Boral Limited Annual Review 2008 Boral

It’s not business as usual at Boral Boral Limited ABN 13 008 421 761

Contents for the 2008 Annual Review It’s not business as usual at Boral 2 Chairman’s Review 6 Managing Director’s Review 8 Financial Highlights 12 Summary of Reporting Groups 14 Financial calendar* Review of Operating Divisions Australian Construction Materials 16 Ex dividend share trading commences 25 August 2008 Cement 18 Record date for final dividend 29 August 2008 Clay & Concrete Products 20 Final dividend payable 18 September 2008 Timber 2 2 Plasterboard 24 Annual General Meeting 24 October 2008 USA 26 Half year 31 December 2008 Management Committee 28 Half year profit announcement 11 February 2009 Financial Review 29 Ex dividend share trading commences 23 February 2009 Board of Directors 31 Record date for interim dividend 27 February 2009 Corporate Governance 32 Interim dividend payable 3 April 2009 Directors’ Report 38 Year end 30 June 2009 Remuneration Report 42 Concise Financial Report 50 * Timing of events is subject to change. Statutory Statements 65 Shareholder Information 66 Financial History 68 Glossary and Abbreviations 69

Our 2008 Sustainability Report can be found on the reverse side of this Annual Review.

The Annual General Meeting of Boral Limited CEO and Managing Director Boral Limited will be held at the ABN 13 008 421 761 Rod Pearse Level 39, AMP Centre City Recital Hall, Angel Place, Chief Financial Officer 50 Bridge Street, Sydney NSW 2000 Ken Barton Sydney on Friday 24 October at GPO Box 910, Sydney NSW 2001 Company Secretary 10.30am. Telephone: (02) 9220 6300 Michael Scobie International: +61 2 9220 6300 Auditor Facsimile: (02) 9233 6605 KPMG The Annual Review includes a concise International: +61 2 9233 6605 report containing abbreviated financial Internet: www.boral.com.au statements. Detailed financial statements Email: [email protected] are available in the separate 2008 Financial Report, which shareholders Stock Exchange Listing may access on Boral’s website Australian Securities Exchange www.boral.com.au or request free Share Registry of charge by phoning Boral’s share c/- Link Market Services registry on (02) 8280 7133 or via email to Level 12 [email protected] or 680 George Street, Sydney NSW 2000 by writing to Link Market Services, Locked Locked Bag A14, Bag A14, Sydney South NSW 1235. Sydney South NSW 1235 Boral Limited is a company limited by Telephone: (02) 8280 7133 shares, incorporated and domiciled in International: +61 2 8280 7133 Australia. Facsimile: (02) 9287 0303 International: +61 2 9287 0303 Front Cover: The 20km long Gateway Motorway upgrade project in Brisbane includes Internet: the duplication of the Gateway Bridge. The new www.linkmarketservices.com.au 1.6km long bridge will link both sides of the Email: Brisbane River with its 130 metre long and 80 metre high mainspan. [email protected] Boral has been working with the developer, Leighton Abigroup Joint Venture on this project for Queensland Motorways Limited. We delivered 156,000m3 of concrete to the project in 2007/08 and will supply a total of 250,000m3 by the completion of the project. 1

It’s not business as usual at Boral

Boral is an integrated, resource-based manufacturing company with strong upstream and downstream positions in building and construction materials markets in Australia, the USA and in Asia. The markets in which we operate are cyclical in nature. Dealing with cyclical market swings is business as usual for Boral, but in 2008, it is not business as usual. The spectacular cyclical downturn in the USA has coincided with several other extraordinary factors to create a particularly challenging business environment.

Boral’s 2008 performance highlights the growing importance of Boral’s largest reporting group, Construction Materials, Australia. Strengthening results from the Australian business (despite the continued housing downturn) partially offset a dramatic decline in Boral’s offshore earnings. Key financial results for 2008: • Net reported profit after tax down 19% to $243 million • Sales revenue up 6% to $5.2 billion • EBITDA1 down 10% to $688 million – Australian EBITDA up 9% to $657 million – Offshore EBITDA down 82% to $27 million • EBITDA1 to sales margin of 13.2% • Earnings per share1 down 17% to 41.4 cents • Full year fully franked dividend maintained at 34 cents

1. Excluding significant item

Boral Limited Annual Review 2008 2 Challenges Boral faces a number of challenges due to several extraordinary external factors. These simultaneous events have created a business environment that is not business as usual.

US housing activity down 1 45% from its 2006 peak 2500 In 2007/08 total US housing 2000

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ta to 1.13 million compared 1500 to 1.55 million in the prior year, leading to Boral’s 1000

ousing S USA EBIT decreasing from a A$95 million profit to a 500 l US H A$27 million loss. ota

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Energy and other input costs 2 increase dramatically during 2008 250

200 Overall Boral’s costs grew by 6.5%. For example 150 GasOil and Natural Gas prices up 112% and 97%

es (indexed to Jul-07) 100 c i respectively, impacting transport and manufacturing 50 GasOil 0.5% US Nymex natural gas costs.

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Jul 07 Jul 06 J Jan 07 Jan 08

NSW housing activity at 3 40 year lows 40000

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ts (MAT) 30000 r Australian housing ta 25000 activity remains at low 20000 levels, and well short 15000

ousing S of underlying demand – 10000 especially in NSW where 5000 Boral earns around l NSW H 40% of its Australian 0

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Boral Limited Annual Review 2008 3

Demand for concrete in 4 Australia at record levels

140 Solid levels of infrastructure and non-dwelling activity drove industry concrete 120 volumes up 7%, and Boral’s umes

l Construction Materials EBIT o up 10% to A$351 million. To

ete v 100 meet this growing demand, cr Boral is investing in further on Australia construction materials NSW capacity.

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Jul 01 Jul 99 Ju Jan 00 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07

Despite plasterboard growth, Asian 5 profits declined by A$5 million

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008 and trading conditions

2001 2007 2002 2003 2004 2005 2 2006 remain challenging.

Global credit crisis impacts 6 liquidity and borrowings

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hma 300 A global credit c tightening was 250 experienced in 200 2007/08 leading to s ) p

ead to ben diminished market ( b 150 pr liquidity and higher 100 borrowing costs. 50

owing s JULI Banks Index

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Jul 07 J Jan 07 Jan 08

Government progresses 7 emissions trading scheme

The “Carbon Pollution Reduction Scheme”, scheduled for introduction in 2010, will impact emissions-intensive, trade-exposed (EITE) industries such as the cement industry. Recognition of cement as an EITE industry and provision of a “level playing field” for domestic competitors and importers is vital for Boral.

Boral Limited Annual Review 2008 4 Response We recognise that in a not business as usual environment, the best response is to focus on the things that are within our control and to do them particularly well.

To manage the major downturn in us housing activity, Boral is implementing a rigorous cost saving and plant slowdown program, 1 but still investing for market recovery.

• US$42.5 million of cost saving programs in Bricks and MonierLifetile (Boral’s share) have been implemented, with US$11 million of savings already delivered. An incremental benefit of US$31.5 million is expected in 2008/09. An extensive plant slowdown/mothballing program is in place in bricks and roof tiles to match production with sales and avoid an inventory build. By year end, utilisation was ~40% and ~30% in bricks and roof tiles, respectively. • A new US$55 million brick plant in Terre Haute, Indiana, and a US$30 million clay tile plant in Ione, California were commissioned in 2008. These new plants position Boral well when markets recover and, during the downturn, these low cost plants will operate at high utilisation, allowing higher cost capacity to be mothballed. • We are embarking on a step change program in the Denver and Oklahoma construction materials businesses including plant optimisation, an alternative fuels study and integration of systems and overheads.

To manage energy, fuel and other cost increases, Boral is increasing 2 prices and investing in alternative fuel strategies. • We are strongly focused on recovering costs through price increases. In Australia we have announced August / September 2008 price increases in concrete ($12.50 per cubic metre), quarries ($1 - $3 per tonne), and cement ($15 per tonne). Additionally, price increases have been announced for most building products and fuel price levies introduced for bricks, roof tiles and masonry products. • In the USA, price increases and energy surcharges have been announced and an through alternative fuels strategy the new Terre Haute brick plant is operating on up to 80% landfill gas, and overall in the US brick business, we are targeting to source around 30% of energy from alternative (lower cost) fuels. • Performance Enhancement Programs (PEP) across the company delivered $151 million of savings in 2007/08, a 3.4% reduction in compressible costs.

Despite the protracted housing downturn in Australia, especially in NSW, Boral’s price management and capacity planning strategies 3 are allowing the Company to remain competitive.

• Despite volume pressures, Building Products earnings increased due to disciplined price and cost management programs. • Matching production with sales demand continues, with East Coast brick plant utilisation ~75% in 2008. Post year end, Boral’s Grafton parquetry plant was closed and production at the Walcha timber mill was suspended as a result of the continued NSW downturn and high input costs. • Growth investments have been directed to higher growth states. Boral’s new low-cost plasterboard plant at Pinkenba, which was commissioned in 2008 for a net investment of ~$119 million, will supply a growing Queensland market.

Boral Limited Annual Review 2008 5

Infrastructure activity is delivering record levels of demand for concrete in Australia, (outside NSW), with Boral investing to 4 supply growing markets.

• Around 45% of Boral’s A$2.3 billion of growth spend since demerger has been invested into construction materials to increase cement capacity, maximise quarry output and expand Boral’s concrete and asphalt networks into growth regions around Australia. An A$85 million (total) investment is underway in Sunstate Cement to lift clinker storage and cement grinding capacity from 1.0 million to 1.5 million tonnes per annum. • Low levels of demand in NSW are resulting in under-utilisation of the Berrima cement works with excess capacity being used to supply wholesale purchases and to supply interstate.

With mixed conditions across Asia, cost disciplines, price increases (where possible) and investments to strengthen Boral’s leading 5 positions are continuing.

• In the LBGA plasterboard joint venture, price increases and a structured cost reduction program have offset input cost increases and enhanced margins. • LBGA’s leading positions continue to strengthen. US$70 million was invested into new plants in Dangjin (Korea), Chengdu (China) and Rajasthan (India) with commissioning completed in 2008. A further US$48 million investment in Baoshan (China) was announced in August 2008. • In construction materials, focus is on delivering improved results through targeted volume growth, cost disciplines, and where possible, price increases. Due to continued challenging conditions, in FY08 we wrote-off the $31.9 million of goodwill which arose on acquisition of the Thailand business in 2004.

Despite the global credit crisis, Boral maintains a robust balance 6 sheet and continues its value adding capital management initiatives. • Boral’s balance sheet remains robust, with gearing (debt/equity) of 52% within our target of 40%-70%. Cash flow from operations increased by $100 million to $582 million in FY08 and stay-in-business capital expenditure was maintained at 70% of depreciation. • Value-adding capital management initiatives were undertaken including a $114 million off-market share buy-back, which was completed in April 2008. • In April 2008, we completed an issuance of US$382 million of 10 and 12 year unsecured notes in the US private placement market and following year end a US$600 million note issuance facility expiring in August 2009 was replaced by a US$700 million facility expiring in August 2011. Boral’s debt maturity now averages around 6 years. Our facilities ensure funding is available for current projects and potential market opportunities.

To manage the impact of the introduction of an Australian emissions trading scheme, Boral is improving its energy and emissions 7 reporting, and investing in emissions abatement programs.

• The Government’s Green Paper on the Carbon Pollution Reduction Scheme indicates that the cement and lime industries are likely to be recognised as EITE industries and that compensation will take place for such industries. We remain concerned about the phasing out of compensation over time.

• Boral’s 2007/08 emissions of 3.79 million tonnes CO2-e were 1% higher than the prior year due to a lift in production volumes in Australia, largely offset by a decline in USA emissions. • Our focus on reducing emissions continues, particularly in cement, transport and brick operations. Our emissions produced per unit of cementitious material sold is 13% lower than 1990 levels. In the USA, 30% of our energy use is currently sourced from lower cost, lower greenhouse gas intensive alternative fuels.

Boral Limited Annual Review 2008 6

Chairman’s Review

A solid 2007/08 result in to reconfigure our brick and roof tile tiles are reducing the adverse impacts of challenging conditions networks contributed to the severe fall in historically low sales volumes. earnings. 2007/08 was a challenging year for many Management expects that benefits of Boral’s businesses, particularly our In Asia, improvements in housing from the step change program in bricks building products businesses in the USA markets in Indonesia, China and South together with Boral’s share of benefits and construction materials operations in Korea benefited our joint venture from the MonierLifetile step change Asia. In Australia, our businesses in New plasterboard business, LBGA. LBGA’s program will deliver Boral an incremental South Wales continued to face low levels earnings in US dollars were up 29% benefit of US$31.5 million in 2008/09 of activity, but elsewhere around the before exchange rate impacts, reflecting on top of the US$11 million delivered country strong levels of infrastructure and volume and price increases as well as in 2007/08. non-dwellings activity saw volume lifts benefits from cost reductions and growth Whilst in Australia the housing downturn and solid improvements in earnings. initiatives. In Australian dollars, Boral’s has been far less severe, it has been a equity accounted profit from LBGA was We reported a 6% increase in sales very long and slow downturn that has up 12% to $18.1 million. Unfortunately, revenue to $5.2 billion but a 10% decline seen reduced profitability since the 1 this was offset by a decline in earnings in Boral’s underlying EBITDA (earnings peak in 2003/04. Boral’s businesses, from Boral’s construction materials before interest, tax, depreciation and particularly on the East Coast, have operations in Indonesia and Thailand. amortisation) to $688 million. Our managed the reduced volumes through Overall, EBITDA from Asia was down reported profit after tax (PAT) of an ongoing program of plant slowdowns 22% to $16 million. We continue to face $243 million was down 19% and and temporary closures. Our East Coast challenging market conditions in our underlying PAT of $247 million (excluding brick business continues to operate Thailand concrete and quarry business goodwill and tax provision adjustments) at around 75% of capacity to avoid and we have written off the $31.9 million was 17% lower. over-producing bricks, which in past of goodwill which arose on acquisition of downturns has led to price pressures In Australia, housing activity remained the business in July 2004. at low levels, especially in New South to move stock. Pleasingly, prices have Wales. However, the overall value of A focus on managing well through held or increased through the housing work done in Australian building and the downturns downturn, despite volume pressures. construction was up by nearly 5% year- The US business has been very profitable on-year as increased work in Australian Shareholder returns and a strong contributor to Boral’s non-dwellings and major projects A decline in Boral’s share price of 37% earnings over the years. When market offset the soft housing market. Boral’s during the year reflected the impacts of conditions were strong in 2005/06 the Australian sales revenues were up the broader equities markets coupled business delivered an EBIT profit of 13% due to solid price gains, volume with the earnings impact of the USA and A$186 million compared with a loss of increases and growth benefits. EBITDA New South Wales housing downturns. A$27 million in 2007/08. in Construction Materials was up 8% to Despite cyclical earnings pressures, a full $489 million and in Building Products No-one enjoys reporting a decline in year fully franked dividend of 34.0 cents was up 11% to $168 million. The results annual earnings or losses from any per share has been maintained for four were underpinned by strong markets in business, especially those that have years. The full year dividend represents Queensland and Victoria which offset historically delivered substantial returns a grossed up dividend yield of 7.3% softer conditions in Western Australian and have very strong manufacturing per annum (after franking) on Boral’s housing activity and continued weakness and market positions. Whilst the result weighted average share price for the year in New South Wales. is disappointing, we have long-term of $6.65. confidence in Boral’s US markets and our In the USA, the continued deterioration management who we believe are doing Boral’s total shareholder return (TSR) in the housing market, particularly in a commendable job of managing the US from share price appreciation and the second half of the year, saw a 13% business through the downturn. dividends was 16% per annum over the decline in US dollar revenues and a eight and a half years from demerger to decrease in EBITDA from US$102 million It is well understood within the Company 30 June 2008, which placed the stock to US$10 million. Total housing starts that reducing fixed costs, increasing in the second quartile of the ASX 100 were down 27% year-on-year to 1.13 prices and avoiding a build in inventory companies over the same period. Boral’s million starts. This compares with peak levels by matching production with TSR under-performed in 2007/08 with levels of demand above 2.0 million starts sales volumes are critically important a TSR of -33% compared with the TSR experienced just a couple of years ago during the downturn. Our plant network of the ASX 100 Index over the period in 2005/06. Lower volumes, increased optimisation and structured cost of -16%. raw material costs and one-off costs (of reduction programs in bricks and roof US$4 million) associated with programs

1. Excluding significant items reflecting a $31.9 million write-down of goodwill in Thailand construction materials, Boral Limited Annual Review 2008 which was largely offset by a $28.1 million write-back of tax provisions. “It is well understood within the Company that reducing 7 fixed costs, increasing prices and avoiding a build in inventory levels by matching production with sales volumes are critically important during the downturn.” Ken Moss, CHairman

Boral’s Board Sydney and London and almost two Dr Bob Every was appointed as a non- years as Regional Counsel Australia/Asia executive Director of Boral Limited in with BHP Billiton. September 2007. His appointment was I thank Boral’s management team and all confirmed at the 2007 Annual General of Boral’s employees for their hard work Meeting. and contribution over the past year. Elizabeth Alexander, who joined the Board in 1994, will retire as a Director Corporate governance and at this year’s Annual General Meeting. remuneration Together with the Board, I acknowledge Boral’s Directors support appropriate During 2007/08, the Board of Directors the significant contribution that Elizabeth and transparent corporate governance spent time meeting with Boral’s has made to Boral, including her valued processes and controls. On page 32 to customers, shareholders, market contribution as Chair of the Audit 37 of Boral’s Annual Review, we report analysts, managers and employees. Committee. on our corporate governance activities We also spent time visiting Boral’s US in accordance with the Principles of At this year’s Annual General Meeting, brick and roof tile operations and Boral’s Good Corporate Governance and Best shareholders will be asked to confirm construction materials and plasterboard Practice Recommendations of the ASX. the appointment of a new Director with operations in Brisbane. The separate Remuneration Report for appropriate financial expertise to replace shareholders as part of the Directors’ Whilst conditions remain challenging Elizabeth when she retires. Report (on pages 42 to 49) provides in some of Boral’s key markets, the The Board remains confident in the ability extensive information on the Company’s Directors believe that the Company of Boral’s CEO and Managing Director, remuneration structures. is well positioned to deliver long-term Rod Pearse, to deliver Boral’s strategic shareholder value through the economic In reviewing the Remuneration Report imperatives. Currently in his ninth year cycles. We look forward to a recovery in it is important for shareholders to be of leading the Company, Rod continues Boral’s key markets which will strengthen mindful that executive remuneration is to demonstrate Boral’s Values of Boral’s ability to deliver improved returns not driven solely by the level of Company leadership, respect, focus, performance for shareholders. profits. Executives are rewarded for and persistence, which have underpinned managing their business according Boral’s strong and effective to pre-approved objectives, plans and workplace culture. budgets, and sometimes budgeted earnings are lower than previous years Boral’s people due to the cyclical nature of our markets. The Board also remains confident in the ability of the Management Committee to Ken Moss deliver Boral’s strategy. Chairman The Management Committee has been a stable team of senior executives with considerable experience in Boral. In August 2008, however, Boral’s long- Share Price serving Company Secretary and General Manager of Corporate Services, Michael ASX 100 Scobie, announced his intention to retire. $ Index Michael, who joined Boral through the 10 10000 BMI acquisition in 1982 and has 35 years 8 8000 of service with both organisations, has Boral contributed a great deal to Boral. On 6 6000 behalf of the Board I thank Michael for his valued contribution. 4 ASX 100 4000

Margaret Taylor will take over the role of 2 2000 General Counsel and Company Secretary

of Boral Limited from November 2008. 0 0 08 Margaret joins Boral after 17 years with g

Feb 00 Feb 01 Feb 02 Feb 03 Feb 04 Feb 05 Feb 06 Feb 07 Feb 08 Au law firm Minter Ellison in Brisbane, Aug 00 Aug 01 Aug 02 Aug 03 Aug 04 Aug 05 Aug 06 Aug 07

Boral Limited Annual Review 2008 8

HeadingManaging Director’s Review

It’s not business as usual at Boral planned that 10 of our 24 brick kilns in and is having a considerable impact on I am in my ninth year as Boral’s CEO and the USA will be mothballed and will not Boral’s earnings. recommence until the market picks up. Managing Director and my 14th year with Whilst activity in Victoria, Queensland Only two kilns are expected to operate at the Company. I have seen Boral perform and South Australia increased during capacity and the remaining 12 kilns will in good times and in challenging times. the year, activity in all Australian states be slowed or temporarily closed. In many respects, managing through the is below underlying demand. Further challenging times is business as usual In addition to the plant network declines in New South Wales in 2007/08 for a company like Boral that operates in optimisation program, we have been together with continued weakening cyclical markets, but 2007/08 was not implementing a comprehensive cost in the Western Australian detached business as usual. reduction program. The benefits from housing market impacted Boral’s building Several extraordinary external factors these step change programs when fully products and construction materials coincided to create a particularly implemented will be US$30 million in businesses. the brick business and US$25 million challenging business environment. We have been responding to the in the MonierLifetile concrete roof tile challenges of the protracted downturn joint venture, with Boral’s 50% share of Managing through a “generational” through disciplined price management MonierLifetile benefits being downturn in US housing activity and a relentless focus on cost reduction US$12.5 million. These programs are The dramatic decline in US housing programs. Pleasingly, despite volume expected to deliver an incremental activity is a generational downturn. With pressures, EBIT from Building Products benefit for Boral of US$31.5 million in dwelling starts some 45% below its was up 15% to $114 million in 2007/08. 2008/09. We are also initiating step peak in 2006 and likely to fall to around changes in our US concrete and quarry A focus on matching production with half of sustainable underlying demand in businesses, which will bring further sales demand continues. During the year, 2008/09, the USA has not experienced benefits in 2008/09 and 2009/10. East Coast brick plant utilisation stayed such a severe decline in housing activity at around 75%. Since year end, we have for at least 25 years. This is not business Despite the short-term imperative to closed our Grafton parquetry plant and as usual. streamline the business to reduce suspended production at our Walcha costs and minimise the impacts of the In 2007/08, total US housing starts were timber mill as a result of the continued downturn, we continue to manage the down 27% to 1.13 million compared to New South Wales downturn combined business for the longer term. We have 1.55 million starts in the prior year and with increasing input costs. confidence in US markets and we believe single family housing starts were down that the underlying level of demand over Growth investments have been directed by a more significant 35%. the next 10 years is around 1.8 million to higher growth states including Boral’s USA earnings before interest and starts per annum. Boral’s new low-cost, state-of-the-art tax (EBIT) decreased from a A$95 million plasterboard plant on the Port of Brisbane During the year, we commissioned a profit to a A$27 million loss as a result of at Pinkenba, which was commissioned new US$55 million brick plant in Terre the dramatic deterioration in the housing during the year. The new plant involved a Haute, Indiana, and a new US$30 million market. Significantly lower volumes, net investment of around $119 million and clay tile plant in Ione, California. These increased raw material costs and one- will supply a growing Queensland market new plants position Boral well when the off costs (US$5 million associated with and support broader supply constraints. market recovers. In the meantime, we a specialty brick plant write-down and will operate these low cost plants at high Our Perform & Grow strategy is US$4 million of costs associated with utilisation rates allowing older high cost allowing Boral to manage well through programs to reconfigure our brick and capacity to be mothballed. the downturn and has positioned the roof tile plants) contributed to the severe Company to deliver considerable benefits fall in US earnings. The protracted Australian housing when housing markets recover in New A program of extensive plant slowdowns downturn continues to impact, South Wales, and in the USA. and mothballing is in place to match especially in New South Wales production with sales demand to avoid Australian housing approvals of around Record levels of demand for concrete a build up of inventory. Going into the 155,000 starts per annum are 15% in Australia 2008/09 financial year, plant utilisation to 20% below underlying demand. Whilst concrete volumes in New South in concrete roof tiles remains less than The New South Wales market is 40% Wales are below where they were 10 30%, with an average of 27% in 2007/08 below underlying demand. New South years ago, concrete demand nationally compared to 48% in the prior year and Wales is Boral’s largest state market, has increased by around 40% over the around 75% in 2005/06. Brick capacity and represents around 40% of our same period, with volumes running at utilisation is around 40%, down from an Australian revenues. New South Wales is record levels in 2007/08. average of 56% in 2007/08 and 79% in experiencing housing activity at 40 year the previous year. During 2008/09 it is low levels. This is not business as usual Boral Limited Annual Review 2008 “The dramatic decline in US housing activity is a 9 ‘generational’ downturn. Some 45% below its peak in 2006, the USA has not experienced such a severe decline in housing activity for at least 25 years. This is not business as usual.” Rod Pearse, ceo and managing director

Solid levels of infrastructure and non- Australian dollars exchange rate impacts) dwelling activity drove industry concrete were better than expected, but with volumes up 7%, and underpinned a 10% declining results from construction lift in Boral’s Construction Materials EBIT materials offsetting some of the gains, to $351 million. overall, Boral’s earnings from Asia decreased by A$5 million to Since the demerger of the Company in A$7 million in 2007/08. January 2000, around 45% of Boral’s total growth spend of around $2.3 billion In LBGA, price increases and a cost has gone into construction materials reduction program, Excellence 2008, August-September 2008. We have also businesses in Australia to strengthen have offset significant input cost announced price increases in Australia our leading positions and meet growing increases and have enhanced margins. for bricks, roof tiles, plasterboard and demand. Despite this level of investment, We continue to strengthen LBGA’s timber products to build on 2007/08 price we have been capacity constrained in leading plasterboard position in Asia gains. Additionally, fuel levies or energy some markets including cement and through value-adding ongoing growth surcharges have been announced for quarry capacity in Queensland and quarry initiatives. A total of US$70 million was bricks, roof tiles and masonry products in capacity in Western Australia. We invested into new plants in Dangjin Australia and in the USA. are continuing to invest further in (Korea), Chengdu (China) and Rajasthan these businesses, including an (India) with commissioning of these Cost savings from Boral’s ongoing $85 million investment in Boral’s 50% plants completed in 2007/08. In August Performance Enhancement Programs owned Sunstate Cement joint venture, 2008, LBGA announced a further US$48 (PEP) totalled $151 million or 3.4% of to increase clinker storage and cement million investment in Baoshan (China). compressible costs during the period. grinding capacity by 50% to 1.5 million LBGA is positioned well to take advantage Increased focus on reducing fuel and tonnes per annum. of solid growth in the region of more than energy costs is also continuing. In the 10% per annum in most markets. USA, a comprehensive alternative fuels Mixed conditions across Asia strategy is underway to reduce reliance Whilst construction materials demand Significant energy, fuel and other on fossil fuels and importantly to reduce has been strong in Australia, in Asia cost increases costs. Boral’s new Terre Haute brick plant we have seen very challenging trading Across our entire portfolio of businesses is operating on around 80% landfill gas. conditions for our concrete and quarry in Asia, in the USA and in Australia, we Overall, 30% of our energy consumption businesses in Indonesia and Thailand. have been feeling the impacts of higher in the US brick business is targeted to be Political uncertainty in Thailand has input costs including record high energy sourced from alternative fuels. constrained investment in major project and fuel prices. Oil prices are highly work and an oversupply of cement volatile, so the recent partial correction Global credit crisis capacity has led to substantial concrete in prices may or may not indicate a A global credit tightening also added to margin erosion. Significant input cost sustained downward trend. We are the extraordinary economic headwinds increases and a lack of pricing power assuming energy and fuel prices will experienced in 2007/08. Diminished have resulted in a significant price/cost stay at high levels and we are focused liquidity and higher borrowing costs squeeze. In Indonesia, where Boral has on recovering those costs through price flowed through to corporate Australia. operated for more than 30 years, we increases and levies. are seeing some improvements but in We have focused on improving cash During the year, our cost base increased Thailand we expect difficult conditions management, with cash flow from by around A$284 million including higher to continue for some time and we have operations up by $100 million to fuel and energy costs, raw materials and therefore written off the $31.9 million of $582 million in 2007/08. Stay-in-business labour costs. This increase represents goodwill which arose on acquisition of capital expenditure was maintained at an average 6.5% increase on our the business in July 2004. Our focus is 70% of depreciation. compressible costs, which is higher than on delivering improved results through any year since demerger. In April 2008, we completed the issuance targeted volume growth, cost disciplines of US$382 million of 10 and 12 year and, where possible, price increases. We are strongly focused on recovering unsecured notes in the US private We continue to explore opportunities extraordinary cost increases through placement market. Following year end, to build an integrated cementitious price increases in Australia. Thus we in August 2008, we replaced a position in Asia. have announced a second round of US$600 million note issuance facility price increases for concrete of $12.50 Conditions for our 50%-owned expiring in August 2009 with a per cubic metre, for quarry products of plasterboard joint venture business, US$700 million facility expiring in August $1 to $3 per tonne, and for cement of LBGA, are far more favourable. A 29% 2011. These moves have lengthened $15 per tonne, which were effective increase in results from LBGA (before Boral’s debt maturity and increased our

Boral Limited Annual Review 2008 10

Managing Director’s Review continued

committed facilities to ensure adequate Outlook for 2008/09 growth programs will again enhance liquidity for current activities and potential Many of the extraordinary challenges that earnings. market opportunities. we faced in 2007/08 will stay with us in It is too early to comment further on Because of Boral’s strong cash flows and 2008/09. 2008/09 expected financial outcomes. balance sheet, we were well positioned We expect Australian dwelling starts to We will provide an update on trading to undertake value-adding capital be broadly in line with last year at around conditions at the Annual General Meeting management initiatives during the year. In 155,000 starts but a further decline in on 24 October 2008. April 2008, we completed an off-market housing affordability in 2008 and high share buy-back of $114 million, or 3.3% interest rates make this quite uncertain. Managing the business in of issued shares, at $5.65 per share. If housing activity holds up, Building a sustainable way Boral’s balance sheet remains robust, Products profits will remain steady, with We remain focused on delivering with gearing (debt/equity) of 52% staying effective price and cost management value through the economic cycles. within our target range of 40% to 70%. offsetting the impact of further softening Our overarching objective of delivering in Western Australia and the entry of superior returns in a sustainable way Introduction of an Australian a new competitor into the Western remains unchanged. Australian clay brick market. emissions trading scheme We have maintained momentum around In July 2008, the Australian Government We anticipate increased non-dwelling our sustainability agenda despite the issued a Green Paper indicating its and infrastructure activity outside New external challenges faced in 2007/08. preferred options for an emissions trading South Wales which will favourably impact Our current sustainability priorities, goals scheme (ETS), which it has named a Construction Materials businesses in and performance are detailed in Boral’s Carbon Pollution Reduction Scheme. Australia. The already announced price Sustainability Report, which forms part of The introduction of an ETS is not increases should offset cost increases. this Annual Review. business as usual. We expect earnings from Quarry End Safety remains the highest of priorities Use activities to remain steady at around We support the introduction of an ETS across Boral. In 2007/08, Boral’s safety $50 million, which will again be weighted to reduce greenhouse gas emissions. performance as measured by lost heavily to the second half of the year. We are however concerned about time injury frequency rate (LTIFR) and Construction Materials earnings from the potential unintended economic percent hours lost, continued to improve. Australia should be stronger in 2008/09. consequences of a poorly designed LTIFR of 2.5 for the year was an 11% scheme, especially on emissions- In the USA unsold new and existing improvement on the prior year, and intensive, trade-exposed (EITE) industries house inventories remain at high levels, percent hours lost also reduced by 11% such as the cement industry. It is critical foreclosure rates have increased and to 0.08. This improved performance was that Australia does not adopt an ETS and there is uncertainty in credit markets. pleasing. It was, however, overshadowed an emissions target which will undermine Market forecasters currently expect US by the death of an employee in South our competitiveness compared to trading housing starts to be around 900,000 Australia in a heavy vehicle accident in partners who have not taken similar in 2008/09, compared to annualised December 2007. We deeply regret this initiatives which will serve to drive starts of around 1.0 million in the June tragic accident and remain focused on investment and emissions offshore. half of 2008. Whilst lower volumes eliminating all accidents, particularly will adversely impact brick and roof tile serious workplace accidents that There are many views on how a scheme sales volumes and earnings, increased could risk the lives of employees and could be designed to avoid this. The benefits from significant cost reduction contractors. Business Council of Australia in its paper and network efficiency programs will Modelling Success: Designing an ETS I commend the focus and hard work be delivered. US construction materials that Works, has proposed an option for of Boral’s management and employees, markets are expected to be weaker. addressing EITE industries. We support particularly their commitment and Overall, US earnings are expected to be the proposal for the provision of full persistence in challenging times. lower in 2008/09. compensation to EITE industries for emissions above a threshold of emission We expect continued competitive market costs of 3%-5% of value-add (profits conditions and input cost pressures plus labour). This option still sees EITE in Asia, particularly in construction industries wearing a significant share materials. of the cost and abatement burden but Rod Pearse We have targeted to deliver operating it provides greater investment certainty CEO and managing director cost improvements from performance and gives industry a better chance to enhancement programs of at least 3% continue to effectively compete with of compressible costs, and benefits from imports and to invest for the future.

Boral Limited Annual Review 2008 “Despite the short-term imperative to streamline the 11 business to reduce costs and minimise the impacts of the downturn, we continue to manage the business for the longer term.” Rod Pearse, ceo and managing director

Recent and current major growth activities

Growth project Current status New 40 million m2 plasterboard plant in Plant operational by end of May 2008. Early commissioning difficulties close Queensland for net investment of ~$119 million to resolution. Completed. $21 million total investment in new asphalt plants Construction of new asphalt plants at West Burleigh (August 2007) and in Queensland, Victoria and Western Australia Ipswich (September 2007) in Queensland, Geelong in Victoria (July 2007) and Welshpool in Western Australia (October 2007). Completed. US$84 million acquisition of assets of Schwarz Positions Boral as the second largest concrete producer in Oklahoma City Readymix concrete & sand business and and includes a limestone quarry at Davis, Oklahoma. Combined operations quarry assets of Davis Arbuckle Materials have annual production of ~750,000 cubic yards of ready-mixed concrete in Oklahoma City and 1.6 million tons of sand and aggregates. Completed. US$10 million acquisition of sand and gravel Reserves well located to supply the Denver market as existing reserves reserves in Denver, Colorado come to the end of their useful lives. Completed. New US$55 million, 120 million SBE US brick Commissioning completed June 2008 quarter. This low cost plant will plant at Terre Haute, Indiana operate at high utilisation rates, reaching full production in FY09. Final spend was around 5% above original plan. Completed. New US$30 million, 130k square p.a., clay roof Commissioning completed June 2008 quarter. The plant will operate at tile plant at Ione, California high capacity utilisation in FY09. Final capital costs were slightly ahead of announced US$27.5 million expenditure. Completed. US$42 million total upgrade of LBGA’s Dangjin Commissioning completed in December 2007 ahead of plan with investment plasterboard plant, near Seoul, to double capacity cost below budget. Benefits will flow as the Korean residential market lifts. to 75 million m² Completed. US$28 million (total) in new LBGA plasterboard New plants completed at Rajasthan, India (8 million m²) in April 2008 and plants in Rajasthan, India and Chengdu, China in Chengdu, China (10 million m²) in June 2008, both ahead of plan with investment costs below budget. Completed. $85 million (total) to upgrade cement capacity of Expansion of clinker storage and grinding from 1.0 million to 1.5 million Sunstate Cement in Queensland tonnes p.a. to meet growing Queensland demand. Completion of clinker storage due in September 2008 quarter and increased grinding capacity by June 2009 quarter. $44 million investment in new masonry plant at New plant will replace high cost, ageing Cannington and Jandakot plants Middle Swan in Western Australia and lift Boral’s Western Australia masonry capacity from 90,000 to 170,000 tonnes p.a. Cannington and Jandakot sites will be liberated for sale. Benefits to come shortly after commissioning in the September 2009 quarter. Strengthening of concrete network in Rebuilding Artarmon (New South Wales) concrete plant expected to be New South Wales ($14 million) and Queensland complete by December 2009. Replacement of Gladstone (Queensland) plant ($5 million) with new, higher capacity plant expected to be complete around June 2009. US$48 million (total) in new LBGA plasterboard New Baoshan plant expected to be in operation in December 2009 quarter, plant (and land) at Baoshan, Shanghai, China with 34 million m2 p.a. capacity and flexibility to increase capacity in future. (34 million m²)

Boral Limited Annual Review 2008 12

summary of Financial results

Financial Results

A$ million unless stated Share of revenue2 by market YEAR ENDED 30 JUNE 2008 2007 % CHANGE Australian dwellings Revenue 5,199 4,909 6 Australian non-dwellings 1 EBITDA 688 762 (10) Australian engineering 1 and construction EBIT 448 531 (16) USA dwellings Net interest 112 111 1 USA non-dwellings 1 Profit before tax 336 420 (20) USA engineering and construction 1 Tax 90 122 (26) Asia

Minority interest 1 0 Other Underlying profit after tax1 247 298 (17) Net significant items 4 0 Profit after tax 243 298 (19) EBITDA by segment

Cash flow from operating activities 582 482 21 Gross assets 5,895 5,817 1 Construction Materials, Funds employed 4,425 4,470 (1) Australia Building Products, Liabilities 2,985 2,829 6 Australia Net debt 1,515 1,482 2 USA Growth and acquisition capital expenditure 327 226 45 Asia Stay-in-business capital expenditure 169 192 (12) Depreciation 240 231 4

Employees 15,928 16,194 (2) Sales per employee, $ million 0.326 0.303 8 Net asset backing, $ per share 4.96 4.98 Net tangible asset backing, $ per share 4.41 4.41 EBITDA margin on sales1, % 13.2 15.5 (15) EBIT margin on sales1, % 8.6 10.8 (20) EBIT return on funds employed1, % 10.1 11.9 (15) Return on equity1, % 8.5 10.0 (15) Gearing (net debt/equity), % 52 50 Interest cover1, times 4.0 4.8 Underlying earnings per share1, ¢ 41.4 50 (17) Dividend per share, ¢ 34.0 34.0 Safety: Lost time injury frequency rate 2.5 2.8 Recordable injury frequency rate 26.7 27.8

Sales revenue $m EBITDA1 $m EBIT1 $m Profit after tax1 $m Earnings per share1 c 5,199 823 4,909 370 370 362 63. 8 63. 4 4,767 794 794 61. 7 614 762 603 600 4,305 4,150 68 8 531 672 289 3,831 50. 0 283 49. 1 478 3,489 44 8 3,280 24 7 531 41.4 451 34 3 33. 7 192 27.0 153

262

08 08

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Y Y

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FY 03 FY 03

F F FY01 FY04 FY05 FY06 FY07 FY01 FY04 FY05 FY06 FY07 FY02 FY02 FY 03

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FY 03 FY01 FY04 FY05 FY06 FY07 F FY 03

FY02 FY01 FY04 FY05 FY06 FY07 F FY02

Boral Limited Annual Review 2008 13

Company Announcements

EBITDA variance analysis ($ million) 19 August 2008 Boral announces an after tax profit of $243 million for the year ended 30 June 2008, a 19% or $55 million decrease on the PAT 762 for the year ended 30 June 2007.

688 15 August 2008 Boral announces that its 50/50 plasterboard joint venture with Lafarge, Lafarge Boral Gypsum Asia (LBGA), intends to invest a total of US$48 million to build a new plasterboard plant in Baoshan, China. 8 May 2008 Boral announces that due to the deterioration in market conditions in the US and poor weather in the March quarter, it is revising its guidance for its FY2008 result. Boral expects FY2008 PAT to be around the bottom end of analysts forecast range of $234 million to $256 million. 16 April 2008 Boral announces the successful completion of an issue of US$382 million of Senior Unsecured Notes to institutions in the North American Traditional Private Placement market. The Notes are structured in two tranches comprising ten year and twelve year bullet maturities with fixed coupon rates of 7.12% pa and 7.22%, respectively. 1 PEP Cost

QEU 7 April 2008 Price Plant Other FY07 FY08 Growth Volume one-offs Boral announces the successful completion of its off-market EBITDA EBITDA escalation buy-back tender. Boral will purchase 20.0 million, or 3.3%, of its fully paid ordinary shares. The Buy-Back price has been set at $5.65 per share, which represents a discount of 13% to the Volume Market Price of $6.4922. Substantial brick and roof tile housing related volume declines in the US offset overall volume growth in Australian businesses, 13 February 2008 particularly in quarry products. High levels of non-residential and Boral announces that it intends to buy back approximately infrastructure construction activity in all Australian states except $100 million of its ordinary shares, through an off-market New South Wales benefited volumes. buy-back tender. Price Pricing outcomes in Australia were favourable despite housing Boral announces a profit after tax (PAT) of $132 million for the half activity remaining at low levels. Prices lifted by 3%-7% in cement, year ended 31 December 2007, a 10% or $15 million decrease concrete and quarry products and 6% in timber, whilst bricks, on the PAT for the half year ended 31 December 2006. roofing, masonry and plasterboard prices were up 1%-3%. Boral announces that it intends to build a new $33 million Despite the severe housing downturn in the US, prices were only concrete masonry plant at its Middle Swan (Midland Brick) site down in bricks and concrete roof tiles by 2% and 5% respectively, in Western Australia. The new masonry plant will replace Boral’s whilst clay roof tile prices were up 4%. existing 40-year old, high cost, low capacity Cannington plant Costs and PEP more than doubling that sites’ current output. [A subsequent Cost savings of $151 million were delivered from Performance announcement on 19 August 2008 as part of Boral’s full year Enhancement Programs (PEP), equal to 3.4% of compressible results announcement upgraded this project to a $44 million costs, however, costs increased by around 6.5%, or $284 million, masonry plant, which will also allow the older, high cost capacity due in part to higher input costs in Australian Construction at Jandakot to close.] Materials, including raw materials, fuel, equipment and services that are competing with the booming resources sector. Low 21 December 2007 volume related production network inefficiencies in bricks in the Boral announces that it has entered transactions with DB RREEF US also impacted the result. for a total price of $157.7 million for the sale of a 47.5 hectare parcel of land which forms approximately 66% Growth and QEU or Boral’s Greystanes Estate – Southern Employment Lands. Benefits from growth initiatives contributed $20 million, with the new Oklahoma construction materials business, Kiln 11 at Midland 10 September 2007 Brick and Union City brick plant being significant contributors. Boral Chairman Ken Moss announces that Mark Rayner will retire Boral’s growth portfolio will be increasingly value-adding as as a non-executive Director of Boral Limited. markets recover and grow. Quarry End Use earnings were $2 million lower than the prior year. Boral Chairman Ken Moss announced the appointment of Plant one-offs Dr Bob Every as a non-executive Director of Boral Limited. Plant slowdown and shutdown costs were around $18 million, mostly due to extended temporary shutdowns in bricks particularly in the US, in response to lower sales volumes with the severe housing downturn. 1 Excluding goodwill and tax provision adjustments. FY05 results onwards restated to reflect transition to A-IFRS accounting standards. 2 Includes Boral’s share of revenues from Asia Plasterboard and MonierLifetile joint ventures. Boral Limited Annual Review 2008 14

summary of reporting groups

Construction Materials, Australia Building Products, Australia

Share of external revenue Share of external revenue

19% Concrete * Cement division 28% Bricks includes Blue Circle 22% Quarries Roofing 38% (excl. internal sales Masonry 6% Asphalt to Boral businesses), De Martin & Gasparini Windows 2% Other and Formwork & 9% QEU Scaffolding. Timber

Cement division* Australian Plasterboard 9% 22% 20% 13% 12%

Revenue $m EBITDA1 $m EBITDA/Revenue % Revenue $m EBITDA1 $m EBITDA/Revenue % 2,960 489 19. 6 16. 6 202 19. 2 1,357 16. 1 454 191 18. 2 1,275 17. 8 2,549 1,217 1,213 17. 0 416 14. 3 1,187 412 16.5 410 1,156 2,410 16 8 164 13. 4 162 12. 8 2,164 12.4 14. 4 151 999 2,099 11. 8 13. 7 955 335 11. 5 1,846 128 8. 7 8. 7 1,640 110 1,523 7. 5 7. 5 237

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FY01 FY02 FY04 FY05 FY06 FY07 F FY 03 FY 03

FY06 FY07 FY01 FY04 FY05 F FY02 FY 03

FY06 FY07 FY01 FY04 FY05 F FY 03 FY02

FY06 FY07 FY01 FY04 FY05 F FY02 FY 03

FY06 FY07 FY01 FY04 FY05 F FY02

FY 03 FY06 FY07 F FY01 FY04 FY05 FY02

year ended 30 June 2008 2007 % change year ended 30 June 2008 2007 % change A$ million unless stated A$ million unless stated Sales revenue 2,960 2,549 16 Sales revenue 1,357 1,275 6 EBITDA 489 454 8 EBITDA 168 151 11 EBIT 351 318 10 EBIT 114 99 15 Capital expenditure3 180 169 6 Capital expenditure3 125 127 (1) Funds employed3 2,310 2,271 2 Funds employed3 1,178 1,114 6 EBITDA return on sales, % 16.5 17.8 EBITDA return on sales, % 12.4 11.8 EBIT return on sales, % 11.9 12.5 EBIT return on sales, % 8.4 7.8 EBIT return on funds employed, % 15.2 14.0 EBIT return on funds employed, % 9.7 8.9 Employees, number 5,798 5,838 (1) Employees, number 4,080 4,107 (1) Revenue per employee 0.511 0.437 17 Revenue per employee 0.333 0.311 7 Performance Performance • Stronger asphalt, quarries, cement and lime volumes were • Whilst New South Wales housing activity remains very weak, underpinned by high levels of non-dwellings and infrastructure a lift in activity in Queensland and South Australia offset major project activity in all states except New South Wales. weaker housing starts in Western Australia. • Improvements in concrete, quarries and cement pricing • Stronger pricing outcomes were reported across all building together with $88 million of PEP cost reductions contributed products and $29 million of PEP cost reduction were to the result. delivered. • EBITDA margin of 16.5% was down due to higher input costs. • Earnings increased in most businesses except bricks due • Quarry End Use (QEU) contributed $54 million of EBIT ($56 to lower volumes in Western Australia and temporary plant million in prior year). closures.

Boral Limited Annual Review 2008 15

USA Asia Includes Boral’s Asian plasterboard joint venture with Lafarge2 and Boral’s Indonesian and Thailand construction materials businesses. Share of external revenue

19% Bricks * MonierLifetile and Clay roof tiles* Trinidad JVs are equity 51% accounted – Boral’s share Concrete roof tiles* of revenue does not appear in consolidated Fly ash 16% accounts but is included Construction materials in the revenue pie chart.

10% 4%

Revenue $m EBITDA1 $m EBITDA/Revenue % Revenue $m EBIT1 $m EBIT/Revenue % 219 22. 8 11. 9 21. 8 957 29 20. 6 20. 0 883 19. 6 10. 4 411 19. 0 396 177 810 9. 4 793 24 761 364 756 755 23 157 155 22 151 144 67 1 14. 6 20 300 7. 4 129 6. 2 241 227 21 0 12 4. 0 3. 1 7 98 4 1. 6 1. 7

11

08

08

08

08

08

08

Y

Y

Y

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Y Y FY 03

FY06 FY07 FY01 FY04 FY05 F FY02 FY 03

FY06 FY07 FY01 FY04 FY05 F FY02 FY 03

FY06 FY07 FY01 FY04 FY05 F FY02 FY 03 FY 03

FY06 FY07 FY01 FY04 FY05 F

FY06 FY07 FY01 FY04 FY05 F FY02 FY02 FY 03

FY06 FY07 FY01 FY04 FY05 F FY02

year ended 30 June 2008 2007 % change year ended 30 June 2008 2007 % change US$ million A$ million unless stated Sales revenue 607 699 (13) Sales revenue 191 183 5 EBITDA 10 102 (90) EBITDA4 16 21 (22) EBIT (25) 75 (133) EBIT4 7 12 (45) A$ million Funds employed3 285 376 Sales revenue 671 883 (24) Return on funds employed, % 2.3 3.2 EBITDA 11 129 (91) Performance EBIT (27) 95 (129) Capital expenditure3 180 100 (81) • The Boral/Lafarge Asian plasterboard JV, LBGA, contributed Funds employed3 789 813 (3) an equity accounted profit after tax of $18.1 million, which EBITDA return on sales, % 1.7 14.6 was 12% above the prior year. EBIT return on sales, % (4.0) 10.7 • Before exchange rate impact the LBGA result was up 29% EBIT return on funds employed, % (3.4) 11.6 year on year in US dollars, reflecting continued improvement Employees, number 2,208 2,503 (12) in market conditions in a number of key plasterboard markets Revenue per employee 0.304 0.353 (14) together with price lifts, cost reductions and growth benefits. • Construction Materials results were significantly down. In Performance Indonesia, volumes were up but prices were flat and costs • US housing starts were down 27% to 1.13m compared to increased significantly. In Thailand, volumes were down by 1.55 million starts in FY07 and over 2.0 million starts in FY06. 1% and prices were down at the same time as cement and diesel costs continued to increase. • Lower volumes, increased raw material costs, and one-off costs to reconfigure production networks contributed to the • With conditions remaining difficult in Thailand the severe fall in earnings. $31.9 million of goodwill which arose on acquisition of the business in July 2004 was written off during the year. • Prices held despite volume pressures. • US$24 million of PEP and other cost savings were delivered. Significant cost reduction initiatives continue to be implemented. 1 EBITDA and EBIT results from FY05 onwards have been adjusted for A-IFRS. 2 Boral’s profits from LBGA are equity accounted and are after financing and tax. Boral’s • Oklahoma construction materials acquisition favourably share of revenue from the LBGA joint venture do not appear in consolidated accounts, however, Boral’s share of LBGA revenues is included in the revenue bar chart for Asia impacted the result. from FY01 onwards. 3 Capital expenditure and funds employed include acquisitions. 4 The Asia result excludes the $31.9 million write-off of Thailand goodwill in FY08.

Boral Limited Annual Review 2008 16

review of operating divisions Australian Construction Materials

In 2007/08 sales from Australian the EastLink project in Melbourne and Outlook Construction Materials were around highway upgrades in Brisbane, together We anticipate that high levels of non- 16% higher than the prior year. with a favourable product mix. Margins dwelling and infrastructure activity will Performance was underpinned by remained at historically high levels continue to favourably impact ACM strong trading conditions including despite bitumen cost escalation. during 2008/09. Concrete and quarry strong non-dwelling and infrastructure Quarry volumes were 10% higher than price increases that were announced activity, particularly in the resource rich effective 1 April 2008 will continue to states of Queensland, South Australia last year due to concrete and asphalt pull-through and participation in a number flow through in 2008/09, augmented and Western Australia, and from our by additional increases of $12.50 per participation in Melbourne’s EastLink of infrastructure projects. Capacity constraints affected our businesses cubic metre for concrete and $1-$3 per project. Robust market conditions in tonne for quarry products, which were these states, together with effective in Queensland, Victoria and Western Australia, leading to increased cost announced effective 1 August 2008. price management and disciplined QEU forecast earnings of around cost reduction programs, more than pressures from higher incremental costs from mobile plant and equipment hire, $50 million will again be weighted offset weaker market conditions in heavily to the second half of 2008/09. New South Wales. additional labour and campaign crushing. High fuel costs also impacted costs. Boral’s concrete volumes were 3% higher These cost pressures were largely offset than last year. This was due largely to by price increases and cost reduction our participation in infrastructure activity initiatives. and was despite the ongoing difficult trading conditions in New South Wales Boral’s Quarry End Use (QEU) business where detached dwelling construction contributed $54 million of EBIT. This year, activity remains at 40 year low levels. QEU earnings came from the George’s Strong pricing outcomes were achieved Fair (Moorebank), Nelson’s Ridge during the year, largely off-setting higher (Greystanes) and Southern Employment production and cartage costs. Land (Greystanes) developments, the sale of land at a number of locations Asphalt performed very strongly including Gillman (South Australia) and during the year with higher volumes from the Deer Park Western Landfill underpinning a 26% lift in revenue. operation. The improved result was driven by high levels of infrastructure activity such as

The Australian Construction Materials Concrete markets where it supports our internal (ACM) division employs around 4,600 The network of around 240 premix business. Boral Transport manages employees and 1,600 contractors in concrete plants produces a wide range approximately a further 300 contracted quarry, concrete, asphalt, transport and of mixes in metropolitan and country vehicles and drivers land development activities throughout areas. Boral is the largest national Australia. With around 400 operating precast concrete provider through its Quarry End Use sites, ACM has a regional focus to serve investments in GoCrete in Perth and QEU focuses on realising appropriate Boral’s local markets. Girotto Precast operating in key markets end uses for quarry properties and other on the East Coast. Boral land assets that are nearing the end Quarries of their economic life. Current major QEU Boral has leading quarry resource Asphalt activities include development of the positions close to market and is Boral is a national supplier of asphalt Greystanes Estate and the Moorebank Australia’s leading quarry operator with with around 50 plants producing asphalt brick plant redevelopment in Sydney around 100 quarries, sand pits and gravel and other materials for the surfacing and and a 40% share in the Penrith Lakes operations producing products such maintenance of road networks. Development Scheme. as concrete aggregates, crushed rock, asphalt and sealing aggregates, road Transport base materials, sands and gravels. The company-owned fleet totals around 400 vehicles providing bulk transport and logistics solutions to the construction materials businesses, other Boral divisions and to selected external freight Boral Limited Annual Review 2008 “Across our construction materials businesses we have been facing 17 acute cost pressures that threaten to erode margins and profitability. Strong commodity prices (particularly steel and diesel) have hurt us. We compete with resources companies for people and other inputs and this has also added to the cost pressures. We have had to work very hard to recover the extraordinary cost increases and we have been doing that through focused cost reduction programs and by announcing out of the ordinary price increases to the market.” John Douglas, Executive General Manager

Large scale infrastructure projects Boral has successfully secured the leading have been a key source of revenue industry position in South East Queensland for ACM, with growth in this segment with the largest consented reserves and forecast to continue. Major projects best quarry network. Work over recent for which Boral is currently supplying years on our quarry resource positions in include the Gateway Bridge in Queensland has yielded eight resource Brisbane, the Deer Park Bypass in extensions or greenfield sites in addition Melbourne, the Sturt Highway in to four long-term extractive leases. South Australia, the Hume Highway In 2007, ACM obtained development upgrade between NSW and Victoria, approvals to convert un-consented and the F3 upgrade in NSW. ACM has resources to consented resources at significant capacity and capability to four sites. meet the demands of such projects, as demonstrated by our successful participation in the EastLink motorway project in Melbourne.

ACM has benefited from the mining “boom” as our large project capabilities make us an ideal partner in the development of new mines. ACM is supplying construction material for the development of the Boddington Boral’s Concrete Panels business is Gold Mine in Western Australia, the largest national precast concrete the Oxiana Prominent Hill mine in provider in Australia. Girotto Precast South Australia and the Cadia Mine supplies the major East Coast centres in New South Wales. Our mobile while GoCrete supplies the Perth and relocatable equipment, as market. An automated plant was well as our transport capabilities, commissioned for our GoCrete precast make us a valuable partner to operations during the year, an example the resources industry in the of our commitment to employ the latest development of mines and technology to grow this business. infrastructure.

Boral Limited Annual Review 2008 18

review of operating divisions Cement

Blue Circle Cement volumes were during the year. The scale efficiencies specifically and construction generally. up 6% on last year, underpinned by a that are expected from this program are Margin squeeze was experienced as substantial lift in Queensland and steady necessary because of lower prices driven prices reduced at the same time as but strong volumes in Victoria. In New by low cost imports predominantly from cement and diesel costs continued to South Wales, core cement volumes China. Scaffolding utilisation increased increase. In Thailand, we expect difficult were up marginally but the New South during the period. EBITDA was lower. conditions to continue for some time. Wales business benefited from increased During 2007/08 we wrote off the De Martin & Gasparini reported higher wholesale and interstate sales. Average $31.9 million of goodwill which arose on revenues and relatively steady margins. cement prices were 3% higher than the acquisition of the business in July 2004. prior year. EBITDA from Dowell Windows was up Lime volumes improved by 32%, on last year due to higher prices, ongoing Outlook primarily driven by increased usage tight cost controls and stronger volumes. Cement demand in Australia should intensity by the steel sector and lime Revenues increased with stronger remain well supported in 2008/09 by prices were 9% higher. sales in South Australia and Victoria in expected continued strength in non- particular. dwellings and infrastructure activity Blue Circle’s EBITDA improved due Construction Materials results in Asia outside of New South Wales. Global principally to increased volumes and cement production costs have increased prices as well as improved kiln operating were significantly down for the period. Whilst concrete volumes in Indonesia sharply, particularly coal and other levels. In the prior year (July 2006), there energy costs, which has resulted in a was a trunnion failure at Berrima resulting increased by 30%, including market share recovery, prices were flat in an higher import parity price, despite the in a three week outage and costing appreciation of the Australian dollar. around $5 million. environment where costs increased significantly, particularly diesel and This has provided headroom for an Formwork & Scaffolding experienced cement. At the end of the year, concrete increase in cement prices in Australia. stronger volumes during the period, prices in Indonesia increased significantly, Price increases ranging from $10 to however, the business was impacted resulting in an improved level of margins $15 per tonne were implemented on by pricing pressure and one-off costs and profitability. 1 September 2008. Trading conditions resulting from branch rationalisation are expected to remain challenging and stock write-downs. The national Thailand concrete volumes were slightly in Asia. branch rationalisation project, which down, with market share maintained, has reshaped the business, saw branch however, political uncertainty continued numbers reduce from 28 to 17 branches to impact large infrastructure projects

The division operates across 142 BCSC is a large producer of limestone Dowell Windows operating sites in Australia, Indonesia for both internal and external customers Boral’s window businesses operate and Thailand and employs approximately from our substantial reserves at Marulan under various brand names including 5,500 people (with around 3,500 in Asia. and at Galong in NSW. Lime is produced Dowell Windows. The business operates at Marulan and at Galong. nationally through 14 window fabrication Blue Circle Southern Cement (BCSC) businesses focusing on supplying the Blue Circle has 13 operating and four Boral Formwork & Scaffolding (BFS) residential builder market. distribution sites. Major operations are Boral is a leader in the hire and sale of in the Southern Highlands of NSW at formwork and scaffolding, providing Indonesian Construction Materials Berrima where the dry process cement engineering expertise to the construction PT Jaya Readymix is the largest producer capacity is 1.4 million tonnes p.a. At industry. BFS has 17 depots around of premixed concrete in Indonesia, Maldon, up to 300k tonnes p.a. of off- Australia with an increasing focus on new operating on 39 sites, predominantly white and grey cement can be produced formwork products. located on the main island of Java. Its and there is a bagging and dry mix hard rock quarries produce aggregates facility. BCSC markets fly ash acquired De Martin & Gasparini (DMG) for the Jakarta market. The business is from power stations in NSW and has a DMG is a specialist concrete placing expanding its concrete pipe and precast 50% shareholding in Fly Ash Australia. In business which has been servicing panels business. Victoria, at Waurn Ponds near Geelong, Sydney’s construction industry for over the dry process kiln has a capacity of 50 years. DMG has built its expertise in Boral Thailand Concrete & Quarries 800k tonnes p.a. BCSC also has a 50% large pours, detailed formwork design This business is one of Thailand’s leading interest in Sunstate Cement which and high strength concrete. concrete and quarry businesses and operates a cement milling facility in operates around 53 concrete batch plants Brisbane. and quarries throughout the country. Boral Limited Annual Review 2008 “The most important challenge for us is to ensure the 19 long-term sustainability of the cement industry in Australia. Cement is emissions-intensive and trade-exposed, and the introduction of an emissions trading scheme is a significant event. A well designed scheme should preserve Australia’s competitiveness, avoid carbon leakage and motivate actions to further reduce emissions.” Phil Jobe, Executive General Manager

Jayamix, a Boral subsidiary, the leading The $85 million (total investment) premix concrete company in Indonesia, upgrade of the cement capacity has strongly improved health and safety of Boral’s joint venture Sunstate performance during 2007/08 winning Cement business in Queensland the Boral Award for Excellence in is underway and is expected to People Practices. The implementation continue through to June 2009. of Boral’s hazard identification and The project will see clinker grinding safety management software system capacity lift by 50% “SiteSafe” in Asia as well as the to 1.5 million tonnes p.a together development and acceptance of detailed with additional clinker, cement “Traffic Light” and other plant safety and fly ash storage capacity to performance monitoring metrics has meet growth in market demand in significantly reduced the number of lost Queensland. time injuries from 6 to just 1 in 2007/08. The LTIFR has been reduced by 74% and % hours lost reduced by 42% on last year.

Blue Circle is working with batch plants being used for road base paving, providing additional onsite De Martin & Gasparini in conjunction cement and flyash storage to road with Boral Formwork & Scaffolding projects such as the Coolac Bypass are building the new car park at the project, a 16km dual carriageway Sydney International Airport for the being constructed by Abigroup. Blue Sydney Airports Corporation. This Circle has supplied 180k tonne of project is an excellent example of cement and flyash providing 1,300 collaboration across the division, with tonne/day during peak demand for the structure of the carpark built by road projects in NSW. Work on these De Martin & Gasparini and formwork projects is expected to continue provided by Boral throughout 2008/09.

Boral Limited Annual Review 2008 20

review of operating divisions Clay & Concrete Products

Demand for Clay & Concrete Products is tile volumes were up 9% nationally expectations in the East Coast Bricks, primarily driven by Australian dwelling driven by increases in all states except Roofing and Masonry businesses. construction, particularly detached New South Wales. Masonry volumes housing. Again this year, market were up 1% with declines in New South Outlook conditions varied widely between Wales and Victoria offset by increases We expect 2008/09 dwelling different states. Total Australian in other states. Pricing outcomes were commencements in Australia to be dwelling approvals were up 4% on the positive across all businesses. Average similar to the forecast level of around prior year, with detached housing starts prices improved by around 3% in Bricks, 155,000 for 2007/08. Earnings are up 3%. However, the division’s two 1%-2% in Roof Tiles, and by 2% in expected to decline in 2008/09, driven largest markets were both down with Masonry. Market shares were broadly by further softening in Western Australia Western Australia down 13% and New stable throughout the year. residential dwelling activity and the entry South Wales down 1% to 40 year low of a new competitor into the Western levels. To match production levels to the weak market conditions a series of plant Australian clay brick market. Effective Detached dwelling activity in slowdowns and/or extended temporary price and cost management will provide Queensland, Victoria and South Australia shutdowns continued across the East some offset to this decline. Fuel price were all up, which helped to offset the Coast. Most clay manufacturing plants levies, effective 1 October 2008, have decline in Western Australia. Dwelling had extended shuts and multiple concrete been announced for brick, roof tiles and starts were around 155,000 starts in products plants operated on reduced masonry products and price increases 2007/08, well below underlying demand shifts. Manufacturing performance was have also been announced in bricks and levels of around 185,000 starts per favourable across the businesses when roofing which will benefit the 2008/09 annum. compared to the prior year except in result. Revenues were up 3% on the prior year, Western Australia. Western Australia driven by a combination of higher selling was adversely impacted by market prices but lower volumes. Due to these driven lower production volumes and lower volumes, earnings for the division unscheduled production interruptions as were slightly down on the prior year. a result of a clay shed fire and electricity supply interruptions resulting from the Sales volumes reflected the differing Varanus Island gas fire. In Roofing, regional market conditions, with volumes benefits arose from the Springvale above prior year in all states except (Victoria) and Carole Park (Queensland) Western Australia. Brick volumes were concrete tile plants which have both been down 2%-3% nationally as declining upgraded in recent years. conditions in Western Australia offset improvements in all other states. Roof Major business improvement programs continued to deliver in line with

Clay & Concrete Products has 43 Bricks West includes Midland Brick Masonry Australian locations including 23 which is the largest clay brick Boral is the leading manufacturer of operating sites, and employs around manufacturer on one site in the world. concrete masonry products in Australia 1,800 people and over 800 contractors. Midland was established in 1945 and with manufacturing sites in five states. The products are sold in Australia, New acquired by Boral in 1990. We are a recognised leader in the Zealand and Asia. paving, landscaping and retaining wall Roofing segments and have an industry-leading Bricks As Australia’s second largest roof tile range of products. Boral is Australia’s second largest supplier, Boral competes in both the producer of clay bricks and pavers. Boral supply-only and supply-and-fix market is also an exporter of clay products to segments. We operate four concrete New Zealand, Japan and, increasingly, roof tile plants in the cities of Brisbane, other Asian countries. Sydney, Melbourne and Adelaide and one clay roof tile plant at Wyee, on the Bricks East comprises eight brick New South Wales Central Coast. manufacturing sites in Victoria, New South Wales and Queensland.

Boral Limited Annual Review 2008 “Our businesses are fairly heavily exposed to the Australian housing 21 market, which is continuing to track well below underlying demand levels. On the East Coast, we have been running our plants at sub-optimal levels for the past three or four years, in an effort to match production to sales volumes. We are using performance enhancement programs and price management to try to offset some of the lost profitability that comes with low volumes in a high fixed cost business.” Keith Mitchelhill, Executive General Manager

Several new product releases and an overall lift in the fashionability of the division’s product range has assisted in improving the relative positioning of Boral’s product range against competitor offerings.

During FY09, construction of a new $44 million large format concrete masonry plant at Middle Swan, Western Australia will commence. When commissioned, the new operation will replace ageing plant at Cannington, remove existing production capacity constraints and facilitate exit from both Commissioning of a $6 million the Cannington and Jandakot production sites, releasing upgrade of the ageing Springvale them for redevelopment. The new plant will manufacture concrete tile plant in Victoria a wide range of walling and landscaping products at delivered improved quality and lower costs. It will also deliver a wide range of improved lower costs and removed previous environmental and safety outcomes. capacity constraints.

Boral Limited Annual Review 2008 22

review of operating divisions Timber

Whilst market activity levels remain low, at Herons Creek completed in the prior favourable pricing environment, which Timber’s revenues increased by 11% year. The engineered flooring operation is helpful in recovering higher cost to $273 million during the year, driven also showed significant improvement inputs. PEP cost reduction initiatives and primarily by price rises and stronger during the year through improved plant inventory reduction will be a major area demand for structural timber products in efficiency. However, due to the overall of focus for 2008/09. Queensland, formwork demand from the market softness, inventory levels of buoyant Australian concrete market, and hardwood and engineered flooring an increase in flooring demand in the increased during the year. With demand alterations and additions (A&A) market, in the New South Wales A&A market particularly in the first half of the year. weakening in the second half of the Overall, Timber product prices improved year following interest rate rises, cost 6% on average as a result of price reduction was the focus. increases and a favourable product mix. In July and August 2008, Boral Timber Increased log costs and wage escalation ceased production at the higher cost pressures were more than offset by price South Grafton and Walcha hardwood increases, including an improvement mills due to the weak market conditions in residue prices and manufacturing experienced in New South Wales and efficiency gains at Herons Creek and higher input costs. at the engineered flooring operation at Murwillumbah. This resulted in Timber Outlook delivering a significant improvement in Demand for softwood and hardwood EBITDA compared with the prior year, timber products is expected to remain driven primarily by improved softwood relatively steady in 2008/09 with and hardwood prices, manufacturing activity in New South Wales remaining costs and increased sales volumes. depressed and a softening in Queensland Manufacturing performance continues volumes offset by a lift in Victoria. Supply to improve following the capacity of Australian hardwood and softwood investments during the year at the timber products is expected to remain Oberon Softwood mill and the upgrade constrained in the year, providing a

The Timber division employs around 800 Softwood people in its hardwood, softwood and Softwood’s single manufacturing plywood operations, located on the East facility is located at Oberon in New Coast of Australia. Timber operates 17 South Wales and operates through a manufacturing sites and six distribution joint venture with Carter Holt Harvey. outlets. Products are sold into the The mill has a capacity of around structural, commercial and renovation 725,000 m3 following a recent capital markets and are distributed across upgrade. The mill has successfully domestic and export markets. produced to full capacity in the last quarter of FY08. Softwood products are Hardwood primarily sold in East Coast markets. Boral’s hardwood business operates 15 manufacturing facilities in New Plywood South Wales and distributes product Boral is Australia’s leading plywood to domestic and export markets. The producer and operates one large business has a strong position in both plywood operation at Ipswich in structural and flooring markets. Boral Queensland. Products are sold in all exports small quantities of woodchips major Australian markets. processed from sawmill waste, forest residues and plantation stock from the hardwood operations in northern New South Wales.

Boral Limited Annual Review 2008 “Our Timber business is primarily New South Wales-based and is heavily 23 reliant on the housing sector. Because of the long and deep downturn in New South Wales housing, we have worked hard to develop new products, increase interstate sales, reduce manufacturing costs and increase prices to recover cost increases. The greatest challenge in doing this has been the dramatic increase in wood fibre and extraction costs. In some parts of our business, we have seen wood supply costs increase by over 10% during the year, with product prices tracking below this level.” Bryan Tisher, Executive General Manager

Boral Timber won the tender to Manufacturing performance provide flooring to the prestigious continues to improve following residential development the the upgrade of Boral’s softwood “Sydney wharf”. This successful manufacturing facility at Oberon, project involved a new client, a joint venture with Carter Holt Multiplex and the custom design Harvey, with the mill now having and manufacture of a new product. the capacity to process 725,000 m3 of incoming log.

Most of the Boral Timber products are sourced from Australian Forestry Standard (AFS) certified forests. Boral Timber endorses the AFS that covers over 90% of certified forestry in Australia and is acknowledged as the only forest certification scheme with an Australian Standard (AS4708-2007). Boral Plywood achieved AFS Chain of Custody certification for all of its products during the year.

Boral Limited Annual Review 2008 24

review of operating divisions Plasterboard

Despite continued weakness in New which allowed our existing plasterboard new 8 million m2 p.a. capacity plant in South Wales, Australian demand for line at Northgate to close during June Rajasthan, India and the new 10 million plasterboard grew by around 2%-3% in 2008 and our mothballed plant in the m2 p.a. capacity plant in Chengdu, China the year, reflecting stronger new house Adelaide suburb of Gillman to be taken were all completed within time and cost construction in Queensland. Sales out of service permanently and the land budgets during the year. revenue from the Australian business sold. was up 7% to $376 million, assisted Outlook In July 2007, GRA, our gypsum supply by a 2% lift in average plasterboard A cyclical uplift in building construction selling prices and stronger volumes joint venture with CSR, was restructured and our share of its shipping duty is expected to favourably impact on of plasterboard, cornice and jointing future plasterboard demand, particularly compounds which we manufacture. outsourced to CSL Australia Pty Ltd. CSL is building a new self-unloading vessel in Queensland and New South Wales. More sales of non-manufactured However, uncertainty in relation to products bought for resale through our in China to help service this work and which is expected to be trading on the affordability continues to work against extensive network of company, owned any early timing of such uplifts, and operated specialised trade stores Australian coast as an Australian licensed vessel by the end of September 2008. despite low rental vacancies. The also helped. competitiveness of plasterboard imports EBITDA for the year was steady despite Our Asian Plasterboard JV with Lafarge, into Australia from Asia looks to have stronger sales revenues. A net $3 million LBGA, recorded an equity accounted been impacted by rising energy and restructuring gain in the half year to after tax profit of $18.1 million, 12% freight costs there whilst our product December 2007 was offset by one- above the same period last year and range and segment tailored channels to off costs in the half year to June 2008 after a $2.5 million adverse impact due market look to position us well to meet associated with the commissioning of our to the appreciation of the Australian any future threat. Market conditions in new plasterboard plant in Brisbane and dollar. Underlying US dollar profits in Korea, Thailand and China are expected transitioning production from the existing LBGA were up 29% year-on-year. LBGA to remain competitive over the next year. plant. Cost reduction initiatives helped to sales volumes and revenues lifted in all However, strong underlying plasterboard maintain underlying margins in the face markets with improved market conditions demand is expected to underpin longer- of inflationary cost pressures, particularly in South Korea, Thailand, Indonesia and term Asian returns. in energy and labour. East China and market development activity assisting growth in the Central Construction of our new plant in the West of China and in Vietnam. LBGA’s Brisbane suburb of Pinkenba was cost improvement program, Excellence completed during the year at a net 2008, resulted in enhanced margins expected investment cost of up to despite transport and energy cost $119 million, 12% above the net pressures. The doubling of capacity to $106 million as budgeted. Commissioning 75 million m2 p.a. at the Dangjin plant was completed at the end of May 2008 in Seoul, and commissioning of the

The Plasterboard division is an jointing compounds plant in Victoria, one in every four square metres of integrated plasterboard manufacturing, cornice plants in New South Wales plasterboard sold in this region comes distribution and installation business and Victoria, an integrated national from LBGA. The JV has 368 million m2 with 54 company-owned distribution network of 54 specialist trade centres of plasterboard capacity, specialist and operating sites around Australia and and Australia’s largest residential wall ceiling tile plants, a metal roll forming employing around 650 people. and ceiling installation service. Boral is a mill and production capacity for jointing 50% shareholder in Gypsum Resources compounds and industrial plasters, Australia Australia (GRA) and in Rondo Building all feeding established distribution Boral specialises in the manufacture, Systems, the leading metal products networks. Boral and Lafarge intend that distribution and installation of supplier for wall and ceiling lining LBGA continues to profitably grow its plasterboard-based wall and ceiling systems. leadership position across Asia in a lining systems and aims to be manner which substantially increases Australia’s leading supplier of wall Asia Joint Venture markets for plasterboard systems and and ceiling lining solutions. We have Boral has a 50% shareholding of the associated products and delivers value. plasterboard manufacturing plants Lafarge Boral Gypsum Asia (LBGA) JV, in Queensland, New South Wales the leading multi-country plasterboard and Victoria, a specialty plasters and producer in Asia (outside Japan). Around

Boral Limited Annual Review 2008 “Delivering on growth investments in growth markets is our 25 current priority. We have finished commissioning our new plasterboard plant in Queensland and the work-up phase is going very well. The Queensland housing market, however, was a bit softer towards the end of 2007/08, which could create volume pressures in the shorter term. In Asia, we are very happy with our growth investments and the improved performance of the business.” Ross Batstone, Executive General Manager

LBGA is investing a total of The construction of the new Queensland US$48 million to purchase land plasterboard plant has been completed. and to construct a new plant at This 40 million m2 p.a. plant is adjacent the Baoshan Industrial Zone in to the river in the suburb of Pinkenba Shanghai, China. The new plant and is Australia’s largest. Its gypsum is expected to be in operation feedstock is taken directly from ship by in the December 2009 quarter. conveyor to plant so as to reduce costs Plasterboard production capacity and to take trucks from the roads. The will be 34 million m2 p.a. initially process technology utilised is expected to with site flexibility to increase deliver enhanced energy efficiency. The capacity in the future. The plant uses harvested roof water for part additional plant will strengthen of its process water needs and can use LBGA’s leading position in East recycled water when available. China and position the business well to supply the growing market.

Our Plasterboard business continues to benefit from product research and development activities. A robust innovation process coupled with a strong project management framework continues the tradition of successful delivery of new products and systems such as BoxCoteTM and IntRwallTM. Our focus on lightweight, sustainable interior building systems aims to ensure that evolving market needs will be fully met. Boral Limited Annual Review 2008 26

review of operating divisions USA

In the USA, EBITDA earnings MLT reported a loss of US$21 million volumes were 10% lower than last decreased by 90% on the prior year to compared to a US$4 million loss last year as commercial and infrastructure US$10 million. The result was driven by year. Whilst average concrete roof tile sales only partially offset the impact the continued significant deterioration in prices for the year were down 5%, June of a weak residential market and poor housing activity, with US housing starts 2008 prices were up 7% year-on-year. weather conditions. Price increases down 27% to 1.13 million. Sales volumes were down by 42%. The and cost controls offset higher fuel and Lower volumes, increased material decline in single family housing starts in other inflationary cost impacts. EBITDA costs, and one-off costs (US$4 million) MLT’s four key markets averaged 48% in Denver was down year-on-year. associated with programs to reconfigure on the prior year (73% from the peak in Integration of the Oklahoma business is Boral’s brick and roof tile production 2005). Unit production costs increased complete, however, performance was network contributed to the severe fall due to production inefficiencies, with below expectations because of energy in earnings, particularly in the second plant utilisation down to 27% compared related cost increases and lower than half. Cost reduction initiatives including to 48% in the prior year and around 75% expected volumes due in part to poor network optimisation aimed at reducing in 2005/06. weather. fixed costs, continue to be implemented Revenue of US$25 million from Clay Roof Outlook in the brick and roof tile businesses, Tiles was down 8% on last year because with an expected incremental benefit of of lower volumes more than offsetting It remains unclear when a turnaround in US$31.5 million in 2008/09. a 4% increase in average selling prices. US housing activity may occur. Market Volumes were 11% lower as the overbuilt forecasters currently expect US housing Revenue from Bricks was down by 28% starts to be around 900,000 in 2008/09 due to a 27% decline in sales volumes. western US and Florida markets were further impacted by the tight US credit compared to annualised starts of around Average brick prices reduced by 2% 1.0 million in the June half 2008. Brick due to a less favourable regional and market and high levels of foreclosures. EBITDA was well below last year as utilisation is around 40% at the start product mix, otherwise prices remained of 2008/09 and in concrete roof tiles it stable. Boral bricks sold through direct costs were impacted by lower production to avoid inventory build. remains at around 27%. Lower volumes distribution remain at approximately 80% will adversely impact brick and roof tile of total volumes. Brick plant utilisation Profit from BMTI was lower than last sales volumes and earnings but increased averaged 56%, down from 79% last year. Higher prices and new product benefits from cost reduction programs year. EBITDA was significantly down initiatives did not offset lower volumes will be delivered, including efficiencies as a result of low volumes and related resulting from the loss of the Belews from the reconfiguration of Boral’s brick production inefficiencies, as well as one- Creek contract in December 2006 plant network. US construction materials off costs of US$2.5 million to reconfigure and because of continued very weak markets are expected to be weaker the brick plant network and a residential construction in Florida and in 2008/09 compared with 2007/08. US$5 million write-down of specialised Georgia. Overall, US earnings are expected to be plant used to manufacture product for lower in 2008/09. the high end market. The strong cost Revenue from the US Concrete & Quarry reduction focus is continuing in 2008/09, businesses (Denver and Oklahoma) of Boral is well positioned in the markets with targeted incremental benefits of US$125 million was 61% up on the prior it serves with low cost, modern US$24 million. year primarily due to the newly acquired manufacturing facilities, and will Oklahoma operations in August 2007; deliver benefits as markets recover. EBITDA increased. In Denver, concrete

Boral employs around 2,200 people at plants in the western and south-western plants, fly ash terminals and sales offices. 160 sites across the USA. states and also in Florida. US Tile, the With cementitious properties, fly ash is country’s largest clay roof tile producer, used as a cement substitute. Bricks operates from a plant in Southern Boral Bricks operates 24 plants across 15 California and in Northern California. Construction Materials locations in eight states, primarily in the Through a 50% interest in a joint venture, Boral has a strong number three position south-east and south-west. Over 80% US Tile operates in Trinidad, producing in the growing Denver market with eight of product sales are through a network roof tiles for importation into Florida. concrete plants, 109 trucks, three sand of around 60 company-owned direct and gravel deposits and two masonry selling locations with the remainder via a Fly Ash plants. In August 2007, Boral acquired network of independent distributors. Boral Material Technologies Inc. (BMTI), Schwarz concrete and sand business and one of the largest marketers and Arbuckle limestone quarry in Oklahoma. Roof Tiles distributors of coal combustion products The business has 18 concrete plants, four Boral owns 50% of MonierLifetile (MLT). in the USA, has around 40 locations sand mines and a limestone quarry. The joint venture has 14 concrete roof tile including operations at electrical utility “2007/08 has been the most difficult year for Boral’s US businesses 27 since it began trading in the US some 30 years ago. Demand from the housing market has halved over the past two years and in some markets, activity has reduced by as much as 75% from 2006 peak levels. We have dramatically reduced our workforce, mothballed plants, and optimised plant networks. We have been relentless around reducing overhead and other fixed costs to minimise the impacts on Boral’s overall profitability during the US downturn.” Emery Severin, Executive General Manager

US$10 million acquisition of sand In August 2007, Boral acquired and gravel reserves in Denver, the concrete and sand assets of Colorado are very well located Schwarz Readymix and the quarry to supply the Denver market as assets of Davis Arbuckle Materials existing reserves come to the for US$84 million. This acquisition end of their useful lives. positions Boral as the second largest concrete producer in Oklahoma City and demonstrates Boral’s ongoing commitment to growing in construction materials in the USA.

US Tile’s new US$30 million clay roof tile plant in Ione, California was commissioned during the year with an output of 130,000 squares1 per annum. Whilst this new plant positions Boral well for when Boral Bricks new US$55 million, 120 million standard brick Western housing markets recover, equivalent plant at Terre Haute, Indiana completed commissioning it will operate at high utilisation during the year. Around 80% of the energy requirements of the rates during the downturn, allowing plant can come from landfill gas, which is considerably lower cost higher cost capacity at Corona to than more conventional sources of energy. This low cost plant will be mothballed. allow older high cost brick capacity to be mothballed during the downturn and positions Boral well when the market recovers. 1 One square=100 square feet.

Boral Limited Annual Review 2008 28

Management Committee

Rod Pearse 1 Ross Batstone 6 1 2 CEO and managing director Executive General Manager, Biography on p.31 Plasterboard Ross is 60 and was Boral’s Divisional General John Douglas 2 Manager, Plasterboard Australia from 1996- Executive General Manager, Australian 2000 before becoming Executive General Construction Materials Manager of the Plasterboard division. He was previously Boral’s Divisional General Manager, 3 4 John is 46 and has been in his current position Roofing from 1991-1995, Chief Executive since 2004. He joined Boral in 1995 and has Montoro Resources Ltd from 1988-1990 held roles as Regional General Manager of and held various roles at Shell Company of Boral’s NSW Construction Materials business, Australia from 1970-1987. He holds chemical General Manager of NSW Metropolitan engineering and commerce degrees from Quarries and General Manager, Strategic Queensland University. Planning for Boral’s Construction Materials 5 6 Group. Prior to joining Boral, John held Emery Severin 7 various positions with the Boston Consulting Group, Pioneer Concrete UK, John Mowlem President, Boral USA International and Douglas Partners. He holds Emery is 52 and was previously Executive a civil engineering degree with First Class General Manager of the Australian Honours from the University of Adelaide and Construction Materials division from 1999– an MBA from London Business School. 2004 before being appointed as President of Boral USA in August 2004. He was previously 7 8 Phil Jobe 3 National General Manager of Blue Circle Executive General Manager, Cement Southern Cement from 1998-1999. Prior to that he was Regional General Manager of Phil is 54 and has been Executive General Boral’s NSW Construction Materials Group Manager of the Cement division since late from 1996-1998. Prior to joining Boral he 1999. Prior to this he was Regional General held various management roles at BHP Steel Manager for Boral’s NSW Construction from 1986-1995. Emery has a doctorate of 9 10 Materials business and General Manager philosophy in physical chemistry from Oxford of Boral’s Construction Related Businesses University and a science degree (First Class from 1995-1999. Before joining Boral, Phil Honours) from the University of NSW. was Managing Director of the Stegbar Group of Companies from 1987-1994. He holds a Ken Barton 8 commerce degree from the University of NSW. Chief Financial Officer Ken is 42 and has been Boral’s Chief Financial 11 Keith Mitchelhill 4 Officer since December 2002. He was Executive General Manager, previously Vice President and Chief Financial Clay & Concrete Products Officer of Boral Industries Inc in the USA from August 2000. Prior to joining Boral, he Keith is 45 and rejoined Boral as Executive was Vice President Finance, Pioneer USA General Manager of Clay & Concrete from 1997-2000 and prior to that he was a Products in August 2002 from Sirius Partner in the Corporate Finance division of Robin Town 10 Telecommunications where he was CEO of Arthur Andersen based in Sydney. Ken has General Manager, Human Resources the Phoneware Division. He was previously a Bachelor of Economics degree from the Executive General Manager of Boral Timber University of Sydney and is an Associate of Robin is 56 and has been Boral’s General from 2000-2001, General Manager, Boral the Institute of Chartered Accountants in Manager, Human Resources since June Masonry from 1997-1999 and General Australia and a fellow of the Financial Services 2001. He was previously President of Boral Manager Marketing, Boral Building Products Institute of Australia. Material Technologies in the USA from Group from 1996-1997. Prior to that he held 1999-2001 and Regional General Manager positions with Laminex BTR Nylex and Michael Scobie 9 of Boral’s Construction Materials business in NEC Australia. He holds an economics Queensland from 1996-1999. Prior to joining degree (Honours) and an MBA from General Manager, Corporate Services and Company Secretary Boral, he worked in the cement industry with Monash University. Queensland Cement for 23 years. He holds Michael is 62 and is General Manager, a chemical engineering degree from the Bryan Tisher 5 Corporate Services and Company Secretary University of Queensland. Executive General Manager, Timber of Boral. He joined the Boral Group as a corporate lawyer and has 35 years’ service. Andrew Warburton 11 Bryan is 45 and was appointed Executive He became the Company Secretary in 1983 General Manager, General Manager, Timber in March 2007. and has also held general counsel and other Corporate Development Prior to this he was General Manager corporate roles since then. Michael has a law Corporate Development, a role which he degree from the University of Sydney. Andrew is 44 and is General Manager, held from 2000-2007, and General Manager, Corporate Development. He was previously Strategic Planning for Boral’s Construction National General Manager, Quarry End Materials Group from 1998-1999. Prior to Use from 2003-2007. Prior to joining Boral, joining Boral he held a variety of positions at he held marketing, business development Rio Tinto (1985-1998) including roles in project and financial positions in the plastics and finance, engineering design and construction electronics industries based in Europe and in a variety of locations including Australia, funds management in Australia. Andrew holds USA, Africa and Indonesia. He holds a civil an economics degree from the University of engineering degree (First Class Honours) from Sydney and an MBA from INSEAD. Monash University and an MBA from Harvard Business School.

Boral Limited Annual Review 2008 29

Financial Review

Financial Performance Income Statement 2008 2007 Significant external factors weighed for the year ended 30 June $ millions $ millions heavily on the Group’s results for 2007/08. A substantial decline in US Sales revenue 5,198.5 4,909.0 housing starts had a direct impact EBITDA 688.2 762.3 on the US businesses, particularly Depreciation and amortisation (240.2) (231.4) the brick and roof tile operations, Write-down of Thailand goodwill (31.9) – which resulted in EBIT for the US EBIT 416.1 530.9 segment declining by 130% to a loss Net interest (111.9) (110.5 ) for the year of $27 million. A rapid Operating profit before tax 304.2 420.4 escalation in energy costs resulted in Income tax expense (62.0) (122.3) a contraction of margins, particularly Minority interests 0.6 – in the Australian Construction Profit after tax 242.8 298.1 Materials businesses. Tighter credit Earnings per share (cents) 40.7 50.0 markets have led to increased funding costs and tighter lending conditions lower revenues in the MonierLifetile roof tiles, masonry, plasterboard, broadly; however, interest costs business which is equity accounted. timber and windows which are all for Boral remained flat and debt MonierLifetile’s markets experienced heavily reliant on the new residential maturities were extended. Tighter greater declines in housing starts construction market as a driver of credit conditions have led to some than the brick markets and the US as demand. The Australian Building greater levels of customer defaults in a whole. The Australian dollar was Products businesses all achieved the US and Australia, although at this stronger against the US dollar, by price increase. Profits were lower stage not at levels materially above around 14%, which resulted in the in bricks due to a weakening in prior years. Despite these factors, reported Australian dollar revenues the brick-intensive West Australian Australian operating profits increased decreasing by around 24%. Revenues housing market. Profits in other 12% over the prior year, largely as a in the Indonesian and Thailand building products businesses were in result of improved prices and volumes concrete and quarry businesses, line with or higher than the prior year. across most of the Australian rose around 5%. businesses. The US housing market continued The Group’s underlying1 operating to weaken during 2008. Substantial Largely as a result of the weaker US profit before interest and tax for the declines in activity, particularly in markets, Boral’s net profit for the year year declined by 16% compared to single family, detached housing decreased by 19% to $242.8 million. the previous year to $448.0 million. led to losses being incurred in the This net profit is equivalent to 40.7 US segment. Brick sales volumes cents per share, a decrease of around The Australian operations generated declined by 27% and prices declined 9.3 cents per share compared with operating profits of $465.3 million by around 2%. Concrete tile sales the prior year. A final fully franked during the year, up 12% compared volumes declined by 42% and dividend of 17 cents per share has to the prior year. The improvement prices were lower by around 5%. been declared, bringing the full year in earnings was due to increased Despite price increases and cost dividends to 34 cents. The dividends building activity in a number of key improvements, volume declines in remained unchanged from 2007. markets, particularly in non-residential the Denver construction materials segments, as well as favourable The Group’s revenues increased by business led to reduced profits. pricing outcomes. 5.9% compared with the previous Profits from the fly ash business were year to $5.2 billion. The increase in The Construction Materials lower than the prior year. revenues can be largely attributed operations reported an operating To further increase Boral’s exposure to increased prices across most profit of $350.9 million, which to the US construction materials Australian businesses. Price and compares to $318.0 million in the market, a further acquisition was volume increases, particularly in the prior year. Strength in the non- announced during the year. During construction materials segment, residential building markets and in the the year, $99.8 million was spent to contributed to the growth in revenue infrastructure segments underpinned acquire the concrete and aggregate with around a 7% price increase in increased volumes across most in Oklahoma. concrete, 5% in quarry products and construction materials businesses, 3% in cement. with the notable exception of NSW. In Asia, prices and volumes improved Price increases were achieved in in plasterboard in most major Despite continued weak housing cement, concrete and aggregates markets. During the year, new plants markets across Australia’s East and asphalt. These price increases, were successfully commissioned in Coast, revenue increased 6% in together with cost savings and higher South Korea, India and China. the Australian Building Products volumes, were not sufficient to offset segment. The revenue growth was 1 cost increases and the profit margin Excluding goodwill and tax provision adjustments driven largely by price increases increase during the year decreased combined with the volume impacts to 11.9% from 12.5%. of growth initiatives. US revenues in local currency declined by 13% as Results from the Australian Building housing starts across the US declined Products businesses were up by by around 27%. The revenue decline 15% compared to the prior year. does not include the impact of This segment includes bricks,

Boral Limited Annual Review 2008 30

IFinancialncome S Reviewtatement Boral limited and controlled Entities

The reported result from the Asian Balance Sheet plasterboard business was 12% 2008 2007 above prior year. As at 30 June $ millions $ millions The Construction Materials Current assets 1,570.8 1,451.0 businesses in Asia reported weaker Non-current assets 4,324.2 4,365.6 results due to lower margins as cost Total assets 5,895.0 5,816.6 increases were not recovered through Current liabilities 1,025.3 921.8 higher prices. Concrete volumes Non-current liabilities 1,960.1 1,907.5 were lower in Thailand due to Total liabilities 2,985.4 2,829.3 lower levels of construction activity. Net assets 2,909.6 2,987.3 Challenging market conditions have been experienced in our Thailand Total equity 2,909.6 2,987.3 concrete and quarry businesses and Debt and Gearing trading conditions remain difficult; we 2008 2007 have therefore chosen to write off the As at 30 June $ millions $ millions $31.9 million of goodwill which arose Total debt 1,562.5 1,518.0 on acquisition of the business in July Total cash and deposits 47.4 35.7 2004. Net debt 1,515.1 1,482.3 Net interest expense increased Total shareholder equity 2,909.6 2,987.3 from $110.5 million to $111.9 million, Gearing ratios largely due to an increase in average Net debt: equity (%) 52 50 net debt. Underlying EBIT interest Net debt: equity plus net debt (%) 34 33 cover declined from 4.8 times to Interest cover1 (times) 4.0 4.8 4.0 times, largely as a result of the decline in earnings. Financial Position Boral is exposed to financial risk in its operations as a result of fluctuations The average underlying tax rate for The net financial position of the Group remained relatively unchanged during occurring in interest/foreign exchange the year was lower than the prior rates and certain commodity prices. year at 26.8%, due to the tax effect the year with total equity decreasing by 2.6% to $2,909.6 million. Net Boral uses financial instruments to of the losses incurred in the US manage such risks. which are subject to a higher tax borrowings increased by 2% to rate than Australian earnings. Boral’s $1,515.1 million from $1,482.3 million. Boral’s reported return on reported tax expense of $62 million The increase in net borrowings was shareholders’ funds declined from includes a benefit of $28.1 million after approximately $327 million 10.0% to 8.4% during the period arising from the resolution of a of growth capital and acquisitions as reported earnings declined by number of outstanding matters during the year and was partly around 19%. with the Australian Taxation Office offset due to a favourable currency predominantly around the utilisation adjustment from the appreciation of Cash Flow the Australian dollar and translation of of tax losses and capital gains arising The Group generated operating our significant US dollar borrowings. from the demerger in 2000. cash flows of $581.8 million after The Group’s gearing (measured as net payment of interest and income tax. The interim and final dividends for the debt to equity) increased from 50% This represents an increase of 21% year totalled $202.1 million which, to 52% and remains at the lower end or $100 million compared to the cash combined, represent a payout ratio of the stated target range of 40% to flow reported last year. The increase of 83% of profit after tax, a higher 70%. payout ratio than the 68% ratio for reflects the lower earnings offset by the prior year. Boral continued its Boral’s long-term and short-term higher dividends from associates, Dividend Reinvestment Plan (DRP) credit ratings continued at BBB+/ lower tax payments and improved during the fiscal year. This resulted A2 with Standard & Poor’s and Baa1/ working capital management. P2 with Moody’s Investors Service, in proceeds of $41.4 million being These cash flows were used to fund although in both cases a negative applied to the issue of 6.1 million new around $496.0 million of capital and outlook was noted during the year. ordinary shares. Boral will continue to acquisition expenditure. This largely offer a DRP and will again undertake At 30 June 2008, the Group had related to major capital projects in an on market buy-back to reduce available undrawn committed and the US and Australia, including a new earnings per share dilution. The Group uncommitted debt facilities of plasterboard plant in Queensland, conducted an off-market share buy- $2,570 million. Boral’s average debt the new brick plant in Indiana, new back during the year which resulted maturity profile at 30 June 2008 was rooftile operations in California and in 20.0 million ordinary shares being 6.0 years compared with 4.9 years at a number of new asphalt plants in bought back and cancelled at a 30 June 2007. Australia. In addition, $99.8 million price of $5.65 per share. The price was invested in the acquisition of Boral has hedged its foreign comprised a capital component of construction materials operations in exchange exposures (primarily US $2.84 per share and a fully franked Oklahoma City in the US. dividend component of $2.81 per dollar denominated) arising from share. investments in overseas operations. Earnings from foreign operations are not hedged.

Boral Limited FinancialAnnual Review Report 2008 2008 31

Board of Directors

Kenneth J Moss, AM 1 10 years with the UK’s Vodafone Group as 1 2 Non-executive Chairman, age 63. CEO Vodafone Australia, CEO Vodafone Asia Pacific and Group Human Resources Dr Moss joined the Boral Board in 1999 Director. Dr Clark has a doctorate in and became the Chairman of Directors physics from the University of Pretoria, in 2000. Dr Moss is the Chairman of South Africa and completed the Advanced Centennial Coal Company Limited Management Program at the Harvard and a director of GPT RE Limited (the Business School. responsible entity for the General Property 3 4 Trust) and Macquarie Capital Alliance Dr Clark is a member of the Group (the responsible entity for the Remuneration Committee. Macquarie Capital Alliance Trust). Dr Moss was previously the Managing E John Cloney 5 Director of Howard Smith Limited and Non-executive Director, age 67. is experienced in building materials Mr Cloney joined the Boral Board in businesses. He has an engineering 1998. Mr Cloney is the Chairman of QBE 5 6 degree (Honours) and a doctorate of Insurance Group Limited and a director philosophy in mechanical engineering of Maple-Brown Abbott Limited and ABN from Newcastle University. AMRO Australia Holdings Pty Limited. Dr Moss is a member of the He is a member of the Advisory Council Remuneration Committee. in Australia of ABN AMRO. His career was in international insurance and he Rodney T Pearse 2 was previously the Managing Director of 7 8 Managing Director, age 61. QBE Insurance Group Limited. Mr Cloney is a fellow of the Australian Institute Mr Pearse became the Managing Director of Management and the Australia and and Chief Executive Officer of Boral in New Zealand Institute of Insurance and January 2000. He joined the Boral Group Finance. as the Managing Director, Construction Materials Group in 1994. Mr Pearse Mr Cloney is the Chairman of the had previously held senior management Remuneration Committee. positions in Shell International, Shell Australia and CSR Limited. He is a Robert L Every 6 board member of the Business Council Non-executive Director, age 63. of Australia, a member of the Advisory Dr Every joined the Boral Board in J Roland Williams, CBE 8 Panel of the Australian Graduate School September 2007. He is the Chairman Non-executive Director, age 69. of Management, the Chairman of of Iluka Resources Limited and Deputy Outward Bound Australia and serves as Chairman of Wesfarmers Limited (and Dr Williams joined the Boral Board in a Councillor for the Australian Business will become the Chairman of Wesfarmers 1999. He is a director of Origin Energy Arts Foundation. He has a commerce Limited following its Annual General Limited. Dr Williams had an international degree (Honours) from the University Meeting in November 2008). Dr Every career with the Royal Dutch/Shell Group of New South Wales and an MBA (High held senior executive positions with from which he retired as Chairman and Distinction) from Harvard University. Tubemakers of Australia and BHP and Chief Executive of Shell Australia. He has was the Managing Director and CEO of a chemical engineering degree (Honours) Elizabeth A Alexander, AM 3 OneSteel Limited. Dr Every is a fellow of and a doctorate of philosophy from the Non-executive Director, age 65. the Australian Academy of Technological University of Birmingham. Ms Alexander joined the Boral Board in Sciences and Engineers. He has a Dr Williams is a member of the 1994. Ms Alexander is the Chairman of science degree (honours) and a doctorate Audit Committee. CSL Limited and a director of DEXUS of philosophy (metallurgy) from the Funds Management Limited (the University of New South Wales. responsible entity for DEXUS Property Dr Every is a member of the Group, which was formerly named DB Remuneration Committee. RREEF Trust). A chartered accountant, she was a partner in PricewaterhouseCoopers Richard A Longes 7 in Melbourne until 2002. Ms Alexander Non-executive Director, age 63. is a member of the Takeovers Panel and Mr Longes joined the Boral Board in 2004. the Financial Reporting Council. She has a He is a director of Austbrokers Holdings commerce degree from the University of Limited and Metcash Limited. Mr Longes Melbourne. is a lawyer and a non-executive director of Ms Alexander is the chair of the Investec Bank (Australia) Limited. He was Audit Committee. previously an executive of Investec Bank, a principal of Wentworth Associates, the J Brian Clark 4 corporate advisory and private equity Non-executive Director, age 59. group, and a partner of Freehills, a leading Dr Clark joined the Boral Board in May law firm. He has arts and law degrees 2007. Dr Clark has experience as a from the University of Sydney and an non-executive director in Australia and MBA from the University of New South overseas. He is a director of AMP Limited Wales. and a member of the Merrill Lynch Mr Longes is a member of the Australian Advisory Board. In South Audit Committee. Africa, he was President of the Council for Scientific and Industrial Research (CSIR) and CEO of Telkom SA. He also spent

Boral Limited Annual Review 2008 32

Corporate Governance

This section of the Annual Review The responsibilities of the Board Work of Directors on Strategy discloses the key details of Boral’s include: and Other Matters governance framework. Boral is The Board reviews the strategic • Oversight of the Company including committed to ensuring its policies and action plan, approves the annual its conduct and accountability practices reflect good governance budget and monitors the Company’s systems. and compliance with all requirements performance against them. Initiatives applying to Australian listed • Reviewing and approving overall have included disciplined growth companies. financial goals for the Company. strategies, capital management, cost efficiencies and other aspects of The Directors consider that the • Approving strategies and plans for operational improvement programs. governance framework and Boral’s businesses to achieve these adherence to that framework are goals. Directors and senior management fundamental in demonstrating that meet annually for two days to discuss • Approving financial plans and annual they are accountable to shareholders in detail the strategic direction of the budgets. and are appropriately overseeing the Company’s businesses. The Board’s management of risk and the future • Monitoring implementation of focus is on improving shareholder direction of the Company. strategy, business performance and returns and pursuing disciplined results and ensuring appropriate growth. In August 2007, the Australian resources are available. Securities Exchange (ASX) Corporate Each month, Directors receive a Governance Council released its • Approving key management detailed operating review from revised Corporate Governance recommendations (such as major the Managing Director and Chief Principles and Recommendations. capital expenditure, acquisitions, Executive Officer (CEO) regardless Even though disclosure by Boral divestments, restructuring and of whether or not a Board Meeting is under these revised Principles and funding). being held. Recommendations is not required • Appointing, rewarding and Non-executive Directors would spend until the 2009 annual report, Boral determining the duration of approximately 30 days each year has made an early transition to the appointment of the chief on Board business and activities reporting by reference to them in executive officer and ratifying the including Board and Committee this Corporate Governance section. appointments of senior executives meetings, the strategy meeting, Boral complied with the revised including the chief financial officer visits to operations and meeting Principles and Recommendations in and the company secretary. employees, customers, business all substantial respects throughout the associates and other stakeholders. • Reviewing the performance of the 2008 financial year. In any instance chief executive officer and senior During the year, the Board visited a where Boral has an alternative management. number of sites including Highland approach to a recommendation, this Pine Products Pty Limited (50% has been disclosed and explained. • Reviewing and verifying systems owned) in Oberon, NSW and the of risk management and internal new plasterboard plant and Sunstate compliance and control, codes of Principle 1: Lay Solid Foundations Cement Limited (50% owned) in conduct and legal compliance. for Management and Oversight Brisbane, Queensland. The Board also Responsibilities of the Board • Reviewing sustainability spent a week in March 2008 in the and Management performance and overseeing USA visiting Boral’s brick, roof tile and The Board of Directors is responsible occupational health and safety and construction materials operations and for setting the strategic direction environmental management and MonierLifetile LLC (50% owned). of the Company and for overseeing performance. and monitoring its businesses and The Chairman regularly communicates affairs. Directors are accountable to • Approving and monitoring with the CEO to review key issues the shareholders for the Company’s financial reporting and reporting and performance trends. to shareholders on the Company’s performance. Evaluating the Performance direction and performance. The Board reviews and approves the of Senior Executives Company’s strategic and business • Meeting legal requirements and The performance of senior executives plans and guiding policies. Day to ensuring that the Company acts is reviewed annually against day management of the Company’s responsibly and ethically and appropriate measures as part of affairs and implementation of its prudently manages business risks Boral’s performance management strategy and policy initiatives are and Boral’s assets. system, which is in place for all managers and staff. The system delegated to the chief executive In fulfilling the Board’s includes processes for the setting of officer and senior executives, who responsibilities, Directors seek to objectives and the annual assessment operate in accordance with Board enhance shareholder value. approved policies and delegated limits of performance against objectives and of authority. Policies, plans and strategies and workplace style and effectiveness. limits of delegated authority, which On an annual basis, the Remuneration have been approved by the Board Committee and subsequently the and are reviewed regularly, define non-executive Directors formally the responsibilities and functions of review the performance of the CEO. senior executives.

Boral Limited Annual Review 2008 33

The criteria assessed are both Director Independence It is considered that none of the qualitative and quantitative and The Board has assessed the interests of Directors with other include: independence of non-executive firms or companies having a business Directors (including the Chairman) relationship with Boral could • profit performance. in light of their interests and materially interfere with the ability of • other financial measures. relationships and considers all those Directors to act in Boral’s best of them to be independent. The interests. Material in the context of • safety performance. criteria considered in assessing the Director independence, is generally • strategic actions. independence of non-executive speaking, regarded as being 5% of Directors include that: the revenue of the supplier, customer The CEO annually reviews the or other entity being attributable to performance of each of Boral’s • The Director is not a substantial the association with a Boral company senior executives being members of shareholder of the Company or an or companies. the Management Committee using officer of, or otherwise associated criteria consistent with those used directly with, a substantial Nomination and Appointment for reviewing the CEO and reports to shareholder. of Directors the Board through the Remuneration The Board has considered • The Director is not employed, or Committee on the outcome of those establishing a Nomination Committee has not previously been employed reviews. and decided in view of the relatively in an executive capacity by a Boral small number of Directors that The performance of the CEO and the company, and there has been such a Committee would not be Company’s senior executives during a period of at least three years a more efficient mechanism than the 2008 financial year was assessed between ceasing such employment the full Board for detailed selection in August 2008 in accordance with and serving on the Board. and appointment practices. The full the above processes. • The Director has not within the last Board performs the functions that three years been a principal of a Principle 2: Structure the Board would otherwise be carried out by professional adviser or consultant a Nomination Committee. to Add Value to a Boral company, or an employee The Board’s policy for the selection, Structure of the Board associated with the service appointment and re-appointment of The Board of Directors comprises provided. seven non-executive Directors Directors is to ensure that the Board (including the Chairman) and one • The Director is not a significant possesses an appropriate range of executive Director, the CEO. The roles material supplier or customer of a skills, experience and expertise to of Chairman and CEO are separate. Boral company or an officer of or enable the Board to most effectively The skills, experience and expertise otherwise associated directly or carry out its responsibilities. As part of each Director are set out on page indirectly with a material supplier or of this appointment process, the 31 of the Annual Review. customer. Directors consider Board renewal and succession plans and whether the • The Director has no material The period of office held by each Board is of a size and composition contractual relationship with a Boral current Director is: that is conducive to making company other than as a Director. appropriate decisions. Last elected at an Annual General The appointment of Bob Every Appointed Meeting as a new non-executive Director Ken Moss, Chairman 1999 27 October 2006 in September 2007 followed a Rod Pearse, CEO 2000 Not applicable process during which the full Board assessed the necessary Elizabeth Alexander 1994 21 October 2005 and desirable competencies of Brian Clark May 2007 29 October 2007 potential candidates and considered a number of names before deciding John Cloney 1998 27 October 2006 on the most suitable candidate for Bob Every September 2007 29 October 2007 appointment. The selection process includes obtaining assistance from Richard Longes 2004 29 October 2007 an external consultant to identify Roland Williams 1999 29 October 2007 suitable candidates and in assessing them. Candidates identified as being The Board selects the Chairman from the non-executive independent suitable are interviewed by one or Directors. The Chairman leads the Board and is responsible for the efficient more Directors. Confirmation is organisation and conduct of the Board’s functioning. He ensures that Directors sought from prospective directors have the opportunity to contribute to Board deliberations. that they would have sufficient time to fulfil their duties as a Director.

Boral Limited Annual Review 2008 34

Corporate Governance

The key terms and conditions relative discussion between the Chairman and other obligations to legitimate to the appointment of Directors, and each other Director. stakeholders. the Board’s responsibilities and the An evaluation of the Board’s A copy of Boral’s Code of Corporate Company’s expectations of Directors performance was not undertaken in Conduct is available on Boral’s are set out in a letter when a new the 2007/08 financial year but one is website. non-executive Director is appointed. currently underway. Dealings in Boral Shares Tenure of Directorships Conflicts of Interest The Board has a policy that Boral The Company’s Constitution was Directors are required to declare Limited Group directors, officers amended at the 2007 Annual General the nature of any interest they have and senior executives may not buy Meeting to require that a Director in business to be dealt with by the or sell Boral shares except within a must not hold office (without Board. Except as permitted by the period of one month after any major re-election) past the longer of the Corporations Act, Directors leave public announcement regarding third Annual General Meeting or three Board Meetings and do not vote the Company’s results and trading years following that Director’s last when business in which they are prospects (such as the yearly and half election or appointment. interested is considered. yearly profit announcements and the This amendment brought the Chairman’s and Managing Director’s Independent Advice and Constitution into line with the Addresses to the Annual General Indemnification ASX Listing Rules on the issue of Meeting). The policy precludes After consultation with the Chairman, retirement of Directors. Retiring executives from entering into any Directors may seek independent Directors are eligible for re-election. hedge or derivative transactions professional advice in furtherance When a vacancy is filled by the Board relating to options or share rights of their duties at the Company’s during a year, the new Director must granted to them as long-term expense. stand for election at the next Annual incentives, regardless of whether or General Meeting. The requirements Pursuant to the Company’s not the options or share rights have relating to retirement from office do Constitution and agreements with vested. The policy supplements not apply to a managing director of Directors and to the extent permitted the Corporations Act provisions the Company. by law, the Company must indemnify precluding directors and officers Directors and executive officers from trading in securities when they The Directors believe that limits on against liabilities to third parties are in possession of price sensitive tenure may cause loss of experience incurred in their capacity as officers of “insider” information. and expertise that are important the Company and against certain legal contributors to the efficient working A copy of Boral’s Share Trading Policy costs incurred in defending an action of the Board. As a consequence, is available on Boral’s website. for such a liability. the Board does not support arbitrary Share dealings by Directors are limits on tenure and regards Principle 3: Promote promptly notified to ASX. nominations for re-election as not Ethical and Responsible being automatic but based on the Decision-making Boral Directors must hold a minimum individual performance of Directors shareholding of 1,000 shares. and the needs of the Company. Conduct and Ethics Before the business to be conducted The Board’s policy is that Boral Principle 4: Safeguard Integrity at the Annual General Meeting is companies and employees must in Financial Reporting observe both the letter and spirit finalised, the Board discusses the Audit Committee of the law, and adhere to high tenure of any Director standing for Boral has an Audit Committee which standards of business conduct and re-election in the absence of those assists the effective operation of the comply with best practice. Boral’s Directors. Board. The Audit Committee is wholly Management Guidelines contain a comprised of independent non- Evaluation of Board Performance Code of Corporate Conduct and other executive Directors. The Board periodically undertakes guidelines and policies which set an evaluation of the performance of out legal and ethical standards for The Audit Committee is chaired by the Board and its Committees. The employees. As part of performance Elizabeth Alexander with Richard evaluation encompasses a review of management, employees are Longes and Roland Williams being the structure and operation of the assessed against the Boral Values the other members. The members Board, the skills and characteristics of leadership, respect, focus, possess sufficient technical expertise required by the Board to maximise performance and persistence. to fulfil the functions of the Committee. its effectiveness and whether the The Committee met five times during This policy and code guide the blending of skills, experience and the 2008 financial year, and attendance Directors, the CEO, the chief financial expertise and the Board’s practices by members at these meetings officer, the company secretary and procedures are appropriate for is shown in paragraph (13) of the and other key executives as to the the present and future needs of Directors Report on page 39. the Company. Steps involved in the practices necessary to maintain evaluation include the completion of a confidence in the Company’s The Audit Committee has a formal questionnaire by each Director, review integrity and as to the responsibility Charter which sets out its role of responses to the questionnaire and accountability of individuals for and responsibilities, composition, at a Board Meeting and a private reporting and investigating reports structure and membership of unethical practices. The code requirements. The Committee has also guides compliance with legal the necessary power and resources

Boral Limited Annual Review 2008 35

Balance Sheet Boral limited and controlled Entities to meet the Charter including rights External Auditor Boral is committed to making of access to management and Boral’s external auditor is KPMG. timely and balanced disclosure of auditors (internal and external) and The scope of the external audit and all material matters and to effective to seek explanations and additional the effectiveness, performance and communication with its shareholders information. independence of the external auditor and investors so as to give them are reviewed by the Audit Committee. ready access to balanced and The Audit Committee Charter is understandable information. available on Boral’s website. If circumstances arise where it becomes necessary to replace the A copy of Boral’s Continuous The Committee also reviews external auditor, the Audit Committee Disclosure Policy is available on the Company’s compliance with will formalise a process for the Boral’s website. applicable accounting standards selection and appointment of a new and generally accepted accounting auditor and recommend to the Board Principle 6: Respect the Rights principles. the external auditor to be appointed of Shareholders Accounting and financial control to fill the vacancy. Communications with policies and procedures have been The Audit Committee monitors Shareholders established and are monitored by the procedures to ensure the rotation of The Company’s policy is to promote Committee to ensure the accounts external audit engagement partners effective communication with and other records are accurate every five years as required by the shareholders and other investors so and reliable. Any new accounting Corporations Act. that they understand how to assess policies are reviewed by the relevant information about Boral and Committee. Compliance with these The Audit Committee has approved its corporate proposals. procedures and policies and limits a process for the monitoring and of authority delegated by the Board reporting of non-audit work to be Annual and half-yearly reports are to management is subject to review undertaken by the external auditor. provided to shareholders other than by the external and internal auditors. Services by the external auditor those who have requested that they which are prohibited because they do not receive copies. Shareholders When considering the yearly and half have the potential or appear to may elect to receive annual reports yearly financial reports, the Audit impair independence include the electronically. While companies are Committee reviews the carrying participation in activities normally not required to send annual reports value of assets, provisions and other undertaken by management, being to shareholders other than those that accounting issues. remunerated on a “success fee” have elected to receive them, Boral Questionnaires completed by structure and where the external gives shareholders the opportunity divisional management are reviewed auditor would be required to review to elect to receive notifications via by the Committee half yearly. their work as part of the audit. email when reports are available on line or to have sent to them copies As required by the Corporations Act An Independence Declaration by the of a new overview document being for year end financial reports, the external auditor forms part of the the Shareholder Review, the Annual CEO and the chief financial officer Directors’ Report and is set out on Review (including the Sustainability give a declaration to the Directors that page 41. Report) or the full Annual Report. the Company’s financial records have Internal Audit been properly maintained and that Announcements to the market are The internal audit function the financial reports give a true and placed on Boral’s website after is outsourced with fair view before the Board resolves they are released to ASX and these PricewaterhouseCoopers being the that the Directors’ Declarations announcements and financial data are Company’s internal audit service accompanying the financial reports retained on the website for at least provider. The internal audit program be signed. three years. General meetings and is approved by the Audit Committee briefings to analysts following results At each scheduled meeting of the before the start of each year and the and other major announcements Committee, both external and internal effectiveness of the function is kept are webcast. auditors report to the Committee under review. on the outcome of their audits and Boral encourages shareholders to the quality of controls throughout Principle 5: Make Timely and attend and participate in all general Boral. As part of its agenda, the Audit Balanced Disclosure meetings including annual general meetings. Shareholders are entitled to Committee meets with the external The Company complies with all ask questions about the management and internal auditors in the absence of relevant disclosure laws and ASX of the Company and of the auditor management twice during the year. Listing Rule requirements in Australia as to its conduct of the audit and and has in place mechanisms The Chair of the Audit Committee preparation of its reports. ordinarily reports to the full Board (including Boral’s Continuous after Committee Meetings. Minutes Disclosure Policy) designed to ensure of Meetings of the Audit Committee compliance with those requirements. are ordinarily included in the papers These mechanisms also ensure for the next full Board Meeting after accountability at a senior executive each Committee Meeting. level for that compliance.

Boral Limited Annual Review 2008 36

Corporate Governance

Notices of Meeting for general • Established policies and procedures The Board has acknowledged that the meetings are accompanied by for the managing of funding, foreign material provided to it on risks has explanatory notes to provide exchange and financial instruments enabled it to review the effectiveness shareholders with information to (including derivatives) including of the risk management and internal enable them to decide whether to the prohibition of speculative control system to manage the attend and how to vote upon the transactions. The Board has Company’s material business risks. business of the meeting. Full copies approved Treasury policies regarding Compliance of Notices of Meeting and explanatory exposures to foreign currencies, The Company has adopted notes are posted on Boral’s website. interest rates, commodity price, policies requiring compliance with If shareholders are unable to attend liquidity and counterparty risks occupational health and safety, general meetings, they may vote by which include limits and authority environmental and trade practices appointing a proxy using the form levels. Compliance with these laws. attached to the Notice of Meeting or policies is reported to the Board an online facility. monthly and certified by Treasury There are also procedures providing management to the Audit employees with alternative means to Principle 7: Recognise and Committee twice yearly. usual management communication Manage Risk lines through which to raise concerns • Key business risks being identified relating to suspected illegal or Risk Identification and on a Divisional basis and on unethical conduct. The Company Management a corporate-wide basis and acknowledges that whistleblowing The managers of Boral’s businesses reported to the Directors as part can be an appropriate means to are responsible for identifying and of the strategic planning process. protect Boral and individuals and managing risks. The Board (in the Management was assisted by to ensure that operations and case of financial risk as noted above, a specialised risk management businesses are conducted within through the Audit Committee) is consultancy in assessing risks the law. responsible for satisfying itself that corporate-wide during the 2007/08 a sound system of risk oversight and financial year and this process will There are ongoing programs for audit management exists and that internal provide a continuous approach to of the large number of Boral operating controls are effective. In particular, risk management. sites. Occupational health and safety, the Board ensures that: environmental and other risks are • Policies, standards and procedures covered by these audits. Boral also • The principal strategic, operational, in relation to environmental and has staff to monitor and advise on financial reporting and compliance health and safety matters. risks are identified. workplace health and safety and • Training programs in relation environmental issues and in addition, • Systems are in place to assess, to legal and compliance issues education programs provide training manage, monitor and report on such as trade practices/antitrust, and information on regulatory issues. these risks. intellectual property protection, Despite the Company’s policies and occupational health and safety and Under the supervision of the Board, actions to avoid occurrences which environmental. management is responsible for infringe regulations, there have been designing and implementing risk • Procedures requiring that significant a small number of prosecutions management and internal control capital and revenue expenditure and against subsidiary companies for systems to manage the Company’s other contractual commitments are breaches of occupational health and material business risks. Boral’s senior approved at an appropriate level of safety legislation. management has reported to the management or by the Board. Board on the effectiveness of the CEO and Chief Financial Officer management of the material business • Comprehensive management Declaration risks faced by Boral during the 2008 guidelines setting out the standards The CEO and the chief financial financial year. of behaviour expected of employees officer have provided the Directors in the conduct of the Company’s with a declaration in accordance with Risk management matters are business. section 295A of the Corporations Act analysed and discussed by the Board for the 2008 financial year including The internal audit function is at least annually and more frequently confirmation that the Company’s involved in risk assessment and if required. financial reports present a true and management and the measurement fair view, in all material respects, of In addition to maintaining appropriate of effectiveness. The internal and the Company’s financial condition insurance and other risk management external audit functions are separate and operational results. The Board measures, identified risks are and independent of each other. managed through: confirms that it has received In addition to an overall risk assurance from the CEO and the management policy, Boral has chief financial officer that the above numerous risk management statement was founded on a sound systems and policies that govern the system of risk management and management of risk. internal control, and that such system is operating effectively in all material respects in relation to financial reporting risks.

Boral Limited Annual Review 2008 37

Balance Sheet Boral limited and controlled Entities

Principle 8: Remunerate Fairly Boral’s Share Trading Policy, which and Responsibly is referred to under the subheading Remuneration Committee “Dealings in Boral Shares” under The Board has a Remuneration Principal 3, prohibits executives Committee which is comprised of entering into transactions or four independent non-executive arrangements which limit the Directors, namely John Cloney economic risk of participating in (Chairman), Brian Clark, Bob Every unvested entitlements under the and Ken Moss. The Committee met equity based remuneration schemes, on two occasions during the 2008 namely the Boral Senior Executive financial year, and attendance by Option Plan and the Boral Senior members at those meetings is shown Executive Share Performance Plan. in paragraph (13) of the Directors Remuneration of Non-executive Report on page 39. Directors The Remuneration Committee has The remuneration of the non- a formal Charter which sets out its executive Directors is fixed by way role and responsibilities, composition of cash, superanuation contributions structure and membership or salary sacrifice in equity through requirements. A copy of this Charter the Non-Executive Directors Share is available on Boral’s website. Plan and they do not receive any options, bonus payments or other The Committee makes performance related incentives. Non- recommendations to the full Board on executive Directors are not provided remuneration arrangements for the with retirement benefits other than CEO and senior executives and as superanuation. appropriate, on other aspects arising from its functions. Further information relating to the remuneration of the non- Part of the role of the Remuneration executive Directors is set out in the Committee is to advise the Board Remuneration Report on pages 44, on the remuneration policies and 45 and 47. This information includes practices for Boral generally and the a summary of the terms of the Non- remuneration arrangements for senior Executive Directors’ Share Plan. executives. Remuneration Report Boral’s remuneration policy and A detailed Remuneration Report is practices are designed to attract, set out in clause (19) of the Directors’ motivate and retain high quality Report on pages 42 to 49. As people. The policy is built around required by the Corporations Act, principles that: a resolution that the Remuneration • Executive rewards be competitive Report be adopted will be put to the in the markets in which Boral vote at the Annual General Meeting, operates. however, the vote will be advisory only and will not bind the Directors or • Executive remuneration has an the Company. appropriate balance of fixed and variable reward. • Remuneration be linked to Boral’s performance and the creation of shareholder value. • Variable remuneration for executives has both short and long-term components. • A significant proportion of executive reward be dependent upon performance assessed against key business measures, both financial and non-financial. These principles ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to corporate and individual performance is defined.

Boral Limited Annual Review 2008 38

Directors’ Report

The Directors of Boral Limited (a) Boral’s operations in future (9) Names of Directors (“the Company”) report on the financial years; or The names of persons who have consolidated entity, being the (b) the results of those operations in been Directors of the Company during Company and its controlled entities future financial years; or or since the end of the year are: (“Boral”), for the financial year ended 30 June 2008: (c) Boral’s state of affairs in future Elizabeth A Alexander Kenneth J Moss financial years. J Brian Clark Rodney T Pearse (1) Review of Operations E John Cloney Mark R Rayner The Directors review the operations (5) Future Developments during the year of Boral and the and Results Robert L Every J Roland Williams results of those operations as stated Other than matters referred to under Richard A Longes in the Chairman’s Review and the heading “Outlook for 2008/09” Managing Director’s Review on pages in the Managing Director’s Review on All of those persons, other than 6 to 11 of the Annual Review. page 10 of the Annual Review, the Dr Every and Mr Rayner, have been Directors have no reference to make Directors at all times during and since (2) State of Affairs to likely developments in Boral’s the end of the year. Dr Every was appointed a Director on 7 September There were no significant changes in operations in future financial years 2007 and has been a Director at all Boral’s state of affairs during the year and the expected results of those times since that date. Mr Rayner other than: operations. was a Director from 1 July 2007 to • the acquisition of the assets (6) Environmental Performance 29 October 2007, on which date he of two construction materials retired from the Board of Directors. Details of Boral’s performance in businesses in Oklahoma, USA, relation to environmental regulation Schwarz Readymix, a ready mixed (10) Options are set out under Environment on concrete and sand business, and pages S18 to S23 of the Sustainability Details of options that are granted the Davis Arbuckle Materials quarry, Report which is a supplement to the over unissued shares of the for prices totalling $99.8 million in Annual Review. Company, options that lapsed during August 2007; the year and shares of the Company • the off-market buy-back of (7) Other Information that were issued during the year as a result of the exercise of options are 20,019,889 of the Company’s Other than information in the Annual set out on page 39. shares for the total consideration of Review, there is no information that $114.2 million ($5.65 per share) on members of the Company would Since the end of the year, a further 7 April 2008; and reasonably require to make an 21,692 shares of the Company have • significant items having a net loss informed assessment of: been issued at the price of $5.57 each of $3.8 million being the write- (a) the operations of Boral; as a result of the exercise of options in down of $31.9 million of goodwill (b) the financial position of Boral; and tranche (xiii). (c) Boral’s business strategies and applicable to the quarry and Tranche (xvii) was issued during the its prospects for future financial concrete business in Thailand, less year pursuant to the Boral Senior years. the income tax benefit of $28.1 Executive Option Plan. The number million taken to account following of options in that tranche granted to the resolution with the Australian (8) Dividends Paid or Declared each of Mr R T Pearse, the Managing Taxation Office of matters relating Dividends paid to members during Director and Chief Executive Officer, to the utilisation of tax losses the year were: and the executives named in the and capital gains arising from the Total dividend $ million Remuneration Report in clause (19) demerger in 2000 and progress on as part of their emoluments for the other outstanding taxation matters. The final dividend of year and certain other details of the 17 cents per ordinary terms of the options are set out in (3) Principal Activities share (fully franked the Remuneration Report on page 49 and Changes at the 30% corporate of the Annual Review. The grant of Boral’s principal activities are the tax rate) for the options to Mr Pearse was approved manufacture and supply of building year ended 30 June by shareholders at the Company’s and construction materials in 2007 was paid on 18 Annual General Meeting held on 21 Australia, the USA and Asia. There September 2007 102.0 October 2004. were no significant changes in the Each option granted over unissued nature of those activities during the The interim dividend of shares of the Company entitles the year. 17 cents per ordinary share (fully franked at holder to subscribe for one fully paid the 30% corporate tax share in the capital of the Company. (4) Events After End Optionholders have no rights under of Financial Year rate) for the year was paid on 19 March 2008 102.5 any options to participate in any share There are no matters or issue or interest issue of any body circumstances that have arisen The final dividend of 17 cents per corporate other than the Company. since the end of the year that ordinary share (fully franked at the No unissued shares and interests of have significantly affected, or may 30% corporate tax rate) for the year the Company or any controlled entity significantly affect: has been declared by the Directors and are under option other than as set out will be paid on 18 September 2008. in this clause. Boral Limited Annual Review 2008 39

(10) Options (continued) Balance Sheet Shares issued during the year Boral limited and controlled Entities Balance at as a result of Exercise beginning of Options issued Options lapsed exercise of Tranche Grant Date Expiry Date price year during the year during the year options Options at end of year Number Number Number Number Issued Vested (xii) 04 /11/ 2002 04 /11/ 2009 $ 4.12 215,800 – – 72,800 143,000 143,000 (xiii) 29/10/2003 29/10/2010 $5.57 2,876,808 – 54,230 208,150 2,614,428 733,748 (xiv) 29/10/2004 29 /10 / 2011 $6.60 2,053,100 – 103,400 – 1,949,700 – (xv) 31/10/2005 31/10/2012 $7.70 3,305,500 – 110,500 – 3,195,000 – (xvi) 06/11/2006 06 /11/ 2013 $7.32 4,717,900 – 137,000 – 4,580,900 – (xvii) 06 /11/ 2007 06 /11/ 2014 $6.83 – 5,938,700 – – 5,938,700 – 13,169,108 5,938,700 405,130 280,950 18,421,728 876,748

The above mentioned options were held by 177 persons.

(11) Indemnities and Insurance for (the responsible entity for DEXUS Metcash Trading Limited from 2000 Officers and Auditors Property Group which was formerly to January 2006 During or since the end of the year, named DB RREEF Trust) from Metcash Limited from April 2005 Boral has not given any indemnity January 2005 (current) (current) Viridis Investment Management to a current or former officer or J B Clark Limited from September 2005 to auditor against a liability or made any AMP Limited from January 2008 August 2007 agreement under which an officer or (current) auditor may be given any indemnity K J Moss E J Cloney of the kind covered by sub-section Adsteam Marine Limited from 2001 Patrick Corporation Limited from 199A(2) or (3) of the Corporations to March 2007 2003 to May 2006 Act 2001. Centennial Coal Limited from 2000 QBE Insurance Group Limited from (current) During the year, Boral paid premiums 1981 (current) in respect of Directors’ and Officers’ GPT RE Limited from June 2005 Liability and Legal Expenses R L Every (current) insurance contracts for the year Iluka Resources Limited from March Macquarie Capital Alliance Group ended 30 June 2008 and since the 2004 (current) (being Macquarie Capital Alliance end of the year, Boral has paid, or Sims Group Limited from October Limited, Macquarie Capital Alliance agreed to pay, premiums in respect of 2005 to November 2007 Management Limited and such contracts for the year ending 30 Wesfarmers Limited from February Macquarie Capital June 2009. The insurance contracts 2006 (current) Alliance Bermuda Limited) from insure against certain liability (subject March 2005 (current) to exclusions) persons who are or R A Longes R T Pearse have been directors or officers of Austbrokers Holdings Limited from Nil the Company and controlled entities. November 2005 (current) A condition of the contracts is that Lend Lease Corporation Limited from J R Williams the nature of the liability indemnified 1986 to November 2005 Origin Energy Limited from and the premium payable not be 2000 (current) disclosed.

(12) Directors’ Qualifications, (13) Meetings of Directors Experience and Special Responsibilities and Directorships The number of Meetings of the Board of Directors and each Board Committee of Other Listed Companies in the held during the year and each Director’s attendance at those Meetings was:

Last Three Financial Years Remuneration Each Director’s qualifications, Board of Directors Audit Committee Committee experience and special responsibilities Meetings Meetings Meetings are set out on page 31 of the Annual held while a Meetings held while a Meetings held while Meetings Director attended member attended a member attended Review. Details for each Director of all E A Alexander 11 9 5 5 – – directorships of other listed J B Clark 11 10 – – 2 2 companies held at any time in the three years before the end of the E J Cloney 11 11 – – 2 2 year and the period for which such R L Every 8 8 – – 1 Nil directorships has been held are: R A Longes 11 10 5 5 – – E A Alexander K J Moss 11 11 – – 2 2 Amcor Limited from 1994 to October 2005 R T Pearse 11 11 – – – – CSL Limited from 1991 (current) J R Williams 11 11 5 5 – – DEXUS Funds Management Limited

Boral Limited Annual Review 2008 40

Directors’ Report

(13) Meetings of Directors (continued) Mr Pearse, the Managing Director, is not a member of the Audit and Remuneration Committees but attended all of the Meetings held by those Committees.

(14) Company Secretary The qualifications and experience of the Company Secretary, Michael B Scobie, are set out on page 28 of the Annual Review. (15) Directors’ Shareholdings Details of each Director’s interests in the shares and other securities of the Company are:

Shares Non-Executive Directors’ Share Plana Options and Share Acquisition Rights (SARs) E A Alexander 16,374 20,924 – J B Clark 56,079 2,225 – E J Cloney 14,529 24,701 – R L Every 13,004 1,631 – R A Longes 13,379 6,237 – K J Moss 31,000 21,908 – R T Pearse 4,101,178 – b J R Williams 48,522 20,214 –

The shares are held in the name of the Director except in the case of: • Dr J B Clark, 37,931 shares are held by UBS Wealth Management Australia Nominees Pty Limited – and 17,063 shares are held by UBS Wealth Management Australia Nominees Pty Limited – JBC Investment Holdings Pty Ltd ; • Mr E J Cloney, 534 shares are held by Lizzey Investments Pty Limited and 12,500 shares are held by Cloney Superannuation Fund; • Mr R A Longes, 10,000 shares are held by Richard Longes Superannuation Fund; • Dr K J Moss, 31,000 shares are held by K J and G A Moss; and • Mr R T Pearse, 41,639 shares are held by Pearse Nominees (NSW) Pty Limited. 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. There were no disposals of such securities by any Directors or their Director-related entities during the financial year. 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.

b Options and SARs held by Mr Pearse are:

Number of options Expiry date Exercise price 308,000 29 October 2010 $5.57 350,000 29 October 2011 $6.60 939,800 31 October 2012 $7.70 2,083,300 6 November 2013 $7.32 2,694,000 6 November 2014 $6.83

Number of SARs Expiry date 120,000 29 October 2011 247,036 31 October 2012

The SARs are rights to acquire shares in the Company under the Boral Senior Executive Performance Share Plan and will only vest 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.

Boral Limited Annual Review 2008 41

Balance Sheet Boral limited and controlled Entities

(16) No Officers • provision of the non-audit services Lead Auditor’s Independence are Former Auditors is consistent with the processes in Declaration Under Section 307C No officer of the Company has been place for the Audit Committee to of the Corporations Act 2001 monitor the independence of the a partner in an audit firm, or a director To: the Directors of Boral Limited of an audit company, that is an auditor auditor. of the Company during the year or I declare that, to the best of my was such a partner or director at a (18) Auditor’s knowledge and belief, in relation to time when the audit firm or the audit Independence Declaration the audit for the financial year ended company undertook an audit of the The auditor’s independence 30 June 2008 there have been: Company. declaration made under section 307C (i) no contraventions of the auditor of the Corporations Act 2001 is set independence requirements as set (17) Non-audit Services out on page 41 of the Annual Review out in the Corporations Act 2001 in Amounts paid or payable to Boral’s and forms part of this report. relation to the audit; and auditor, KPMG, for non-audit services provided, during the year, by KPMG (19) Remuneration Report (ii) no contraventions of any applicable totalled $447,000. These services The Remuneration Report is set code of professional conduct in consisted of: out on pages 42 to 49 of the Annual relation to the audit. Review. Taxation compliance/ advisory services (20) Proceedings on behalf in Australia $90,000 of the Company Taxation compliance/ No application under section 237 of KPMG advisory services in the Corporations Act 2001 has been jurisdictions other than made in respect of the Company Australia $199,000 and there are no proceedings that a person has brought or intervened in Assurance on behalf of the Company under that related services $103,000 section. Acquisition services $55,000 (21) Rounding of Amounts David Rogers Fees for audit services during the The Company is of a kind referred Partner year totalled $1,890,000. There was to in ASIC Class Order 98/100 and no audit related services component in accordance with that Class Order, of that amount. amounts in the financial report and Sydney, 4 September 2008 In accordance with advice from Directors’ Report have been rounded the Company’s Audit Committee, off to the nearest one hundred Directors are satisfied that the thousand dollars unless otherwise provision of the above non-audit indicated. services during the year by the Signed in accordance with a auditor is compatible with the resolution of the Directors. general standard of independence for auditors imposed by the Corporations Act 2001. 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 Kenneth J Moss independence requirements of the Director Corporations Act 2001 because: • Directors are not aware of any reason to question the auditor’s independence declaration under section 307C of the Corporations Act 2001; Rodney T Pearse • the total amounts paid or payable Director to the auditor for non-audit services are not material; • the nature of the non-audit services Sydney, 4 September 2008 provided is not inconsistent with those requirements; and

Boral Limited Annual Review 2008 42

Remuneration Report

This Remuneration Report is clause remuneration, executives are Short Term Incentive (19) of the Directors’ Report. rewarded at the market median level The STI amount awarded to any for “target” performance and at executive is determined at the The Remuneration Report: the upper quartile level for delivery end of the financial year when • Explains the Board’s policies of “stretch” targets. Boral makes results are available. The STI is relating to remuneration of directors, extensive use of market data to a proportion of a pre-determined secretaries and executives within benchmark remuneration levels. target amount which varies with Boral. job size. The target amount is set (iii) Executive Remuneration by the Board based on market data. • Discusses the relationship between Structure The actual incentive awarded is such policies and the Company’s determined by assessment of the performance. Remuneration for Boral executives includes both fixed and variable executive’s performance against • Provides details of Boral’s (incentive) components. Fixed specific objectives, both financial performance condition. remuneration includes base salary, and non-financial. The executive’s performance is assessed relative to • Sets out remuneration details for any non-cash benefits such as three measurement levels (minimum, the Company’s key management provision of a vehicle (including any target and stretch). A percentage personnel including Non-executive FBT charges) and in most instances, of the target amount is awarded, Directors, the Executive Director superannuation contributions. depending on results, between and other executives. Remuneration levels are reviewed annually by the Remuneration 30% for minimum performance and 200% for stretch performance. (i) Remuneration Committee Committee through a process that considers individual and Target performance achieves 100% The role of the Remuneration company performance. External of the target amount. No incentive Committee, which oversees market advice is also considered to is awarded where performance falls remuneration issues, is referred to on ensure remuneration levels remain below minimum. page 37 of the Annual Review. competitive in the market-place. In the year to 30 June 2008, the Management support for the Variable remuneration for executives target STI levels for members of the Committee and advice from specialist includes both short-term and long- senior executive team were 35% to remuneration advisers is provided term incentives and is designed to 53% of fixed remuneration. primarily through Boral’s General reward executives for meeting or Manager, Human Resources. The financial performance objective exceeding their financial and personal is based on “Profit After Funding” (ii) Remuneration Policy objectives. The Short Term Incentive which is a measure of profit related (STI) is provided in the form of cash to assets employed. The non-financial Boral’s remuneration policy and while the Long Term Incentive (LTI) objectives vary with position and practices are designed to attract, is currently provided as options over responsibility and include measures motivate and retain high quality ordinary Boral shares and/or share such as achieving strategic outcomes, people. The policy is built around acquisition rights (SARs). Participation safety performance, workers’ principles that: by executives in the STI and LTI compensation cost reduction, • Executive rewards be competitive schemes is at the discretion of the environment and sustainability in the markets in which Boral Board. outcomes, operational improvement operates. STIs are provided for employees and performance enhancement, customer satisfaction and staff • Executive remuneration has an who have significant influence over development. These performance appropriate balance of fixed and the annual outcomes of business measures have been chosen to focus variable reward. units. Currently, about 6% of Boral employees participate in the STI executives on adding shareholder • Remuneration be linked to Boral’s scheme. value and demonstrating the Boral performance and the creation of Values. Financial and non-financial shareholder value. Salaried staff in Australia participate objectives each typically account in an annual staff incentive scheme for 50% of the target STI for the • Variable remuneration for executives which is performance related. majority of executives. For divisional has both short and long term Currently, about 23% of Boral’s Executive General Managers, financial components. Australian employees participate objectives account for 67% of the • A significant proportion of executive in the staff incentive scheme. The target STI. reward be dependent upon average incentive represents about STIs in 2008 were higher than in performance assessed against key 2.5% of base remuneration. 2007 for most senior executives of business measures, both financial LTIs are provided for senior Australian divisions reflecting stronger and non-financial. executives who are determined by the performance against financial Current practice is to target fixed Board as having significant influence objectives and higher target STI levels remuneration at market median over the long-term outcomes of Boral. which were reviewed to market in levels paid by comparable companies About 1% of employees participate in 2007. In the USA, STIs were generally for similar positions, with scope of the LTI scheme. lower than in 2007 reflecting financial role, performance and competence results which were below target. determining level of remuneration relative to market. Through variable

Boral Limited Annual Review 2008 43

Balance Sheet Boral limited and controlled Entities

Long Term Incentive Full details of the current hurdle The percentage of options or SARs The LTI award for an executive is a which has applied since 2001 are as which become exercisable increases percentage of fixed remuneration follows: from the 50th percentile up to the which is set by the Board based 75th percentile by 2% for each 1% Exercise hurdle on market data and the executive’s increase in the percentile of the TSR The exercise hurdle for both options position within the Company. The of the Company, compared to the and SARs is measured by comparing number of options or SARs to be TSR of the ASX 100. the performance of the Company awarded is calculated using the with the performance of other The measurement of Boral’s TSR fair market value of those options companies in which shareholders may from the 2004 grant onwards requires or SARs determined in accordance potentially invest. This is in line with the exercise hurdle to be maintained with the applicable accounting the approach of other major Australian for a minimum of 10 consecutive standard and based on the average companies. business days. The percentile Boral share price for the five trading measurement of Boral’s TSR will days following the Annual General Accordingly, the exercise of the be based on the lowest share price Meeting. options and vesting of SARs will during the 10 day period. depend on the maximum Total In the year to 30 June 2008, the LTI Shareholder Return (TSR) of the The number of options to be granted levels for members of the senior Company relative to the TSR of to an executive under the Option executive team were 35% to 50% of the companies from time to time Plan in respect of a financial year fixed remuneration. comprising the ASX 100. is determined by the Board after Options over ordinary Boral shares considering the level of responsibility Determination of the TSR will be and SARs awarded to senior and accountability of the executive. made on the basis of movements executives as LTIs are issued The award is based on a percentage in the share price and dividends, under the Rules of the Boral Senior of fixed remuneration (dependent calculated in a similar manner to the Executive Option Plan and Boral upon position within the Company) Accumulation Index of ASX. Senior Executive Performance Share and the fair market value of a Plan respectively. The period over which the TSR of the market priced option as determined Company is compared with the TSR independently using a valuation The number of options and/or rights of the ASX 100 commences on the method defined by the applicable that may be offered to executives date of grant of the options and the Australian Accounting Standard. when aggregated, together with SARs and is measured at any time The exercise price of the options the number of shares held in the during the exercise period. Measuring is the average of the last sale price Company’s Employee Share Plan Boral’s TSR at any time during the of Boral ordinary shares traded on and Senior Executive Performance exercise period affords executives ASX on each of the five trading days Share Plan and the number of shares the same opportunity as shareholders immediately after the date of the that would be issued on exercise or to review the performance of the Annual General Meeting. vesting of outstanding options and Company progressively during the rights, shall not exceed 5% of the SARs were introduced in 2004 to exercise period. total number of issued shares at the provide an alternative LTI vehicle time of any such offer. The percentage of options or SARs to options. SARs are granted to capable of exercise is based on a executives under the Boral Senior Subject to an exercise hurdle being sliding scale as follows: Executive Performance Share Plan attained, the exercise period during following similar principles to those of which options may be exercised and If at any time during the The percentage of options the Option Plan. SARs can be granted SARs may vest commences after exercise period the TSR or SARs which become in lieu of options, with the number three years and ends after seven of the Company: exercisable is: granted calculated in the same way, years. The options and SARs lapse Does not ie based on a percentage of fixed or forfeit if they are not exercised reach the 50th remuneration and the fair market or released during such period. percentile of the value of a SAR. No consideration is Generally the options and SARs do TSR of the payable by the executive for the SARs not remain available to executives ASX 100 0% or on transfer of shares after the who resign unless the Board Reaches the SARs vest. exercises a discretion. Options may 50th percentile only be exercised and SARs may only The LTIs and the Option and of the TSR of the vest if the exercise hurdle, which is Performance Share Plans are ASX 100 50% set by the Board and is dependent on designed to align participants’ Boral shares performing favourably Reaches or interests with those of shareholders. compared with the overall returns of exceeds the 75th shares in companies in the ASX 100, percentile of the is met. TSR of the ASX 100 100%

Boral Limited Annual Review 2008 44

Remuneration Report Boral limited and controlled Entities

Boral’s earnings improved in 2004 (iv) Non-executive Directors’ • Dividends in respect of shares and held steady through 2005 and Remuneration notionally allocated to a non- 2006, however, earnings have The remuneration of non-executive executive Director may be decreased in 2007 and 2008. Directors is determined by the full distributed by the Trustee to that Shareholder wealth has fluctuated in Board upon the recommendation of non-executive Director after receipt years since 2003 as follows: its Remuneration Committee within of those dividends, together a maximum amount approved by with any franking credits which Boral share relate to them. In addition, the Year ended Full year’s price at Return on shareholders in general meeting. The 30 June dividend year end equity maximum amount was last increased Trustee is entitled, if requested by a non-executive Director, to 2003 23 cents $5.06 13.2% to $1,250,000 per annum in total remuneration at the Company’s 2006 elect to participate in the Dividend 2004 30 cents $6.46 15.7% Annual General Meeting. Reinvestment Plan in respect of 2005 34 cents $6.48 15.4% those shares notionally allocated to The remuneration of non-executive that non-executive Director. 2006 34 cents $ 8.14 13.2% Directors is structured on a total remuneration basis which may be • The Plan is required to hold the 2007 34 cents $8.78 10.0% in the form of cash, superannuation shares notionally allocated to a non- 2008 34 cents $5.65 8.5% contributions or Boral shares acquired executive Director on trust for that through the Non-Executive Directors’ non-executive Director for at least 2005 figures restated to reflect adoption of 10 years. Upon request, the Trustee Australian equivalents to International Financial Share Plan. Non-executive Directors Reporting Standards. are not provided with retirement will transfer all shares notionally allocated to a non-executive 2008 return on equity excludes the financial benefits other than superannuation impact of significant items. contributions. Director for not less than 10 years to that non-executive Director. The Board has agreed that as a Boral’s TSR performance in recent matter of guidance rather than by Upon retirement from office or death years is detailed as follows: way of requirement, an appropriate of a non-executive Director, all shares notionally allocated to that non- Average annual TSR minimum proportion of non-executive LTI grant in year Performance over three Directors’ remuneration to be taken executive Director will be transferred ended 30 June years from date of grant in the Company shares through the by the Trustee to him or her or, in the 2003 39% Non-Executive Directors’ Share Plan event of death, to his or her personal would be 10%. representative. 2004 20% In considering the level of 2005 9% The terms and conditions of the Plan provide to the effect that: remuneration for Directors, the Board takes account of survey and other Boral’s TSR performance was such • The Company may pay into the Plan information on remuneration being that the exercise hurdle for options such percentage of the fees of a paid by peer group companies. granted as LTIs in 2004 has, since the non-executive Director as he or she exercise period for them commenced from time to time wishes to have For the year, base remuneration on 29 October 2007, not yet been applied under the Plan. (fees) of $115,000 was payable to satisfied and none of those options non-executive Directors. The base have become exercisable. • The amount so paid will be applied remuneration for the Chairman was by the Trustee of the Plan to the $316,250. In addition, remuneration Whether executives will benefit from purchase of the Company’s ordinary of $12,500 was payable to members vesting of LTIs awarded in 2004 and shares on ASX at market price of Board Committees and $18,750 to subsequent years will be determined during the 30 day period after the the chairs of Committees. by whether or not the exercise release by the Company to ASX hurdles are satisfied during applicable of its half yearly results and its The Board has approved an increase exercise periods which commence preliminary final results in each year in yearly base remuneration (fees) for three years after an award and end or after the annual general meeting non-executive Directors to $123,000 seven years after such award. in each year. and for the Chairman to $338,250 from 1 July 2008. The additional Boral has a policy on share trading • In the books of the Plan, the Committee remuneration will be which applies to Directors, officers shares purchased will be notionally $13,500 for members and $20,250 and senior executives including key allocated to each non-executive for the chairs. management personnel. This policy Director in proportion to the amount prohibits executives entering hedge paid to the Plan in respect of that and other derivative transactions non-executive Director. regarding options or SARs granted to them as LTIs. Refer to the sub- heading “Dealings in Boral Shares” on page 34 of the Annual Review.

Boral Limited Annual Review 2008 45

Balance Sheet Boral limited and controlled Entities

The remuneration of the non- This has been achieved by the Termination Events and executive Directors is fixed and they Company granting to Mr Pearse in Calculation of Payments do not receive any options, variable each of November 2005, November Shareholders at the Company’s remuneration or other performance 2006 and November 2007, options Annual General Meeting held on related incentives. under the Boral Senior Executive 21 October 2004 approved the Option Plan and SARs under the payment of any termination payments Non-executive Directors’ Boral Senior Executive Performance which may become payable to Remuneration Share Plan so that the aggregate Mr Pearse under his contract. The remuneration of the non- fair market value of the options executive Directors is set out in Set out below are the circumstances and SARs granted to him is equal the Key Management Personnel in which Mr Pearse’s contract may be to 125% of the base remuneration Remuneration table on page 47. terminated and details of payments payable in respect of the period and other benefits that he may be ending on 31 August immediately (v) CEO’s Remuneration entitled to receive as a result of such prior to the date of grant. In effect, termination. For these purposes, the Mr Pearse is the Managing Director Mr Pearse has received three “total annual reward” in respect of and Chief Executive Officer (CEO) long-term incentive grants worth any year is the base remuneration of Boral Limited. Mr Pearse was 125% of base remuneration in each payable in that year plus the amount appointed to this position effective of years one, two and three of the of any short-term incentive payable in 1 January 2000 for a five year term contract, instead of five long-term that year. and agreed to a further five year incentive grants worth 75% of base contract which commenced on remuneration in each of years one to Payment on expiry of term – Upon 1 January 2005. five of the contract. Mr Pearse will Mr Pearse entering a no compete Mr Pearse’s base remuneration therefore not be granted further LTIs condition for 15 months, the is set by the Board annually and in 2008 or 2009. For these purposes, Company will pay him 1.25 times his may be taken as cash salary, fair market value means the fair total annual reward. market value of options or rights to company provided motor vehicle and Payment on resignation – Upon shares measured in accordance with superannuation contributions. Mr Pearse resigning by giving six the accounting standards applicable months’ written notice and entering Mr Pearse’s STI entitlement for 2008 to the Company at the time. was to a payment of 100% of base into a no compete condition for 15 remuneration for target performance If the service contract is terminated months, the Company will pay him and up to 200% of base remuneration before the expiry of the five year 1.25 times his total annual reward. term other than for breach by the for stretch performance. The amount Termination for illness or incapacity Company, fundamental change or of the STI in any year is determined – Either Mr Pearse or the Company termination by the Company without by the Board in consultation with may, by giving six months’ written notice then part of the LTIs granted Mr Pearse by assessment of his notice, terminate his employment by to Mr Pearse will be cancelled so performance against financial and reason of illness or incapacity. non-financial targets agreed by the that the aggregate LTIs which Mr Board in consultation with him at the Pearse retains following termination Termination for cause – No start of each financial year. represent 75% of base remuneration termination payment is payable to received over the term for which Mr Mr Pearse if he is dismissed for Mr Pearse’s 2008 STI is higher than Pearse actually served. misconduct, willful neglect, serious in 2007 due to a market review of his or persistent breach of the service Shareholders at the Company’s remuneration (as a result of which contract or other serious causes. target STI was increased from 60% Annual General Meeting held on to 100% of base remuneration) and 21 October 2004 approved the above Termination for breach by the the Company’s stronger financial contemplated grants of options and Company or fundamental change performance against target. In 2007, SARs to Mr Pearse in respect of the – If Mr Pearse terminates his Mr Pearse’s STI was significantly five year period of his service contract employment because the Company below market median. from 1 January 2005. is in breach of its obligations under the service contract or either party Mr Pearse’s aggregate annual Mr Pearse is also entitled to LTIs in terminates the employment if there remuneration, including base the form of options granted under is a fundamental change which remuneration, STI and LTI, is the Boral Senior Executive Option removes or diminishes his status, reviewed by the Board annually taking Plan and/or SARs granted under the duties or authority, the Company will into account the performance of Mr Boral Senior Executive Performance pay him an amount equal to twice Pearse in the preceding year and a Share Plan with a fair market value the total annual reward in the year of comparison against the remuneration intended to represent, so far as termination. practicable, 75% of the aggregate payable to chief executives of an base remuneration payable over the appropriate comparator group of five year term of the contract. companies determined by the Board and drawn from the top 50 ASX companies and international companies of appropriate size and industry.

Boral Limited Annual Review 2008 46

Remuneration Report Boral limited and controlled Entities

Termination by Company for poor General employment terms and performance – If the Company conditions are set out for each terminates the employment of Mr executive in their respective letters Pearse because his performance is of employment/appointment. not at the level reasonably required, A limited number of US senior the Company will pay him an amount executives have entered Executive equal to his base remuneration in the Transition Agreements with Boral year of termination. Industries Inc. pursuant to which Termination by Company without benefits are payable in the event of notice – If the Company terminates termination in certain circumstances the employment of Mr Pearse and within a specified period without notice, the Company will pay following a change of control of Boral him: Limited or Boral Industries Inc. Any such benefit which becomes payable (a) an amount equal to one half of his is two times annual salary plus STI. total annual reward in the year of termination (in lieu of six months’ Executives’ Remuneration notice); and The remuneration of the most highly remunerated company executives and (b) an amount equal to total annual relevant group executives is set out reward in the year of termination in the Key Management Personnel or where there is less than Remuneration table on page 47. one year between the date of termination and the agreed expiry Executive remuneration is not driven date, that amount multiplied by solely by the level of company the number of days remaining until profits. Executives are rewarded for the expiry date divided by 365; managing their business according to pre-approved objectives, plans and and, upon his entering into a no budgets and sometimes budgeted compete condition for 15 months, the earnings are lower than previous Company will also pay him 1.25 times years due to the cyclical nature of his total annual reward. our markets. CEO’s Remuneration In 2007, executive STIs were The remuneration of the CEO, reviewed to market and were found Mr Pearse, is set out in the to be below market median and not Key Management Personnel satisfying Boral’s remuneration policy Remuneration table on page 47. as set out on page 42. As a result, (vi) Executives’ Remuneration STI levels were increased for 2008. In addition to this, stronger financial The remuneration of the most highly performance against targets for remunerated company executives most Australian divisions resulted and relevant group executives is in increased STI outcomes for determined in accordance with executives. Boral’s remuneration structure detailed above. Termination Periods of notice to be given by the executive upon resignation are from one to three months. There are no contractual pre-set termination benefits for these executives and in the event that an executive’s service is terminated by the employer whether for cause, poor performance, redundancy or otherwise, payments are made to satisfy Boral’s legal obligations and meet fair market practices.

Boral Limited Annual Review 2008 47

Key Management Personnel Remuneration – 2008 Balance Sheet Other long- Boral limited a nd controlled EntitiShort-termes Post-employment term Share-based payments Super- Non- annuation Retire- Salary Short Term monetary contri- ment Long Term Share Total and fees Incentive (cash bonus) benefits butionsa benefits Incentivesb plan remuneration

Value of Share Proportion of options as Acquisition remuneration proportion Rights Vested performance- of rem- Options (SARs) benefit related uneration % % A$ A$ vested forfeited A$ A$ A$ A$ A$ A$ A$ A$ % %

Directors Non-executive E A Alexander 2007 102,901 – – – – 9,261 – – – – 12,463 124,625 – – 2008 39,314 – – – – 423 – – – – 94,013 133,750 – – J B Clark 2007 8,323 – – – – 749 – – – – 1,008 10,080 – – 2008 105,275 – – – – 9,475 – – – – 12,750 127,500 – – E J Cloney 2007 102,901 – – – – 9,261 – – – – 12,463 124,625 – – 2008 110,436 – – – – 9,939 – – – – 13,375 133,750 – – R L Every 2007 0 – – – – 0 – – – – 0 0 – – 2008 82,311 – – – – 7,408 – – – – 9,921 99,640 – – R A Longes 2007 98,050 – – – – 8,825 – – – – 11,875 118,750 – – 2008 105,275 – – – – 9,475 – – – – 12,750 127,500 – – K J Moss 2007 262,600 – – – – 12,800 – – – – 30,600 306,000 – – Chairman 2008 260,458 – – – – 13,500 – – – – 54,792 328,750 – – M R Rayner 2007 98,050 – – – – 8,825 – – – – 11,875 118,750 – – 2008 38,396 – – – – 0 – – – – 4,250 42,646 – – J R Williams 2007 98,050 – – – – 8,825 – – – – 11,875 118,750 – – 2008 105,275 – – – – 9,475 – – – – 12,750 127,500 – – Executive R T Pearse 2007 2,045,333 576,000 23% 77% 18,070 413,000 – 34,089 770,307 339,520 – 4,196,319 40% 18% Managing Director and CEO 2008 2,253,333 2,269,953 41% 59% 18,070 455,000 – 37,556 1,288,904 339,520 – 6,662,336 59% 19% Total 2007 2,816,208 576,000 18,070 471,546 – 34,089 770,307 339,520 92,159 5,117,899 Total 2008 3,100,073 2,269,953 18,070 514,695 – 37,556 1,288,904 339,520 214,601 7,783,372

Executives J M Douglas 2007 658,642 215,897 53% 47% 18,070 12,800 – 10,977 44,598 38,123 – 999,107 30% 4% Executive General Manager, 2008 740,800 373,618 54% 46% 18,070 13,400 – 12,347 61,163 61,174 – 1,280,572 39% 5% Australian Construction Materials P J Jobe 2007 699,160 162,697 38% 62% 18,070 12,800 – 11,653 66,501 48,735 – 1,019,616 27% 7% Executive General Manager, 2008 746,577 269,446 39% 61% 18,070 13,400 – 12,443 73,459 73,432 – 1,206,827 34% 6% Cement K A Mitchelhill 2007 624,003 94,732 25% 75% 18,070 12,800 – 10,400 59,250 45,040 – 864,295 23% 7% Executive General Manager, 2008 672,267 383,227 69% 31% 18,070 13,400 – 11,204 67,068 67,071 – 1,232,307 42% 5% Clay & Concrete W R Batstone 2007 526,866 244,015 65% 35% 18,070 89,351 – 8,781 59,183 43,557 – 989,823 35% 6% Executive General Manager, 2008 583,384 290,231 56% 44% 18,070 98,936 – 9,723 64,851 64,847 – 1,130,042 37% 6% Plasterboard B M Tisher 2007 488,140 81,848 30% 70% 12,047 12,800 – 8,136 40,935 30,495 – 674,401 23% 6% Executive General Manager, 2008 542,733 324,552 77% 23% 0 13,400 – 9,046 45,841 45,851 – 981,423 42% 5% Timber E S Severin 2007 641,750 156,354 22% 78% 297,536 102,783 – 10,696 86,782 65,087 – 1,360,988 23% 6% President, 2008 590,517 243,723 38% 62% 255,482 102,783 – 9,842 97,076 97,098 – 1,396,521 31% 7% Boral Industries USA K M Barton 2007 623,137 144,320 37% 63% 18,070 12,800 – 10,386 53,739 41,774 – 904,226 27% 6% Chief Financial Officer 2008 684,267 292,569 52% 48% 18,070 13,400 – 11,404 63,739 63,741 – 1,147,190 37% 6% M B Scobie 2007 443,345 96,696 37% 63% 18,070 75,187 – 7,389 45,067 32,757 – 718,511 24% 6% General Manager, 2008 471,829 182,083 47% 53% 18,070 80,018 – 7,864 48,200 48,191 – 856,255 33% 6% Corporate Services and Company Secretary R J Town 2007 397,107 75,811 32% 68% 18,070 67,226 – 6,618 36,756 27,674 – 629,262 22% 6% General Manager, 2008 433,117 154,406 43% 57% 18,070 73,453 – 7,219 41,394 41,404 – 769,063 31% 5% Human Resources A I Warburton 2007 107,823 24,000 36% 64% 6,023 4,267 – 1,832 5,765 4,252 – 153,962 22% 4% General Manager, 2008 428,267 136,845 43% 57% 18,070 13,400 – 7,138 20,100 20,091 – 643,911 27% 3% Corporate Developmentc Total 2007 5,209,973 1,296,370 442,096 402,814 – 86,868 498,576 377,494 – 8,314,191 Total 2008 5,893,758 2,650,700 400,042 435,590 – 98,230 582,891 582,900 – 10,644,111 a Superannuation guarantee or defined benefit fund contributions. Voluntary superannuation contributions are included in salary and fees. b The fair value of the options and SARs 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 SARs allocated to this reporting period. c Andrew Warburton appointed General Manager, Corporate Development on 1 March 2007.

Boral Limited Annual Review 2008 48

Remuneration Report (vii)Bora lDetails limited ofand Long cont Termrolle dIncentives Entities Granted as Remuneration The vesting profile and other details of LTIs being options and SARs granted as remuneration to the CEO and the above executives are:

Options granted Share Acquisition Rights granted Value yet to vesta

% Financial year Option SAR Total vested % forfeited in which Max Max Max No. Date No. Date in year in year grant vests Min A$ A$ A$

Directors Non-executive E A Alexander 0 0 J B Clark 0 0 E J Cloney 0 0 R L EVERY 0 0 R A Longes 0 0 K J Moss 0 0 M R Rayner 0 0 J R Williams 0 0 Executive R T Pearse 700,000 29 October 2003 0% 0% 30 June 2007 0 158,760 0 158,760 Managing Director 350,000 29 October 2004 120,000 29 October 2004 0% 0% 30 June 2008 nil 0 733,200 733,200 and Chief Executive Officer 939,800 31 October 2005 247,036 31 October 2005 0% 0% 30 June 2009 nil 0 1,509,390 1,509,390 2,083,500 6 November 2006 0 0% 0% 30 June 2010 nil 0 0 0 2,694,000 6 November 2007 0 0% 0% 30 June 2011 nil 0 0 0 Executives J M Douglas 53,300 29 October 2003 0% 0% 30 June 2007 0 12,088 0 12,088 Executive General Manager, 25,900 29 October 2004 6,938 29 October 2004 0% 0% 30 June 2008 nil 0 42,391 42,391 Australian Construction 71,700 31 October 2005 18,849 31 October 2005 0% 0% 30 June 2009 nil 0 115,167 115,167 Materials 79,100 6 November 2006 21,623 6 November 2006 0% 0% 30 June 2010 nil 0 132,117 132,117 103,100 6 November 2007 26,825 6 November 2007 0% 0% 30 June 2011 nil 0 163,901 163,901 P J Jobe 146,000 29 October 2003 0% 0% 30 June 2007 0 33,113 0 33,113 Executive General Manager, 56,200 29 October 2004 15,057 29 October 2004 0% 0% 30 June 2008 nil 0 91,998 91,998 Cement 82,900 31 October 2005 21,782 31 October 2005 0% 0% 30 June 2009 nil 0 133,088 133,088 88,200 6 November 2006 24,097 6 November 2006 0% 0% 30 June 2010 nil 0 147,233 147,233 108,400 6 November 2007 28,185 6 November 2007 0% 0% 30 June 2011 nil 0 172,210 172,210 K A Mitchelhill 117,000 29 October 2003 0% 0% 30 June 2007 0 26,536 0 26,536 Executive General Manager, 59,100 29 October 2004 15,849 29 October 2004 0% 0% 30 June 2008 nil 0 96,837 96,837 Clay & Concrete Products 73,500 31 October 2005 19,330 31 October 2005 0% 0% 30 June 2009 nil 0 118,106 118,106 77,900 6 November 2006 21,284 6 November 2006 0% 0% 30 June 2010 nil 0 130,045 130,045 97,200 6 November 2007 25,269 6 November 2007 0% 0% 30 June 2011 nil 0 154,394 154,394 W R Batstone 128,500 29 October 2003 0% 0% 30 June 2007 0 29,144 0 29,144 Executive General Manager, 56,800 29 October 2004 15,218 29 October 2004 0% 0% 30 June 2008 nil 0 92,982 92,982 Plasterboard 71,700 31 October 2005 18,849 31 October 2005 0% 0% 30 June 2009 nil 0 115,167 115,167 74,900 6 November 2006 20,465 6 November 2006 0% 0% 30 June 2010 nil 0 125,041 125,041 94,100 6 November 2007 24,481 6 November 2007 0% 0% 30 June 2011 nil 0 149,579 149,579 B M Tisher 86,000 29 October 2003 0% 0% 30 June 2007 0 19,505 0 19,505 Executive General Manager, 41,300 29 October 2004 11,080 29 October 2004 0% 100% 30 June 2008 nil 0 0 0 Timber 49,400 31 October 2005 12,986 31 October 2005 0% 0% 30 June 2009 nil 0 79,344 79,344 51,800 6 November 2006 14,166 6 November 2006 0% 0% 30 June 2010 nil 0 86,554 86,554 69,300 6 November 2007 18,012 6 November 2007 0% 0% 30 June 2011 nil 0 110,053 110,053 E S Severin 178,600 29 October 2003 0% 0% 30 June 2007 0 40,506 0 40,506 President, 78,100 29 October 2004 20,940 29 October 2004 0% 0% 30 June 2008 nil 0 127,943 127,943 Boral Industries USA 108,800 31 October 2005 28,603 31 October 2005 0% 0% 30 June 2009 nil 0 174,764 174,764 117,000 6 November 2006 31,985 6 November 2006 0% 0% 30 June 2010 nil 0 195,428 195,428 138,700 6 November 2007 36,082 6 November 2007 0% 0% 30 June 2011 nil 0 220,461 220,461 K M Barton 98,500 29 October 2003 0% 0% 30 June 2007 0 22,340 0 22,340 Chief Financial Officer 44,200 29 October 2004 11,857 29 October 2004 0% 0% 30 June 2008 nil 0 72,446 72,446 72,900 31 October 2005 19,162 31 October 2005 0% 0% 30 June 2009 nil 0 117,080 117,080 77,200 6 November 2006 21,100 6 November 2006 0% 0% 30 June 2010 nil 0 128,921 128,921 97,200 6 November 2007 25,269 6 November 2007 0% 0% 30 June 2011 nil 0 154,394 154,394 M B Scobie 101,200 29 October 2003 0% 0% 30 June 2007 0 22,952 0 22,952 General Manager, 44,200 29 October 2004 11,847 29 October 2004 0% 0% 30 June 2008 nil 0 72,385 72,385 Corporate Services 53,500 31 October 2005 14,054 31 October 2005 0% 0% 30 June 2009 nil 0 85,870 85,870 and Company Secretary 55,300 6 November 2006 15,115 6 November 2006 0% 0% 30 June 2010 nil 0 92,353 92,353 67,600 6 November 2007 17,579 6 November 2007 0% 0% 30 June 2011 nil 0 107,408 107,408 R J Town 74,800 29 October 2003 0% 0% 30 June 2007 0 16,965 0 16,965 General Manager, 34,800 29 October 2004 9,335 29 October 2004 0% 0% 30 June 2008 nil 0 57,037 57,037 Human Resources 46,000 31 October 2005 12,098 31 October 2005 0% 0% 30 June 2009 nil 0 73,919 73,919 48,300 6 November 2006 13,198 6 November 2006 0% 0% 30 June 2010 nil 0 80,640 80,640 60,700 6 November 2007 15,788 6 November 2007 0% 0% 30 June 2011 nil 0 96,465 96,465 A I warburton 37,300 29 October 2003 0% 0% 30 June 2007 0 8,460 0 8,460 General Manager, 17,200 29 October 2004 4,617 29 October 2004 0% 0% 30 June 2008 nil 0 28,210 28,210 Corporate Development 20,800 31 October 2005 5,459 31 October 2005 0% 0% 30 June 2009 nil 0 33,354 33,354 21,600 6 November 2006 5,904 6 November 2006 0% 0% 30 June 2010 nil 0 36,073 36,073 35,100 6 November 2007 9,119 6 November 2007 0% 0% 30 June 2011 nil 0 55,717 55,717 a Maximum values yet to vest are based on the last sale price of Boral shares on 18 August 2008 of $6.11. Boral Limited Annual Review 2008 49

Options Details of theBalance movement during theS heetyear of options held by the CEO and the above executives are: Granted during Exercised Value of Lapsed

Boral limited andBalance cont atro lled Entitithe yeare sas Value of options during options during Value of options Balance at 1 July 2007 remuneration granteda the year exercisedb the year lapsed/cancelledc 30 June 2008 Number Number $ Number $ Number $ Number Executive Director R T PEARSE 3,681,100 2,694,000 3,125,040 – – – – 6,375,100 Executives J M DOUGLAS 200,152 103,100 119,596 – – – – 303,252 P J JOBE 291,540 108,400 125,744 – – – – 399,940 K A MITCHELHILL 261,980 97,200 112,752 – – – – 359,180 W R BATSTONE 331,900 94,100 109,156 (74,530) 63,351 – – 351,470 B M TISHER 228,500 69,300 80,388 – – (41,300) (41,300) 256,500 E S SEVERIN 482,500 138,700 160,892 – – – – 621,200 K M BARTON 292,800 97,200 112,752 – – – – 390,000 M B SCOBIE 201,576 67,600 78,416 – – – – 269,176 R J TOWN 203,900 60,700 70,412 (43,384) 46,855 – – 221,216 A I WARBURTON 76,900 35,100 40,716 – – – – 112,000 a The fair value of options granted during the year calculated at the date of grant using a Monte Carlo simulation analysis is $1.16 per option. The options expire on 6 November 2014. b Calculated per option as the last sale price of Boral shares on the date of exercise less the exercise price. c Calculated per option at fair market value of option on date of grant. Share Acquisition Rights Details of the movement during the year of SARs held by the CEO and the above executives are:

Granted during Exercised Value of Lapsed

Balance at the year as Value of rights during rights during Value of rights Balance at 1 July 2007 remuneration granteda the year exercised the year lapsed/cancelledb 30 June 2008 Number Number $ Number $ Number $ Number Executive Director R T PEARSE 367,036 – – – – – – 367,036 Executives J M DOUGLAS 47,410 26,825 119,640 – – – – 74,235 P J JOBE 60,936 28,185 125,705 – – – – 89,121 K A MITCHELHILL 56,463 25,269 112,700 – – – – 81,732 W R BATSTONE 54,532 24,481 109,185 – – – – 79,013 B M TISHER 38,232 18,012 80,334 – – (11,080) (41,328) 45,164 E S SEVERIN 81,528 36,082 160,926 – – – – 117,610 K M BARTON 52,119 25,269 112,700 – – – – 77,388 M B SCOBIE 41,016 17,579 78,402 – – – – 58,595 R J TOWN 34,631 15,788 70,414 – – – – 50,419 A I WARBURTON 15,980 9,119 40,671 – – – – 25,099 a The fair value of SARs granted during the year calculated at the date of grant using a Monte Carlo simulation analysis is $4.46 per right. The SARs expire on 6 November 2014. b Calculated per right at fair market value of right on date of grant.

Boral Limited Annual Review 2008 Boral Limited Sustainability Report 2008 Boral

It’s not business as usual at Boral Contents for the 2008 Sustainability Report It’s not business as usual s1 Boral has undertaken a trial within its concrete transport fleet designed to cut fuel costs Message from the Managing Director s 2 and abate greenhouse emissions. Five of Sustainability Priorities s4 the company’s concrete agitators have been turned into “hippie trucks”, using compressed Managing Sustainability s6 natural gas technology (CNG), rather than Human Resources diesel. Preliminary results reveal that fuel Our People s12 costs for the trucks involved have been cut by almost 60 per cent, while greenhouse gas Health and Safety s16 emissions have dropped by more than seven Our Environment s18 per cent. Marketplace and Supply Chain s 2 4 For more information see www.boral.com.au/buildsustainable Social Responsibility Our Stakeholders s26 Community Investment s28 Divisional Performance Boral at a Glance Australian Construction Materials s 3 0 Boral is an integrated resource-based manufacturing company with strong upstream reserves and Cement s 3 2 downstream market positions. Clay & Concrete Products s 3 4 Timber s 3 6 Boral’s overriding objective is to ‘achieve superior returns in a sustainable way’ in a financial, social Plasterboard s 3 8 and environmental sense. USA s 4 0 Independent Assurance Statement s42 Where we operate Data and Glossary s 4 3 We operate in Australia, the USA and in Asia. We have 717 operating sites and a further 148 distribution sites and offices across 12 countries. About this report Our resources Welcome to Boral’s fifth Sustainability Report for the year Boral has long-term and well positioned hard rock, sand and gravel reserves as well as valuable ending 30 June 2008. This report outlines our sustainability limestone, shale, clay and gypsum reserves. Boral’s access to timber resources are primarily strategy, approach, goals and provides information on our through long-term supply agreements with Forests NSW. performance. Each year we have sought to improve our report to better Our products address information on the issues most relevant to Boral and We produce and distribute a broad range of construction materials, including quarry products, our stakeholders. We have responded to the feedback from our cement, fly ash, concrete and asphalt; and building products including clay bricks and pavers, clay readers and made the following changes to this year’s report: and concrete roof tiles, concrete masonry products, plasterboard, windows and timber. • Boral’s material issues and respective targets are outlined in Sustainability Priorities (p s4 – s5). These sustainability Our markets priorities are consistent with the sustainability issues covered We are generally number one or number two in the markets in which we operate. We have strong by our internally developed Boral Sustainability Diagnostic downstream market positions servicing building and construction materials segments, including Tool (BSDT). new residential construction markets, non-residential markets and major infrastructure projects such • The Managing Sustainability section includes our as roads, highways, subdivisions and bridges. management approach to Human Resources, Health and Safety and Environment which was previously included in the respective sections of the report (p s6 – s11). Our customers Our customers include: developers, builders, architects, construction companies, government and • A brief overview of Boral is provided in Boral at a Glance. councils and DIY consumers. • A table summarising Boral’s key sustainability performance data is included (p s43). The non-financial content of this report has been independently assured by Net Balance in accordance with the AA1000 Assurance Standard (p s42). We welcome feedback on our sustainability progress and reporting either through the “Contact Us” link on our website www.boral.com.au or by contacting Boral Corporate Affairs at [email protected] or (02) 9220 6300 It’s not business as usual at Boral

In 2008, several extraordinary factors have coincided to create a particularly challenging business environment. These challenges include a spectacular downturn in US housing activity; 40 year low levels in NSW housing activity; dramatic increases in energy and other input costs; record high levels of concrete demand in Australia; and, the approaching introduction of an emissions trading scheme in Australia. These challenges have called for a clear set of business responses, with overlapping implications for our financial and sustainability plans. For example, our focus on alternative fuel use is driven by both cost benefits and emission reduction imperatives; our need to reduce fixed costs during market downturns directly impacts employees and in turn local employment; and, supplying record levels of concrete demand in Australia requires increased quantities of quarry materials which can have local community and environmental impacts.

Despite operating in a challenging business environment that is not business as usual, we have delivered solid performance outcomes. • Lost time injury frequency rate down 11% to 2.5 • Employee turnover up from 21% to 23% • Mains water consumption down 4.6% to 2.82 billion litres

• Greenhouse gas emissions up 1% to 3.79 million tonnes of CO2-e • By-products and waste material re-used or recycled up 3.6% to 5.56 million tonnes

s1 s2

“This past year has presented a number of challenges, it has not been business as usual. Despite this, we have progressed our sustainability programs and delivered a solid performance against target.” Message from the Managing Director

Managing the business As in the USA, market conditions in But it’s not always smooth sailing. In Victoria, Health and safety in a sustainable way Australia also presented challenges during we have been working for several years to Although safety can often be at risk Working in a sustainable way or towards the year. On the one hand, the protracted extend the approved reserves at our 50-year- of deteriorating when profits are under sustainable development requires housing downturn required us to continue old Montrose Quarry. Our original application pressure, pleasingly we delivered an 11% balance. It’s about balancing the social, temporary plant shutdowns in bricks and roof for extension was made in 1999 and, improvement in lost time injury frequency environmental and economic needs of tiles, and following year end, we suspended following an extensive process of stakeholder rate (LTIFR) to 2.5 and an 11% reduction today with the needs of tomorrow. It’s production at two of our New South Wales engagement, we revised our submission, in hours lost. Plasterboard delivered an also about balancing the needs of our timber mills. On the other hand, record levels increasing the proposed buffer zones and outstanding result of zero lost time injuries stakeholders. Not all of our stakeholders of concrete demand around the country, reducing the workable reserves by around and hours lost. share the same point of view, but for us driven by strong infrastructure and major 50% to address potential environmental Unfortunately, our overall safety it’s about understanding those views and project work, have seen sustained labour concerns. We continue to believe that we performance was overshadowed by the ultimately working towards an outcome that shortages in some regions and a relatively can find a balance between the needs tragic death of an employee in a heavy we believe has the best chance of meeting high employee turnover of 23%. The strong of the environment, the community and vehicle accident in South Australia. We today’s needs without compromising the demand for construction materials has also government on this project and those of were also disappointed that contractor ability to meet the needs of tomorrow. required us to maximise capacity and expedite our customers and shareholders. However, consents for resource extraction. after considerable investment in a rigorous LTIFR remained steady at 5.7 for the year, Environment Effects Statement (EES) and but our resolve is strong to bring contractor It’s not business as usual In Queensland, we have converted with an expectation that the community and safety performance in line with employee This past year has presented a number of around 130 million tonnes of un-consented government would review the application performance and to eliminate all accidents, challenges, it has not been business as resources to additional consented resources and fully assess the EES, the application was especially serious accidents that can result usual. Despite this, we have progressed over the past two years. These newly rejected by Yarra Ranges Shire Council with in fatalities. our sustainability programs and delivered consented quarry resources are now virtually no debate. Several months later, in a solid performance against target. The available for extraction over the next June 2008, the State Government made a Climate change most significant challenge has been decade or two, which is critical to satisfy decision not to call in the application for an In addition to managing the impacts of the substantial deterioration in housing growing development needs. Particularly independent review. We are disappointed cyclical markets and balancing economic, activity in the USA which has seen activity in Queensland, Boral is now seen as with this outcome. It highlights, however, community, environmental and employee decline by 45% over the past two years. the industry leader in terms of both our the challenges faced by resource companies needs across our 717 operating sites, This has required us to mothball plants quarry resource positions as well as the striving to secure and protect state-significant the past year has required considerable and significantly reduce the number of implementation of effective stakeholder resource positions to cost-effectively supply focus on managing the physical and employees in our US operations. Over an engagement strategies to secure and future construction demand and at the regulatory risks of climate change. 18-month period some 1,400 employees strengthen those resource positions. in our US brick business and MonierLifetile same time trying to address community joint venture business have been affected. and environmental needs. On the north coast of New South The Australian cement industry is relatively competing economies. This option ensures storage, and possibly a timber plantation Wales and in Queensland extreme wet environmentally efficient, with total Australian business shares the economic strategy. Together these abatement projects weather conditions slowed operations emissions intensity per tonne of cement, burden but does not unfairly disadvantage could significantly reduce our 2020 carbon and construction activity during summer including blending, currently 0.77 tonne of business or the economy as we introduce emission level compared to “business as months. The region around our engineered CO2-e per tonne of cement. This compares an ETS ahead of trading partners. usual”. Whilst we await the Government’s flooring plant in Murwillumbah experienced to 1.10 tonne of CO2-e per tonne of cement White Paper, we are continuing to work In addition to lobbying Government to floods, but we had anticipated the physical for cement imported from China. It is critical on the “low hanging fruit” across the protect Australia’s cement industry, we have risk of increased flood activity in designing that there are mechanisms in place to divisions, including energy efficiency gains also been actively involved in discussions our new plant and as a result the plant was ensure that domestically produced materials and increased use of alternative fuels and with Government to make sure that we spared. In other regions around Australia, do not have to bear much greater “costs of materials. have an efficient, cost-effective and drought conditions persisted and we carbon” than imported materials, so that meaningful National Greenhouse Emissions continued to focus on reducing our reliance Australia’s industry is not forced offshore, Managing waste Reporting System. on mains water consumption. Through taking its emissions with it. Substitution of virgin material with waste enhanced on-site water capture and re-use, Internally, we continue to develop our climate or by-product materials that need less In its Green Paper on an Australian Carbon the implementation of recycling processes change strategies. Boral’s Energy & Climate processing is one way we are reducing the Pollution Reduction Scheme, the Federal and generally more efficient use of water, Change Technical Working Group continued emissions intensity of our products. It is also Government proposes to provide assistance we reduced our mains water consumption to coordinate and monitor activities across helpful because we are reducing the amount to the most heavily intensive trade-exposed by 4.6% on a comparative basis to the Company, reporting regularly to the of waste material going to landfill and activities through a free allocation of 90% 2.8 billion litres. Management Committee and Boral’s Board. reducing our use of virgin quarry reserves. of their required permits. The Federal This year we recorded 3.79 million tonnes of Over the past year we re-used or recycled Government has also proposed to limit the Managing emissions and greenhouse gas emissions from Boral-owned some 5.6 million tonnes of our own or other total amount of free permits to a level of emissions trading operations, which was a 1% increase on the people’s waste or by-products, which is a 30% of the national cap. We are concerned The move to a carbon emissions trading prior year on a comparative basis. Whilst 4% increase on last year. Opportunities for about the possible reduction in the level of scheme (ETS) in Australia has been emissions from our US business and in Clay further use of recycled or waste materials free permits allocated to the trade-exposed, gathering significant pace. Whilst Boral & Concrete Products in Australia decreased in Boral products continue to be explored in emissions-intensive industries over time supports the move towards a lower CO2-e due to lower production volumes, emissions a number of innovation initiatives currently and the impact this will have on the global economy, and as such, the adoption from construction materials operations underway. competitiveness of Australia’s cement of relevant policies by the Australian in Australia increased due to market manufacturing. This impact will of course I hope that this 2008 Sustainability Report Government, we have been very busy demand growth. be exacerbated by the inevitable increase in helps our stakeholders to better understand lobbying the Government both directly the cost of permits over time. We recognise Our current goal is to at least hold absolute the challenges that we face and how we and through industry associations, around the challenge that the Government has in emissions steady and to offset any increase are responding to those challenges. We specific design aspects of an ETS. designing an effective scheme that in emissions associated with market welcome your feedback on specific issues Any scheme will impact the way we price encourages the required emissions reductions demand growth by reducing the emissions and general performance. our products, how we invest our capital, but does not create unintended economic per tonne of production. Whilst it is early how we compete with domestic and with impacts and “carbon leakage” offshore. days, our forward projections estimate offshore competitors, and ultimately how that Boral’s emissions could increase from There are many views on how a scheme we abate our emissions. For Boral, the most current levels of 3.8 million tonnes to around could best balance often competing critical issue is to ensure that the cement 4.6 million tonnes per annum by 2020, environmental and economic demands. industry is acknowledged as an emissions- assuming that our business grows in line The Business Council of Australia in its paper: intensive trade-exposed industry and that its with expected market demand growth. We Modelling Success: Designing an ETS that Rod Pearse CEO and Managing Director competitiveness is preserved following have, however, identified around 35 major works, has called for the provision of full a move by Australia to introduce an ETS prospective abatement projects across compensation to trade-exposed emissions- for the industry ahead of Australia’s key Boral that could be viable, depending on the intensive industries for emissions above a trading partners adopting similar carbon cost of carbon and available technologies. threshold of emission costs of 3-5% of value trading regimes. These longer-term aspirational plans focus add (profits plus labour) until comparable on renewable energy, carbon capture and carbon constraints are introduced for s3 s4

The Boral Sustainability Diagnostic Tool (BSDT) was developed in 2000/01 and subsequently refined in collaboration with an independent sustainability expert and with reference to the Global Environmental Management Initiative (GEMI), the Global Reporting Initiative (GRI) and the Social Venture Network. Sustainability Priorities

The Boral Sustainability Diagnostic Tool (BSDT) assists Boral and its operating businesses with the adoption of business practices consistent with the principles of sustainable development. In 2007, a number of refinements were incorporated, reflecting recent developments that have occurred in the overall understanding and application of sustainability principles and how these apply to Boral. The BSDT comprises 20 sustainability elements. The first seven elements which focus on “Sustainability Management” are covered on page s7. The next 13 elements, which are outlined in the table below, are considered to represent Boral’s sustainability performance. A performance assessment against each element is undertaken across Boral’s businesses every two years, with performance graded Level 1 (compliance/reactive), Level 2 (proactive), Level 3 (industry-specific best practice), or Level 4 (world’s best practice) for each element. We aim to reach and sustain a standard of industry-specific best practice (Level 3). The latest BSDT assessments were completed in October 2007 with an overall score of 2.95 being achieved. Our goals/targets Our performance in FY2008 Current BSDT score

Health, safety 25% improvement in LTIFR and % hours lost for employees Employee LTIFR of 2.5, down 11% on FY07 (down 26% and wellbeing and LTIFR for contractors over the average results for prior on past three year average) and % hours lost of 0.08 improved 2.9

three years by 11% on FY07 (down 23% on past three year average) Zero fatalities One fatality

Human Employee and To have the best people in our industries 91% of employees are engaged or highly engaged, up 1.5% Resources labour relations To maximise workforce satisfaction, productivity and Obtained 2008 EOWA Employer of Choice for Women status 3.0 retention Staff turnover 23% up from 21% Communications, To ensure our people have the appropriate training, knowledge 2,494 employees participated in training programs offered 3.0 awareness and training and skills to deliver on our sustainability objectives through Boral’s global learning teams

1 Energy conservation Reduce emissions per unit and offset Boral’s increases in CO2-e emissions up 1% on last year to 3.79 million tonnes and climate change absolute emissions as a result of market demand growth 2.8

Water conservation, Reduce mains water consumption Mains water used down 4.6%1 on last year to extraction and protection 2,820 million litres 2.9 Environment Waste and resource Minimise waste from our operations and increase waste Re-used or recycled between 43% and 100% of Boral’s management, recycling re-used and recycled operations’ production waste 3.0 and re-use Estimated 5.6 million tonnes of waste and by-products recycled or re-used up 4% on FY07

Land protection, Where possible, rehabilitation is part of ongoing resource Ongoing maturing of quarry end use activities, eg Deer Park remediation and extraction operations quarry landfill operation, now a waste business with a landfill 3.0 rehabilitation gas offtake Remediate contaminated sites to standards internationally Majority of contaminated sites completed by 2003 acceptable for the site purpose

Environment and Protect and, where possible, enhance biodiversity values at 15,050 trees/stems planted and 63,700 m2 weeded and 2.9 ecosystem protection and around our facilities regenerated through Living Green Projects

Community relations Maintain the support and goodwill of communities Formal community consultation at key operational sites and engagement surrounding Boral’s activities through engaging and $591,500 invested in eight key community programs 2.9

consulting on relevant issues $443,000 to Juvenile Diabetes Research Foundation through Make a meaningful contribution to the social and economic employee fundraising efforts in Australia and the USA wellbeing of our communities while providing value to our Social operations through support of business objectives 608 volunteer days across 14 conservation projects Responsibility Business ethics and Boral companies and employees must observe both the 1,550 staff undertook online Trade Practices Act training corporate governance letter and spirit of the law and adhere to high standards of in Australia and 902 staff attended face to face training 2.9 business conduct and strive for best practice 1,739 employees in the US completed Ethics and Compliance online training 97 employees dismissed for serious breach of policy

External relations Understand stakeholders’ views on Boral’s sustainability Participated in the Carbon Disclosure Project (CDP6) and communications priorities and performance and take stakeholder views into Government submissions and dialogue on emissions trading 3.0 account and GHG inventory reporting Provide information back to our stakeholders on sustainability Feedback from key stakeholder groups on our 2007 matters Sustainability Report used to improve this report

Strategic sourcing and Manage Boral’s supply chain in a sustainable way including Supply Chain Sustainability Survey for all strategically critical supply chain consideration of environmental, health and safety, and social suppliers implemented 2.8 standards Midland Brick awarded 2008 HIA GreenSmart award for Resource Efficiency (for brick recycling from customers’ sites)

Sales and marketing Provide customers with better value and service than our Participated in the development of product life cycle analysis

Marketplace competitors Perception study of 682 consumers shows a 28% 2.7

and Supply and Chain Consult and collaborate with customers in the development increase in the number of people who perceive Boral to be of sustainable products “environmentally responsible”

Target 3.0

1 For Boral’s fully owned businesses in Australia, the USA and Asia on a comparative basis. s5 s6

Underpinning Boral’s objective of “superior performance in a sustainable way” is a robust corporate governance framework and management system. Managing Sustainability

Boral’s Board of Directors is accountable • reviewing sustainability performance corporate affairs and human resources to shareholders for appropriately and overseeing occupational health and provide advisory support and corporate Boral’s Values overseeing all aspects of Boral’s safety and environmental management functions. Sustainability matters are Leadership business, including sustainability matters. performance; also integrated into individual managers’ Creating and contributing to an environment in The Company’s corporate governance • meeting legal requirements and objectives, which are linked to variable which our people can excel through a management practices and frameworks provide the ensuring that the Company acts remuneration outcomes. style that is participative, encouraging, demanding and supportive. means by which the Board monitors responsibly and ethically and prudently Since January 2007, an internal Energy performance on behalf of shareholders. manages business risks and assets; and and Climate Change Technical Working Respect Boral’s Values, policies and operating • remuneration policies and practices Group (ECCTWG) has been in place to Ensuring the impact and integrity of our frameworks provide guidance to for Boral and the remuneration make recommendations and advise the operations and actions on employees, customers, its businesses and line managers arrangements for senior executives. Management Committee on technical the communities and environment in which we in managing their operations in a Executive General Managers, heads of issues relating to climate change matters. operate, meet both the spirit and letter of the law and community expectations. sustainable way. functional departments and the Managing The ECCTWG reports back to the Director regularly report to the Board on Management Committee on at least a Focus Corporate governance progress and performance as it relates bi-monthly basis. Work undertaken by Making critical choices on priorities, making Details of Boral’s governance framework to health and safety, climate change the ECCTWG is discussed on page s20. timely, insightful fact-based decisions, and being and practices are disclosed in the and broader aspects of environmental determined to pick the right things and do them well. Corporate Governance section of the and community management, human Our Values Annual Review (p 32 – 37) and on our Boral’s Values describe how we do Performance resources and risk management. Getting on with the job, setting challenging goals things at Boral and influence our day-to- website. Responsibilities of Boral’s Board and standards, measuring results, providing honest which relate to sustainability are: Management responsibility day business activities. Our Values are: feedback on individual contribution and rewarding • oversight of the Company, including its Boral’s Management Committee, which Leadership, Respect, Focus, Performance achievement. conduct and accountability systems; comprises Boral’s Managing Director, and Persistence. Our corporate Values are referred to in our Strategic Intent to Persistence • reviewing the performance of the divisional Executive General Managers and functional General Managers, reinforce their ongoing importance in Boral. Striving to be the best at what we do, being relentless chief executive officer and senior in our pursuit of improvement and of increasing is responsible for delivering Boral’s management; We know that our Values are being targets, never being satisfied with the status quo. sustainability objectives. • reviewing and verifying systems of risk adhered to by observing people’s management and internal compliance Day-to-day management of behaviour. Our Values are incorporated and control, codes of conduct and legal sustainability matters is integrated into into annual performance reviews to compliance; line management. Specialists in health assess behaviour or workplace style and and safety, environmental services, effectiveness. Examples of expected behaviour are provided for managers The approach of Boral’s businesses to To achieve an industry specific best practice score of 3.0, Boral’s businesses taken to ensure a common understanding of managing sustainability is assessed based together should be able to demonstrate that the following goals have been achieved: Boral’s Values across the organisation. on the first seven elements of the BSDT. These seven elements are: BSDT element Our goals Latest BSDT score Our policies • Scope of commitment; Scope of commitment • Measurable sustainability targets are incorporated for all The Boral Management Guidelines • Management systems; contain our formal Code of Corporate aspects of the business into business plans 3.2 Conduct and 52 policies and guidelines • Accountability and performance • Drivers for sustainability are identified through analysis setting out legal and ethical standards management; of products and services for employees. Our Code of Corporate • Budgeting and financial management; Conduct articulates the standards of • Risk management – new business and/ Management systems • Stakeholder input is used in the assessment of behaviour that are expected of Boral or new development, plant, equipment; effectiveness of management systems 2.9 companies and employees in the • Compliance review and reporting; and • All management systems undergo regular independent performance of their duties. The Boral • Continuous improvement. review Management Guidelines were extensively Our target is to reach and maintain a reviewed in 2007 as part of a triennial Accountability • Managers’ performance assessments and rewards review process. standard of industry-specific best practice (BSDT score of 3). and performance systems are linked with sustainability objectives 3.0 management Boral Sustainability Diagnostic The BSDT scores and some of the Tool (BSDT) requirements to achieve an industry The background and purpose of the best practice score of 3 for each of the BSDT, as well as the latest scores for the Budgeting and • Business plans, budgets and reports include substantial first seven elements are included in financial management detail on sustainability performance 3.1 13 performance elements of the BSDT, the accompanying table. are outlined on pages s4 – s5. The BSDT assessment process serves Our management approach to our people to reinforce acceptable standards, train Risk management • Sustainability risks are considered in decision making managers in “best practice” requirements Most of our Human Resources (HR) 3.0 and identify areas of weakness. The activities are managed within Boral’s BSDT is used to monitor progress and divisional management structures, set improvement targets. including: performance management and development plans; employee surveys; The latest 2007 assessment process was employee relations; organisational Compliance review • Sustainability performance is regularly reported undertaken with an external sustainability effectiveness reviews; divisional HR and reporting (CRR) externally 3.1 expert. A total of 57 BSDT assessments planning; recruitment and induction • CRR is integrated with performance management and were completed across our operations in management; and maintenance of business planning systems Australia, the USA and Asia. employee records. During 2008, the criteria outlined for each Boral’s line managers play a significant Continuous • Plans and processes are reviewed regularly to incorporate BSDT performance level (scores of 1 to role in the HR processes on a daily basis. improvement new technologies and best practice 3.1 4) will be independently verified by Net Boral has 55 specialist HR staff working Balance to ensure it is consistent with within Boral’s divisions, most of which are best practice. It is proposed that the next actively involved in business management Target 3.0 BSDT assessments in 2009 will also be processes to ensure appropriate support independently verified. is provided to line managers to achieve business plans and objectives. s7 s8 Managing Sustainability

A small corporate HR team provides We require all contractors to comply with whilst enabling each division and Boral’s Health and Safety Management an advisory and support service to the Boral’s health and safety requirements business unit to develop Health and System, which is built on a foundation of divisions as well as managing centralised and they are also subject to Boral’s Safety Management Systems that solid corporate policies, standards and HR activities such as: superannuation; internal audit program. address their individual requirements. procedures, provides for the diversity and remuneration reviews and incentive geographic spread of Boral’s operations, Across Boral’s businesses, there is an Our Health and Safety Management and ensures accountability at the site level. schemes; learning and organisational emphasis on all managers demonstrating System embodies the requirements development; health and safety direction; commitment and leadership – on being contained within Australian Standards and workers compensation. role models by doing what is right and 4801:2001 and 4804:2001. Site H&S management The corporate function also plays a not what is expedient. This encourages plans and documentation Boral has a formal Health and Safety governance and assurance role for our employees to take personal Policy, which applies across all of HR processes and behaviours and is responsibility for health and safety Business- Boral businesses. The policy states our specific responsible for: Boral-wide policies; issues and to share information. fundamental commitment to providing Division/region H&S succession planning; coordinated Responsibilities safe and healthy working conditions for management plans programs such as MBA and graduate Over 90 full-time equivalent health all people involved in our operations, recruitment; indigenous employment; and safety professionals work in our including employees, contractors, visitors management of expatriates; and HR divisions. In addition, Boral has a and the general public, and how we work planning for the Boral Group. Boral corporate standard corporate health and safety function towards meeting that commitment. The procedures HR strategy is developed at a divisional that provides advice and support to policy is displayed at all Boral worksites level and communicated through to the divisions. The corporate function assists and posted on our intranet and website. Board via divisional strategic plans on an in safety management planning and Boral’s Best Practice Elements (BPEs) annual basis. Boral-wide or cross-divisional initiatives Boral High Consequence are a key component of the Health and and reporting systems. Protocols (HCPs) Incorporated into the Boral Management Safety Management System. BPEs are Guidelines is a series of HR policies and Management system designed to enable each business to guidelines including policies on Diversity, Boral’s Health and Safety Management develop health and safety processes that Boral’s Best Practice Employee Complaints, Harassment, System is designed in accordance address individual requirements while Boral-wide Elements (BPEs) Induction, Leave and Performance with the scope and diversity of Boral ensuring industry best practice in critical Management. business function. We have over safety areas across the organisation. 15,928 employees and some 5,700 Boral’s BPEs (shown in Figure 1), Our management approach to contractors working across 717 operating, together with divisional health and safety Health and Safety policy health and safety administration and distribution sites management systems, cover all aspects In line with our Value of Respect, globally, some accommodating as many of health and safety management which Boral is committed to providing safe as 700 people and others with as few as are currently required by legislation and and healthy working conditions for all two employees. Many of our contractors Company policies, and cater for those people involved in our business including and some employees also work beyond likely to become of concern in the future. Boral Values contractors, visitors and the general Boral’s own sites – our truck drivers, roof Boral’s BPEs were last revised and public. We place the same level of tilers, plasterers, concrete placers and updated in 2005/06. importance on managing safety in partly asphalt crews work on our customers’ Boral’s High Consequence Protocols owned businesses, such as joint venture residential, commercial and infrastructure set out rules and procedures to manage operations which are not managed projects. specific hazards that are associated with directly by Boral, as we do on fully Boral’s Health and Safety Management serious injuries and fatalities. Boral’s high owned operations. System articulates the minimum risk hazards include mobile equipment; requirements to ensure consistent equipment safeguarding; isolation of plant practice across Boral’s businesses Figure 1 Boral’s health and safety Best Practice Elements (BPEs) Planning and equipment; and working at heights. • assessments of electrical safety In some cases where cross-divisional • Planning and performance indicators These protocols are integrated into Boral’s management; learning opportunities exist, particularly Health and Safety Management Systems. • management systems audits; in relation to serious and potentially Implementation serious accidents, safety alerts are • Leadership and commitment Accountability and performance • physical hazards audits; communicated throughout Boral. • Acquisitions, modifications and divestments management • audits of contractor safety Responsibilities are assigned against • Risk management Boral’s BPEs define required levels of management; and corrective actions to ensure tracking and • People and training accountability and responsibility for safety • audits against safety programs. monitoring through to completion. • Contractors and suppliers performance. Individual management • Employee involvement Continuous improvement accountabilities are linked to strategic Boral has a health and safety leadership • Communication plans with performance measured Boral’s BPEs require continuous training program and site-specific safety • Health and safety assurance and work environment and linked to managers’ variable improvement in health and safety training programs for employees and • Systems and procedures of work remuneration. performance. Essential components contractors which include consultation, of continuous improvement in safety risk management, safe work practices, • Health management A component of Boral’s Managing outcomes are: engagement of Boral’s emergency procedures and first aid. • Emergency preparedness and response Director’s and Executive General people, communication and training. • Corrective and preventative action Managers’ variable remuneration is Boral’s divisions maintain staff training also linked to safety performance. Engagement is aided by behavioural registers, which are monitored to ensure Measurement, evaluation and management review safety programs which focus on changing ongoing training needs are met. • Auditing and performance review Compliance review and reporting employee/contractor behaviours and The corporate health and safety team include such activities as “safety Our management approach undertakes formal reviews of divisional conversations”. Hazard identification and to environment performance, reporting back to the Boral’s Environmental Management System corrective actions are closely monitored Responsibilities Management Committee and the Board and communicated to ensure targeted Most environmental responsibilities are on a regular basis. corrective actions are taking place within managed within Boral businesses with In addition to business-level reporting, the targeted time periods. over 25 full-time equivalent environmental Site environmental plans, EMS and documentation following internal reporting takes place: Communication and consultation with professionals working across Boral’s • Divisional management teams present our employees on health and safety is divisions. Business- their health and safety plans to the achieved through safety committees at Boral also has a corporate Environmental specific Board annually. larger sites and via managers consulting Divisional environmental Services department which consists of strategic plans • On a monthly basis, the Management directly with their people at smaller sites. five full-time environmental professional Committee reviews employee and Boral has some 60 formal health and staff. This department provides advisory safety committees, with approximately contractor safety performance including support services to all divisions globally Environmental 90% of Boral’s workforce represented serious and potentially serious incidents. and undertakes a governance role, Management • Safety results and updates are reviewed on these joint management-employee including auditing the businesses, System and procedures monthly by the Board of Directors. committees. Safety committees take reporting back to divisional management, on a number of roles including hazard the Managing Director and the Board. Executive General Managers and business identification, monitoring corrective managers meet with the Board as soon as actions, reviewing safe working Management system Environmental Policy Boral-wide practicable to discuss and review all Boral- practices, and overviewing health, safety Boral’s approach to environmental related accidents involving fatalities. and ergonomic considerations before management is to develop business level purchase of materials and equipment. environmental management systems Boral’s health and safety audit program based on corporate standards. Boral’s includes corporate reviews against Boral’s Divisional safety alerts are broadcast Environmental Management System Boral Values BPEs as well as a range of independent to communicate serious accidents, (EMS) is based on the International third party audits and assessments. near misses and corrective actions. Standard ISO14001 “Environmental A range of assessments are completed Management System – Specification throughout Boral’s businesses each year, with guidance for use”. including the following types of audits s9 and assessments: s10 Managing Sustainability

Boral has a formal Environmental Audit and assurance programs are an Internal communication on environmental Policy, which applies across all of Boral’s important part of Boral’s EMS. Details best practice is achieved through businesses. Our Policy states that we of Boral’s environmental audit and a number of channels: are committed to pursuing industry- assurance programs undertaken during • Boral hosts an annual internal two-day specific best practice in environmental 2007/08 are outlined on page s18. environmental conference for some 45 performance. More specifically, we are Budgeting and financial management employees to share environmental best committed to: Environmental strategic plans are practice learnings across the Company. • reducing GHG emissions from our prepared annually by each of Boral’s • Boral’s annual Awards for Excellence processes and facilities; operating divisions and reviewed and include an Environment and Community • protecting and, where possible, approved by the Managing Director and award which recognises best practice enhancing biodiversity values at and Boral’s General Manager, Environmental across the organisation. around our facilities; Services. • Success stories and environmental • remediating our contaminated sites; These plans have a one- and five-year updates are communicated through • complying with environmental outlook, focus on priority areas covered an internal quarterly environmental legislation; and in Boral’s Environmental Policy as well newsletter as well as Boral in the • continual improvement of our as those areas of importance specific to News and Boral’s intranet. performance with regard to energy, individual businesses, and include targets External sustainability measures water, waste, pollution and the use and action plans. Boral was awarded a “Commendation of virgin materials. Compliance review and reporting for excellent report structure” in the 2007 Boral’s Environmental Management The corporate environmental services team Association of Chartered Certified Procedures include tools to be used undertakes formal reviews of divisional Accountants’ (ACCA) awards for by Boral businesses to develop and environmental performance, reporting back sustainability reporting. implement their own EMS, as set out to the Management Committee and the At the 7th Australian Sustainability in the Boral Environmental Policy and Board on a regular basis. Awards in November 2007, Boral include EMS System Procedures and Improved collection and management of received the Special Award for Corporate Environmental General Procedures. environmental data, particularly energy/ Governance. Boral was recognised for The EMS System Procedures are GHG emissions, water and waste, has having good governance that leads to designed to interpret ISO14001 for been a focus across Boral’s businesses in sound, sustainable business practices. Boral users, while the Environmental recent years. Independent verification of Boral took a leave of absence in the General Procedures are designed to environmental data, which has also been Corporate Responsibility Index (CRI) in 2007 set out Boral’s particular operational a focus, takes place as part of Boral’s after achieving Gold star rankings in 2005 requirements, to assist Boral’s annual sustainability reporting as well as and 2006. Boral has participated in the annual businesses to develop and maintain a number of government water, energy voluntary, non-prescriptive framework for their own EMS. and emissions schemes. corporate responsibility in Australia and Boral Roofing at Wyee and our cement Continuous improvement New Zealand since it commenced in 2003 facility at Waurn Ponds maintain formal Environmental training and communication and will continue in 2008. The CRI is a project ISO14001 certification. Boral’s largest are integral to continued improvement of St James Ethics Centre and validated by Division, Australian Construction in environmental management and Ernst & Young. Materials, has also developed an ACM performance. Details of Boral’s specific EMS which is currently being environmental training programs rolled out across the regional businesses. during FY2008 are covered on page s18. Developing our leaders in a developing country Over the past four years, Boral’s Indonesian construction materials business, Jayamix, has worked persistently to improve its business culture. Focusing on management systems and training, a culture now exists where people are aware of their safety and environmental responsibilities and work in cross-functional teams to produce the required results. Jayamix has moved forward in systematically developing and training its leaders including in environmental management. The business expects to receive full accreditation to the ISO9000 quality standard in 2008 as a result of its improved management systems. The success of this journey has also been demonstrated in FY2008 by the outstanding safety results achieved: • One LTI compared with six in the prior year and eight in FY2006. • LTIFR of 0.31 compared with Boral’s overall result of 2.5. • Percentage hours lost down from 0.04 to 0.02, compared with 0.08 for Boral overall. Despite these strong results, which have been better than expected, Jayamix acknowledges it still has a long way to go in its safety and sustainability journey.

Boral has been included in the Ethical standards and compliance Gifts, Entertainment and Financial FTSE4Good Index since March 2005, Boral’s Code of Conduct states that Boral Inducements policy, Business Expenses demonstrating that we continue to satisfy companies and employees must observe policy, and Government Relations policy. the FTSE4Good independent selection both the letter and spirit of the law and These policies apply to all of Boral’s criteria. The FTSE4Good is an equity adhere to high standards of business operations globally. Induction programs index series, created by the global index conduct and strive for best practice. for new managers and ongoing annual company FTSE Group, which has been performance reviews are used for training We take adherence to legal and ethical designed to measure performance of and discussion around these matters. standards seriously, with 97 Boral companies that meet globally recognised employees dismissed during 2007/08 In addition, internal risk management corporate responsibility standards, and to for serious breach of policy. processes include consideration of “high facilitate investment in those companies. risk” countries1. In summary, Boral’s Companies included in the index must Boral’s employees have access to a policies and/or compliance systems: meet stringent and evolving social, whistleblowing service known as FairCall environmental and ethical criteria. to report possible fraud, illegal acts or • prohibit Boral’s businesses, and agents misconduct. Calls made via the FairCall acting on our behalf, from giving and In 2007, Boral was named as Best hotline are received by an independent receiving bribes; in Class by Storebrand Investments service provider, KPMG, which then • commit to obeying all relevant laws; SRI for environmental and social provides this information to appropriate performance in the global construction • restrict and ensure controls around Boral senior management. Outcomes are materials industry. political donations; reported back to Boral’s Audit Committee. • restrict and ensure controls around Since 2006, Boral has participated in FairCall has been in place since 2001 facilitation payments; and the Carbon Disclosure Project (CDP) and during 2007/08 10 calls making new • restrict the giving and receiving of gifts. and has been included as one of 15 allegations to the FairCall hotline were members of CDP’s Climate Disclosure logged resulting in investigations. Boral’s joint venture business, Lafarge Leadership Index (Aus-NZ), comprising Boral Gypsum Asia, which operates in Boral supports the Australian Government’s the best responses among ASX 100 and countries including those earlier identified commitment to the global fight against NZX 50 companies. CDP is the most as “high risk” countries, is a 50/50 joint corruption and to raising public awareness comprehensive survey regarding the venture with Lafarge SA. Lafarge is a about the foreign bribery offence under potential impacts presented by climate large French multinational company which Australian Criminal Law. change and is sponsored by international comprehensively discloses information on institutional investors with a combined In addition to our Code of Conduct its policies and practices, including those $57 trillion of assets under management. and FairCall whistleblowing services, in relation to its Code of Business Conduct we have formal policies in place that and bribery and corruption. Refer to relate to offering or accepting bribes, www.lafarge.com for more information. kickbacks or gifts. They include our Boral derives around 3% of revenues 1“High risk” countries identified by the FTSE4Good Index include the following from “high risk” countries. countries in which Boral operates: Indonesia and Thailand (and through joint ventures in China, the Philippines, India, Vietnam, Mexico and Trinidad). s11 s12

We recognise that our people are our most valuable assets.

Human We aim to ‘have the best people in our industries’, to provide Resources a safe and healthy working environment and to ensure our people have the appropriate training, knowledge and skills to deliver on our objectives. Our People

To “have the best people in our Our workforce Australia, where the resource boom is Figure 2 industries”, it is essential that we attract, As at 30 June 2008, Boral had 15,928 resulting in a very competitive skilled Employees by region develop, engage and retain the best full-time equivalent employees, compared labour market. Staff turnover in the USA 14% Australia people at all levels. Our HR strategies with 16,194 last year. A decrease in was 29%, up from 24% in the prior year, are geared towards meeting our employee numbers in building products reflecting the protracted US housing Asia internal needs and addressing external businesses in the USA, due to the downturn. In Asia, turnover was 20%. USA challenges. The external challenges significant market downturn, was partly During 2007/08, our turnover rate was 22% that we face include continued low offset by higher employee numbers as highest for employees under the age of unemployment and skills shortages a result of the acquisition of construction 30, with 35% of this age group ceasing 64% in Australia, and an ageing workforce, materials businesses in Oklahoma in their employment with Boral. Despite resulting in a high employee turnover August 2007. only 19% of current employees being and in some businesses difficulty finding Figure 3 Around 36% of Boral’s employees work under the age of 30, Boral’s businesses suitably experienced candidates. On Employees by division in our offshore operations. are focusing on developing retention 2% the other hand, our USA operations Australian Construction strategies for younger employees. 14% have been impacted by a significant In addition to our permanent Boral Materials deterioration in market conditions, workforce, there are around 3,400 people Absenteeism for Boral’s Australian Cement 5% 29% resulting in a loss of around one-third of working in joint venture operations in operations in 2007/08 was 2.3%, which Clay & Concrete Products 4% the workforce over the past two years, Australia, the USA and Asia, and we is broadly consistent with last year. Plasterboard including joint venture employees. engage around 5,700 full-time equivalent The average length of service of Timber contractors in a range of activities 11% We are committed to providing a employees in Australia decreased to including transport operations, contract USA healthy and safe work environment as 7.8 years, from 8.4 years last year. In the maintenance, roof tiling, plasterboard Corporate evidenced by our ambitious continual USA, average length of service increased 35% installations, concrete placement and improvement in safety targets. This year to 10.2, while in Asia, average length of Figure 4 various professional services such as Employment type we are pleased to have exceeded our service increased from 4.3 to 4.6 years. finance and information technology. The proportion of all Boral employees 1% 3% overall LTIFR target for employees, and Contractors with 11 or more years of service was also delivered an exceptional zero LTIFR 26% in our Plasterboard division, which is Employee turnover down marginally this year to 26%, from Full-time Staff turnover in Australia during testament to strong leadership in safety 29% last year. Part-time 2007/08 was 23%, which is in line and systematic processes in place. Casual with the prior year. The sustained high turnover reflects the continued tight labour market, particularly in Western 70% Figure 5 Employees by occupation

Manager Professional Sales Diversity Program (BEAP); our community conjunction with Hunter TAFE and is Clerical Boral has a formal Diversity Policy which partnership activities; as well as our currently in the process of sponsoring Trade states our commitment to operating Indigenous employment and community a group of Aboriginal student leaders Plant and Transport in a manner that exhibits respect for relations programs. from Western Sydney high schools on Labourer differences among employees, as well as an Outward Bound Leadership Program. 0% 10% 20% 30% 40% 50% Boral has had an Indigenous Employment customers and communities. Diversity is Male Female Strategy since 2003 as part of its the variety of skills, abilities, experiences Personal development commitment to the employment of and cultural backgrounds that enable and training Aboriginal and Torres Strait Islander people to achieve superior business and An important part of Boral’s people people. In partnership with the Federal Figure 6 personal results. We understand that strategy is to ensure our people have the Government’s Corporate Leader Program, Turnover in Australia by age diversity brings many benefits and are right skills and capabilities to perform their and managed by the Boral Indigenous increasingly encouraging greater diversity jobs and develop their careers. We use a <20 Employment Manager, this strategy within our workplaces. range of methods to train and develop our 20-29 has seen a continual increase in the people, spanning from on-the-job training 30-39 Women represent 13% of Boral’s number of Indigenous people applying through to leadership development 40-49 employees at 30 June 2008, which is for and being successful in obtaining programs. 50-59 consistent with our industry sector, and jobs with Boral. Currently, Boral has a 60+ compares with 12% in the prior year. Structured Training and Employment In general, on-the-job training and 0% 10% 20% 30% 40% 50% Program (STEP) in place with the Federal competency-based training for operational Women occupy 67% of clerical positions Government (DEEWR) with the aim of and front-line employees as well as and 31% of sales positions. In contrast, employing 50 new Indigenous employees contractors is managed within Boral’s men account for 97% of Boral’s trade and in current vacancies before 2009. Boral divisions. Boral’s learning and direction Figure 7 plant/transport roles. Women occupy 9% has also agreed to support the NSW and support for the development of Age profile of Boral’s employees of Boral’s management positions, which Government’s Aboriginal Job Compacts Boral’s managers and future leaders is consistent with last year. <20 which is an initiative aiming to improve is provided by Boral’s Organisational employment outcomes for Indigenous Development team. 20-29 In 2008, Boral was recognised as an 30-39 Employer of Choice for Women by the people in Dubbo, Tweed Heads, South During 2007/08, 2,494 employees 40-49 Federal Government’s Equal Opportunity Western Sydney, Eastern Sydney and participated in a comprehensive range of 50-59 for Women in the Workplace Agency Western Sydney. As part of this strategy training programs offered through Boral’s 60+ (EOWA). The Employer of Choice for Boral is committed to better connect global learning teams. 228 employees in 0% 10% 20% 30% Women status recognises Boral’s with local Aboriginal communities, Australia, Asia and the USA participated initiatives to create equity for women, and schools and TAFE Colleges to assist in Male Female in Boral’s formal leadership development among other things, that its recruitment improving community awareness of local programs. (See Figure 9.) and promotion processes are merit-based employment opportunities. Through and transparent. these programs 25 Indigenous people Boral also developed a formal Asia Figure 8 have been recruited into the Company People Development Plan in 2007, to Length of service of Boral’s employees Some of Boral’s initiatives, which in 2007/08 and another 13 are working attract, develop and retain local people, contributed to this recognition as an 0-5 years indirectly as Boral contractors. identify future leaders and enhance Employer of Choice for Women, include: 6-10 years management talent. Boral’s parental policy, “Springboard Boral also works extensively on the 11-15 years for Women” training program and other retention of Indigenous staff through In 2007/08 we focused on the 16-20 years Boral training programs; Boral’s Health Aboriginal Cross Cultural Training, development of leadership programs that 21+ years and Wellness Program (BWell); our establishment of a mentoring program for can be tailored to suit individual country 0% 10% 20% 30% 40% 50% family friendly programs such as Boral’s Indigenous staff and better community requirements and the establishment of Male Female Outward Bound Family Re-Discovery relations with their local Indigenous “train the trainer” processes. program; the Boral Employee Assistance communities. This year, Boral sponsored Indigenous trainees in plasterboard installation at Worimi Land Council in s13 s14 Our People

All of Boral’s businesses conduct safety Employee engagement Employee relations training, which is complemented by Boral conducts independent employee The past few years have seen us Boral’s centrally administered leadership satisfaction surveys on an annual basis. develop an understanding of the program, Leading Health and Safety. The results of these surveys allow us to practical application of the Work This program focuses on safety culture identify and address areas that require Choices industrial system in Australia. and leadership. A total of 330 Boral attention in working towards our goal We are, however, preparing ourselves for employees participated in this program of maximising workforce satisfaction, another fundamental change to industrial in 2007/08. productivity and retention. legislation – “Forward with Fairness”, as part of the current Labor Government’s Boral’s Australian Construction Materials In 2007/08, employee surveys were industrial relations reforms. While the division operates a registered training conducted in several of the business ongoing flux in legislation brings with organisation (RTO). Boral’s RTO uses groups in Australia. A total of 2,550 it constant challenge to educate and the national training system, including employees responded, representing a adapt, our underlying employee relations competency standards and qualifications, 76% response rate. The survey results strategy has remained constant and firmly to establish rigorous performance indicate that our employees in Australia based on engaging directly with In 2008, Boral was recognised as an Employer of benchmarks for operators, supervisors continue to be highly engaged and our employees. Choice for Women by the Federal Government’s and managers. satisfied with working at Boral. Consistent Equal Opportunity for Women in the Workplace with last year, 91% of Australian All of Boral’s Australian non-salaried Agency (EOWA). During 2007/08, 350 statements of employees are engaged with 43% employees work under registered Some of Boral’s initiatives which contributed to attainment and 123 certificates at levels II, of employees highly engaged. industrial instruments. In broad terms, this recognition include Boral’s parental policy and III, IV and V under the Australian Quality approximately: the “Springboard for Women” training program, Training Framework (AQTF) were issued While there have been improvements pictured above. through Boral’s RTO. A large number of in perception around safety, key issues • 80% are regulated by Union Collective employees undertake structured training which affect employee engagement that Workplace Agreements; on modules under the AQTF relevant to require ongoing attention include: fair pay, • 3% are regulated by a Notional Figure 9 their work but do not go on to complete work-life balance, training and coaching, Agreement Preserving a State Award; Number of staff participants in Boral’s a full certificate program. In addition to resourcing, inclusive leadership style, • 10% are regulated by Employee leadership development programs in promoting entry level employment and communicating and involving employees Collective Workplace Agreements; and 2007/08 up-skilling in non-salaried roles, Boral in decisions. These issues are indicative • 7% are regulated by Australian has an extensive number of registered of the needs of our increasing numbers of 22 traineeships in place, including 171 in Generation X and Y employees. Feedback Workplace Agreements or Individual Frontline Leadership Australian Construction Materials. sessions take place with our employees Transitional Employment Agreements. 23 Emerging Leaders at a local level to discuss the results and We estimate from our records of union Management Development payroll deductions that in Australia 32% of likely actions in key areas. Executive Development our non-salaried employees are financial In Asia, we engage employees directly 40 members of a trade union and in the USA 143 through a number of communication 18% of Boral’s employees are members channels that promote two-way exchange of a trade union. of information and employee views. For example, in Indonesia over 33 “Morning Talks” or tool box meetings take place per week to deal with issues of concern to business and employees. Communicating and celebrating sustainability outcomes Planned and systematic approaches to communications have been developed within Boral’s divisions to raise awareness and ensure employees and contractors have access to sustainability information. Boral’s sustainability priorities and achievements are communicated frequently via several channels including Boral in the News, which is distributed quarterly to employees, and available for external stakeholders via Boral’s website. Boral’s intranet, known as Boral OnSite, together with divisional newsletters provide employees with more detailed and divisional-specific information. Boral’s internal Environment Matters quarterly newsletter is distributed to employees and businesses informing them on a range of issues including those relating to climate change, water, waste, biodiversity and the latest environmental cases or new legislation. Its primary focus is to share learnings and knowledge across divisions. In addition to communicating achievements and sharing information across divisions on an ongoing basis, the annual Boral Awards for Excellence recognise and celebrate the best achievements in the Company, across several categories including, Safety, Environment and Community and People. With over 100 submissions received each year for the past 11 years, the Awards are highly regarded within Boral. For a listing of the 2008 finalists and winners refer to www.boral.com.au/sustainability.

Managing and rewarding Boral conducts a formal succession Through our community partnership Figure 10 our people planning process focused on managerial programs, employees have access to Results from Boral’s employee Of Boral’s Australian workforce, about positions on an annual basis. This family zoo passes for complimentary satisfaction surveys 59% work under an enterprise or enables us to identify talent and future entry to Taronga and Western Plains Zoos industrial agreement, which generally leaders and develop our leaders through and discounted tickets for partner events. involves hourly rates of remuneration aligning individual development plans Through its partnership with Outward and in some cases a productivity bonus; with participation in Boral’s Leadership Bound Australia, Boral funded seven 37% are in salaried staff positions with Development programs and providing Family Re-Discovery scholarships in an annual bonus linked to individual opportunities for internal promotion. 2007/08 to employees with a high-school performance; and 5% are in “total aged son or daughter. Since 2003, cost” salaried positions which involves Work/life balance 69 employees and their son or daughter an annual short-term incentive tied to Employees are encouraged to focus on have participated in the nine-day program individual performance objectives and an appropriate work/life balance. Flexible in the Australian wilderness. financial performance of the business. working arrangements are increasingly In the USA, Boral provided six Educational being adopted by Boral’s businesses. Boral’s remuneration practices are Scholarships of US$4,000 per year for Often these arrangements have been designed to be market-competitive and four years towards the college tuition created due to maternity leave, return to to use variable at risk remuneration to fees for children of employees. work, breastfeeding, work location, semi- reward good performance. Details of retirement and special circumstances Boral’s employees also have access to Boral’s remuneration policy and structure around a sick employee or family the BWell program (which offers regular for “total cost” salaried positions, is member. medical assessments for employees and included in the Remuneration Report Highly Disengaged health awareness educational material found on pages 42 to 49 of the 2008 Boral’s Australian parental leave policy Moderately Engaged for employees and family members) Annual Review. includes eight weeks paid maternity leave and BEAP (a counselling service for Highly Engaged and one week of paid paternity leave. Performance reviews are carried out employees and their families). Further otal

During 2007/08, 94 female employees T annually for salaried and management information on these programs is included commenced or continued paid maternity staff (38% of all Australian employees in on page s17. leave and 277 male employees took paid 2008) as part of our annual remuneration Operational paternity leave. Management reviews. Performance reviews consist of a formal two-step performance We recognise that it is increasingly management process, incorporating challenging to find time outside of work identification of individual development for family and to give something back Administration/Suppor t needs, as well as assessing performance to the community. Boral’s community against pre-agreed individual objectives. partnership programs are therefore designed to allow employees to combine community-giving activities with their work schedules and with their family life. s15 s16 Health and Safety

The health and safety of all people During 2007/08 Boral was prosecuted set to impact self insurers as benefits to Figure 11 involved in our operations is a key priority. for two safety incidents which occurred employees on workers compensation Lost Time Injury Frequency Rate* (LTIFR) Our aim is to eliminate or minimise the in NSW. The first incident relates to will increase significantly compared to * Per million hours worked circumstances under which people can a contract truck driver injured when a current levels. The full impact will not be be injured. Boral’s approach to health load of timber board fell from his truck, realised for some 18 months with a staged 12 and safety is built on a solid foundation breaking both his legs and injuring his introduction of changes to occur over the of corporate policies, standards and back. Boral pleaded guilty and was coming 12 months. procedures. fined $115,000 plus costs. The incident 9 9 occurred in 2005/06. The second Risk management and Details of Boral’s approach to managing prosecution related to a fatality which injury types health and safety is provided on pages occurred in 2004/05. A subcontractor to Boral’s businesses are required to s8 to s9. a joint venture company was killed when effectively integrate health and safety 5. 1 concrete panels fell on him from the risks into management of all work 5 5 4. 5

Safety performance 4. 2 floor above, when he was working on a activities and processes. This requires Boral’s Lost Time Injury Frequency residential construction site in Sydney. a systematic process for hazard 3. 1 2. 8

Rate (LTIFR) for employees was 2.5, 2. 5 The joint venture company pleaded guilty identification, risk assessment and down 11% compared with 2006/07 and and was fined $215,000. development of control measures. Risks percentage hours lost improved by 11% associated with identified hazards are to 0.08% during the same period. Our Workers compensation assessed, taking into consideration both target is to reduce LTIFR and percentage As shown in Figure 15, in 2007/08 Boral’s the probability of a hazard causing an hours lost by 25% on the previous three workers compensation claim numbers actual incident and the potential severity FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 year average. LTIFR of 2.5 was 26% decreased by 3% to 1,918, while claim of the consequences of such an incident. better than the previous three year costs decreased by 27% to $4.9 million. Control measures are then required to average of 3.37. Percentage hours lost Figure 12 be implemented to effectively manage of 0.08 was a 22% improvement on the Claim numbers remained high relative to Percentage hours lost identified and assessed risks. previous three year average of 0.103. 2005/06 and prior years despite strong gains in LTIFR and percentage hours Boral uses statistical injury analysis to

Despite our improved performance and 0.30 lost. Claim costs, however, were lower formulate action plans to address specific our efforts to make safety the number than last year across all divisions with risks. As shown in Figures 13 and 14, the one priority across the Company, the exception of Australian Construction majority of injuries in Boral’s Australian 0.25 tragically we experienced one fatality 0.24 Materials. workplaces in 2007/08 resulted from which occurred in our Australian “muscular stress”, “hitting an object operations. Jakob Semmler, an employee The average cost per claim declined with a part of the body”, “being hit by driver, was delivering a tanker load of across all divisions and overall by 25%. 0.17 a moving object” or “falls from on the 0.16 fly ash to a customer site in suburban This is attributable to sound injury 0.15 0.15 same level”, and around 50% of the Adelaide when the truck he was driving management practices with a strong

injuries sustained were to the hand/ 0.11 0.11 rolled over on a bend and the cabin emphasis on return to work strategies

fingers, back/neck or arm/elbow/wrist. 0.09 hit a concrete power pole, causing resulting in improved return to work 0.08 Consequently, corrective actions including fatal injuries. We deeply regret this outcomes. training and process redesign have been tragic accident. Boral is currently in its second year of self taken to reduce these types of injuries. Contractor safety performance remained insurance in South Australia, with early consistent with last year with LTIFR of signs indicating strong management of 5.7 and percentage hours lost of 0.09%. claims and claim costs. However, recent Whilst much work has been done to legislative reforms in South Australia are FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 improve both contractor and electrical safety, they remain areas of special focus. Figure 13 Mechanism of injury

Hitting objects with Boral’s first division to achieve zero lost time injuries and zero hours lost part of the body Muscular stress

Over the past seven years, Plasterboard has come a long way in its safety journey. It has moved from an ad-hoc approach to safety Hit by moving object to one where there are systems and processes in place and there is ownership for safety at all levels and in all areas of the business. Falls on same level This desire and commitment to improve has translated into outstanding results, which the division is working hard to sustain. For example, the lost time injury frequency rate has reduced from over 12 in 2000/01 to zero in 2007/08 with percentage hours lost Repetitive movement down from 0.4 to zero over the same period. Contact/Exposure to heat/cold Plasterboard managers have consistently exceeded “Safety Conversation” targets while employees have identified and controlled Fall from height over 3,200 hazards in the last three years. Contact with chemical/substance An “all green” scorecard has been achieved in the 2007 Corporate Governance Review against the Boral Best Practice Elements and Other and multiple second party audits verify system compliance. mechanisms of injury The Boral Interior Lining HSE Management System has won various state and industry awards including the 2006 Self Insurers in Vehicle accident SA Award in Injury Prevention and employee survey results reinforce that Plasterboard’s safety strategy is on track. Other With strong leadership, teamwork and the continued efforts of everyone in the business, Plasterboard has achieved its goal of zero Figure 14 workplace incidents, injuries and illnesses. Body part injured

Hand/fingers Employee health and wellbeing BWell’s health assessments are widely specialist advice on a range of personal Back/neck Boral requires its employees to be fit for accessed. In Australia, 2,121 employees and work issues that may affect their Leg/knee work, with the required level of fitness obtained health assessments in 2007/08 wellbeing. During 2007/08, a total of 346 Arm/elbow/wrist depending on the nature of the work. and 8,507 BWell health assessments employees and family members accessed Head/face/eye Pre-employment medicals are conducted have been carried out since the program the service for a new issue. Foot/ankle for most employees to ensure they are commenced in 2003/04. In addition, 546 Shoulder physically able to meet the demands of BWell seminars were conducted during Managing security issues the job. In some higher-risk roles, regular the year in working hours, across 103 The security issues facing Boral’s Other employment medicals are also conducted. sites. In the USA, approximately 800 employees and JV staff working in employees participated in BWell heath countries of political and social unrest 2500 It is Boral’s policy to maintain a drug and Figure 15 Figure 16 assessments in 2007. are closely monitored. Boral engages alcohol-free work environment. Drug Number of workers Workers compensation global security advisers and our travel testing of employees and contractors Through the BWell program we aim to compensation claims claim costs ($ million) and security policies are reviewed and 8 takes place where it is a part of enterprise improve the health status and awareness 2000 adjusted in response to the changing or workplace agreements. While Boral of our employees through improvements global situations. Boral regularly considers 7 provides reasonable assistance to in their lifestyle and diet. The average emerging global health and security individuals to appropriately manage drug number of risk factors amongst Boral’s 1500 6 issues that may affect Boral’s operations and alcohol problems, it may terminate employees who have had health and employees abroad. 5 an employee or bar a contractor from assessments has reduced from 2.9 to 2.6 Corporate Corporate 8 returning to a Company site following a and the proportion of employees at the Our 50%-owned plasterboardUSA joint USA 1000 4 7 positive test result. high end of the health risk spectrum with venture business inTi mberAsia, Lafarge Boral Timber five or more undesirable risks has reduced Gypsum Asia (LBGA) has developed, 3 Beyond Boral’s requirement to be “fit for Plasterboard Plasterboard by 7% since 2003/04. Many examples of documented and implemented “Crisis 6 the job”, Boral is committed to supporting 500 2 improved health and wellbeing have been Management Guidelines”.Clay & Concrete A full Products Clay & Concrete Products the health and wellbeing of its employees. 8 5 reported by employees as a result of simulation exerciseCement has been conducted Cement Corporate 1 Boral’s employee wellbeing program, 7 increased health awareness and positive across the region, alongAus. Construction with multiple Materials Australian Construction MaterialUSAs 4 BWell, is currently available to employees 0 0 lifestyle changes. staff education seminars to ensure our in Australia and in the USA. In Australia, Timber 6 3 staff are prepared for the potential effects FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 BWell provides three core services: Boral also offers employees and family FY01 FY02 FY03 FY04 PlasterboardFY05 FY06 FY07 FY08 of medical or security emergencies. 5 2 annual or biennial health assessments, members in Australia a confidential, free Corporate Clay & Concrete Products wellbeing awareness seminars, and counselling program called BEAP (Boral USA Cement 4 1 educational information on health issues Employee Assistance Program). BEAP Timber Australian Construction Materials for employees and their families. provides short-term assistance and/or 3 0 Plasterboard s17 2

Clay & Concrete Products FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08

Cement 1

Australian Construction Materials 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 s18

One of our major environmental challenges this year was responding to the plethora of proposed and regulated state and Environment federal carbon and energy efficiency programs and reviews, particularly around the design of an Australian Carbon Pollution Reduction Scheme.

To achieve an industry-specific best practice score of 3.0, Boral’s businesses taken Our Environment together should be able to demonstrate that the following goals have been achieved:

BSDT element Our goals BSDT score Boral’s approach to managing the Boral held its fourth internal sustainability Energy conservation • Involved in voluntary, industry sector energy efficiency environment is detailed on pages s9 conference in March 2008, involving over and climate change or greenhouse programs including target setting; 2.8 to s10. 45 staff from across Boral’s businesses • looking at alternate technologies to lower emissions; who have responsibility for environmental • have systems in place to measure emissions; and Environmental performance management. The two-day conference • can demonstrate positive performance trends when being An important part of Boral’s highlighted best practice sustainability compared with peers. environmental strategy is to ensure that management and shared learnings across Water conservation, • Have consumption and cost savings tracking integrated our people have the right knowledge the organisation. extraction and into business reporting systems; 2.9 and capabilities to perform their job Audit and assurance programs are an protection • undertake water risk assessments for all sites; and protect the environment. During • incorporate reduction targets for key sites; important part of Boral’s EMS. In 2007/08, 2007/08, Boral’s staff and contractors • achieve performance improvements; and Environmental Services undertook continued to receive the latest • demonstrate positive performance trends when being 42 compliance and/or systems corporate environmental training via 33 business- compared with peers. audits, and 14 acquisition and divestment specific environmental awareness audits. Business-specific auditing takes Waste and resource • Monitor waste streams across key operational areas and training sessions (to 435 employees), report on these relative to operational efficiency; place across the Company. For example, management, 3.0 7 sessions on sustainable development recycling and re-use • conduct risk analyses to determine risks and opportunities Australian Construction Materials (to 32 managers), and 11 environmental associated with waste management and resource allocation; completed 326 internal environmental management sessions (to 60 employees). • incorporate waste reduction targets for key sites; short-form audits and in the USA In addition, 11 sessions were held on • introduce approaches to improve the sustainability environmental management system audits the rapidly developing area of energy performance of products throughout their lifecycle; and were conducted at 20 locations. This is • demonstrate meaningful improvements in key areas. and climate change with business part of the three-year re-audit program in management teams. Business-specific Land protection, • Have management systems in place to prevent land the USA for some 70 operating sites. To environmental training takes place across remediation and contamination including well-trained people; 3.0 date, 32 locations have been audited and the organisation. rehabilitation • evaluate land contamination risks and have systems in 708 issues identified of which 61% have place to identify land contamination hazards and risks and been completed. to manage contaminated land liability holistically; and • have a good understanding of rehabilitation conditions In our Thailand and Indonesian with completion plans for site closures. businesses, best practice standards, auditing protocols and hazard/action Environment and • Have undertaken comprehensive biodiversity ecosystem protection investigations and have implemented protection plans 2.9 registers to monitor closing out of for all relevant sites. actions is being maintained. Target 3.0 Figure 17

Boral’s GHG emissions (‘000 tonnes of CO2-e)

138 (28) 4 1 (103) 3,790 3,753 25 During 2007/08, Boral incurred nine The distribution of Boral’s energy use of carbon” than imported materials, so Penalty Infringement Notices (PINs) in and related GHG production across that Australia’s industry is not forced Australia (resulting in $12,201 fines) for Boral’s businesses is summarised in offshore, taking its emissions with it. environmental contraventions. These Figure 19. Around 65% of Boral emissions The Federal Government’s Green Paper were issued for minor or technical non- come from our Cement division, half of on the Australian Carbon Pollution compliances including contraventions of which is due to calcination, the chemical Reduction Scheme proposes to provide development approvals around dust, mud/ process of forming clinker from limestone assistance to EITE industries through a sediment on road and odour, and three at high temperatures. Emissions free allocation of 90% of the industry fines for discharging of concrete slurry into associated with cement are obviously a average required permits. The Federal stormwater drains and a failure of a recycled key issue for Boral but beyond calcination Government has also proposed to limit water pump, resulting in an overflow. Over of limestone, some 2.4 million tonnes the total amount of free permits to a level the last two years, the total monetary of emissions per annum result from of 30% of the national cap, which will fines issued to Boral companies has nearly Boral’s electricity, gas, coal and diesel reduce over time. The major risk is around halved. There were no fines or prosecutions consumption. the possible reduction in the level of free in the USA or Asia for environmental permits allocated to EITE industries over In each of our divisions we are striving to contraventions in 2007/08. time and the impact this will have on reduce emissions per unit and to offset future cement manufacturing. 1

Boral’s increases in absolute emissions USA imbe r Energy use and GHG emissions FY08 T FY07 Clay & as a result of market demand growth. In The other risk is the ability for Boral to be Cement Products Concrete Material s

Boral’s operations consume a significant Australia n 2007/08, GHG emissions per tonne of able to pass through costs of emissions Plasterboard amount of energy and some businesses Construction cementitious material sold improved by associated with landfill waste already in are particularly energy intensive. In 3% on the prior year and as shown in the ground. The peculiarity of the landfill 2007/08, greenhouse gas (GHG) 1.0Figure 18 Figure 18, emissions per tonne of cement business is that waste which is already emissions from Boral’s fully owned GHG emissions in cement* (tonne CO2-e/tonne have reduced by 13% compared with in landfill continues to emit GHGs for 1.0 businesses in Australia, the USA and 0.9of cementitious material sold) 1990 levels. Divisional performance (on decades, resulting in an inequity for new 1990 base year Asia totalled 3.79 million tonnes of pages s30 to s41) provides more detailed landfill operations that do not bear the 0.80.9 CO . This compares with 3.75 million 1990 base year 2-e energy and emissions efficiency data same legacy. tonnes of CO emitted in 2006/071 as 2-e specific to Boral’s businesses. 0.8 shown in Figure 17. On a comparative Boral is continuing to have ongoing 0.7 basis with 2006/07, absolute GHG Boral is exposed to regulatory and discussions both directly and through 0.7 emissions in 2007/08 increased physical risks related to climate change, industry associations with the Department 0.6 by 1%. Despite improved efficiencies both as a building and construction of Climate Change regarding the design of 0.6 at Berrima, Waurn Ponds, Badgerys materials company and as a major an emissions trading scheme. 0.5 Creek and in our hardwood business in energy user, particularly in our cement particular, increased emissions due to and brick operations. 0.40.5 higher production volumes in Australian For Boral, the most critical issue is 0.4 Construction Materials and Cement 0.3 Indirect emission per tonne to ensure that the cement industry in Australia more than offset lower of cementitious material sold is acknowledged as an emissions- volume-related emissions in the USA. 0.20.3 FuelIndirect emissions emission per tonne per tonne intensive trade-exposed (EITE) industry of cementitiousof cementitious material material sold sold In addition to the 3.79 million tonnes of and that there are suitable equity ProcessFuel emissions per tonne CO emission from Boral’s fully owned 0.10.2 2-e mechanisms in place to ensure that of cementitiousof cementitious material material sold sold businesses in 2007/08, approximately (FY07Process and FY08 emissions adj for pernet tonne domestically produced materials do 0.1 0.20 million tonnes of CO were emitted 0.0 clinkerof cementitious sales) material sold 2-e not have to bear much greater “costs from Boral’s equity share of joint venture (FY07 and FY08 adj for net * Includes clinker fly ash sales and) slag businesses in Australia and Asia. 0.0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 sales since FY07, tonnes of cementitious material sold 1 In Boral’s 2007 Sustainability Report, Boral’s 2006/07 GHG emissions were reported as 3.70 million FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 includes net clinker sales tonnes. This restated figure reflects the removal of Scope 3 electricity emissions, updated emission factors, enhanced data collection and review processes. s19 s20 Our Environment

Boral has been actively managing risks renewable electricity at our landfill We are also identifying an opportunities Figure 19 associated with climate change for more operations (Boral Waste Solutions) set for abatement of our GHG emissions. Boral’s energy use and related GHG emissions than ten years through the participation in in Victoria, avoiding the production of These opportunities include: energy (‘000 tonnes of CO2-e) a range of voluntary energy efficiency and 41,000 tonnes of CO2-e. efficiency programs and alternative emission reduction schemes, including: fuels which have environmental and Boral Waste Solutions commissioned cost benefits; revenue and cost saving 2,454 • Greenhouse Challenge Plus (member its second “Biogas to Energy” module opportunities through more sustainable since 1997). at Deer Park in February 2008. This products and technologies including facility uses landfill gas to produce • NSW SEDA Energy Smart Business generation and use of landfill gas; and renewable electricity which is exported Program. a potential timber plantation strategy into the national grid. Commissioning of • DRET’s Energy Efficiency Opportunities that would provide a carbon offset and the second 1.1 MW generating module (EEO) Program (covering 18 sites saleable product in the future. From this brings total electricity export capacity to representing 80% of Boral’s emissions opportunity set we have been developing3,000 2.2 MW which is sufficient to provide the in Australia). an abatement cost curve to prioritise our electricity needs of around 2,000 homes. • NSW Greenhouse Gas Reduction abatement opportunities. In January 2007, Boral formed a Scheme (NSW GGAS). For an effective longer-term solution, cross-divisional and cross-functional • EPA Victoria Greenhouse Program we need to see the development2,000 of new Energy and Climate Change Technical Other (Environment and Resource technologies around carbon capture and Working Group (ECCTWG). Reporting Efficiency Plans). storage (CCS). Geological CCS has a Petrol to Boral’s Management Committee, number of location-specific constraints LPG • NSW Department of Energy, Utilities the ECCTWG, has undertaken scenario and Sustainability’s (DEUS) Energy that may make it unworkable at cement Diesel

planning to understand potential financial 1,000 475 Saving Action Plans. manufacturing works and while it is early Electricity 364

impacts under an emissions trading 352 days, there may be more hope in algal • Californian Climate Action Registry scheme, increasing our understanding of Natural Gas (covering US Tiles). “sequestration”, which is an area of focus

possible impacts and opportunities under 116 for the global cement industry. Boral is Coal Participation in these schemes generally various scenarios. 29 not directly involved in the development Calcination requires Boral’s businesses to establish 0 We have looked back at our 1990 and of this type of technology, however, improvement targets and develop action USA imbe r

2000 historical data, and we have through the Cement Industry Federation, T plans, which are audited as part of the Cement forecasted future emissions out to 2012 Boral is actively involved in global Material s

program. Plasterboard and 2020. At the same time, the divisions benchmarking and sharing of knowledge Boral is one of only seven elective have continued to review systems to at an international level. benchmark participants in the NSW collect data, ensuring that Boral has a

For additional information on Boral’s Australian Constructio n

GGAS scheme that receives Large solid and robust carbon inventory. This Concrete & Clay Products approach to managing climate change, User Abatement Certificates (LUACs) will allow us to establish appropriate refer to the Message from the Managing for reducing GHG. Boral has created abatement targets for the future. We Director and for Boral’s response to the more than 468,000 LUACs since 2005, consider it prudent to wait to set external Carbon Disclosure Project (CDP6) saving more than 5 million GJ of energy targets until such time as the Australian www.cdproject.net. Also see the and more than 232,563 tonnes of and US governments set national targets Cement Industry Federation’s website: CO2-e in 2007. Under the NSW GGAS and trajectories. www.cement.org.au. Scheme in 2007, Boral created around 41,000 NGACs for reducing electricity consumption at Berrima and generating Blue Circle is reducing greenhouse gas emissions

Blue Circle Southern Cement has avoided the production of more than 485,000 tonnes of CO2-e over the past two years. At Berrima and Maldon, the addition of mineral and supplementary cementitious materials to replace emissions intensive clinker in the manufacturing of cement, has already delivered a reduction of more than 75,000 tonnes of CO2-e in 2007/08 and is expected to reduce emissions by more than 90,000 tonnes of CO2-e in 2008/09. Through the NSW Greenhouse Gas Abatement Scheme, Boral has elected to be a benchmark participant as a Large User and was the first company under the scheme to create large user abatement certificates. Our cement kiln upgrade at Berrima has avoided the production of more than 410,000 tonnes of CO2-e over the last two years (equivalent to taking some 100,000 cars off the road). At Waurn Ponds, Blue Circle is substituting ~40% fossil fuels with reprocessed waste oil, tallow residue, reprocessed carbon electrodes as well as around 600,000 used car tyres per annum (approximately 25% of Victoria’s annual tyre dump). The Waurn Ponds plant is a pioneer in alternative fuel use in Australia. In Europe, where alternative fuels are more common, average substitution rates are 28% whilst alternate fuels elsewhere in Australia average only 5%.

Other emissions A total of 2.82 billion litres of mains plan under the Victorian Government’s Figure 20 Data on pollutant emissions for 51 of water was used by Boral’s fully owned Pathways to Sustainability program. Boral’s mains water Boral’s Australian facilities is reported businesses in Australia, the USA and Fifteen of Boral’s South East Queensland consumption (million litres) to the National Pollutant Inventory Asia in 2007/08. This compares with businesses were required to produce 3500 (NPI) annually, as required under the 2.96 billion litres1 of mains water used Water Efficiency Management Plans

NPI National Environmental Protection in 2006/07, a 4.6% reduction year on in response to the region’s dire water 2,957

3000 2,820 Measure. This data is available at year, as shown in Figure 20. Water situation. In Western Australia, Midland www.npi.gov.au. efficiency gains were delivered across Brick has been a voluntary participant in 2500 many businesses through specific the Water Corporation’s Water Achievers In the USA, 16 Boral sites report their projects, although the decline was program for a number of years and was releases and transfers of hazardous 2000 also attributed to the increased use of one of the first businesses to submit and toxic chemicals on the annual Toxic rainwater and a decline in production and have approved its Water Efficiency Release Inventory as required under 1500 volumes in the USA. In addition to the Management Plan under new legislation The Emergency Planning and Community 2.82 billion litres of mains water used in that state this year. Midland has Right-to-Know Act (EPCRA) 1986 and the 1000 by Boral’s fully owned businesses, reduced its water consumption annually Pollution Prevention Act (1990). This data approximately 63 million litres of mains by 20% per tonne of standard brick is available at www.epa.gov/tri. 500 water was consumed by Boral’s equity equivalent (SBE) produced in the last share of joint venture businesses two years and is targeting a further 10% 0 Water management in Australia. annual reduction per tonne of SBE by 2012. 1 Boral recognises the need to manage FY08 FY07 our valuable water resources in an A breakdown of mains water usage Waste, recycling and re-use environmentally sustainable manner. by division is shown in Figure 21 and Boral Waste Solutions’ landfill site at Throughout our operations we rely details on divisional water usage and Deer Park in Victoria, is the second on water for our manufacturing and improvements is provided in the divisional largest landfill site in Australia. Deer Park maintenance processes, to suppress performance pages (pages s30 to s41). Figure 21 received more than 400,000 tonnes dust, for cleaning and for sanitation. Boral’s mains water consumption Since 2007, numerous Boral sites in of commercial and municipal waste by division in 2007/08 We use water from a range of sources, Australia participated in formal water in 2007/08. Of this, around 5% was including mains/town water, ground/ conservation programs in partnership recycled or recovered, the majority of this 12% Australian Construction Materials bore water, surface water (including with governments and/or water being green waste which was composted 3% rainwater) and on-site recycled water (as authorities. For example, in NSW, Boral to produce manufactured topsoil. Cement shown in the Sustainability Data Table Plasterboard, Camellia, is classified 11% Clay & Concrete Products on page S43). Mains/town water usage is as a high water user (>50 megalitres 51% Plasterboard material to Boral. per year) by DECC and was required 7% Timber to submit a Water Savings Action Plan during the year, while Plasterboard USA Port Melbourne developed a similar 16%

1 In Boral’s 2007 Sustainability Report, Boral’s 2006/07 mains water usage was reported as 2.93 billion litres. This restated figure reflects enhanced data collection and review processes. s21 s22 Our Environment

Re-use and recycling of materials are and granulated used tyres in LoNoise™ More information about the amount of Figure 22 part of Boral’s focus to responsibly Asphalt. Information on Boral’s waste produced and recycled by the Internal and external waste manage our resources, including sustainable products can be found divisions is provided in the divisional and by-product re-used/recycled (‘000 tonnes) reducing our reliance on virgin materials. at page s25. performance pages (pages s30 to s41) Re-use refers to the incorporation of and included in the Sustainability Data During the year, Midland Brick, through

waste material back into the same Table (page s43). 5,557

its Midland Magpies recycling program, 5,363 product and recycling involves waste returned ~14,000 tonnes of surplus material being used in a different Land management and biodiversity building materials from off-site to be product. Both conserve primary Responsible land management starts recycled back into brick products – the resources, reduce the environmental with environmental due diligence equivalent of 5.4 million bricks, which is impact and cost of disposal and, before acquisition of new land assets or enough to build around 280 average-size depending on the circumstances, businesses, and continues through to double brick houses. can reduce the energy required divesting sites only when they are “fit for to manufacture the product on a Boral’s businesses only deal with very purpose”. Complying with environmental production unit basis. minor amounts of hazardous waste and and planning regulatory requirements, this is managed in accordance with minimising Boral’s “environmental An estimated total of 5.56 million tonnes government regulations. Similarly, we footprint”, progressively rehabilitating of waste and by-products was re-used or only use relatively small amounts of our extraction sites and maximising the recycled in 2007/08, up 3.6% year-on- packaging, as the vast majority of our sustainability and financial end use of our year. We measure waste from our products are delivered in bulk. extraction sites are key aspects of our production processes based on a

land management activities. FY07 FY08 combination of quantitative waste data Two types of Boral’s businesses are where available, mass balance based primarily on the utilisation of other Where practicable, Boral rehabilitates calculations or estimations through people’s waste – Boral Recycling in its extractive operations on an ongoing sampling. We also measure the Australia and our fly ash operations in basis. Rehabilitation works reduce proportion of this waste that is the USA and Australia – BMTI and Blue visual impacts, enhance biodiversity and re-used or recycled and, in general, Circle Ash through Fly Ash Australia minimise erosion through planting of Boral’s businesses re-use or recycle (50% Boral-owned) respectively. The fly native trees and revegetation. Examples between 43% and 100% of the ash businesses process coal-fired power of Boral’s rehabilitation work in 2007/08 production waste that they generate. station waste to provide fly ash as a include the planting of over 1,000 trees at supplementary cementitious material in Wollert Quarry in Victoria; extensive grass Our own returned waste materials cement and in concrete, and bottom seeding and rehabilitation of overburden re-used to produce the same product ash as drainage, filter and fill materials at Bacchus Marsh Quarry also in Victoria; include concrete washout slurry, recycled (eg “EnviroAgg®”). and the planting of 14,000 endemic trees, asphalt profiling (RAP), plasterboard shrubs and bushes at the Orange Grove waste from production and building sites, The Boral Recycling business processes Quarry in Western Australia. brick bats and bricks from customers’ construction and demolition waste in sites, and green and cured masonry combination with concrete washout, product. External waste products or RAP and natural rock, and markets a secondary resources that we use in the variety of products including road bases, manufacture of our products include: pipe-bedding, backfill and aggregates. cementitious waste materials and by- In addition, Enviropave™ is a bound, products in cement, crushed demolition recycled road base consisting of RAP, concrete in new concrete (“Envirocrete”) recycled crushed concrete and a slow setting binder (ground granulated blast furnace slag and hydrated lime). Water savings add up Across Boral’s 717 operating sites there are numerous innovative water saving initiatives that have been identified and developed by employees and are delivering real benefits. In Boral’s hardwood timber business a large amount of water can be used in the drying/curing process because of the need to create a high humidity environment that minimises the risk of stressing, splitting and warping of the timber as it is drying. At Boral’s Murwillumbah plant, however, water usage has reduced by 3.6 million litres per annum through an innovative approach that has improved a complicated industry-wide wet bulb kiln control system. Boral Timber’s innovative approach, which is based on the use of a high temperature wet bulb station to maintain the necessary water levels in the drying process, only uses 5% of the water used in traditional control systems. Boral Roofing’s Wyee plant has also achieved water savings. Some 1.8 million litres of mains water a year has been saved by installing a windmill to pump rain water back from an existing dam to the plant. The site already had systems in place to catch rainwater over a large catchment area including the Wyee clay pit, however, this water was being pumped to a dam and released without opportunity for use in the production process. A source of electricity was required for the water in the dam to be pumped back for use in the production process. Boral chose a windmill as a renewable energy source providing the most environmentally sustainable outcome.

In addition to the already developed The same approach applies for heritage • Maintaining the habitat of the Western or proposed nature reserves at various values, in particular around aboriginal Swamp Tortoise (a nationally threatened Boral locations, Boral quarries continue heritage. In carrying out heritage species currently classed as “critically to develop rehabilitation plans in greater assessments, Boral appoints appropriate endangered”) at Ellen Brook Nature alignment with current thinking around heritage experts and follows government Reserve, in Western Australia. biodiversity, such as re-establishment guidelines. • Installing rehabilitation ponds, trenches Environmental Policy of natural ecosystems relevant to the Some Boral locations are subject and fencing for the Seabird Recovery Boral embraces the principle of sustainable development, ie. development which meets the needs of the local area, rather than just addressing facility at Torrens Island, South present without compromising the ability of future generations to meet their own needs. We believe this to Native Title claims and these are principle is fundamental to Boral’s continued success and growth. visual impact. Australia, to help to preserve important Boral is committed to pursuing industry specific best practice in environmental performance. As an international dealt with according to local statutory resources-based company, we acknowledge that our shareholders, employees and the community at large expect Boral’s efforts in biodiversity requirements. Boral is committed to bird species. responsible environmental practice by Boral’s businesses. • Reafforestation of Box-Ironbark Specifically Boral is committed to: enhancement and land management working cooperatively with traditional • Conducting our operations to minimise environmental risk and, wherever practicable, eliminate adverse generally involve long-term commitments. land owners and where necessary habitat corridors at O’Keefe Rail Trail environmental impacts • Continual improvement of our environmental performance including regular review and the setting of rigorous Commitments to protecting the Western Boral’s businesses draw on the expertise in Bendigo, Victoria, to rehabilitate a environmental objectives and quantified targets – particularly with regards to: Swamp Tortoise in the Swan Valley in of Boral’s Indigenous Employment significantly declined ecosystem with efficient use of energy (including appropriate use of alternative fuels) conservation of water Western Australia, the Striped Legless Coordinator to assist with indigenous many nationally threatened species minimisation and recycling of wastes Lizard and Plains Rice-flower on the cultural issues. There is currently of fauna and flora including the Grey prevention of pollution effective use of virgin and recovered resources and supplemental materials Basalt Plains west of Melbourne, and ongoing dialogue with claimants with Crowned Babbler, Swift Parrot, Regent • Open, constructive engagement with communities surrounding our operations the Grey-Headed Flying Fox in NSW respect to three quarry sites, one each Honeyeater, Tuan and Squirrel Glider. • Reducing the greenhouse gas emissions from our processes, operations and facilities • Protecting and, where possible, enhancing biodiversity values at and around our facilities are ongoing. in Queensland, New South Wales and • Complying with environmental legislation, regulations, standards and codes of practice relevant to the particular Western Australia. business as the absolute minimum requirement in each of the communities in which we operate All required biodiversity assessments • Conducting business with suppliers and contractors who have a commitment to the values and objectives contained in this environmental policy under the federal Environment Protection Our work on our contaminated sites • Consulting and collaborating with customers and suppliers in the development of sustainable products Biodiversity and Conservation Act are globally is substantially completed, • Remediating our contaminated sites to standards internationally acceptable for the site purpose. To support these commitments, Boral will progressively implement and maintain environmental management systems always undertaken, as well as those however, from time to time divestment for its businesses based on the international standard ISO-14001 or its equivalent. required under the equivalent state level of properties may trigger some Through communication and training, our employees and contractors will be encouraged and assisted to enhance Boral’s environmental awareness and performance. legislation, and resulting management supplementary work depending plans implemented, such as for the on eventual disposition of the site. Striped Legless Lizard at our Deer Park Through the Boral Living Green initiative R.T. PEARSE Quarry in Victoria. CEO & Managing Director in partnership with Conservation Volunteers Australia, we have continued Date of issue: June 2007 to support several projects to enhance the habitat of threatened species including the following:

s23 s24

Working across our supply chain we aim to ensure that we act with integrity and that our actions meet both the spirit and letter of the law and community expectations. While price, quality and Marketplace service are a major focus, negotiations with suppliers, customers and Supply Chain and consumers include opportunities for improved safety, environmental and broader sustainability outcomes. Marketplace and Supply Chain

Our suppliers Working with our suppliers of heavy At a site level, working with suppliers To achieve an industry specific best practice Boral’s procurement processes are well transport vehicles has enabled complex also introduces innovative sustainable score of 3.0, Boral’s businesses taken together defined and reinforced through to the sustainability improvements, including outcomes. Boral Windows has worked should be able to demonstrate that the businesses with divisional strategic the introduction of compressed natural with its suppliers of aluminium section following goals have been achieved: sourcing plans completed annually. gas (CNG) engines to concrete agitator and glass to reduce, re-use and recycle These plans specifically address vehicles, as well as a range of simpler packaging products. Paper separations in BSDT Our BSDT capability improvement initiatives modifications improving driver safety. glass supply have been reduced by 60%, element goals score identified through the utilisation of Boral’s Improved steps for entry and exit, timber packaging cleats are now starting Strategic • Procurement and/or supply Procurement Capability Assessment additional mirrors reducing the risk from to be returned and re-used by the supplier sourcing chain plans incorporate 2.8 Tool. Sustainability is entrenched in blind spots, in-cabin instrumentation and shrink wrap plastics are now being and supply sustainability objectives and the supplier selection criteria and the for checking oil and water, reducing the sorted from general site waste, then chain performance metrics, applied procurement process now includes the risk of injury from lifting bonnets, are all baled and recycled. across all activities which have identified sustainability issuing of a Supply Chain Sustainability examples of Boral improvements made procurement risks. Survey to strategically critical suppliers. to standard vehicles. Boral’s leadership Our customers • HS&E/sustainability The sustainability survey addresses role in encouraging suppliers to integrate From trade practices compliance to standards for strategic governance and ethics, policies, risk these changes with their normal product labelling, we aim to ensure that sourcing activities are in place management, systems, reporting production processes provides the heavy our marketing and sales activities meet and are supported by effective and key areas including safety, labour vehicle manufacturing industry with both the spirit and letter of the law. decision-making structures standards, stakeholder engagement production capability and opportunities to Marketing and sales people are provided and resources. and environment as key supplier offer safer, more sustainable vehicles to with information on trade practices and Sales and • Sales and marketing plans selection criteria (as applicable) in Boral’s other industry participants. other requirements related to acceptable marketing incorporate clearly identified 2.7 procurement processes. standards for marketplace behaviour, sustainability objectives and Boral has also continued to work with with all managers and sales required to performance metrics. Boral’s application of its procurement suppliers to reduce supply chain waste. complete an online, regularly updated • Inform and seek responses process specifically aims to work with Over 14 million paper sacks are used for from key stakeholders about Trade Practices Compliance training our products and their suppliers to continuously improve Boral’s cement and plasterboard finished program and a biennial refresher course. Boral’s sustainability through the supply products per year. Boral’s modified paper sustainability characteristics. During 2007/08, a total of 1,550 Boral Use this feedback in product chain. This sustainable supply chain sacks reduce paper consumption by employees completed on-line compliance development improvements. management includes actively improving over 1,500 tonnes per annum through training in Australia, while 902 employees • Product stewardship concepts suppliers’ products and reducing supply a change to sack construction (from a attended trade practices training seminars. are incorporated into delivery chain waste. 3 ply to 2 ply paper wall). This reduces and support systems of key the waste which must be removed from products/services. Target 3.0 construction sites. Examples of Boral products and their sustainable features. Boral Hancock Plywood • Through Chain of Custody and Australian Forestry Standard (AFS) certification, Boral’s plywood products have systems in place to track In the USA, Boral’s legal department We work closely with our customers timber from its origin in a certified sustainable forest through to point of conducted five face-to-face training to understand their needs and the manufacture. sessions to some 290 managers and sales challenges they face so that we can • Boral’s plywood is produced from 100% renewable plantation resource staff which concentrated on our product deliver the best solutions. We use a timber and 100% of the timber is used (waste products used in landscaping liability and contract reviews. number of forums for obtaining feedback and fuel source for brick kilns). including workshops and meetings as All of Boral’s businesses have well as regular customer surveys and Boral Envirocrete™ systems in place for dealing with other market research. customer complaints, in the event that • Envirocrete™ uses a proportion of recycled materials including aggregate dissatisfaction arises. When it comes During the year, 677 builders and 682 and cementitious waste (reclaimed concrete, fly ash and slag) and may use to managing product performance consumers participated in perception recycled water where available, diverting waste from landfill and preserving and health and safety risks through studies to help us better understand how virgin material. the lifecycle of our products, Boral’s Boral is viewed in the marketplace and • The product contributes to sustainability ratings systems, including UDIA and businesses have processes in place whether we are meeting our objectives. Green Building Council of Australia’s Green Star environmental rating scheme. including appropriate product labelling, The 2007/08 survey results indicate that training and a well developed system of 41% of consumers perceive Boral to be Material Safety Data Sheets for users of “environmentally responsible” (50% Boral Plasterboard Quiet Living™ our products. “couldn’t say”). This was a 28% increase • Boral’s Quiet Living™ systems are designed to enable modern homes on surveys undertaken 14 months earlier. During the year, Boral continued to to meet changes in lifestyle and living habits over the past decade that develop appropriate and consistent Within Boral’s divisions customer contribute to potential noise problems for those seeking quiet including: methodologies for undertaking product satisfaction surveys are undertaken and – home cinema and digital home entertainment; and lifecycle assessments both internally and the feedback is used to improve service. – higher density living. through various industry groups including For example, in Boral Plasterboard the the Building Products Innovation Council team has continued to deliver a strong (BPIC). level of service and product quality with recent customer surveys showing a very Boral Concrete Masonry Bricks and Blocks Since 2005, Boral has been a National high 86.9% customer satisfaction index. Leader of the Housing Industry of • Boral FireLight™ bricks contain ~75% by-product (ash from power stations) Australia (HIA) GreenSmart initiative. In 2007/08, Boral provided large and ~5% recycled concrete. Boral continues to sponsor the Boral customers with a self service electronic • FireLight™ has a very low embodied energy (Boral has reduced energy GreenSmart Awards, which recognise facility through Boral’s website. With needed to cure concrete blocks) and may be used for cavity wall construction excellence in environmentally sustainable the increasing migration to electronic or reverse block veneer providing thermal mass inside the house. housing construction. GreenSmart is data management, we maintain • Up to 20% of the coarse aggregates used in FireLight™ is recycled or a practical approach to building which extensive and robust security systems crushed concrete. focuses on educating builders, designers, and procedures, and give continued Boral Asphalt and Road Bases product manufacturers and consumers priority to customer data protection and about the benefits of environmentally privacy. Boral’s Privacy Policy is available • Boral’s recycled road bases are produced from recycled materials including responsible housing. Boral is also a on Boral’s website. crushed concrete and recycled aggregate products, diverting waste from Foundation Partner with the Urban landfill. Development Institute of Australia • LoNoise™ Asphalt incorporates granulated used (recycled) tyres into (UDIA) in its EnviroDevelopment project production to reduce noise pollution on heavily trafficked roads in urban and in Queensland. EnviroDevelopment suburban areas. is a scientifically-based branding system designed to make it easier for purchasers to recognise and select more environmentally sustainable homes For more examples of Boral’s products and lifestyles. and their sustainable features refer to www.boral.com.au/buildsustainable. s25 s26

We have a genuine regard for the interests of our stakeholders, including our shareholders, employees, customers, suppliers, Social neighbours, members of the communities, government and other

Responsibility stakeholders. Developing and maintaining a strong relationship with these stakeholders is crucial to our business success and maintaining our licence to operate.

Our Stakeholders Figure 23 Key stakeholder groups Key methods of engagement during 2007/08 Stakeholder engagement is integrated aligning non-financial indicator definitions Shareholders • The Annual General Meeting, annual and interim results announcements, into our business systems and processes. with the GRI where appropriate. formal meetings with institutional investors and site visits/presentations. Figure 23 outlines the key methods used The non-financial content of this report • Information made available includes: Boral’s Annual, Sustainability and to engage with our stakeholders. half-yearly reports, media releases, Boral in the News and Boral’s website. has been assured by Net Balance in • Carbon Disclosure Project (CDP6), which seeks information from companies The Boral Sustainability Diagnostic accordance with AA1000 Assurance on climate change risks and opportunities on behalf of institutional investors. Tool has two elements focusing on Standard, which places importance Independent surveys to assist the investment community benchmark Boral’s monitoring and measuring Boral’s on stakeholder engagement (p s42). performance. performance in regard to stakeholder Employees • Annual independent employee surveys undertaken across Australian and US engagement: Community Relations and Government and regulators operations to identify key issues affecting employee engagement. Engagement and External Relations and Boral has regular dialogue with public • Boral’s Annual, Sustainability and half-yearly reports, Boral in the News, Boral’s Communications. officials both directly and through intranet, divisional newsletters, tool box meetings, safety committees and “safety membership of industry associations. conversations”. To achieve our objective of “industry • Regular performance reviews for salaried staff. specific best practice” we aim to work Boral has a Government Relations directly with the community, taking policy which outlines how we work with Customers • Customer surveys and focus groups. community views into consideration. government and our intent to contribute • Annual and Sustainability Reports. We also aim to be active members of the to debates on policies, laws and • One-on-one meetings, site visits. community, engaged in policy shaping regulations that affect our operations • Product information, material safety data sheets, brochureware, website. and community partnerships. and financial performance. Suppliers • Regular feedback and performance reviews with critical suppliers covering: Boral is actively engaged in commenting operational activities, safety, environment and continuous improvement. Engaging with our stakeholders • Safety and site inductions. through our Sustainability Report on government consultation processes relating to sustainability. During Local communities • Community consultation and engagement groups. During 2007/08 we sought feedback 2007/08, public advocacy efforts largely and neighbours • Open days, site tours, one-on-one meetings, public meetings, newsletters and on Boral’s 2007 Sustainability Report revolved around emissions trading, with targeted communications, and Boral’s website. through two formal discussion groups submissions made, or being made, to: • From time-to-time independent community perception interviews are undertaken with employee, shareholder, customer, particularly where local concerns have been identified and there is a need to supplier, government and community • The Greenhouse and Energy Reporting better understand those concerns. representatives. The feedback was used Taskforce of the Department of Climate Government and • Meetings with government and regulatory officials. in determining the content of this report. Change on its Regulations Policy Paper regulators • Conferences and selected events to understand public policy developments. for a National Greenhouse and Energy We have also considered the Global • Submissions to government consultation processes. Reporting System, in February 2008. Reporting Initiative (GRI) Guideline • Engagement via industry associations. (www.globalreporting.org) in determining • Professor Garnaut’s Emissions Trading the content of this report, including Scheme Discussion Paper in April 2008. • The Department of Climate Change on to develop a robust lifecycle analysis Figure 24 its Carbon Pollution Reduction Scheme and inventory methodology to ensure Recent and current community issues Green Paper in September 2008. a scientific and consistent approach Key issue Boral’s position Supporting these submissions, Boral’s in comparing building materials across their lifecycle. Safe use of Berrima was granted approval in FY07 to burn alternative fuels, partially replacing senior executives were involved in alternative fuels coal as a fuel for the cement kiln, reducing its GHG emissions. direct dialogue with politicians and Berrima, NSW Community and neighbours Concerns have been raised locally about possible increases in dioxins, resulting government officials including those (Cement) in extensive community engagement. Recently, Boral has engaged independent from the Department of Climate Change. Community liaison groups exist at key advisers to interview members of the local community and other stakeholders Boral was also a Pilot Group member Boral operations and a number of smaller to better understand these concerns and determine how they may be able to for the National Greenhouse and Energy operations to facilitate the exchange of be addressed. Reporting System during the year. open and transparent communication. The use of non-standard fuels in cement kilns is common in our industry both The most common issues of local in Australia and overseas, and has shown to be an effective way to reduce GHG At a business level, Boral directly engages emissions over many years. with local councils and regulators such as concern raised through community state EPAs and planning authorities. consultation processes are about Public health and For several years, Boral has been seeking to extend approved reserves at the local noise and vibration impacts, dust environmental Montrose quarry whilst members of the local community have been opposed to Boral is apolitical and does not make or emissions, traffic conditions or concerns any proposed extension because of environmental impacts and potential health donations to political parties or individuals. biodiversity issues. In operations that Montrose quarry, concerns due to dust emissions. Despite comprehensive stakeholder engagement, However, Boral is a member of the NSW Vic (ACM) Boral’s revised application was rejected by Yarra Ranges Shire Council with raise considerable concern or contention, virtually no debate. The State Government made a decision not to call in the Millennium Forum and NSW Australian we may engage specialist consultants to Labor Party’s Business Dialogue and application for an independent review. investigate these concerns and/or provide Boral had sought to address environmental concerns and meet the needs of the attends business events to access expert advice. When appropriate, we bipartisan political debate. The Australian community and government by increasing the proposed buffer zones and reducing also establish dust, noise and vibration workable reserves by around 50% when compared with our original application. Electoral Commission’s reportable monitoring devices on our neighbours’ Boral undertook a rigorous Environment Effects Statement (EES) which was not funding from Boral in 2007/08 properties to help ensure that we are reviewed or fully assessed by the Council or State Government. was $41,883. operating within acceptable levels. Mixed land use Boral has proposed to build a bitumen storage and distribution facility at Crib Point Recent and current issues of concern Crib Point, Vic on cleared vacant land which was already earmarked for bulk liquid handling and is Industry influence (ACM) a former refinery site. Boral actively participates in major to local communities surrounding our The local community has raised concerns in regard to the proximity of the site to business and industry associations operations or proposed developments are outlined in Figure 24. residential properties. Boral’s proposal meets all the regulatory requirements and and initiatives which to varying extents the project exceeds the standards required by EPA regulations. The impact on local focus on sustainable development. We actively consult with communities roads and the local environment will be minimal. These associations include: Cement when considering major new investments The proposal is currently being assessed by the advisory committee of the Industry Federation; Cement, Concrete and in land management issues. Victorian Government, with the Planning Minister expected to make a decision on and Aggregates Australia; Housing Stakeholder reference groups are formed the proposal thereafter. Industry Association; Think Brick for major developments to facilitate Regional Boral suspended manufacturing at its Walcha facility in August 2008 as a result Australia; Association of Wall and Ceiling risk assessments to identify and rank employment of escalating wood supply costs and continued weak housing market in NSW. Industries; Gypsum Board Manufacturers perceived risks. In land management Walcha, NSW Boral’s primary concern was for the welfare of the affected employees. Of the Association; 10,000 Friends of Greater issues, we often work in partnership (Timber – 23 affected employees at Walcha, the majority found new jobs within weeks of the Sydney; The Urban Development Institute with local community members, special hardwood) announcement, including at other Boral timber sites, while others have decided of Australia; and the Business Council of interest groups and/or government to retire. Australia (BCA). Boral’s CEO, Rod Pearse, bodies. For example, we have recently The temporary closure of the mill and lost employment has been an issue of is a BCA Board member and Chair of the advertised for expressions of interest concern for the local community. Following discussions with the local Mayor and BCA’s Sustainable Growth Taskforce. other community representatives, we are continuing to work with stakeholders to from members of the local Marulan South explore options to support the regional timber industry. Boral is currently working with the community to establish the Community Business Product Innovation Council Consultative Committee for Boral’s newly (BPIC) and various industry associations proposed Marulan South Quarry in NSW. s27 s28 Community Investment Through our community support programs we aim to make a meaningful contribution to the social and economic well-being of our communities and also Boral has a strategic community partnership model supported by key selection criteria that help determine the most effective provides value to our operations by supporting business objectives and improvements in community relations. partnerships for the Company. The core platform of Boral’s partnership program is to make a valued and sustainable contribution Boral’s community contributions involve financial to the communities in which we operate with partnership selection based on a Products, People, and Places strategy. We involve support, materials in kind support and employee our People to encourage a better work/life balance and to use our expertise to benefit the wider community. We use our Products volunteering, as well as using our networks to raise to build communities and for conservation initiatives and we focus on our Places, the communities in which we operate, to address awareness about key community issues. environmental and social issues. Boral’s businesses have the flexibility to support local community activities where appropriate, whilst being required to adhere to limits of authorities and use Boral’s Partnership Framework and Criteria to assess the appropriateness of local partnership our people opportunities.

Boral has seven key strategic partnerships that we use to engage our employees and make a difference in our local communities. support These community partnership programs and their key outcomes are listed below. In 2007/08, a total of $591,500 of cash and Making a valued materials support was invested in these community programs together with a further $443,000 of cash donated to the Juvenile and sustainable Diabetes Research Foundation through employee fundraising efforts in Australia and the USA. Also included in this amount is involvement contribution to the communities in Boral’s sponsorship of “The Building As Muse” photographic exhibition, which documents the partnership of photographer Max which we operate Dupain and architect Harry Seidler. The collection was exhibited in Paris in 2008 and will be on public exhibition in Sydney in 2009. our our places products relevance

Boral partnership framework Partnership initiative FY2008 outcomes/achievements Conservation Volunteers Australia (CVA) • Celebrating 20 years of partnership between Boral and CVA in 2008. – Boral Living Green • 608 volunteer days across 14 conservation projects including weed Building on a 20-year association with CVA, Boral removal, tree planting and collection of native seed and restoration Living Green, which commenced in January 2005, of animal habitat in WA, Qld, NSW, ACT, SA and Vic. During the supports the involvement of employees, their families, year, 15,050 trees/stems were planted and 63,700 m2 weeded and other stakeholders and local community groups, such regenerated. as Landcare and Bushcare, on projects that provide • CVA participated in Koolkhan sawmill open day, engaging 100+ staff, environmental benefits for communities in the areas in family and community members. which Boral operates. • Living Green Nature Walks program was introduced in 2007, enabling Boral employees and their families to learn more about their environment by participating in guided walks in selected National Parks.

Taronga Conservation Society Australia • Many Boral employees, families and customers visited the Zoo in Boral has partnered with the Taronga Conservation 2007/08 including 280 Boral attendees at the Twilight concerts in Society Australia (formerly Taronga and Western Plains February/March 2008; and around 600 Boral staff and families at Zoos) since early 2003, sponsoring the backyard Boral’s Family Day in November 2007. precinct of Backyard to Bush. In 2006, we expanded our • YATZ Eco Fair was held in January 2008 with Boral participation. partnership to include the sponsorship of the Youth at the • Substantial quantities of Boral concrete were used in the new Great Zoo (YATZ) program. Southern Oceans precinct. Bangarra Dance Theatre • In 2007/08, 160 Boral staff and their guests attended Bangarra’s Boral has partnered with the Bangarra Dance Theatre, capital city main stage performances or regional performances. Australia’s leading Indigenous dance company, since In November 2008, Bangarra will perform for a group of Boral 2002. Since March 2007 we have been the Sydney employees and their families at Bangarra’s Walsh Bay Theatre. season sponsor. • Bangarra performed in Sydney, Melbourne, Brisbane and Canberra, and toured throughout regional Qld and NSW. • Boral is the main Sydney season sponsor for 2008.

Outward Bound Australia • Since the Boral Family Re-Discovery program was developed in – Boral Family Re-Discovery Programs 2003, a total of 69 family groups have participated in the program Boral continues to offer Outward Bound Family across five states. Scholarships to Boral employees with a high school • 7 family groups received Boral scholarships in 2007/08. aged son or daughter and through the Harden • 84% of past participants in the Outward Bound scholarships still Education Foundation for less advantaged youth in work for Boral. the community. Outward Bound is widely recognised for delivering a program focused on work/life balance and the scholarships are a key platform of Boral’s broader commitment to corporate responsibility and to supporting, nurturing and developing its employees. Juvenile Diabetes Research Foundation (JDRF) • Boral has contributed over $1.46 million to JDRF since our JDRF has been Boral’s preferred charity since 2001. It partnership began in 2001 including around 85% from employee provides Boral with structured opportunities to participate fundraising efforts. in fundraising and promote employee engagement whilst • In 2007/08, Boral’s employees raised over $443,000 for JDRF increasing awareness of Type 1 diabetes and the need through the Walk to Cure Diabetes in Australia and the USA and for further research towards finding a cure. Since 2006, through the Ride to Cure Diabetes and the Spin for a Cure events in Boral has been a Global Walk Leader for the Walk to Cure Australia. 2,000 employees and family members participated in the Diabetes campaign. October 2007 Walk to Cure Diabetes. • 61 riders participated in the Ride to Cure Diabetes in January 2008 and raised $230,000. • The focus on engaging managers through JDRF corporate committees and Walk Captains continues. Building Communities in Asia • Approximately $30,000 of materials in-kind support provided to two Boral commenced its Building Communities in Asia World Vision projects in Thailand – the Phathalung Province School program with World Vision in 2005 following the and the Trang Province School. devastating Boxing Day tsunami. In addition to working • A further $70,000 of investment in community building activities with World Vision in Indonesia and Thailand, Boral has in Indonesia including education to 90 secondary school children been investing directly in community building activities in to improve their prospects of gaining a tertiary education, and the Bayah in Indonesia. extension of pipelines to provide fresh water supply to five villages. • Employees in Indonesia were involved in raising funds for 12 children to undergo restorative facial surgery. HomeAid • Boral is represented on HomeAid’s US Board of Directors. Boral USA has partnered with HomeAid, a leading national • Due to the US housing downturn some projects have been delayed, non-profit organisation providing shelter for the homeless. but two buildings in the California project have been built using our tile. Boral’s initial two-year commitment is for US$50,000 in • Whilst a previously planned project in Georgia has been delayed Boral cash and US$50,000 in-kind product donations. is still committed to providing the bricks once the project commences. s30 “During the year, Australian Construction Materials upgraded its management systems. We developed a best practice national Safety Management System for employees and contractors, which is currently being rolled out, and we developed a national Environmental Management System which has been piloted across six sites and is now being rolled out across the business. We are also continuing to improve our sustainability measurement, with centralised data capture of diesel and electricity now in place.” John Douglas, Executive General Manager Australian Construction Materials

475,000 tonnes 482,000 tonnes 1 2 CO2-e emitted (6% ) of waste recycled/re-used (29% )

1,436 million litres BSDT 2.8 (target 3.0) of mains water consumed (2% )

Our performance Our goals/plans Health • Tragically, an employee was fatally injured in a heavy vehicle 25% improvement on last three-year

and safety accident in South Australia in December 2007. His vehicle average LTIFR and % hours lost. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08

rolled and collided with a concrete telegraph pole. • Complete roll-out of the national Safety 6.0

• LTIFR was 4.7 and % hours lost was 0.10. Management System. 0.20 0.20 e 4.7

• An extensive audit of electrical safety resulted in the • Align contractor management under a 3.7 3.3 0.10

Human identification of more than 10,000 hazards and $7.1 million national Safety Management System. 0.09

Resources of capital expenditure to reduce this risk. Nearly two thirds of hazards already addressed. Lost time injury time Lost rat frequency lost hours %

Energy • Energy use and GHG emissions increased by 7% and 6% Reduce emissions per unit and offset 3 x

conservation to 5.7 million GJ and 475,000 tonnes of CO2-e, respectively, Boral’s increases in absolute emissions 3 x and climate reflecting higher production and increased reporting scope. as a result of market demand growth. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 change • Quarries energy and GHG emissions per unit produced • Continue electrical efficiency audits and 101% 100% 100% 100% 98% 92% 93% increased 5% and 1% respectively. programs in quarries. 91% • Emu Plains, one of ACM’s largest quarries, improved • Investigate increased use of compressed s s electricity efficiency by 25%. natural gas in concrete fleet. Environment • Investigate trials of second generation biodiesel. Energy efficiency inde efficiency Energy Quarrie – inde emissions GHG Quarrie – Water • Mains water use of 1,436 million litres reduced by 2% year-on- Reduce mains water consumption across conservation, year, mainly due to increased capture and use of rainwater. the division. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 e

extraction • Concrete increased its mains water usage per unit of • Identify areas where more accurate, e 1,468 100% 1,436 96% and 95% production by 1%, while Quarries decreased water use per granular monitoring is required at high 1,257 81% protection unit by 28% due to increased capture and use of rainwater. usage sites. 1,492 ater Efficiency ater

• Use of treated effluent for concrete was successfully trialled • Roll-out of treated effluent for concrete at Concret – 3 3

in South East Queensland. suitable sites in eastern states. x nde Mains W Mains i usag water Mains litres) (million 3 x Waste and • ~482,000 tonnes of waste was re-used or recycled, Minimise waste from our operations and

FY05 FY06 FY07 FY08 resource up 29% on the prior year. increase the amount of waste re-used and FY05 FY06 FY07 FY08 management, recycled that would have otherwise gone to

• Recycling facilities in NSW and Victoria increased processing 218% 175%

recycling and of construction and demolition waste by 29% in FY08, or landfill. inde lumes 141% 169% 140% Vo re-use 118% above 2005 levels, replacing virgin resources. • Further grow recycling business. 144% 100% aste Re-used aste 100% • Recycled asphalt pavement volumes increased by 11% in • Further expand recycled asphalt 3 FY08, or 75% above 2005 levels. pavement. RA P Own W Own in Recycling Recycling

Community • ACM has Stakeholder Engagement Plans for sensitive quarry Maintain the support and goodwill of relations and sites. Community consultation models are in place at key communities surrounding Boral’s activities BSDT Scorecard engagement sites and new developments. through engaging and consulting on relevant Community relations

• In Queensland, ~130 million tonnes of proven reserves issues. and engagement Target 3.0 were consented over two years underpinned by effective • Implement community relations and 2.9 FY07

Social stakeholder engagement. engagement initiatives. 2.4 FY05 • After considerable investment in a State Environment Effects • Continue to undertake stakeholder risk 2.0 FY03 Responsibility Statement to support an application to extend the Montrose assessments for all businesses, prioritising 1.3 FY01 Quarry, the application was rejected without independent sites that require development of review. stakeholder engagement plans.

Sales and • Up to 30% recycled asphalt was incorporated into more Provide customers with sustainable product

marketing than 150,000 tonnes of asphalt for the EastLink project solutions. BSDT Scorecard since 2006. • National consistency around the use of Sales and marketing Target 3.0 • Third party assurance of concrete inputs, recognising their recycled materials, cementitious waste 2.4 FY07 recycled materials and cementitious waste content. and recycled water content in concrete. 2.0 FY05 • Installed ThoroughTrack synthetic horse racing surfaces at • Identify opportunities to support 1.7 FY03

Marketplace seven sites, eliminating the need for water for maintenance. environmental standards. 1.0 FY01 and Supply and Chain

1 In preparation for reporting under the National Greenhouse and Energy Reporting Guidelines, Scope 2 factors have been applied for electricity in FY08. In previous years, About Australian Construction Materials (ACM) Boral applied full lifecycle (Scope 2 and 3) to electricity emissions. Historical comparisons ACM, Boral’s largest division, has a diverse number of businesses including Quarries, have been adjusted to take into account Scope 3 electricity changes. Concrete, Asphalt, Transport, Contracting and Quarry End Use, which incorporates a 2 If waste data is not available, waste is calculated through a mass balance equation or landfill operation at Deer Park in Victoria. The division has 410 operating sites, 4,600 estimated through sampling. Waste recycled/re-used includes both internal waste and external waste consumed. employees and 2,000 contractors in Australia. 3 Indexed to 100% in FY05 as base year. Energy/GHG calculations based on total quarries ACM’s sustainability data includes second brand operations Concrite, Alsafe, GoCrete, energy and GHG emissions divided by tonnes of quarries production; water calculations based on total concrete water use divided by m3 of concrete production; recycling Q-Crete and Allens Asphalt. ACM’s total GHG emission excludes Boral’s Deer Park and RAP calculation based on own waste re-used in tonnes divided by tonnes of landfill operations; a model is under development for calculating landfill GHG emissions RAP produced. s31 for FY09. s32 “For our business it is critical that the cement industry is recognised as an emissions-intensive, trade-exposed (EITE) industry and that there is recognition for EITE industries in the Carbon Pollution Reduction Scheme. Whilst our FY08 emissions increased by 6% due largely to higher lime production volumes, we are continuing to work on emission reductions. We avoided over 76,000 tonnes CO2-e pa through a mineral and slag addition project and the Berrima kiln upgrade has abated 410,000 tonnes CO2-e over two years.” Phil Jobe, Executive General Manager Cement

2.5 million tonnes 1.1 million tonnes of waste and 1 2 CO2-e emitted (6% ) by-products recycled/re-used (16% )

453 million litres BSDT 3.03 (target 3.0) of mains water consumed (1% )

Our performance Our goals/plans Health • LTIFR of 1.6 and % hours lost of 0.05, due to strong 25% improvement on last three-year

and safety performance improvement in Asia where LTIFR was down average LTIFR and % hours lost. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08

27% and hours lost decreased by 38%. • Continue focus on electrical safety. 0.08 2.8

• Rigorous internal audit of CRB businesses contributed to 2.6 0.07 0.07

• Enhance awareness and employee e improved safety compliance. 2.2

engagement through increased safety 0.05 1.6

Human • Implementation of Boral’s hazard identification and safety conversations.

Resources management software system “SiteSafe” in Asia. • Improve contractor safety, especially on • Blue Circle standardised its site-based systems into a National construction sites.

Health, Safety, Environment and Quality Management model. injury time Lost rat frequency lost hours %

Energy • Energy use increased by 9% to 12.9 million GJ and GHG Reduce emissions per unit and to offset 3 x 3 x conservation emissions increased 6% to 2.5 million tonnes of CO2-e, partly Boral’s increases in absolute emissions as a FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 and climate due to higher cement and lime production. result of market demand growth. 102% 100% 100% 100% 99% 99%

change 97% • Energy use and GHG emissions per tonne of clinker produced • Implement approved energy efficiency 96%

increased by 7% and 3%, respectively, mainly due to slowing projects at all major sites under the EEO e e of the Berrima kiln in the first half of the year to match lower program. market demand and an increasing number of kiln start-ups. • Continue to resolve regulatory issues to Environment recommence the use of alternative fuels

and increase the use of alternative iron inde efficiency Energy Circl Blue – inde emissions GHG Circl Blue – source materials. • Obtain EITE status and protection for cement and lime production. Water • Blue Circle used 46 million litres of mains water in FY08, Reduce mains water consumption across conservation, down 17% on the prior year due to the use of alternative the division. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 e extraction sources of water (eg pit water from quarries) to offset • Update water security plans across e and increases in production. Mains water usage in Asia was 100% 68

key sites. 56

74% e

protection ~407 million litres. 46 46 • Resolve regulatory issues around use 63% 56%

of industrial-treated waste water as Circl Blue – 3 3

alternative water supply at Berrima. x nde Mains water efficiency water Mains i usag water Mains litres) (million Circl Blue – e Waste and • Blue Circle re-used and recycled ~831,000 tonnes of Minimise waste from our operations FY05 FY06 FY07 FY08 resource internal/external waste and by-products, including ash and increase the amount of waste or FY05 FY06 FY07 FY08 management, produced by power plants, slag used in clinker and cement by-products re-used and recycled that 902 83 861 832 recycling and production, and tyres, Hi Cal 50, tallow and waste oils would otherwise go to landfill. 825 re-use producing ~1 PJ of alternative fuels. • Continue to engage with the community • Berrima continued to work with suppliers and regulators on regarding the use of non-standard fuels at 35 31 the use of iron bearing wastes to reduce the requirement to Berrima. 29 mine virgin iron ore. • Explore options to use refuse derived fuel xternal and internal waste internal and xternal Internal waste produced waste Internal tonnes) (’000 Australia for at Waurn Ponds. E wast re-used and recycled tonnes) (’000 Australia for

Community • Berrima, Maldon, Galong and Waurn Ponds sites have Maintain the support and goodwill of relations and active Community Liaison Committees and community communities surrounding Boral’s activities BSDT Scorecard4 engagement engagement programs. through engaging and consulting on relevant Community relations

• Through Boral’s Building Communities partnership with issues. and engagement Target 3.0 World Vision, ~$30k of cash and materials provided to • Strengthen community relations and 2.9 FY07

Social projects in Thailand in FY08. Further support to local engagement initiatives through Boral 2.8 FY05 communities in Indonesia by establishing water supply to Living Green projects. 2.0 FY03 Responsibility five villages, funding and providing English and technical • Continue to support local communities 1.6 FY01 education to ~90 secondary school students. around our Asian operations.

Strategic • Blue Circle Ash has gained acceptance of EnviroAgg® Manage supply chain in a sustainable way ® sourcing and 4 products in the masonry industry. EnviroAgg uses more including consideration of environmental, BSDT Scorecard supply chain recycled materials and is light weight, high strength and has health and safety, and social standards. Strategic sourcing improved fire rating. • Continue to grow volumes of sustainable and supply chain Target 3.0 • In July 2008, DECC issued Berrima with three Penalty products such as EnviroAgg®. 2.9 FY07 Infringement Notices relating to air testing procedures by • Ensure external suppliers and contractors 2.6 FY05 contractors, procedures for receipt and use of non-standard Markeplace Markeplace are adhering to recognised standards 1.9 FY03 fuels, and receipt of out of specification fuel. Berrima has of safety, quality control and testing 1.3 and Supply and Chain FY01 improved procedures relating to contractors and suppliers procedures. of standard and non-standard fuels.

1 In preparation for reporting under the National Greenhouse and Energy Reporting Guidelines, Scope 2 factors have been applied for electricity in FY08. In previous years, Boral applied full lifecycle (Scope 2 and 3) to electricity emissions. Historical comparisons About Cement have been adjusted to take into account Scope 3 electricity changes. Cement comprises: Blue Circle Southern Cement and Construction Related Businesses 2 If quantitative waste data is not available, waste is calculated through a mass balance (CRB) (Formwork & Scaffolding, Windows and De Martin & Gasparini concrete placing) equation or estimated through sampling. Waste recycled/re-used includes internal waste, in Australia and the Asian construction materials operations in Indonesia and Thailand. external waste and by-products consumed. 3 Indexed to 100% in FY05 as base year. Energy/GHG calculations based on total energy Blue Circle manufactures cement and lime and markets fly ash through its 50% owned use and GHG emissions from clinker production divided by tonnes of clinker produced; Fly Ash Australia and operates a 50% owned joint venture cement milling facility in water calculations based on total mains water use divided by tonnes of cement produced, Brisbane, Sunstate Cement Ltd. The division has 142 operating sites under Boral including net clinker sales since FY07. management, around 2,000 employees in Australia, and around 3,500 employees in Asia. 4 BSDT scores excludes Asia. BSDT assessments were introduced into Indonesia in 2005 and into Thailand in 2007. Current BSDT score for Asia is 1.6. s33 Environmental data is for 100% owned businesses excluding De Martin & Gasparini and Formwork & Scaffolding as data from these businesses is immaterial. s34 “All our manufacturing sites gained accreditation to Australian Standard 4801:2001 during the year, signifying that our businesses have best practice Occupational Health Management Systems in place to further improve our already solid safety performance. We also took greater responsibility for product life-cycle through Midland Brick’s recycling program, which was awarded the 2008 HIA GreenSmart Award for Resource Efficiency and two awards in the Keep Australia Beautiful Sustainable Cities Award.” Keith Mitchelhill, Executive General Manager Clay & Concrete Products

364,000 tonnes 215,000 tonnes 1 2 CO2-e emitted (7% ) of waste recycled/re-used (7% )

200 million litres BSDT 3.1 (target 3.0) of mains water consumed (6% )

Our performance Our goals/plans Health • Accreditation to AS/NZS 4801:2001 across manufacturing 25% improvement on last three-year

and safety sites. average LTIFR and % hours lost. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08

• LTIFR of 1.8 and % hours lost of 0.04. • Maintain safety system accreditation 2.1

to AS4801. 0.07 0.07 1.8 • Reviewed electrical systems at all sites as part of an electrical e safety program and upgraded roofing contractor management 1.6 1.6 0.04

Human system. 0.03 Resources • Bricks NSW awarded the 2007 National Safety Council of Australia’s Award for Business Excellence through

OH&S Management. injury time Lost rat frequency lost hours %

Energy • Energy use and GHG emissions decreased by 7% to Reduce emissions per unit and offset 3 x 3 x conservation 5.1 million GJ and 364,000 tonnes of CO2-e, respectively, Boral’s increases in absolute emissions as a FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 and climate reflecting lower production and efficiency gains from kiln result of market demand growth. 104% 103% 100% 101% 100% 100% change optimisations, improved product design and energy 99% • Carry out Energy Efficiency Opportunities 96% efficient lighting. (EEO) assessments for Badgerys Creek, • Clay product energy use and GHG emissions per tonne of Darra and Scoresby. production decreased by 4% on prior year, reflecting energy • Implement selected EEO initiatives at Environment efficiency gains. Midland Brick to deliver a reduction in kiln

• Midland Brick participated in the Federal Government’s EEO energy usage. inde efficiency Energy Clay – inde emissions GHG Clay – program focusing on two of its kilns. Water • Mains water use increased 6% from FY07 due in part to Reduce mains water consumption across conservation, difficulties in using recycled water, and temporary pipe the division. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 extraction leakages. At 200 million litres, mains water consumption • Reduce mains water usage at Badgerys e 100% 100% 94% 89% 88% 87% and remains 20% below FY05 levels. Creek through a recycled waste water 87% protection • On a per tonne of clay production basis, mains water use program. 78% increased by 1.4%. • Initiatives to increase the harvest of clay – concret – 3 3 3

on-site water. x x nde nde Mains water efficiency water Mains i efficiency water Mains i

Waste and • C&C, a net consumer of waste, used 125,000 tonnes of Minimise waste from operations and resource external waste in production in FY08, and re-used/recycled maximise percentage of waste re-used FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08

management, 88% of own waste. and recycled. 166 92% 90% recycling and 88% 85% • Introduced lightweight masonry block in NSW, which uses • Increase usage of demolition waste 136 136 re-use over 50% recycled material by weight. through Midland Brick Recycling Program. 115 • Midland Brick’s recycling program collected 14,000 tonnes • Single site pilot program to reduce reliance of brick and concrete waste from customer sites, up 80% on virgin clay materials by up to 5%. on last year. % Own waste re-used/ waste Own % recycled waste solid Net landfill from diverted tonnes) (’000

Community • Ongoing community engagement groups at various sites. Maintain the support and goodwill of C&C’s relations and • Midland Brick and Conservation Volunteers Australia program surrounding communities through a high BSDT Scorecard engagement level of engagement and consultation. Community relations

to help preserve natural habitat of Western Swamp Tortoise continued. Activities included weed control, reduction of • Implement community relations and and engagement Target 3.0 exotic flora, fence repair to reduce unauthorised access, and engagement initiatives. 3.1 FY07

Social planting seedlings to improve biodiversity. • Plant approximately 10,000 trees around 2.7 FY05 selected WA sites. 1.6 FY03 Responsibility 1.1 FY01

Sales and • Developed a new, lightweight masonry product, over Ongoing development of sustainable

marketing 20% lighter than conventional blocks: key benefits include products. BSDT Scorecard improved manual handling, reduced energy use for transport, • Development of lifecycle inventory and Sales and marketing Target 3.0 and increased use of waste. lifecycle assessments for key products. 2.9 FY07 • Through Think Brick and Newcastle University, continued to 2.5 FY05 research and promote Thermal Mass as a factor in energy 2.0 FY03 efficient building.

Marketplace 1.2 FY01 and Supply and Chain

1 In preparation for reporting under the National Greenhouse and Energy Reporting About Clay & Concrete Products (C&C) Guidelines, Scope 2 factors have been applied for electricity in FY08. In previous years, C&C manufactures, distributes and markets clay products (terracotta roof tiles, clay Boral applied full lifecycle (Scope 2 and 3) to electricity emissions. Historical comparisons bricks and pavers) and concrete products (concrete roof tiles, masonry blocks, bricks have been adjusted to take into account Scope 3 electricity changes. and pavers). The division has 23 manufacturing sites under Boral management, 2 If waste data is not available, waste is calculated through a mass balance equation or estimated through sampling. Waste recycled/re-used includes both internal waste and approximately 1,800 full-time equivalent employees and approximately 900 contract external waste consumed. employees in Australia. 3 Indexed to 100% in FY05 as base year. Calculation based on total for clay or concrete products (as identified) divided by tonne of clay or concrete product produced as indicated. Masonry tonnage amended to standardise lightweight and standard weight products. s35 s36 “During the year, we continued to investigate the viability of plantation and co-generation strategies in light of the proposed Australian Carbon Pollution Reduction Scheme. We also supported our hardwood log supplier Forests NSW in attaining AFS certification, a globally recognised certification scheme, providing additional assurance that Boral’s log stocks are drawn from sustainably managed forests. Our own Plywood business also achieved AFS certification for timber sourcing and resource stewardship.” Bryan Tisher, Executive General Manager Timber

29,000 tonnes 223,000 tonnes 1 2 CO2-e emitted (2% ) of waste recycled/re-used (2% )

81 million litres BSDT 2.8 (target 3.0) of mains water consumed (10% )

Our performance Our goals/plans Health • Safety performance improved in FY08, with a reduction 25% improvement on last three-year and safety in lost time injuries to five compared to 16 in FY07. average LTIFR and % hours lost. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08

• LTIFR decreased to 3.2, down from 10.2 in FY07 and • Expand “Safe Mate” strategy to fully 10.2

% hours lost decreased from 0.15 to 0.13 in FY08. incorporate Boral’s best practice 0.15 0.13 • The annual Safe Mate system audit continued to show elements. e 6.1 0.09 5.4 Human incremental improvement in safety management across the • Further evolve manual handling initiatives. 0.08 Resources

business as well as highlighting improvement opportunities. 3.2 • Programs in hazard reduction, manual handling education and

improved injury management were undertaken. injury time Lost rat frequency lost hours %

Energy • GHG emissions increased by 2% to 29,000 tonnes of CO2-e Reduce emissions per unit and offset 3 x conservation reflecting increased production volumes. Boral’s increases in absolute emissions 3 x and climate • Energy use of 858,000 GJ remained steady year-on-year. as a result of market demand growth. FY06 FY07 FY08 FY06 FY07 FY08 change • Energy and GHG emissions per tonne of hardwood • Continue to develop plantation strategy 130% 130% 107% 106% in light of any potential carbon trading 100% production remained relatively steady year-on-year. 100% schemes/tax regimes. Environment Energy efficiency inde efficiency Energy Hardwood – inde emissions GHG Hardwood – Water • Mains water use of 81 million litres decreased 10% in FY08 Reduce mains water consumption across conservation, due to significant water saving projects at Ipswich and the the division. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 4 extraction “wet bulb” kiln initiatives at Murwillumbah. • Further develop Plywood water saving 91 100% 90 87 81 and • Water savings and “leak control” program at HPP has programs to achieve an overall reduction 89% 80% protection reduced daily water consumption at site by up to 30%, of 25% on mains water use. 79% saving more than 15.9 million litres of mains water to date. • Implement processing systems for storm Hardwood – 4 4

water and process water to reduce mains x water consumption by a further 20% nde at HPP. efficiency water Mains i used water Mains litres) (million

Waste and • Used ~223,000 tonnes of timber residues in paper Improve conversion of timber resource to resource production, biomass fuels, landscaping and animal husbandry. value-added timber product. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08

management, • Sawdust residues from northern NSW operations used as • Improve sawing technologies, particularly 252 252 95% 215 88% 87% recycling and biomass fuel for co-generation facilities and as a heating fuel ‘sizing’ on log breakdown and re-sawing. 86% re-use 186 for Boral’s Kempsey brick plant. • Continue business case studies into biomass fuels and co-generation options. aste produced aste % Own waste re-used/ waste Own % recycled W tonnes) (’000

Community • Provided financial assistance to 10 teachers and career Contribute positively to regional relations and advisers to attend the National Careers forum at the Australia communities. BSDT Scorecard engagement Timber conference. • Build plant scale; develop alternate Community relations

• Ongoing community engagement group established markets/products to strengthen long-term and engagement Target 3.0 at Ipswich. sustainability of Boral’s operations, which 2.7 FY07

Social • ~100 attended the Koolkhan open day. are recognised as important regional 2.7 FY05 employers. • Site visits by ~100 school, TAFE and regional medical students. 2.0 FY03 Responsibility • Participate in local Conservation 1.3 FY01 Volunteers Australia projects. • Investigate public open days at other timber facilities.

Sales and • Boral Plywood achieved certification of the Chain of Custody Use Boral’s supply chain to deliver improved

marketing System (AS4707-2006) and Australian Forestry Standard sustainability outcomes. certification (AS4708-2007). These certifications provide • Obtain Chain of Custody and AFS assurances that Boral’s plywood products have systems certification for Boral’s hardwood in place to track the timber from its origin in a certified products. sustainable forest through to the point of manufacture. • Continue to develop systems and processes for the transport of goods Marketplace to ensure compliance with chain of and Supply and Chain responsibility requirements.

About Timber 1 In preparation for reporting under the National Greenhouse and Energy Reporting Boral Timber incorporates Hardwood, Softwood and Plywood operations. The softwood Guidelines, Scope 2 factors have been applied for electricity in FY08. In previous years, manufacturing operations are 50% owned by Boral through the Highland Pine Products Boral applied full lifecycle (Scope 2 and 3) to electricity emissions. Historical comparisons (HPP) joint venture; HPP is managed by a separate joint venture board. Boral Timber have been adjusted to take into account Scope 3 electricity changes. 2 If waste data is not available, waste is calculated through a mass balance equation or reports data for 100% Boral owned businesses. HPP’s equity share of GHG emissions estimated through sampling. Waste recycled/re-used includes both internal waste and data is reported as part of Boral’s overall equity share of joint venture data (Scope 3 external waste consumed. emissions) on page s42. 3 Indexed to 100% in FY06 as base year (due to improved data collection since FY06) on a per unit of production basis. The division has 17 operating sites under Boral management and approximately 750 4 Indexed to 100% in FY05 as base year per unit of production. s37 employees in Australia. s38 “It has been an exciting year with the achievement of zero LTIs, a first for a Boral division and the commissioning of our new plant in Queensland. Our new plant sets new standards, utilising efficient calcining and drying technology, extensive rainwater harvesting, and recycling of major waste streams. Our employee and customer survey results are also pleasing with an 86.9% customer satisfaction index and 93% of employees being engaged or highly engaged.” Ross Batstone, Executive General Manager Plasterboard

116,000 tonnes 43,000 tonnes 1 2 CO2-e emitted (3% ) of waste recycled/re-used (14% )

309 million litres BSDT 3.1 (target 3.0) of mains water consumed (8% )2

Our performance Our goals/plans Health • Zero LTIFR and hours lost in FY08. 25% improvement on last three-year

and safety • Over 1,700 actions raised with 96% closed out by the agreed average LTIFR, and % hours lost. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08

date, well above the FY08 targeted rate of 85%. • Continue the focus on high risk activities and the use of national management 2.7 0.05

• More than 10,000 safety conversations recorded in the e 1.9

systems. 0.04

business, enabling transparent and open communication at 1.7

Human all levels. • Continue to implement lead indicators to 0.02 Resources encourage behaviours needed to enhance performance for both employees and 0 0

contractors. injury time Lost rat frequency lost hours %

Energy • Underlying energy use and GHG emissions of 1.6 million GJ Reduce emissions per unit and offset 3 x

conservation and 116,000 tonnes of CO2-e decreased by 3% year-on-year. Boral’s increases in absolute emissions 3 FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 x and climate • However, total energy use and GHG emissions per unit of as a result of market demand growth change 101% 100% 100% 100% 99% 98% 98% Australian plasterboard increased by 2% and 3% year-on-year • Carry out energy efficiency assessments 97% as a result of commissioning of the Pinkenba plant. at Port Melbourne • Boral’s equity interests in Australia (GRA and Rondo) • Reduce GHG emissions per tonne of generated 4,000 tonnes of CO2-e, while the Asian production at Pinkenba through the use Environment plasterboard JV LBGA emitted 165,000 tonnes of CO2-e. of new technologies Energy efficiency inde efficiency Energy Plasterboard – inde Efficiency GHG Plasterboard – Water • 309 million litres of mains water was used in FY08. Despite Reduce mains water consumption across FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08

conservation, the commissioning of the Pinkenba plant, mains water was the division. 3 extraction e down 4% from FY07 due to the implementation of water 322

• Reduce reliance on mains water at 309 304 301 100% 91% 89% and efficiency improvement plans across the three plants. Pinkenba by up to 30% through the use 88% protection • Mains water use per unit of board produced decreased by of harvested rainwater. 5% in FY08 relative to FY07. Efficiency ater • Investigate rainwater harvesting at Port Plasterboard – 3 3

Melbourne and Camellia. x nde Mains water usag water Mains litres) (million W Mains i

Waste and • As a net consumer of waste, plasterboard recycled/re-used Minimise waste from our operations and FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08

resource more than 43,000 tonnes of waste in FY08. increase the amount of waste re-used and 2 2

management, 17.4 • Excluding commissioning waste at Pinkenba, % of own recycled that would have otherwise gone to 17.2 15.8 15.6

recycling and landfill. 88% 85%

waste re-used and recycled increased 5% in FY08 to 88% 83% re-use due to improved plant performance and data collection. • Investigate further waste recycling 78% • Waste produced as a result of commissioning of the opportunities. Pinkenba plant will largely be re-used/recycled over time. • Continue reducing all forms of waste. However, ~450 tonnes of waste unable to be stockpiled was produced aste sent to landfill. re-used/ waste own % recycled W tonnes) (’000

Community • Boral Plasterboard is an active community and industry body Maintain the support and goodwill of BSDT Scorecard relations and which meets regularly with the Peninsular Committee, an communities surrounding Plasterboard’s Community relations engagement industry body at Rosehill. activities through engaging and consulting Target 3.0 and engagement on relevant issues. • Extensive community consultation prior to the construction 2.8 FY07 of Pinkenba plant. • Ensure community concerns are 2.3 FY05

Social considered when implementing major • Extend BWell health and wellbeing education and events 1.5 FY03 to extended family and friends. Initiated the inclusion of capital works which may impact the 1.3 FY01 Responsibility 100+ family and friends for the 2007 City 2 Surf. community. • Participated in JDRF resulting in staff raising double the average Boral fundraising effort.

Strategic • BIL (Boral Interior Lining) continues to lead the industry in Manage Boral’s supply chain in a

sourcing and safety performance by maintaining industry best practice for sustainable way including consideration of supply chain RIFR <7.5 and LTIFR < 3. environmental, health and safety, and social FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 7.4 standards. ) )

• BIL implemented a rewards system and standardised Public 2.6 6.1 Liability insurance cover for plasterers in Victoria in FY08. • Introduce crane trucks to help eliminate e e 2.0 1.8

• BIL’s OH&S Management System has been nominated for manual handling for waste removal. 4.2 3.6

Marketplace the 2008 Worksafe Victoria Awards. • Review safe work practices at site delivery

to look at ways of eliminating potential 0.6

and Supply and Chain • Plasterboard has adopted product Life Cycle Analysis to measure GHG emissions and other impacts, to establish falls from heights. (BIL contractors (BIL contractors (BIL Lost time injury time Lost rat frequency injury Recordable rat frequency a baseline for continuous improvement. • Continue to develop Life Cycle Analysis work for plasterboard.

1 In preparation for reporting under the National Greenhouse and Energy Reporting About Plasterboard Guidelines, Scope 2 factors have been applied for electricity in FY08. In previous years, Operations are focused on gypsum mining and the manufacturing of plasterboard Boral applied full lifecycle (Scope 2 and 3) to electricity emissions. Historical comparisons and plaster products such as cornices, ceiling tiles and compounds. The division has: have been adjusted to take into account Scope 3 electricity changes. Year-on-year emissions and water comparison excludes the commissioning of Pinkenba. four operating sites and 50 distribution sites under Boral management; a 50% share 2 If waste data is not available, waste is calculated through a mass balance equation or of Gypsum Resources Australia (under GRA management); a 50% share of Rondo estimated through sampling. Waste recycled/re-used includes both internal waste and Building Systems (under Rondo management); and a 50% share of LBGA (under external waste consumed. Year-on-year comparison excludes the commissioning of Pinkenba. 3 LBGA management working under Lafarge systems). Boral Plasterboard operates with Indexed to 100% in FY05 as base year. Calculations based on total divided by square metres of plasterboard produced for Australia only. 650 employees in Australia. s39 s40 “This year our focus has been on managing the market downturn, which has had a significant impact on our facilities and workforce. Despite this, we have continued to meet or exceed our sustainability objectives, including commissioning the Terre Haute brick plant, the first to be built to the US Green Building Council’s LEED standards. Also, all of our businesses became Founding Members of The Climate Registry, to promote disclosure and verification of GHG emissions.” Emery Severin, Executive General Manager USA

352,000 tonnes 3.5 million tonnes of waste and 1 2 CO2-e emitted (23% ) by-products recycled/re-used (8% )

341 million litres BSDT 3.1 (target 3.0) of mains water consumed (21% )1

Our performance Our goals/plans Health • 50% LTIFR reduction to 1.5 due to strong performances in 25% improvement on last three-year

and safety Denver Construction Materials and Bricks. Percent hours lost average LTIFR and % hours lost. FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08

decreased to 0.14. • Develop a simple framework for reliable 6.3 0.15

• Workers compensation claims costs decreased by 34%. risk evaluation and risk management. 0.14 e 0.12

• The Behavioural Accident Prevention Process continues to • Continue to review Contractor Safety 0.10 3.6 3.0

Human deliver strong results with 418 barriers removed, or being Management Systems.

Resources removed, to promote safer work practices.

• Fully integrate behavioural-based safety 1.5 management with traditional compliance

safety processes. injury time Lost rat frequency lost hours %

Energy • Energy use and GHG emissions of 6 million GJ and 352,000 Reduce emissions per unit and offset 3 x 3 x conservation tonnes of CO2-e decreased by 24% and 23% year-on-year, increases in absolute emissions as a result FY06 FY07 FY08 FY06 FY07 FY08 and climate respectively, primarily reflecting lower production. of market demand growth. 104% 101% 100% 100%

change 98%

• Energy use and GHG emissions per tonne for brick • Continue to increase use of biofuels such 94% production were up 3% and 5% against the prior year, as landfill gas and wood waste. reflecting curtailed production levels and subsequent • Improve energy efficiency by shifting decreased efficiencies. production capacity to higher efficiency s s Environment • The new Terre Haute brick plant is currently operating plants.

on ~80% landfill gas. inde efficiency Energy Brick – inde emissions GHG Brick – • Boral Bricks has piloted a technology that converts waste products into alternative fuel to reduce our dependency on fossil fuels. Water • Mains water use reduced by 21% on prior year largely due Reduce water consumption across conservation, to lower production volumes. the division. FY06 FY07 FY08 FY06 FY07 FY08

extraction s 145% • Bricks mains water usage per unit of production was up • Improve collection and recycling/re-use 143% 100% le 97% 95%

and 2% on prior year, again as a result of decreased production of water. Ti

protection 100% efficiencies. • Continue elimination of unnecessary

water use. Bricks – Clay – 3 3 3 • Outsource water intensive activities x x

such as truck washing and saw cutting nde nde Mains water efficiency water Mains i efficiency water Mains i to entities better able to recycle/re-use.

Waste and • USA remains a net consumer of waste, re-using/recycling Minimise waste from our operations and FY06 FY07 FY08 FY06 FY07 FY08

resource ~3.5 million tonnes of external and internally generated increase the amount of waste re-used and s le Ti management, waste and by-products and re-using/recycling 94% of its recycled that would otherwise go to landfill. 100% 100% 100% 94% 93% 91% recycling and own waste. • Increase use of waste materials in re-use • US Tile continues to re-use or recycle 100% of tile waste. product mix. • Bricks USA achieved a 56% reduction in the landfilling of • Generate less production waste from new production waste compared with FY07. plants and kiln retrofits. % Own waste re-used/ waste Own % Bricks – recycled re-used/ waste Own % Clay – recycled

Community • Employees, families and friends have fundraised Maintain the support and goodwill of relations and >US$145,000 for JDRF since 2005. communities surrounding Boral’s activities BSDT Scorecard engagement through engaging and consulting on Community relations • Through Boral’s HomeAid partnership, clay roof tiles were provided for Casa de Amparo, an emergency housing facility relevant issues. and engagement Target 3.0 for abused, neglected or abandoned children. Bricks were • Participate in the JDRF Walk for a Cure 2.8 FY07

Social donated to the Phoenix Pass, a shelter for women and children. and match employee fundraising to a limit 2.0 FY05 • Six educational scholarships of $US4,000 each for of US$25k pa. 1.0 FY03 Responsibility employees’ children. • Support HomeAid through provision 0.8 FY01 of materials to designated projects in 2008/09.

Sales and • US Tile has applied for Cradle to Cradle certification for a Continue to develop sustainable products

marketing line of products. Cradle to Cradle evaluates product lifecycle and promote sustainability of existing BSDT Scorecard and its impacts on the environment, human health and products. Marketing, procurement social equality. • Certify products to applicable and and supply chain Target 3.0 • BMTI has increased its volume of marketable treated fly reputable “environmental” standards. 2.9 FY07 ash by almost 7% on last year that would otherwise have • Continue product development and 1.4 FY05 required landfilling. innovation to enhance the use of 1.3

Marketplace FY03 marketable fly ash, a waste by-product 0.8 FY01 and Supply and Chain that would otherwise go to landfill.

About USA Boral’s US operations include clay brick and roof tile manufacturing, fly ash marketing 1 Previous years’ data has been restated due to invoice and metering reconciliation. and re-use and concrete and quarry operations in Denver, CO. and Oklahoma City, OK. FY07 data has been restated by an additional 22,000 tonnes of CO2-e and 20 million The division has 106 operating sites and 58 distribution sites under Boral management litres of mains water, while FY06 data was overstated by 100 million litres of mains water. 2 If waste data is not available, waste is calculated through a mass balance equation or and over 2,200 employees in the USA. Boral owns 50% of the MonierLifetile joint estimated through sampling. Waste recycled/re-used includes internal waste, external venture which is under MonierLifetile management. Boral is also a 50% joint partner waste and by-products consumed. in a clay roof tile operation in Trinidad. Sustainability data is reported for 100% owned 3 Indexed to 100% in FY06 as base year. Calculations are based on total energy, businesses only. GHG emissions and mains water for Bricks USA or Clay Tiles divided by tonnes of product produced. s41 s42 Independent Assurance Statement

To the Board of Directors, Management The assurance engagement was Conclusions The Way Forward and Stakeholders of Boral Limited: undertaken between June and September • Materiality: Environmental, social It was found that Boral has a 2008. A detailed description of the and broader economic aspects and robust process in place for collecting Boral Limited (Boral) commissioned Net assurance process can be found in our issues that are considered material sustainability performance information Balance Management Group Pty Ltd (Net full statement on the website. to stakeholders and peers have been and that the Report appropriately Balance) to provide independent assurance addressed and communicated within addresses Boral’s environmental, of the 2007/2008 Sustainability Report Assurance Level and Limitations the Report. Boral has restructured social and economic material issues. (the ‘Report’). The Report presents Boral’s The level of assurance provided is this year’s report so that it is in line To ensure that Boral continues to sustainability performance over the period reasonable as defined by the scope and with the requirements of the BSDT, improve, Net Balance has provided 1st July 2007 to 30th June 2008. Boral methodology described in this assurance which provides a consistent approach broad based suggestions for reporting was responsible for the preparation of the statement. A detailed description of the between how Boral internally assesses on materiality assessment and Report and this statement represents the assurance limitations in contained in our performance against material aspects stakeholder engagement, along with assurance provider’s independent opinion. full statement at www.boral.com.au/ and how Boral reports this performance internal training and awareness raising Net Balance’s responsibility in performing sustainability. to stakeholders externally. on the assurance process. These have our assurance activities is to the Board and been outlined in a more detailed report Management of Boral alone, in accordance • Completeness: Boral has effective Our Independence and Capacity presented to Boral management. with the terms of reference agreed with systems in place to measure, monitor A detailed description of our them. Other stakeholders should perform and manage sustainability issues. On behalf of the assurance team independence and capacity can be found their own due diligence before taking any Net Balance carried out visits to a in our full statement at www.boral.com. 3rd September 2008 action as a result of this statement. number of sites during the assurance au/sustainability. engagement and found that the teams Melbourne, Australia responsible for managing sustainability Assurance Standard Our Opinion The assurance was undertaken in were competent and had a good Based on the scope of the assurance accordance with the AA1000 Assurance understanding of the material aspects process, the following represents the Standard, which is based on the principles of Boral’s sustainability performance. assurance provider’s opinion: Net Balance found that the information of Materiality, Completeness and Terence Jeyaretnam Responsiveness. A detailed description • The findings of the assurance presented is comparable (in terms of year-on-year performance) and is in a Director, Net Balance & Lead CSAP of these principles can be found in our engagement provide confidence in the (IRCA UK) full statement at www.boral.com.au/ information contained within the Report. format that is easily understandable by a range of stakeholders. Overall, Email: sustainability. The level of data accuracy was found to [email protected] be within acceptable limits. Data trails Net Balance felt that the information Assurance Objectives and Process selected were easily identifiable and presented is a fair representation of The objective of the assurance process traceable, and the personnel responsible Boral’s sustainability performance and is to provide stakeholders of Boral with were able to reliably demonstrate the is presented in a balanced manner. an independent opinion on the quality origin(s) and interpretation of data. • Responsiveness: Boral was found of the report. This is confirmed through • The statements made in the report to be responding appropriately to verification of the claims made, and a appropriately reflect environmental, the concerns of its stakeholders and review of the organisation’s underlying social and economic performance adequately communicating those systems, processes and competencies achieved during the period. responses within the Report. Net Balance found that Boral actively that support the report with respect to • All errors noted by the assurance engages with customers, industry the principles of materiality, completeness provider were satisfactorily addressed groups, Government and the and responsiveness. Ensuring continuous by Boral prior to finalising the report. improvement in data management systems communities in which they operate. and associated reporting processes is also Overall, the assurance provider is Results of stakeholder engagement are a complementary objective. satisfied that the Report is an appropriate presented in a clear and concise manner representation of Boral’s sustainability within the report. performance during the reporting period. Glossary and Data and Glossary 4 3 2 1

Boral’s total waste recycled / re-used represents a range across Boral’s products. Boral’s across a range represents /re-used recycled waste total Boral’s  changes. scope year-on-year excluding basis, acomparative On operations. Boral owned 100% Social (energy and GHG data only). data GHG and (energy Asia Gypsum Boral Lafarge and Products, Pine Highland Rondo, Australia, Resources Gypsum Cement, Sunstate businesses: JV Asian and Australian following the from data Includes Human Responsibility Environment Resources 30 June 2008 June 30 ended year the For table data Sustainability Mains water, litres (millions) water, litres Mains Water consumption Surface water, litres (millions) water, litres Surface (millions) water, litres River Waste recycled/re-used Waste (‘000) tonnes produced, product Waste Waste (millions) water, litres Ground/bore CO emissions gas Greenhouse Employee fundraising materials) and cash (total partnerships key eight in investment Community investment Community LTIFR, per million hours worked hours million per LTIFR, Employees, FTE’s Safety and People Alternative fuels, petajoules fuels, Alternative (millions) litres Petrol, External waste used, tonnes (‘000) tonnes used, waste External (‘000) tonnes recycled or re-used Waste by-products and Hours lost, % lost, Hours Natural gas, petajoules gas, Natural (‘000) tonnes Coal, Energy consumed Electricity, GWh Electricity, LPG, litres (millions) litres LPG, (millions) litres Diesel, 2-e , tonnes (millions) , tonnes 4 , %

Boral operations’ Boral 43% –100% 43% $443,000 $591,500 2,866.5 4,322.9 2,819.8 5,557.4 162.23 283.67 1372.2 15,928 830.12 308.3 13.20 791.9 8.44 0.08 4.72 3.79 1.79 2.5 Year-on-year Year-on-year (4.6%) (1.6%) (1.6%) (17%) (17%) (11%) (11%) (11%) (11%) change 3.6% (8%) (8%) 32% N/A N/A N/A N/A 9% 3% 3% 3% 4% 2% 2% 1% – 2 Boral’s equity equity Boral’s share of JVs of share 103.84 63.16 17.71 0.08 0.08 0.20 3.27 1.00 190 – 3 Gases (GHG) Gases Greenhouse FY Ash Fly EOWA EMS CPRS CRI CNG CO CDP6 Calcination BSDT Glossary and abbreviations and Glossary LTIFR LBGA JDRF HIA GJ 2-e equivalent (CO equivalent effect. The main GHG are CO are GHG main The effect. are linked to the greenhouse in that the gases atmosphere are (GHG) gases Greenhouse YearFinancial cement in additive (cost-reducing) is therefore as used an important and properties has cementitious it plants; generating electricity of coal-fired ash Fly is a by-product Agency Workplace the in for Women Opportunity Equal System Environment Management Scheme Reduction Pollution Carbon Corporate Responsibility Index Gas Natural Compressed equivalent dioxide Carbon Boral are reported in tonnes ofCO tonnes in reported are Boral for emissions GHG methane. and Carbon Disclosure Project Disclosure Carbon kiln the in roasting by to quicklime oflimestone reducing process The Tool Diagnostic Sustainability Boral page s16page on separately LTIFR is reported LTIFR. employee Contractors arein not included Contractors worked the hours period. during million per (LTIs) Injuries Time Lost ofemployee number the is period for a particular Rate (LTIFR) Frequency Injury Time Lost The Asia in Gypsum Boral Lafarge Foundation Research Diabetes Juvenile Association Industry Housing Gigajoule June to 30 12 period month are emissions for GHG the Reported in42 factors the US. AP and from Climatethe Change EPA of Department the from factors using conversion use data energy 2-e ), calculated from calculated ), 2

2

Water usage Water turnover Staff RIFR Re-use Recycling RAP sites Operating employees of Number NGAC LUAC the financial year ended 30 June 30 ended year financial the match invoices closely that most 12 for the &Clay Products, Concrete as forstated or in cases, some for the 12 toJune 30 month period consumed water ofmains amount is water the usage Reported 100 by multiplied year, during employed and members staff time equivalent offull- number average the by the yearduring divided departures of number employee The hours work million that result in work lost time per treatment as well as those medical injuries that resultemployee in isof the number Rate (RIFR) Frequency Injury Recordable The product same into the back of waste material incorporation The product anew in Wasteused being material pavement asphalt Recycled offices and distribution administration site excluding operating sales, JV owned or 50% owned Wholly contractors. not include does employees of number and byThe region. by division numbers and employee total numbers employee identify is tobasis used time equivalent afull- on ofemployees Number Abatement Certificate Greenhouse NSW Certificate Abatement User Large

month period covered by usage covered by usage month period

s43