$ millions

Current

Employee benefits 137.7 153.4 

Rationalisation and restructuring 7.7 9.0 

Claims 9.4 7.9 

Restoration and environmental rehabilitation 23.3 33.2 

Other 9.7 15.1 

 187.8 218.6 

Non-current

Employee benefits 38.5 20.4 

Claims 3.7 3.7 

Restoration and environmental rehabilitation 44.3 40.8 

Other 25.5 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

CONSOLIDATED

2012

$ millions

2011

$ millions

Rationalisation and restructuring – current

Balance at the beginning of the year 9.0 14.1 

Provisions made during the year 9.2 5.4 

Transfer to liabilities held for sale (4.2) –

Payments made during the year (6.3) (10.5) 

Balance at the end of the year 7.7 9.0 
100 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

22. Provisions (continued)

CONSOLIDATED

2012

$ millions

2011

$ millions

Reconciliations (continued)

Claims – current

Balance at the beginning of the year 7.9 5.0 

Provisions made during the year 2.3 5.2 

Remeasurement of provision – 0.2 

Increase through acquisition of entity – 0.5 

Payments made during the year (0.9) (2.6) 

Net foreign currency exchange differences 0.1 (0.4) 

Balance at the end of the year 9.4 7.9 

Claims – non-current

Balance at the beginning of the year 3.7 2.4 

Provisions made/(released) during the year – 0.1 

Increase through acquisition of entity – 1.5 

Net foreign currency exchange differences – (0.3) 

Balance at the end of the year 3.7 3.7 

Restoration and environmental rehabilitation – current

Balance at the beginning of the year 33.2 34.9 

Provisions made during the year 4.0 7.8 

Transfer to liabilities held for sale (3.3) –

Payments made during the year (10.6) (8.7) 

Net foreign currency exchange differences – (0.8) 

Balance at the end of the year 23.3 33.2 

Restoration and environmental rehabilitation – non-current

Balance at the beginning of the year 40.8 33.6 

Provisions made during the year 2.1 5.7 

Unwind of discount 1.4 1.5 

Balance at the end of the year 44.3 40.8 

Other – current

Balance at the beginning of the year 15.1 15.9 

Provisions made during the year 18.7 3.3 

Transfer to liabilities held for sale (13.7) –

Payments made during the year (22.3) (10.1) 

Transfer from non-current provisions 11.5 8.9 

Net foreign currency exchange differences 0.4 (2.9) 

Balance at the end of the year 9.7 15.1 

Other – non-current

Balance at the beginning of the year 41.6 44.7 

Provisions (released)/made during the year (5.3) 11.0 

Unwind of discount – 1.5 

Payments made during the year (0.4) (0.2) 

Transfer to current provisions (11.5) (8.9) 

Transferred (to)/from investments accounted for using the equity method 0.4 (2.6) 

Net foreign currency exchange differences 0.7 (3.9) 

Balance at the end of the year 25.5 41.6
101

23. Issued capital

CONSOLIDATED

2012

$ millions

2011

$ millions

Issued and paid up capital

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 2,261.3 1,724.0 

14,626,401 (2011: 10,899,457) shares issued under the Dividend Reinvestment Plan 54.8 53.1 

13,971,102 (2011: Nil) shares issued under the Dividend Reinvestment Plan underwriting agreement 52.1 –

48,647 (2011: 172,916) shares issued on vesting of rights 0.2 0.8 

Nil (2011: 119,900,619) shares issued under capital raising net of costs – 479.8 

Income tax benefit on capital raising – 3.6 

Balance at the end of the year 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 1.0 3.4 

228,625 (2011: 670,873) shares purchased on-market (1.0) (3.4) 

Balance at the end of the year – –

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.
102 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

24. Reserves

CONSOLIDATED

2012

$ millions

2011

$ millions

Foreign currency translation reserve (87.5) (131.6) 

Hedging reserve – cash flow hedges (3.6) (0.4) 

Other reserve (66.3) (66.3) 

Share-based payments reserve 48.2 38.8 

(109.2) (159.5) 

Reconciliations

Foreign currency translation reserve

Balance at the beginning of the year (131.6) (75.0) 

Net loss on translation of assets and liabilities of overseas entities (1.5) (123.0) 

Foreign currency translation reserve transferred to net profit on recognition of LBGA as a subsidiary 30.5 –

Foreign currency translation reserve transferred to net profit on disposal of controlled entities 18.6 –

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)) (3.5) 66.4 

Balance at the end of the year (87.5) (131.6) 

Hedging reserve

Balance at the beginning of the year (0.4) (1.1) 

Transferred to the income statement 1.2 0.2 

Transferred to initial carrying amount of hedged item 0.1 2.8 

Gains/(losses) taken directly to equity (5.5) (2.0) 

Tax benefit/(expense) 1.0 (0.3) 

Balance at the end of the year (3.6) (0.4) 

Other reserve

Balance at the beginning of the year (66.3) –

Cultured Stone acquisition – (66.3) 

Balance at the end of the year (66.3) (66.3) 

Share-based payments reserve

Balance at the beginning of the year 38.8 37.2 

Option/rights expense 10.6 5.8 

Purchase of employee compensation shares (1.0) (3.4) 

Transfer to share capital on vesting of rights (0.2) (0.8) 

Balance at the end of the year 48.2 38.8 

Nature and purpose of reserves

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.
103

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.

CONSOLIDATED

2012

$ millions

2011

$ millions

Unsecured contingent liabilities:

Bank guarantees 5.6 3.9 

Other items 1.6 1.6 

 7.2 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.
104 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

26. Commitments

CONSOLIDATED

2012

$ millions

2011

$ millions

Capital expenditure commitments

Contracted but not provided for are payable as follows:

Not later than one year 129.1 32.6 

Later than one year but not later than five years 26.7 –

 155.8 32.6 

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 0.3 0.2 

Later than one year but not later than five years 0.7 –

 1.0 0.2 

Less: Future finance charges and executory costs (0.1) –

 0.9 0.2 

Operating leases

Lease commitments in respect of operating leases are payable as follows:

Not later than one year 91.9 83.2 

Later than one year but not later than five years 187.8 168.2 

Later than five years 55.4 30.5 

 335.1 281.9

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.
105

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

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

Consolidated – 2012

(xiv) 29/10/2004 29/10/2011 $6.55 1,536,700 – (1,536,700) – – –

(xv) 31/10/2005 31/10/2012 $7.65 2,552,700 – (73,400) – 2,479,300 –

(xvi) 6/11/2006 6/11/2013 $7.27 3,823,900 – (103,500) – 3,720,400 1,902,700 

(xvii) 6/11/2007 6/11/2014 $6.78 4,989,800 – (173,600) – 4,816,200 4,239,552 

 12,903,100 – (1,887,200) – 11,015,900 6,142,252 

Consolidated – 2011

(xiii) 29/10/2003 29/10/2010 $5.52 2,269,010 – (2,269,010) – – –

(xiv) 29/10/2004 29/10/2011 $6.55 1,742,200 – (205,500) – 1,536,700 –

(xv) 31/10/2005 31/10/2012 $7.65 2,905,600 – (352,900) – 2,552,700 –

(xvi) 6/11/2006 6/11/2013 $7.27 4,229,100 – (405,200) – 3,823,900 1,911,950 

(xvii) 6/11/2007 6/11/2014 $6.78 5,538,100 – (548,300) – 4,989,800 4,291,228 

 16,684,010 – (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.
106 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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:

2012 2011

Grant date share price $3.70 $4.30

Risk-free rate 4.01–4.28% 5.26%

Dividend yield 4.39% 3.67%

Volatility factor 30% 30%

Set out below are summaries of share acquisition rights granted under the plans.

Tranche Grant date Expiry date

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

Consolidated – 2012

(i) 29/10/2004 29/10/2011 $0.00 438,121 – (160,849) (277,272) – –

(ii) 31/10/2005 31/10/2012 $0.00 671,039 – (19,295) – 651,744 –

(iii) 6/11/2006 6/11/2013 $0.00 237,776 – (14,151) – 223,625 –

(iv) 6/11/2007 6/11/2014 $0.00 83,594 – (6,317) – 77,277 –

(v) 3/11/2008 3/11/2015 $0.00 1,586,280 – (112,269) – 1,474,011 –

(vi) 5/11/2009 5/11/2016 $0.00 2,176,056 – (102,022) – 2,074,034 –

(vii) 12/11/2010 12/11/2017 $0.00 2,994,226 – (152,450) – 2,841,776 –

(viii) 1/9/2011 1/9/2018 $0.00 – 4,680,635 (158,485) – 4,522,150 –

(ix) 1/9/2011 31/12/2012* $0.00 – 135,135 – – 135,135 –

 8,187,092 4,815,770 (725,838) (277,272) 11,999,752 –

Consolidated – 2011

(i) 29/10/2004 29/10/2011 $0.00 493,201 – (55,080) – 438,121 –

(ii) 31/10/2005 31/10/2012 $0.00 763,765 – (92,726) – 671,039 –

(iii) 6/11/2006 6/11/2013 $0.00 586,277 – (87,725) (260,776) 237,776 –

(iv) 6/11/2007 6/11/2014 $0.00 739,734 – (73,127) (583,013) 83,594 –

(v) 3/11/2008 3/11/2015 $0.00 2,058,591 – (472,311) – 1,586,280 –

(vi) 5/11/2009 5/11/2016 $0.00 2,679,078 – (503,022) – 2,176,056 –

(vii) 12/11/2010 12/11/2017 $0.00 – 2,994,226 – – 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.
107

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:

CONSOLIDATED

2012

$ millions

2011

$ millions

Net liability for defined benefit obligation at the beginning of the year (7.3) (13.4) 

Expense recognised in the income statement (4.7) (2.6) 

Actuarial gains/(losses) recognised in retained earnings (9.8) 2.8 

Employer contributions 4.7 5.5 

Net foreign currency exchange differences (0.1) 0.4 

Net liability for defined benefit obligation at the end of the year (17.2) (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.
108 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

27. Employee benefits (continued)

Superannuation (continued)

CONSOLIDATED

2012

$ millions

2011

$ millions

Reconciliation of the net asset recognised in the balance sheet

Defined benefit obligation (76.6) (73.0) 

Fair value of plan assets 59.4 65.7 

Net liability (17.2) (7.3) 

Movements in the present value of the defined benefit obligation

Balance at the beginning of the year 73.0 82.5 

Current service cost 5.0 3.9 

Interest cost 2.6 3.0 

Contributions by plan participants 0.2 0.3 

Actuarial (gains)/losses 8.8 (0.7) 

Benefits paid (13.6) (13.2) 

Net foreign currency exchange differences 0.6 (2.8) 

Balance at the end of the year 76.6 73.0 

Movements in the fair value of plan assets

Balance at the beginning of the year 65.7 69.1 

Expected return on plan assets 2.9 4.3 

Actuarial gains/(losses) (1.0) 2.1 

Employer contributions 4.7 5.5 

Contributions by plan participants 0.2 0.3 

Benefits paid (13.6) (13.2) 

Net foreign currency exchange differences 0.5 (2.4) 

Balance at the end of the year 59.4 65.7 

Expense recognised in the income statement

Current service cost 5.0 3.9 

Interest cost 2.6 3.0 

Expected return on plan assets (2.9) (4.3) 

Defined benefit superannuation expense 4.7 2.6 

Cumulative amounts recognised in equity before tax

Balance at beginning of the year (22.1) (26.4) 

Actuarial gains/(losses) (9.8) 2.8 

Net foreign currency exchange differences (0.3) 1.5 

Cumulative actuarial losses (32.2) (22.1) 

Actual return on plan assets 1.9 6.4
109

27. Employee benefits (continued)

Superannuation (continued)

Plan assets

The percentage invested in each class of the plan assets was:

BORAL SUPER

SUB-PLAN

BORAL INDUSTRIES

INC. PLAN

2012 2011 2012 2011

Equity securities – 66.7% 10.9% 62.4%

Debt securities 100.0% 29.1% 89.1% 37.6%

Property securities – 4.2% – –

Other securities – – – –

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.

BORAL SUPER

SUB-PLAN

BORAL INDUSTRIES

INC. PLAN

2012 2011 2012 2011

Principal actuarial assumptions at the balance sheet date

Discount rate 2.7% 4.3% 5.3% 5.3%

Expected rate of return on plan assets 2.7% 4.5% 6.0% 7.5%

Expected salary increase rate 4.0% 4.0% 3.0% 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

CONSOLIDATED

2012

$ millions

2011

$ millions

2010

$ millions

2009

$ millions

2008

$ millions

Present value of defined benefit obligation (76.6) (73.0) (82.5) (83.8) (79.1) 

Fair value of plan assets 59.4 65.7 69.1 67.3 81.3 

Net asset/(liability) (17.2) (7.3) (13.4) (16.5) 2.2 

Experience adjustments on plan assets – gain/(loss) (1.0) 2.1 4.4 (20.4) (12.0) 

Experience adjustments on plan liabilities – gain/(loss) (8.8) 0.7 (6.0) (2.2) (0.4)
110 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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

Currency

Effective 

interest rate 

2012

Calendar year 

of maturity

Carrying 

amount

$ millions

Fair value

$ millions

Carrying 

amount

$ millions

Fair value

$ millions

Current

Bank overdrafts – BGA* – 

unsecured Multi 6.13% 2012–2013 24.2 24.2 – –

US senior notes – unsecured USD 6.35% 2012 2.8 2.8 146.4 149.5 

Bank loans – unsecured USD 1.44% 2012 9.8 9.8 9.3 9.3 

Bank loans – unsecured THB 5.25% 2012 50.1 50.1 7.1 7.1 

Bank loans – BGA* – unsecured Multi 3.94% 2012–2013 60.7 60.7 – –

Other loans – unsecured1 AUD – 2013 0.4 0.4 0.4 0.4 

Finance lease liabilities Multi 8.75% 2012–2013 0.3 0.3 0.2 0.2 

 148.3 148.3 163.4 166.5 

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 USD 2.39% 2015 150.0 150.0 – –

Syndicated loan facility – 

unsecured AUD 5.51% 2015 461.3 461.3 – –

Bank loans – unsecured THB – – – – 49.2 49.3 

Bank loans – BGA* – unsecured Multi 6.24% 2013–2016 57.2 57.4 – –

Other loans – unsecured1 AUD – 2014 0.3 0.3 0.7 0.7 

Finance lease liabilities Multi 9.04% 2013–2017 0.6 0.6 – –

 1,575.1 1,673.1 903.2 966.2 

Total 1,723.4 1,821.4 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

Notional 

amount

US$ millions Issue date Interest rate Maturity date

AUD equivalent

$ millions

Boral USA 52.0 05/2002 7.01% 05/2014 51.1 

Boral USA 200.0 05/2005 5.42% 05/2015 196.6 

Boral USA 53.5 05/2002 7.11% 05/2017 52.6 

Boral USA 30.0 04/2008 7.12% 04/2018 29.5 

Boral USA 76.2 04/2008 7.22% 04/2020 74.9 

Boral Limited 200.0 05/2005 5.52% 05/2017 229.2 

Boral Limited 276.0 04/2008 7.12% 04/2018 274.6 

Total 887.7 908.5

BANK FACILITIES

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.
111

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.
112 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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:

CONSOLIDATED

Carrying 

amount

2012

$ millions

Fair value

2012

$ millions

Carrying 

amount

2011

$ millions

Fair value

2011

$ millions

Loans to and receivables from associates 27.8 27.8 28.2 28.2 

Trade and other receivables 799.6 799.6 766.2 766.2 

Cash and cash equivalents 205.7 205.7 561.2 561.2 

 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:

CONSOLIDATED

30 June 2012

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

Derivative financial assets

Foreign exchange contracts 

designated as cash flow hedges 0.2 0.2 0.2 0.2 – – – –

 0.2 0.2 0.2 0.2 – – – –

CONSOLIDATED

30 June 2011

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

Derivative financial assets

Commodity swaps/options 

designated as cash flow hedges 3.2 3.2 3.2 2.4 0.8 – – –

Interest rate swaps designated as 

fair value hedges 4.3 4.3 4.5 2.1 2.4 – – –

 7.5 7.5 7.7 4.5 3.2 – – –
113

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

30 June 2012

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

Non-derivative financial liabilities

US senior notes – unsecured 908.5 (1,156.3) (27.9) (27.9) (106.7) (580.5) (413.3) 

Bank overdrafts – unsecured 24.2 (25.0) (5.0) (20.0) – – –

Bank loans – unsecured 789.1 (889.7) (89.0) (65.9) (48.3) (686.5) –

Other loans – unsecured 0.7 (0.7) (0.2) (0.2) (0.3) – –

Finance lease liabilities 0.9 (1.0) (0.2) (0.1) (0.2) (0.5) –

Future purchase liability – Cultured Stone 42.8 (44.2) – – (44.2) – –

Trade and other payables 732.2 (732.2) (732.2) – – – –

Derivative financial liabilities

Foreign exchange contracts designated 

as cash flow hedges 1.3 (1.3) (1.1) (0.2) – – –

Commodity swaps designated as 

cash flow hedges 7.2 (7.4) (4.1) (2.2) (1.1) – –

Cross currency swaps designated as 

cash flow hedges 3.2 (3.6) (0.3) (0.4) (0.8) (2.1) –

Cross currency swaps designated as 

fair value hedges 23.3 (36.0) 0.5 1.3 2.7 (40.5) –

Interest rate swaps designated as cash 

flow hedges 1.7 (1.7) (0.2) (0.4) (0.7) (0.4) –

 2,535.1 (2,899.1) (859.7) (116.0) (199.6) (1,310.5) (413.3)

CONSOLIDATED

30 June 2011

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

Non-derivative financial liabilities

US senior notes – unsecured 999.7 (1,301.3) (31.3) (173.5) (52.7) (376.4) (667.4) 

Bank loans – unsecured 65.6 (67.6) (10.7) (8.2) (48.7) – –

Other loans – unsecured 1.1 (1.1) (0.2) (0.2) (0.4) (0.3) –

Finance lease liabilities 0.2 (0.2) (0.1) (0.1) – – –

Future purchase liability – Cultured Stone 63.9 (69.5) – – – (69.5) –

Trade and other payables 702.8 (702.8) (702.8) – – – –

Derivative financial liabilities

Foreign exchange contracts designated 

as cash flow hedges 3.6 (3.6) (3.0) (0.5) (0.1) – –

Commodity swaps designated as 

cash flow hedges 0.1 (0.1) (0.2) – 0.1 – –

Cross currency swaps designated as 

cash flow hedges 3.9 (4.4) (0.3) (0.4) (0.8) (2.2) (0.7) 

Cross currency swaps designated as 

fair value hedges 48.0 (64.8) (1.3) (1.5) (3.0) (18.1) (40.9) 

Interest rate swaps not designated as hedges 

for accounting purposes 0.2 (0.2) (0.2) – – – –

 1,889.1 (2,215.6) (750.1) (184.4) (105.6) (466.5) (709.0)
114 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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:

CONSOLIDATED

USD Euro GBP NZD THB Multi*

Currency Equivalent to A$ millions

30 June 2012

Balance sheet

 Net investment in overseas domiciled 

Boral subsidiaries 391.1 1.6 (1.7) 1.6 (17.3) 940.0 

Forward exchange contracts 9.8 – – – – –

Foreign currency borrowings (650.3) – – – – –

Cross currency swaps 253.8 – – – – –

 4.4 1.6 (1.7) 1.6 (17.3) 940.0 

* Exposure relates to net assets of BGA, which are denominated in multiple currencies.

CONSOLIDATED

USD Euro GBP NZD THB IDR

Currency Equivalent to A$ millions

30 June 2011

Balance sheet

 Net investment in overseas domiciled 

Boral subsidiaries 162.4 2.1 (1.6) 2.8 (23.3) 58.1 

Forward exchange contracts 76.4 – – – – –

Foreign currency borrowings (466.1) – – – – –

Cross currency swaps 232.1 – – – – –

 4.8 2.1 (1.6) 2.8 (23.3) 58.1 
115

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 14.6 56.5 0.9968 1.0003

One year to two years – 1.5 – 0.9469

Sell US dollars/buy Australian dollars

One year or less 21.2 – 1.0348 –

Buy US dollars/sell MYR

One year or less 5.9 – – –

Euros

Buy Euros/sell Australian dollars

One year or less 6.4 7.2 0.7434 0.6802

Buy Euros/sell US dollars

One year or less – 0.9 – –

JPY

Buy JPY/sell Australian dollars

One year or less 1.1 – 81.9100 –

THB

Sell US dollars/buy THB

One year or less 7.4 – – –

Sell SGD/buy THB

One year or less 1.2 – – –

KRW

Buy US dollars/sell KRW

One year or less 6.7 – – –

Sell US dollars/buy KRW

One year or less 10.0 – – –

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:

 Average rate Reporting date spot rate

2012 2011 2012 2011

USD 1.0347 1.0002 1.0175 1.0728 

Euro 0.7742 0.7272 0.8075 0.7404 

GBP 0.6529 0.6276 0.6496 0.6667 

NZD 1.2752 1.3064 1.2739 1.2953 

THB 31.9775 30.3567 32.3460 32.9900 

IDR 9,286 8,776 9,481 9,219
116 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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:

CONSOLIDATED

2012

Carrying 

amount

$ millions

2011

Carrying 

amount

$ millions

Fixed rate instruments

US senior notes – unsecured1 908.5 999.7 

Other loans – unsecured 0.7 1.1 

Finance lease liabilities 0.9 0.2 

 910.1 1,001.0 

Variable rate instruments

Bank overdrafts – unsecured 24.2 –

Bank loans – unsecured2 671.2 65.6 

Bank loans – BGA – unsecured3 117.9 –

 813.3 65.6 

 1,723.4 1,066.6

1 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.

2 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.

3 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 0.7 –

 Pay fixed against US$ LIBOR 1.0 0.2 

 1.7 0.2 

Pay variable interest rate derivatives

 Pay floating against US$ LIBOR – (4.3) 

 Cross currency swap pay floating US$ LIBOR 26.5 51.9 

 26.5 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.
117

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:

2012

% pa

2011

% pa

Derivatives 0.47–5.22 0.25–5.69

Interest bearing loans and borrowings 0.00–12.70 0.00–7.22

Finance leases 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:

CONSOLIDATED

2012

$ millions

2011

$ millions

Singapore gasoil 0.5% 68.7 33.6 

Natural gas (NYMEX) – 0.9 

Aluminium – LME – 2.8 

Details of balance sheet carrying value/fair value of instruments hedging commodities price risk:

Assets

Commodity swaps/options designated as cash flow hedges – 3.2 

Liabilities

Commodity swaps designated as cash flow hedges (7.2) (0.1) 

(7.2) 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).
118 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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:

Level 1 Level 2 Level 3 Total 

30 June 2012 $ millions $ millions $ millions $ millions

Assets

Derivatives used for hedging – 0.2 – 0.2 

Total assets – 0.2 – 0.2 

Liabilities

Derivatives used for hedging – 36.7 – 36.7 

Total liabilities – 36.7 – 36.7

Level 1 Level 2 Level 3 Total

30 June 2011 $ millions $ millions $ millions $ millions

Assets

Derivatives used for hedging – 7.5 – 7.5 

Total assets – 7.5 – 7.5 

Liabilities

Derivatives at fair value through profit or loss – 0.2 – 0.2 

Derivatives used for hedging – 55.6 – 55.6 

Total liabilities – 55.8 – 55.8
119

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 Non-Executive Director

Eileen Doyle Non-Executive Director 

Robert Every Chairman and Non-Executive Director

Richard Longes Non-Executive Director

John Marlay Non-Executive Director 

Paul Rayner 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* Chief Executive (appointed 22 May 2012)

Mike Beardsell Divisional Managing Director – Boral Cement 

Mike Kane President and CEO Boral USA 

Andrew Poulter Chief Financial Officer 

Murray Read 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:

CONSOLIDATED

2012

$’000

2011

$’000

Short-term employee benefits 6,693.1 6,883.6 

Post-employment benefits 432.7 420.9 

Termination benefits 1,888.3 –

Share-based payments 5,079.1 1,034.2 

Long-term employee benefits 79.1 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.
120 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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:

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

Former Director

Mark Selwaya 2012 – – – – – –

2011 – – – – – –

Current Executives

Ross Batstone 2012 297,500 – – (56,800) 240,700 118,376

2011 351,470 – – (53,970) 297,500 118,376 

Mike Beardsell 2012 113,100 – – (11,100) 102,000 53,514

2011 131,500 – – (18,400) 113,100 53,514 

Mike Kane 2012 – – – – – –

2011 – – – – – –

Andrew Poulter 2012 – – – – – –

2011 – – – – – –

Murray Read 2012 123,200 – – (24,200) 99,000 51,114

2011 146,400 – – (23,200) 123,200 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 2012 734,853 771,186 – – 1,506,039 –

2011 431,034 303,819 – – 734,853 –

Current Executives

Ross Batstone 2012 352,382 321,978 (8,218) (7,000) 659,142 –

2011 236,100 147,569 (31,287) – 352,382 –

Mike Beardsell 2012 182,746 129,280 (1,607) (1,369) 309,050 –

2011 98,218 98,672 (14,144) – 182,746 –

Mike Kane 2012 78,717 102,285 – – 181,002 –

2011 – 78,717 – – 78,717 –

Andrew Poulter 2012 21,701 166,504 – – 188,205 –

2011 – 21,701 – – 21,701 –

Murray Read 2012 202,935 158,263 (3,507) (2,988) 354,703 –

2011 91,430 125,000 (13,495) – 202,935 –

a Final rights holding at the date of ceasing to be a Director.
121

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:

Balance at 

the beginning 

of the year

Received 

during the year 

on the exercise 

of options/ 

SARs

Allocation in

Non-Executive

Directors’ Share

Plana

Other changes 

during the year

Balance at the 

end of the year

Number Number Number Number Number

Current Directors

Catherine Brenner 2012 5,000 – – 195 5,195 

2011 – – – 5,000 5,000 

Brian Clark 2012 71,937 – – 2,609 74,546 

2011 64,621 – – 7,316 71,937 

Eileen Doyle 2012 1,234 – – 48 1,282 

2011 1,000 – – 234 1,234 

Robert Every 2012 70,221 – – – 70,221 

2011 41,851 – – 28,370 70,221 

Richard Longes 2012 27,725 – – 616 28,341 

2011 22,735 – – 4,990 27,725 

John Marlay 2012 4,781 – – 188 4,969 

2011 2,000 – – 2,781 4,781 

Paul Rayner 2012 28,156 – – 1,033 29,189 

2011 10,345 – – 17,811 28,156 

Former Director

Mark Selwayb 2012 21,864 – – (10,574) 11,290 

2011 8,800 – – 13,064 21,864

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.

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

Current Executives

Ross Batstone 2012 705,677 8,218 – 713,895 

2011 561,991 31,287 112,399 705,677 

Mike Beardsell 2012 86,966 1,607 – 88,573 

2011 60,685 14,144 12,137 86,966 

Mike Kane 2012 – – – –

2011 – – – –

Andrew Poulter 2012 10,000 – 186 10,186 

2011 – – 10,000 10,000 

Murray Read 2012 231,289 3,507 (20,000) 214,796 

2011 181,495 13,495 36,299 231,289
122 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

31. Auditors’ remuneration

CONSOLIDATED

2012

$’000

2011

$’000

Audit services:

KPMG Australia – audit and review of financial reports 1,431 1,428 

KPMG Overseas firms – audit and review of financial reports 539 445 

KPMG Australia – other assurance services 103 90 

Other auditors – audit and review of financial reports 649 –

 2,722 1,963 

Other services: 

KPMG Australia – taxation services 86 115 

KPMG Australia – due diligence 513 530 

KPMG Australia – advisory 35 –

KPMG Australia – other 11 8 

KPMG Overseas firms – due diligence 130 1,127 

KPMG Overseas firms – taxation services 162 95 

 937 1,875 

 3,659 3,838

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

CONSOLIDATED

2012

$ millions

Lafarge Boral Gypsum in Asia Sdn Bhd 531.4 

Wagners – concrete and quarry 166.2 

Sunshine Coast quarries 83.0 

Less: Net cash acquired (62.8) 

Less: Cash paid – deposit in prior year (17.3) 

Total purchase consideration 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.
123

32. Acquisition/disposal of controlled entities (continued)

(i) Lafarge Boral Gypsum in Asia Sdn Bhd acquisition (continued)

$ millions

Fair value of equity accounted investment as at acquisition date 398.6 

Less:

Carrying value of equity accounted investment as at acquisition date (210.0) 

Translation reserve on equity accounted investment as at acquisition date (30.5) 

Gain on remeasurement to fair value 158.1

The acquisition had the following effect on the Group’s assets and liabilities:

$ millions

Purchase consideration

Cash paid – purchase price 531.4 

Equity accounted investment at fair value 398.6 

Non-controlling interest 22.8 

Less: Fair value of net identifiable assets acquired (380.5) 

Goodwill on acquisition 572.3

Assets and liabilities acquired are as follows:

 Acquiree’s 

carrying 

amount

$ millions

Fair value

$ millions 

CURRENT ASSETS

Cash and cash equivalents 93.6 93.6 

Receivables 67.9 67.9 

Inventories 42.4 42.4 

Other assets 2.2 2.2 

NON-CURRENT ASSETS

Receivables 4.4 4.4 

Property, plant and equipment 387.1 436.2 

Intangible assets 1.3 6.6 

Deferred tax assets 2.1 2.1 

Other 0.4 0.4 

CURRENT LIABILITIES

Bank overdraft (30.8) (30.8) 

Payables (96.5) (96.4) 

Loans and borrowings (15.5) (15.5) 

Current tax liabilities (5.0) (5.0) 

Provisions (6.0) (6.0) 

NON-CURRENT LIABILITIES

Loans and borrowings (86.9) (86.9) 

Deferred tax liabilities (10.4) (26.7) 

Provisions (7.1) (7.1) 

Other (0.9) (0.9) 

Net identifiable assets acquired 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.
124 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

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:

$ millions

Purchase consideration

Cash paid – deposit in prior year 17.3 

Cash paid – in current period 148.9 

Total purchase consideration 166.2 

Fair value of net identifiable assets acquired

Inventories 4.1 

Property, plant and equipment 162.5 

Other assets 0.3 

Provisions (0.7) 

Total fair value of net identifiable assets acquired 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:

$ millions

Purchase consideration

Cash paid – purchase price 83.0 

Total purchase consideration 83.0 

Fair value of net identifiable assets acquired

Inventories 1.4 

Property, plant and equipment 81.8 

Other liabilities (0.1) 

Provisions (0.1) 

Total fair value of net identifiable assets acquired 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.
125

32. Acquisition/disposal of controlled entities (continued)

Entities disposed

Date of 

disposal

Indonesian Construction Materials Mar 2012

Pt Jaya Readymix 

PT Boral Pipe and Precast Indonesia 

PT Boral Indonesia

Boral Best Block LLC Jun 2012

Entities deregistered

Date of loss 

of control

Boral Building Services Pte Ltd Aug 2011

Boral Asia Pacific Pte Ltd Nov 2011

United States Tile Co. Apr 2012

Boral Tile LLC Apr 2012

Boral Benefits Management Inc. Jun 2012

Boral Bricks of Texas LP merged into Boral Bricks Holdings Inc. Jun 2012

Boral Bricks Holdings Inc. merged into Boral Bricks Inc. Jun 2012

Boral Material Technologies of Texas LP merged into BMT Holdings Inc. Jun 2012

BMT Holdings Inc. merged into Boral Material Technologies Inc. Jun 2012

Name changes during the financial period

MonierLifetile LLC to Boral Roofing LLC

MonierLifetile S.R.L. de C.V. to Boral Roofing de Mexico S. de R.L. de C.V.

Boral Quarry Products (Thailand) Ltd to Boral Concrete & Quarry Limited

Lafarge Boral Gypsum in Asia Sdn Bhd to Boral Gypsum Asia Sdn Bhd

Lafarge Gypsum in Asia Limited to BGA Holdings Limited

Lafarge Gypsum (Shanghai) Co Ltd to Boral Plasterboard (Shanghai) Co Ltd

Lafarge Gypsum (Chengdu) Co Ltd to Boral Gypsum (Chengdu) Co Ltd

Lafarge Boral Gypsum India Private Ltd to Boral Gypsum India Private Ltd

Lafarge Boral Gypsum Vietnam Co Ltd to Boral Gypsum Vietnam Co Ltd

Lafarge Prestia Co Ltd to Boral Prestia Co Ltd

Lafarge Plasterboard System Co Ltd to Boral Plasterboard System Co Ltd

Lafarge Gypsum Korea Co Ltd to Boral Gypsum Korea Co Ltd

West Gypsum (Chongqing) Co Ltd to Boral Gypsum (Chongqing) Co Ltd

Lafarge Plasterboard System (Shanghai) Co Ltd to Boral Gypsum (Shanghai) Co Ltd

Lafarge Gypsum (Shandong) Co Ltd to Boral Gypsum (Shandong) Co Ltd

Lafarge Boral Management Services Shanghai Ltd to Boral Management Services (Shanghai) Co Ltd
126 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

32. Acquisition/disposal of controlled entities (continued)

The following controlled entities were acquired or disposed of during the financial year ended 30 June 2011:

Entities acquired

2011 

$ millions

MonierLifetile 88.3 

Owens Corning Masonry Products LLC 44.2 

Wagners’ deposit 17.3 

Miscellaneous acquisitions 2.4 

Less: Cash acquired (6.2) 

Total purchase consideration 146.0

Entities disposed

Date of 

disposal

Boral Formwork and Scaffolding Pty Ltd Sep 2010

Entities deregistered

Date of loss 

of control

Leo N. Dunn & Sons Pty Ltd (in liquidation) Feb 2011

Concrite Holdings Pty Ltd (in liquidation) Feb 2011

Name changes during the financial period

Blue Circle Southern Cement Ltd to Boral Cement Limited

Girotto Precast Pty Ltd to Boral Precast Holdings Pty Ltd

Go Crete Pty Ltd to Boral Construction Related Businesses Pty Ltd

Midland Brick Company Pty Ltd to Boral Bricks Western Australia Pty Ltd

Owens Corning Masonry Products LLC to Boral Stone Products LLC

Sawmillers Exports Pty Ltd to Boral Timber Fibre Exports Pty Ltd
127

33. Controlled entities

The financial statements of the following entities have been consolidated to determine the results of the consolidated entity.

Beneficial ownership by

Country of incorporation

Consolidated 

entity

2012

%

Consolidated 

entity

2011

%

Boral Limited Australia

Boral Cement Limited > * Australia 100 100

 Barnu Pty Ltd * Australia 100 100

Boral Building Materials Pty Ltd > * Australia 100 100

 Boral International Pty Ltd > * Australia 100 100

 PT Jaya Readymix **** Indonesia – 90

 PT Pion Quarry Nusantara Indonesia 100 100

 PT Boral Pipe and Precast Indonesia   Indonesia – 100

 PT Boral Indonesia ** ** Indonesia – 100

 MJI (Thailand) Ltd Thailand 100 100

 Boral Concrete (Thailand) Ltd Thailand 100 100

 Boral Concrete & Quarry Limited Thailand 100 100

 Ratchiburi Enterprise Company Ltd Thailand 100 100

 Boral USA < USA 100 100

 Boral International Holdings Inc. USA 100 100

 Boral Asia Pacific Pte Ltd ** Singapore – 100

 Boral Building Services Pte Ltd ** Singapore – 100

 Boral Construction Materials LLC USA 100 100

 Ready Mixed Concrete Company USA 100 100

 Boral Best Block LLC   USA – 100

 Sprat-Platte Ranch Co. LLLP USA 100 100

 Morton Lakes LLC USA 100 100

 Aggregate Investments LLC USA 100 100

 BCM Oklahoma LLC USA 100 100

 McCanne Ditch and Reservoir Company USA 100 100

 Boral Industries Inc. USA 100 100

 Boral Finance Inc. USA 100 100

 Boral Timber Inc. USA 100 100

 Boral Lifetile Inc. USA 100 100

 Boral Concrete Tile Inc. USA 100 100

 Boral Roofing LLC USA 100 100

 Boral Roofing de Mexico S. de R.L. de C.V. Mexico 100 100

 E.U.M. Teja de Concreto Servicio Compania S.R.L. de C.V. Mexico 100 100

 Tile Service Company LLC USA 100 100

 United States Tile Co. **  USA – 100

 Boral Tile LLC ** USA – 100

 Boral Bricks Inc. USA 100 100

 Boral Bricks Holdings Inc. ** USA – 100

 Boral Bricks of Texas LP ** USA – 100

 Boral Benefits Management Inc. ** USA – 89.47

 Dennis Brick Distributors USA 50 50
128 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

Beneficial ownership by

Country of incorporation

Consolidated 

entity

2012

%

Consolidated 

entity

2011

%

 Boral Composites Inc. USA 100 100

 Boral Material Technologies Inc. USA 100 100

 BMT Holdings Inc. ** USA – 100

 Boral Material Technologies of Texas LP ** USA – 100

 Boral Stone LLC USA 100 100

 Boral Stone Products LLC USA 50 50

 Boral (UK) Ltd UK 100 100

 Boral Investments Ltd Jersey 100 100

 Boral Investments BV Netherlands 100 100

 Boral Industrie GmbH Germany 100 100

 Boral Klinker GmbH Germany 100 100

 Boral Mecklenburger Ziegel GmbH Germany 100 100

 Boral Industries Ltd NZ 100 100

 Boral Building Products (NZ) Ltd NZ 100 100

 Boral Gypsum Asia Sdn Bhd *** Malaysia 100 –

 Boral Management Services Shanghai Co Ltd *** China 100 –

 Boral Building Materials (Malaysia) Sdn Bhd *** Malaysia 100 –

 Boral Plasterboard (Malaysia) Sdn Bhd *** Malaysia 100 –

 Boral Plasterboard (Marketing) Sdn Bhd *** Malaysia 100 –

 Siam Gypsum Industry Co Ltd *** Thailand 71 –

 Siam Gypsum Industry (Saraburi) Co Ltd *** Thailand 71 –

 Siam Gypsum Industry (Songkla) Co Ltd *** Thailand 71 –

 Siam Gypsum Industry Development Co Ltd *** Thailand 71 –

 Gypsum Business Limited *** Thailand 100 –

 Boonyavajara Mining Co Ltd *** Thailand 100 –

 Boral Prestia Co Ltd *** Thailand 100 –

 Boral Middle East FZE *** UAE 100 –

 Boral Middle East (Dubai) LLC *** UAE 49 –

 PT Petrojaya Boral Plasterboard *** Indonesia 100 –

 BGA Holdings Limited *** Labuan 100 –

 China Plasterboard Corporation *** British Virgin Islands 100 –

 Boral Plasterboard (Shanghai) Co Ltd *** China 96.8 –

 Boral Gypsum (Chongqing) Co Ltd *** China 100 –

 Boral Gypsum (Chengdu) Co Ltd *** China 100 –

 Boral Gypsum (Shanghai) Co Ltd *** China 100 –

 Boral Gypsum (Shandong) Co Ltd *** China 100 –

 Boral Gypsum India Private Ltd *** India 100 –

 LBGA Trading (Singapore) Pte Ltd *** Singapore 60 –

 Boral Gypsum Korea Co Ltd *** South Korea 100 –

 South Korean Plasterboard Corporation *** Labuan 100 –

 Boral Plasterboard System Co Ltd *** South Korea 100 –

 Siamsum Corporation *** Labuan 100 –

33. Controlled entities (continued)
129

Beneficial ownership by

Country of incorporation

Consolidated 

entity

2012

%

Consolidated 

entity

2011

%

 Boral Gypsum Vietnam Co Ltd *** Vietnam 100 –

 Boral Plasterboard Philippines Inc *** Philippines 100 –

 Boral Australian Gypsum Ltd > * Australia 100 100

 Waratah Gypsum Pty Ltd (in liquidation) Australia 100 100

 Boral Plaster Fixing Pty Ltd * Australia 100 100

 Lympike Pty Ltd * Australia 100 100

 Boral Investments Pty Ltd > * Australia 100 100

 Boral Construction Materials Ltd > * Australia 100 100

 Boral Resources (WA) Ltd > * Australia 100 100

 Boral Contracting Pty Ltd * Australia 100 100

 Boral Construction Related Businesses Pty Ltd > * Australia 100 100

 Boral Resources (Vic) Pty Ltd > * Australia 100 100

 Bayview Quarries Pty Ltd * Australia 100 100

 Boral Resources (Qld) Pty Ltd > * Australia 100 100

 Allen’s Asphalt Pty Ltd > * Australia 100 100

 Boral Resources (NSW) Pty Ltd > * Australia 100 100

 Dunmore Sand & Soil Pty Ltd * Australia 100 100

 Boral Recycling Pty Ltd > * Australia 100 100

 De Martin & Gasparini Pty Ltd > * Australia 100 100

 De Martin & Gasparini Concrete Placers Pty Ltd * Australia 100 100

 De Martin & Gasparini Pumping Pty Ltd * Australia 100 100

 De Martin & Gasparini Contractors Pty Ltd * Australia 100 100

 Boral Precast Holdings Pty Ltd > * Australia 100 100

 Boral Construction Materials Group Ltd > * Australia 100 100

 Concrite Pty Ltd > * Australia 100 100

 Boral Resources (SA) Ltd > * Australia 100 100

 Bitumax Pty Ltd > * Australia 100 100

 Road Surfaces Group Pty Ltd > * Australia 100 100

 Alsafe Premix Concrete Pty Ltd > * Australia 100 100

 Boral Transport Ltd > * Australia 100 100

 Boral Corporate Services Pty Ltd Australia 100 100

 Bitupave Ltd > * Australia 100 100

 Boral Resources (Country) Pty Ltd > * Australia 100 100

 MLOP Pty Ltd (in liquidation) Australia 100 100

 Bayview Pty Ltd * Australia 100 100

 Dandenong Quarries Pty Ltd * Australia 100 100

 Boral Insurance Pty Ltd Australia 100 100

 Boral Johns Perry Ltd (in liquidation) Australia 100 100

 Allen Taylor & Company Ltd > * Australia 100 100

 Oberon Softwood Holdings Pty Ltd > * Australia 100 100

 Duncan’s Holdings Ltd > * Australia 100 100

 Boral Bricks Pty Ltd > * Australia 100 100

33. Controlled entities (continued)
130 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

Beneficial ownership by

Country of incorporation

Consolidated 

entity

2012

%

Consolidated 

entity

2011

%

 Boral Masonry Ltd > * Australia 100 100

 Boral Hollostone Masonry (South Aust) Pty Ltd > * Australia 100 100

 Boral Montoro Pty Ltd > * Australia 100 100

 Boral Windows Systems Ltd > * Australia 100 100

 Dowell Australia Ltd (in liquidation) Australia 100 100

 Boral Timber Fibre Exports Pty Ltd > * Australia 100 100

 Boral Shared Business Services Pty Ltd > * Australia 100 100

 Boral Building Products Ltd > * Australia 100 100

 Boral Bricks Western Australia Pty Ltd > * Australia 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.

33. Controlled entities (continued)
131

35. Notes to cash flow statement

CONSOLIDATED

Note

2012 

$ millions

2011 

$ millions

(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 9 205.7 561.2 

Bank overdrafts 18 (24.2) –

 181.5 561.2 

(ii) Reconciliation of net profit to net cash provided by operating activities:

Net profit 177.7 165.4 

Adjustments for non-cash items:

 Depreciation and amortisation 273.4 245.0 

 Discount unwinding 3.6 4.1 

 Gain on sale of assets (50.3) (30.0) 

 Fair value adjustment (184.5) –

 Impairment of assets, businesses and demolition costs 196.2 73.9 

 Net insurance proceeds – (33.4) 

 Share-based payment expense 10.6 5.8 

 Non-cash equity income (8.7) (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 16.9 (39.9) 

 – Inventories (56.1) (33.5) 

 – Payables (35.6) 58.9 

 – Provisions (82.3) (42.6) 

 – Current and deferred taxes (112.6) (16.2) 

 – Other (15.0) 7.5 

Net cash provided by operating activities 133.3 350.7 

(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 (35.3) (4.8) 

Restructure and business closure costs (36.9) (21.8) 

Legal settlements and associated costs (18.9) –

(91.1) (26.6)

(v) Details of credit standby arrangements and loan facilities are included in note 28.
132 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

36. Parent entity disclosures

BORAL LIMITED

For the year ended 30 June

2012 

$ millions

2011 

$ millions

RESULT OF THE PARENT ENTITY

Profit after tax 1.1 111.8 

Other comprehensive income after tax (1.2) 0.1 

Total comprehensive income for the period (0.1) 111.9 

FINANCIAL POSITION OF PARENT ENTITY

Current assets 7,124.3 6,858.2 

Non-current assets 505.4 553.5 

Total assets 7,629.7 7,411.7 

Current liabilities 3,073.1 3,628.5 

Non-current liabilities 1,269.5 505.6 

Total liabilities 4,342.6 4,134.1 

Net assets 3,287.1 3,277.6 

Issued capital 2,368.4 2,261.3 

Reserves 51.0 38.3 

Retained earnings 867.7 978.0 

Total equity 3,287.1 3,277.6

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 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).
133

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.

CONSOLIDATED

2012

$ millions

2011

$ millions

STATEMENT OF COMPREHENSIVE INCOME

Continuing operations

Revenue 3,907.0 3,907.3 

Profit/(loss) before income tax expense (368.2) 520.6 

Income tax expense (37.4) (130.8) 

Profit/(loss) from continuing operations (405.6) 389.8 

Discontinued operations

Profit/(loss) from discontinued operations (net of income tax) (60.0) (15.7) 

Net profit/(loss) (465.6) 374.1 

Other comprehensive income

Actuarial gain on defined benefit plans (6.6) 1.8 

Exchange differences from translation of foreign operations taken to equity 29.1 (31.6) 

Fair value adjustment on cash flow hedges (3.3) 1.1 

Income tax relating to components of other comprehensive income 3.0 (0.9) 

Total comprehensive income (443.4) 344.5 

Attributable to:

Members of the parent entity (443.4) 344.5 

Non-controlling interest – –

(443.4) 344.5 

Reconciliation of movements in retained earnings

Balance at the beginning of the year 1,639.9 1,365.5 

Net profit attributable to members of the parent entity (465.6) 374.1 

Dividends recognised during the year (106.9) (101.0) 

Actuarial gains on defined benefit plans, net of tax (4.5) 1.3 

Balance at the end of the year 1,062.9 1,639.9
134 Boral Limited Annual Report 2012

Notes to the Financial Statements

Boral Limited and Controlled Entities

37. Deed of cross guarantee (continued)

CONSOLIDATED

2012

$ millions

2011

$ millions

BALANCE SHEET

CURRENT ASSETS

Cash and cash equivalents 50.1 497.5 

Receivables 661.2 680.3 

Inventories 483.7 466.8 

Other 60.2 77.7 

Assets classified as held for sale 32.8 –

TOTAL CURRENT ASSETS 1,288.0 1,722.3 

NON-CURRENT ASSETS

Receivables 8.7 3.3 

Inventories 104.9 93.5 

Investments accounted for using the equity method 42.7 240.2 

Other financial assets 2,755.8 2,289.0 

Property, plant and equipment 2,625.4 2,350.3 

Intangible assets 118.4 114.2 

Other 45.4 46.7 

TOTAL NON-CURRENT ASSETS 5,701.3 5,137.2 

TOTAL ASSETS 6,989.3 6,859.5 

CURRENT LIABILITIES

Payables 1,483.9 1,360.6 

Loans and borrowings 0.4 147.2 

Current tax liabilities 57.0 121.5 

Provisions 176.4 197.3 

Liabilities classified as held for sale 29.6 –

TOTAL CURRENT LIABILITIES 1,747.3 1,826.6 

NON-CURRENT LIABILITIES

Payables 46.3 68.2 

Loans and borrowings 1,520.1 854.0 

Deferred tax liabilities 160.6 162.2 

Provisions 81.1 81.4 

TOTAL NON-CURRENT LIABILITIES 1,808.1 1,165.8 

TOTAL LIABILITIES 3,555.4 2,992.4 

NET ASSETS 3,433.9 3,867.1 

EQUITY

Issued capital 2,368.4 2,261.3 

Reserves 2.6 (34.1) 

Retained earnings 1,062.9 1,639.9 

TOTAL EQUITY 3,433.9 3,867.1
135

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
136 Boral Limited Annual Report 2012

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 Greg Boydell

 Partner

Sydney, 11 September 2012

Statutory Statements

Boral Limited and Controlled Entities
137

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.
138 Boral Limited Annual Report 2012

Annual report mailing list

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.

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.

Shareholder Information

Boral Limited and Controlled Entities
139

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 27,032 1.85

1,001–5,000 28,496 8.70

5,001–10,000 5,118 4.79

10,001–100,000 3,087 8.50

100,001 and over 129 76.16

63,862 100.00

(b) holding less than a marketable parcel (146 shares) 2,109 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

Ordinary shares % of ordinary shares

1 National Nominees Limited 144,250,952 19.02

2 J P Morgan Nominees Australia Limited 119,033,515 15.69

3 HSBC Custody Nominees (Australia) Limited 107,920,727 14.23

4 Citicorp Nominees Pty Limited 90,733,532 11.96

5 Cogent Nominees Pty Limited 28,015,864 3.69

6 RBC Dexia Investor Services Australia Nominees Pty Limited 24,816,718 3.27

7 BNP Paribas Nominees Pty Limited 7,464,463 0.98

8 Queensland Investment Corporation 4,628,821 0.61

9 Australian Foundation Investment Company Limited 4,008,492 0.53

10 The Senior Master of the Supreme Court (Common Fund No 3 A/C) 3,474,881 0.46

11 Argo Investments Limited 3,266,907 0.43

12 AMP Life Limited 2,946,232 0.39

13 UBS Wealth Management Australia Nominees Pty Limited 2,882,144 0.38

14 Equitas Nominees Pty Limited 2,450,738 0.32

15 ANZ Executors & Trustee Company Limited 1,977,340 0.26

16 Bond Street Custodians Limited 1,852,566 0.24

17 Milton Corporation Limited 1,627,462 0.21

18 Rodney Pearse 1,446,903 0.19

19 Invia Custodian Pty Limited 1,405,978 0.19

20 UBS Nominees Pty Ltd 1,322,618 0.17
140 Boral Limited Annual Report 2012

Financial History

Boral Limited and Controlled Entities

30 June

2012

$millions

2011

$millions

2010

$millions

2009

$millions

2008

$millions

2007

$millions

2006

$millions

2005

$millions

2004

$millions

2003

$millions

Revenue 5,010 4,711 4,599 4,875 5,199 4,909 4,767 4,305 4,150 3,831

Earnings before interest, tax, depreciation 

and amortisation (EBITDA)1 473 522 505 539 688 762 823 794 794 672

Depreciation and amortisation 273 245 253 263 240 231 209 191 195 194

Earnings before interest and tax1 200 277 252 276 448 531 614 603 600 478

Net financing costs1 (88) (64) (97) (127) (112) (111) (98) (71) (66) (68)

Profit before tax1 111 213 155 149 336 420 516 532 534 410

Income tax expense1 (9) (40) (22) (17) (90) (122) (153) (162) (163) (126)

Non-controlling interests (1) 2 (1) – 1 – – (1) (1) (1) 

Net profit after tax1 101 175 132 131 247 298 362 370 370 283

Significant items – net of tax 75 (8) (222) 11 (4) – – – – –

Net profit attributable to 

members of Boral Limited 177 168 (91) 142 243 298 362 370 370 283

Total assets 6,499 5,668 5,209 5,491 5,895 5,817 5,587 5,001 4,511 4,038

Total liabilities 3,096 2,512 2,583 2,738 2,985 2,829 2,832 2,594 2,151 1,898

Net assets 3,403 3,156 2,626 2,754 2,910 2,987 2,755 2,407 2,360 2,140

Shareholders’ funds 3,403 3,156 2,626 2,754 2,910 2,987 2,755 2,407 2,360 2,140

Net debt 1,518 505 1,183 1,514 1,515 1,482 1,578 1,394 938 764

Funds employed 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 81% 60% 67% 59% 82% 68% 55% 53% 47% 47%

Dividend cover1 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 3.0% 5.6% 5.0% 4.8% 8.5% 10.0% 13.2% 15.4% 15.7% 13.2%

EBIT to sales1 4.0% 5.9% 5.5% 5.7% 8.6% 10.8% 12.9% 14.0% 14.4% 12.5%

EBIT to funds employed1 4.1% 7.6% 6.6% 6.5% 10.1% 11.9% 14.2% 15.9% 18.2% 16.4%

Net interest cover (times)1 2.3 4.4 2.6 2.2 4.0 4.8 6.3 8.5 9.1 7.1

Gearing (net debt to equity) 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.
financial calendar

Ex dividend share trading commences 28 August 2012

Record date for final dividend 3 September 2012

Final dividend payable 28 September 2012

Annual General Meeting 1 November 2012

Half year end 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 25 March 2013*

Year end 30 June 2013

* Timing of events is subject to change.

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.

precinct.com.au
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