Boral Limited Level 3, 40 North Sydney NSW 2060 PO Box ... · Strong 2Q . catch-up following...

15 February 2017 The Manager, Listings Australian Securities Exchange ASX Market Announcements Level 14, Exchange Centre 20 Bridge Street Sydney NSW 2000

Dear Sir Results for half year ended 31 December 2016 – Investor Presentation We attach a copy of the investor presentation in respect of Boral’s half year results. This presentation will be webcast on Boral’s website at www.boral.com.au from 11.00am (Sydney time) today.

The information contained in this announcement should be read in conjunction with today’s announcement of Boral’s half year results and Boral’s most recent annual financial report. Yours faithfully

Dominic Millgate Company Secretary

Boral Limited Level 3, 40 Mount Street North Sydney NSW 2060 PO Box 1228 North Sydney NSW 2059

T: +61 (02) 9220 6300 F: +61 (02) 9233 6605

www.boral.com.au

Boral Limited ABN 13 008 421 761

For

per

sona

l use

onl

y

http://www.boral.com.au/

RESULTSFor the half year to 31 December 2016

15 February 2017

Boral continues to deliver its strategy and a further 9% year-on-year growth in underlying half-year profit after tax1 to $149 million.

1. Excludes significant items

Agenda

• Results Overview Mike Kane

• Financial Results Ros Ng

• Strategic Priorities & Outlook Mike Kane

Boral’s mobile concrete batch plant at Mount Kuring-gai, NSW, for the NorthConnex motorway in Sydney (estimated completion 2019)

2

For

per

sona

l use

onl

y

Boral today: Delivering transformation

3

1. Maintaining and strengthening our leading position in Australia• Well positioned on the East Coast, particularly in NSW where conditions remain very strong

• Quarry reinvestment program strengthening our integrated position

• Operational and commercial excellence delivering margin expansion

2. Growing organically and through innovation in USG Boral• Growing in plasterboard markets in Asia, Australia and the Middle East, including Sheetrock® technologies

3. Transformational growth in the USA• Significant synergies expected from Headwaters acquisition and Meridian Brick JV

• Innovative fly ash-based composite technologies in light building products

4. Leveraging growth in key markets and across all geographies• Australia: multi-year growth trajectory for major roads and infrastructure

• Asia: increasing product penetration and leveraged to economies with long-term growth prospects

• USA: ongoing market recovery and new market opportunities and scale through Headwaters acquisition

5. Strong cash flows and balance sheet to support growth and deliver value

Net profit after tax

$153m 12%

EBIT1

$211m 6%

Half year results highlightsDelivering improved earnings

4

1. Excluding significant items2. Adjusted EPS excludes the impact of the equity raising completed in Dec-20163. EBIT return on funds employed as at 31 December calculated on a moving annual total basis

Profit after tax1

$149m 9%

ROFE1,3

9.3% from 8.6%

Earnings per share1

Statutory Adjusted2

17.2cents 2% 19.7cents 8%

Half year dividend

12.0cents 9%

1H FY2017 vs 1H FY2016

For

per

sona

l use

onl

y

Safety performanceCompany-wide commitment to Zero Harm Today

• Substantially improved RIFR in FY2016; reduced by 27% year-on-year to 8.8

• Continuing to reduce injuries: 1H FY2017RIFR1 down to 8.4 from 8.6

- LTIFR increased to 1.5 from 1.2

- MTIFR decreased to 6.9 from 7.4

• Fatality free since Dec-2013 – the longest fatality-free period for more than 15 years

• Continued engagement throughout Boral around our global safety goal

1. Recordable Injury Frequency Rate, which comprises Medical Treatment Injury Frequency Rate (MTIFR) and Lost Time Injury Frequency Rate (LTIFR)Includes employees and contractors in 100%-owned businesses and 50%-owned joint venture operations 5

2.0 1.8 1.9 1.9 1.8 1.3 1.2 1.5

19.417.2 15.5

11.7 10.37.5 7.4 6.9

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 1HFY2016

1HFY2017

8.6 8.4

Employee and Contractor RIFR1

(per million hours worked)

-2% HoH

21.4

19.017.4

13.612.1

8.8

-27%

LTIFR

MTIFRRIFR

Discontinued Operationsand Other3

Strong earnings performanceGrowth in Boral USA and USG Boral; solid results in Boral Australia

Construction Materials & Cement

Boral USA

Building Products

1H FY2016 EBIT1

1H FY2017 EBIT1

EBIT1 variance, A$m1H FY2017 vs 1H FY2016

USG Boral 2

1. Excluding significant items2. Represents Boral’s 50% post-tax equity accounted income from the USG Boral joint venture3. Discontinued Operations includes earnings from the Boral CSR Bricks JV in Australia and the Denver Construction Materials business; Other includes Corporate costs 6

200211(8)

Boral Australia

3 8(5)

13

For

per

sona

l use

onl

y

Strong activity in our key marketsGrowing RHS&B and strong residential in Australia, improving US markets, mixed conditions in Asia

7

1. Roads, highways, subdivisions and bridges. RHS&B value of work done (VWD) is forecast to increase 23% in FY2017f based on an average of Macromonitor and BIS Shrapnel forecasts. Other engineering VWD is forecast to decline 19% in FY2017f based on BIS Shrapnel forecasts

2. VWD from ABS in 2014/15 constant prices. Average of BIS Shrapnel and Macromonitor forecast used for Dec-16 quarter3. ABS original data. HIA forecasts used for Dec-16 quarter4. Based on various indicators of building and construction activity in key markets in Boral‘s respective countries of operation. For China this is defined as the high-end market in regions

in which USG Boral operates5. US Census Bureau seasonally adjusted data6. McGraw Hill / Dodge raw data. Boral Brick States include: Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee,

Texas. Boral Tile States include: Arizona, California, Florida, Nevada7. McGraw Hill / Dodge value of work completed. Forecast used for Dec-16 quarter

Asia4

KoreaThailand ChinaIndonesia

USA Total housing starts5 3%Single-family housing starts

– Total USA5 6%– Boral Tile States6 9%– Boral Brick States6 7%Non-residential7 25%

AustraliaRHS&B (VWD)1

Other engineering (VWD)1

Non-residential (VWD)2 6%Total housing starts3 4%– Detached housing starts3 1%– Multi-residential starts3 7%Alterations & additions (VWD)2

1H FY2017f vs 1H FY2016

Boral AustraliaContinued strong results from construction materials businesses

EBIT

$164m 3%

Revenue

$1.6b 4%

• 1H FY2017 impacted by completion of major projects6 and Bricks WA decline

- Excluding these impacts, revenue was broadly steady on 1H FY2016

- Strong 2Q catch-up following rain-impacted 1Q

• EBIT reflects strong east coast volumes, pricing gains, margin improvements & higher Property earnings offset by major projects6 completing, WA market decline and $4m settlement in 1H FY2016

• ROFE at 12.9% above cost of capital; solid 10% EBIT margin achieved

1. Excluding significant items2. Excludes contribution from Boral CSR Bricks JV, which was divested in Nov-20163. Moving annual total EBIT return on divisional funds employed (segment assets less segment liabilities)4. Includes inflation, energy, operational and production, and SG&A cost increases5. Includes operational excellence initiatives6. LNG projects in QLD, WA & NT and Barangaroo in NSW

A$m 1H FY2017 1H FY2016 Var, %Revenue 1,616 1,681 (4)

EBITDA1,2 264 266 (1)

EBIT1,2 164 169 (3)

EBIT ROS1, % 10.2 10.1

Net Assets 2,401 2,347 2

ROFE1,3, % 12.9 13.9

8

1H FY16 EBIT1,2 V

olum

e

Pric

e

Oth

er

1H FY17EBIT1,2C

ost

incr

ease

4

Cos

t re

duct

ion

5

EB

IT v

aria

nce,

A$m

169 164

For

per

sona

l use

onl

y

• Concrete: Volumes down 4%, primarily due to LNG and Barangaroo projects; like-for-like prices up 2% on average

• Quarries: Quarry volumes up 1% nationally and average selling price down 1%; aggregate volumes up 3% and like-for-like prices up 1%

• Asphalt: Wet weather in 1Q impacted volumes and delayed projects in QLD & WA; improved 1H FY2017 earnings through margin growth

• Cement: Total volumes up 3% despite lower wholesale volumes; average selling price up 1% in bulk cement and up 3% in packaged products

• Property: $9m EBIT included second settlement at Nelsons Ridge, NSW

• Building products: Bricks WA volumes down 34% on WA market downturn; $2m restructuring cost in 1H FY2017. Roofing volumes up on strong east coast activity. Timber Hardwood volumes down offset by Softwood gains

Boral AustraliaStrong 2Q catch-up supported by favourable weather

1Q FY2017

2Q FY2017

Source: Australian Bureau of Meteorology

USG BoralStrong profit growth through volume gains, including product penetration

Underlying EBIT

A$117m 28%

Underlying revenue

A$735m 2%

• Equity-accounted income of $40m, up 25%

• Underlying EBIT growth reflects increased volumes, and lower energy and production costs

• Australia/NZ: strong lift in earnings with growing board and non-board sales; strong activity in eastern states

• Asia: significant earnings lift in Korea; steady earnings in Thailand on subdued domestic market; growth in Indonesia despite competitive pressures; improved China earnings despite softer activity; steady growth in other markets

1. Post-tax equity income from Boral‘s 50% share of the USG Boral JV2. Excluding significant items3. Moving annual total EBIT return on divisional funds employed (segment assets less

segment liabilities)4. Includes inflation, operational and production, and SG&A cost increases5. Other includes foreign exchange impacts

A$m 1H FY2017 1H FY2016 Var, %Reported result

Equity income1,2 40 32 25

Underlying result

Revenue 735 718 2

EBITDA2 151 128 18

EBIT2 117 91 28

EBIT ROS2, % 15.9 12.7

Net Assets 1,902 1,909 -

ROFE2,3, % 10.7 8.5

10

1H FY16 EBIT2

Vol

ume

Pric

e

Oth

er5

1H FY17EBIT2C

ost

incr

ease

4

Cos

t re

duct

ion

Und

erly

ing

EB

ITva

rianc

e, A

$m

91 117

For

per

sona

l use

onl

y

Boral USAProfit growth driven by improving market and strong business performance

EBIT

A$13m from zero

Revenue

A$410m 10%

• US$ revenue down 6% to US$307m, reflecting impact of equity accounting of Meridian Brick JV- Excluding Bricks, revenue up 6%

• EBIT grew to US$10m, driven by price gains, Cladding6 and Roofing volume growth, and cost and plant efficiencies

• Cladding6 revenue up 15% to US$70m- Stone: volumes up 6%, average prices up 3%- Trim & Siding: growth in volume, price and dealers

• Roofing: revenue up 6% to US$92m, resale strong, tile volumes up 6%, like-for-like prices up 3-4%

• Fly Ash revenue down 5% to US$47m due to lower Celceram® sales; volumes down 2%, prices up 5%

A$m 1H FY2017 1H FY2016 Var, %Revenue1 410 455 (10)

EBITDA1,2 33 23 44

EBIT1,2 13 0

Revenue1 (US$) 307 326 (6)

EBITDA1,2 (US$) 25 16 51

EBIT1,2 (US$) 10 0

EBIT ROS1,2, % 3.3 0

Net Assets1 841 808 4

ROFE1,2,3, % 3.6 0.7

11

3. Moving annual total EBIT return on divisional funds employed (segment assets less segment liabilities)4. Includes inflation, operational and production, and SG&A cost increases5. Other includes Bricks earnings 6. Cladding comprises Stone and Trim & Siding

1. Excludes Denver Construction Materials for both current and comparative periods2. Excludes significant items

11

10

EB

IT v

aria

nce,

US

$m

1H FY16 EBIT1,2

Vol

ume

Pric

e

1H FY17EBIT1,2C

ost

incr

ease

s4

Cos

t re

duct

ion

Oth

er5

1HFY2016

1HFY2017

0.7 3.61H

FY20161H

FY2017

8.5 10.7

Focus on improving ROFEAiming to achieve returns that exceed the cost of capital

Divisional EBIT to funds employed (ROFE1), %

1. EBIT return on divisional funds employed (segment assets less segment liabilities) calculated on a moving annual total basis as at 31 December. EBIT excludes significant items 2. Excludes significant items, calculated on funds employed as at 30 June for FY ROFE and 31 December for 1H ROFE3. Based on USG Boral’s underlying EBIT return on funds employed at 31 December 12

1HFY2016

1HFY2017

13.9 12.9

Group ROFE2, %

Boral Australia USG Boral3 Boral USA14.2

11.910.1

6.5 6.67.6

4.1 4.7

7.28.2 9.0 8.6 9.3

FY

200

6

FY

200

7

FY

200

8

FY

200

9

FY

201

0

FY

201

1

FY

201

2

FY

201

3

FY

201

4

FY

201

5

FY

201

6

1H F

Y20

16

1H F

Y20

17For

per

sona

l use

onl

y

Financial ResultsRos Ng – Chief Financial Officer

Group financial performanceGrowth in Boral USA and USG Boral, and solid Boral Australia result

A$m 1H FY2017 1H FY2016 Var %

Revenue 2,093 2,194 (5)

EBITDA1 333 322 3

Depreciation and amortisation (122) (122) 0

EBIT1 211 200 6

Net interest1 (27) (31) 13

Tax1 (35) (32) (10)

Profit after tax1 149 137 9

Significant items (net) 4 0

Net profit after tax 153 137 12

Effective tax rate 19% 19%

Non-IFRS Information – Earnings before significant items is a non-IFRS measure that is reported to provide a greater understanding of the financial performance of theunderlying businesses. Further details of non-IFRS information is included in the Results Announcement while details of significant items are provided in Note 6 of the half yearfinancial report. Non-IFRS information has not been subject to audit or review.

1. Excluding significant items (Figures may not add due to rounding) 14

For

per

sona

l use

onl

y

Significant itemsNet gain of $4m as Boral continues to transform

Non-IFRS Information – Management has provided an analysis of significant items reported during the period. These items have been considered in relation to their size andnature and have been adjusted from the reported information to assist users to better understand the performance of the underlying businesses. These items are detailed inNote 6 of the half year financial report and relate to amounts that are associated with significant business restructuring, business disposals, impairment or individualtransactions.

(Figures may not add due to rounding)

1. Includes gain on disposal of Boral CSR Bricks joint venture ($36m) and US Bricks ($12m), partially offset by an adverse working capital adjustment from the sale of Thailand Construction Materials in FY2013 ($9m)

A$m 1H FY2017 Notes

Net gain on sale of business 39 1

Headwaters acquisition costs (13)

Meridian Brick JV restructuring costs (1)

Earnings before tax 25

Tax expense (21)

Significant items (net) 4

15

Cash flowStrengthened operating cash flow

1. Excluding significant items2. Institutional equity placement and retail entitlement offer completed Dec-163. On-market share buy-back program completed Sep-2015

(Figures may not add due to rounding)

• Operating cash flow increased 40% to $158m due to:

- Benefits from improved earnings, lower tax payments and lower restructuring costs;

- offset by increase in working capital due to the timing of capital payments, higher sales in 2Q, and increased inventory levels in the US

• Total capital expenditure up 25% to $144m

• Free cash flow increased significantly to $151m, primarily due to proceeds on sale of 40% share in Boral CSR Bricks JV

• $2.0b cash proceeds from capital raising2

to support Headwaters acquisition

Cash flow, A$m 1H FY2017 1H FY2016EBITDA1 333 322

Change in working capital and other (93) (69)

Fly ash contract investments (6) 0

Share acquisition rights vested (4) (15)

Interest and tax (53) (91)

Equity earnings less dividends (7) (10)

Restructuring costs paid (12) (24)

Operating cash flow 158 113Capital expenditure (144) (115)

Investments (9) 0

Proceeds on disposal of assets 145 19

Free cash flow 151 17Capital raisings2 2,018 0

Share buy-back3 0 (115)

Dividends paid (86) (72)

Other items 3 8

Cash flow 2,087 (163)16

For

per

sona

l use

onl

y

Capital expenditureMaintaining disciplined capital allocation with focus on stay in business capex

• Total capex up 25% to $144m, driven by increased stay in business capex

• Capital spend included:- Quarry upgrades at Deer Park (VIC) and Orange

Grove (WA)- Replacement concrete plants in NSW- Roofing plant upgrade in Florida- Building new capacity in US Siding business

Total capital expenditureA$m

1H FY2017 capital expenditure, %

Boral Australia

Boral USA

Total = A$144m

1. Stay in business capital expenditure

SIB1 Growth Depreciation and amortisation

17

• FY2017 capex to be maintained ~$300-$350m

86%

14%

192126

203 211281

103 124

222

18365 39

43

1220

273

307

261249

247

122122

FY12 FY13 FY14 FY15 FY16 1H FY16 1H FY17

0

1,000

2,000

0

500

1,000

FY17 FY18 FY19 FY20 FY21 FY22 FY23 andlater

Balance sheetMaintaining a robust financial position

1. US Private Placement notes 2. Swiss franc notes issued under EMTN program 3. Gross debt / (gross debt + equity)

Gearing (net debt / net debt + equity), % • Net cash of $1.2b at 31-Dec-16 from net debt of $893m at 30-Jun-16 due to proceeds of equity raising completed in 1H FY2017

• Principal debt gearing covenant3 of 22%, down from 30% at 30-Jun-16 (threshold is less than 60%)

• Weighted average debt maturity of ~3.5 years (excluding new undrawn bridge facility)

• Net interest cover of 7.8 times, up from 6.4 times

CHF notes2

Debt maturity profileUSPP1

Undrawn syndicated facilities Net debt reconciliation, A$m 1H FY2017

Opening balance (893)

Cash flow 2,087

Non cash (FX) (15)

Closing balance 1,179

18

USPP1 AUD

A$m

31 30

18 19 20 23

0FY12 FY13 FY14 FY15 FY16 1H16 1H17

Undrawn Headwaters acquisition bridge facility(US$1.2b, right side scale)F

or p

erso

nal u

se o

nly

Strategic Priorities & OutlookMike Kane – CEO & Managing Director

Boral today: Delivering transformation

20

1. Maintaining and strengthening our leading position in Australia• Well positioned on the East Coast, particularly in NSW where conditions remain very strong

• Quarry reinvestment program strengthening our integrated position

• Operational and commercial excellence delivering margin expansion

2. Growing organically and through innovation in USG Boral• Growing in plasterboard markets in Asia, Australia and the Middle East, including Sheetrock® technologies

3. Transformational growth in the USA• Significant synergies expected from Headwaters acquisition and Meridian Brick JV

• Innovative fly ash-based composite technologies in light building products

4. Leveraging growth in key markets and across all geographies• Australia: multi-year growth trajectory for major roads and infrastructure

• Asia: increasing product penetration and leveraged to economies with long-term growth prospects

• USA: ongoing market recovery and new market opportunities and scale through Headwaters acquisition

5. Strong cash flows and balance sheet to support growth and deliver value

For

per

sona

l use

onl

y

21

Announced 21 Nov, subject to Headwaters shareholder and regulatory approvals• Headwaters Proxy Statement issued 29 December 2016

• At Headwaters shareholder meeting held 3 February 2017, >98% of votes cast in favour of the deal

• Working proactively with Federal Trade Commission on its review and providing information to help them complete review on a timely basis

• Expectation of completion by around mid-CY2017 remains unchanged

Acquisition funding in place• A$2.1b equity raise completed (at $4.80 per share, a 15% discount to TERP; 1.172 b shares on issue)

− A$450m placement: 5.7x oversubscribed

− A$1.1b institutional entitlement: 91% acceptance, shortfall bookbuild clearing price of $5.25

− A$486m retail entitlement: 50% acceptance, shortfall bookbuild clearing price of $5.15

• US$835m of debt from a US$1.2b bridge facility (+ US$350m of balance sheet cash)

Key areas of market interest• Understanding Headwaters / quality of earnings

• Synergy drivers

• Fly Ash business fundamentals

Headwaters Inc. acquisitionAligned with Boral’s stated strategy; significant market interest

A brief history of Headwaters Inc.

1987

2000

2002

2004

2005

2006

2007

2016

Inco

rpor

ated

as

Cyn

sulo

Inc

Operating initially as a coal-treatment technology company

Acqu

ires

Indu

stria

l Se

rvic

es G

roup

(ISG

) fo

r US$

65m

Ren

amed

H

eadw

ater

s In

c

SW C

oncr

ete

Prod

ucts

&

Pale

stin

e C

oncr

ete

Tile

be

com

e H

eadw

ater

s

Acqu

ires

Eldo

rado

Sto

ne

(US$

202m

), St

oneC

raft,

&

Tapc

oH

oldi

ngs

(US7

15m

)

Acqu

ires

Kres

tmar

kW

indo

ws

for U

S$24

0m

Acqu

ires

Dut

ch Q

ualit

y St

one

A decade of small bolt-on acquisitions help grow existing

businesses and supplement organic growth

5 years of growth through acquisition

Krestmark Windows in 2016 was the first major acquisition in 10 years

~90% of FY2016 revenues came from Fly Ash, Stone, Light Building Products, Roofing & Block – industries HW has had strong businesses for 12-15 years

10 bolt-on acquisitions made over the past 5 years, totalling ~US$241m, have strengthened these platforms

Over the past 5 years Headwaters growth averaged ~11% pa with ~7% pa organic, in line with the weighted average growth of its end markets

One of the leaders in fly ash, stone & light building products for 12-15 years

ENTERED FLY ASH

ENTERED MANUFACTURED STONE

ENTERED LIGHT BUILDING PRODUCTS

ENTERED CONCRETE BLOCK

ENTERED ROOFING

For

per

sona

l use

onl

y

Block

Windows

Energy Technologies

Combination of complementary businesses establishes leading positions in key market segments and adds significant scale to Boral’s USA footprint, with pro forma combined revenue of US$1.8 billion

1. Based on Boral USA revenue for year ended 30 June 2016 and Headwaters pro forma revenue for year ended 30 September 20162. Light Building Products includes siding, trim and panelised stone3. Denver Construction Materials revenue reported in Discontinued Operations4. Boral USA Bricks revenue represents Boral’s 50% share of revenue of the North American Bricks Joint Venture 5. Synergies as disclosed in Boral’s announcement of the North American Bricks Joint Venture on 24 August 2016

Improved geographiccoverage

Enhanced site service capabilities

Leading sales, marketing and product offering

Improved geographic coverage

Full high-end roof offering

Improved geographiccoverage

Exposure to the re-roof market

Broader product offering

Strong businesses

R&R exposure

Quality windows offering, diverse customer base

Broad block offering,state-of-the-art manufacturing

North American Bricks Joint Venture expected to deliver synergies of US$25m p.a. within four years5

Fly Ash Stone Roofing Light Building Products2

Other Headwaters Other Boral

FY2016 revenue (US$m)1,2

23

Boral USA

Headwaters

Headwaters Inc. acquisitionStrong strategic fit between Headwaters and Boral’s existing US businesses

Denver Construction

Materials3

Bricks4

(now in Meridian Brick JV)

1. Headwaters financials are based on a 30 September year end and are presented on a pro forma basis to reflect ownership of the Krestmark windows business throughout the historical period (i.e. as if the Krestmarkwindows acquisition, which occurred on 19 August 2016, was effective from 1 October 2013). FY14 and FY15 Krestmark financials are on a 31 December year end basis, reflecting Krestmark’s financial year end; FY16 Krestmark financials are based on a financial year ended 30 September 2016, consistent with Headwaters’ financial year end.

2. Building Products and Construction Materials divisional contributions do not add up to total pro forma revenue and Adjusted EBITDA due to the exclusion of Energy Technologies and corporate costs from the graphs.3. Under Boral’s accounting policies, some depreciation and amortisation within Headwaters’ financials may be reclassified as an operating expense.4. Refer to Boral’s announcement of Headwaters acquisition on 21 November 2016 (slide 45) for a bridge from Headwaters’ reported FY16 Adjusted EBITDA to pro forma FY16 Adjusted EBITDA.

Pro forma Adjusted EBITDA (US$m)1,2,3Pro forma revenue (US$m)1,2

Headwaters financial overview

Headwaters has delivered strong margin expansion across its two core divisions

Building products Construction materials

Pro forma Adjusted EBITDA margin

Building Products 19.5% 20.4% 21.2%

Construction Materials 21.6% 22.9% 24.9%

Group 18.1% 19.2% 20.2%

558 623 697

309352

370877

9951,078

FY14 FY15 FY16

109127

148

67

81

92159

1912184

FY14 FY15 FY16

24

For

per

sona

l use

onl

y

Corporate Fly ash Stone Roofing Light Building Products Total

We are highly confident of delivering identified synergies in year four of at least ~US$100 million per annum, which will come from SG&A overhead savings and highly complementary businesses

Substantial synergies anticipated: ~US$50-55m pa year 1 run rate and ~US$100m pa within 4 years

~US$100 million pa within 4 years

SG&A

Operations

Synergies by business unit and source, US$m

Cross-selling and

distribution

ProcurementOverhead savings of ~US$17m,

largely in year 1, include executive head-count, public company costs and

procurement

Remaining synergies of ~$83m pa from operations,

procurement, and cross selling & distribution reflect highly complementary businesses

25

Significant synergies are possible as a result of highly complementary businessesOverview of key synergies by business – Corporate, Fly Ash and Stone

(Continued over page)

Business / synergy drivers Year 1 run rateUS$ pa

Within 4 yearsUS$ pa

Corporate – including executive headcount, public company costs, procurement ~$17m >$17mFly Ash Sub-total ~$12m >$24m Ash supply / network optimisation / logistics

Procurement

Sales coverage expansion & high value product growth – Boral faces local supply constraints in some locations, HW has ability to supply

Organisational efficiencies – eg. consolidating finance systems and overlapping sales coverage, engineering support and operations

Other including technology / R&D

Stone Sub-total ~$6m >$29m Plant network optimisation

Sales coverage

Procurement

Manufacturing equipment

Other including organisational efficiencies

26

For

per

sona

l use

onl

y

Overview of key synergies by business – Roofing, Light Building Products

Business / synergy drivers Year 1 run rateUS$ pa

Within 4 yearsUS$ pa

Roofing Sub-total ~$10m >$19m Procurement

Cross-selling portfolio – eg. re-sale products account for ~20% of Boral’s Roofing sales, while Headwaters has minimal exposure

Manufacturing & network optimisation

Manufacturing efficiencies

Other including organisational efficiencies

Light Building Products Sub-total ~$5m >$11m Procurement

Sales coverage, cross selling, retail presence

Organisational efficiencies

Other

Total ~$50-55m >$100m

Significant synergies are possible as a result of highly complementary businesses

27

1. Includes marketing and other services related to coal combustion products, and storage terminals, as of November 2016 based on diligence information

Combined fly ash sources & storage terminals1

21

68 25

7Boral fly ash source Boral fly ash terminal

Headwaters fly ash source Headwaters fly ash terminal

Combined Fly Ash position has pro forma revenue of >US$450m

Supplied over 7m tons pa of fly ash to the USA construction industry – predominantly to ready mix concrete industry – in FY2016

National and diverse supply / distribution footprint with over 120 fly ash supply and site service contracts

Leading fly ash beneficiation technologies and leading fly ash usage technologies

Strong reputations among both utilities and fly ash customers, with excellent quality, safety, environmental track record

28

Headwaters Inc. acquisitionSignificantly scales Boral’s position in Fly Ash – an attractive, sustainable business

For

per

sona

l use

onl

y

Fly Ash supply and site service contracts with utilities, terms range from ~5 to 15 years

Industry practice is to share revenue with utilities

Fly Ash sales ~80% of revenue (with strong EBITDA margins; site services ~20% of revenue (margins lower)

With fly ash demand strong and growing, contracts are attractive

Contracts

1. Source: Portland Cement Association - 2015 Market Intelligence Report2. Source: Dodge Data & Analytics 2016 Ready Mix market segments 3. Source: Dodge Data & Analytics

Fly Ash demand Substitution of fly ash in ready mix concrete ~16% with potential to grow

Concrete made with fly ash has better performance (durability, permeability, flow), lowers cost, and lowers concrete production CO2 emissions

Cement demand growth forecast1 at ~7% CAGR FY16-22

Exposed to increased US infrastructure spend

Growth opportunities outside of ready mix concrete including as a filler in engineered products

Fly ash revenue by end market2

US roads and highway spending3

31 32 33 31 31 33

38 39 39

42 44 43

40

45 43

47

45

48

51

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6E

201

7E

201

8E

US

$ bi

llion

29

47

20

15

18

Infrastructure

New residential

Commercial / Institutional

R&R

HW and Boral have ~120 fly ash supply & services contracts, around half are concrete quality fly ash supply contracts

2015 American Coal Ash Association Volumes

CCP1

produced ~118m tons

Fly ash produced ~44m tons

Other CCP eg. bottom ash, FGD1

Fly ash used

~24m tons

Fly ash to landfill

~20m tons

Ready mix concrete

~16m tons

Other applications:

• Blended cement/ clinker ~3.6m tons

• Structural fills ~1.3m tons

• Mining applications ~1.1m tons

• Waste stabilisation ~1.1m tons

• Other eg. road-base, engineered products, etc~0.9m tons

Supply considerations Fly ash supply heavily dependent on coal-

sourced electricity generation2

Regulations / CO2 targets may limit coal power generation, but it is expected to remain ~30% of the energy mix in USA3

Currently ~45% of fly ash produced is land-filled

Initiatives in place to increase sources of supply over medium- to long-term:

− Increasing storage capabilities

− Ongoing development of fly ash beneficiation technologies

− Continuing to assess long-term reclamation of fly ash in landfills2

− Potential opportunities to import

1. CCP is Coal Combustion Products; FGD is flue gas desulfurization gypsum2. Other fly ash source of supply includes ~1 billion tons currently landfilled (source: American Coal Ash Association)3. US Energy Information Administration (EIA) Projections for 2040 is for coal to be 29% of total energy in US and if the Clean Power Plan (CPP) is implemented it could reduce to

20%. The CPP is on hold and opposed by the current US Government.30

Around one-third of industry fly ash volumes supplied to ‘other applications’, compares with <20% for Boral & Headwaters.

For

per

sona

l use

onl

y

The US$2.6 billion acquisition of Headwaters is aligned with Boral’s stated M&A strategy

Stra

tegi

cally

alig

ned

M&

A o

ppor

tuni

ty

Diversify market exposures beyond single family housing

Less capital intensive businesses with a more flexible, variable cost structure

Opportunities to align with emerging trends

Earnings accretive opportunities

Increases Boral’s exposure to the USA building and construction markets, which are experiencing positive momentum

Diversifies Boral USA’s channels, end-market exposures, geographic presence and customer concentration

Further reshapes Boral USA’s portfolio following recent North American Bricks Joint Venture

Boral’s portfolio re-weighted towards less capital intensive businesses

Substantial synergies will improve earnings through-the-cycle

Establishes leading positions in fly ash, light building products, stone and roofing materials that will benefit from manufacturing and distribution optimisation

Adds attractive, high margin niche products to Boral’s existing light building products platform, enabling Boral to better serve customers with an expanded product suite

Accretive to Boral’s EPS on a pro forma FY2017F NPATA basis1

Synergies of approximately US$100 million per annum within four years of transaction completion

Boral objective Expected impact of Headwaters acquisition

1. FY2017 pro forma EPS accretion on a NPATA basis assumes the Headwaters acquisition was effective from 1 July 2016, includes synergies and excludes transaction costs, integration costs and amortisation of acquired intangibles. The impact of purchase price accounting has not been completed, which will impact future depreciation and amortisation charges. In accordance with AASB 133, Boral basic EPS for the year ending 30 June 2017 has been adjusted to reflect the bonus element in the Entitlement Offer. 31

Headwaters Inc. acquisitionDelivering Boral’s strategy

Outlook for FY2017

Bor

alA

ustr

alia

• Expect higher EBIT in FY2017 than FY2016; 1H and 2H EBIT expected to be broadly balanced• Property earnings in 2H FY2017 expected to be broadly similar to $9m EBIT in 1H FY2017• Fewer working days in 2H expected to be offset by:

- anticipated stronger pricing outcomes in 2H FY2017 and ongoing operational improvements –combined these are expected to more than offset inflationary impacts and result in margin expansion

- increasing infrastructure work, benefiting Boral’s upstream quarry and cement businesses and downstream concrete and asphalt businesses

- the one-off restructuring cost in Bricks WA in 1H not repeating in 2H- anticipated return to more normal weather patterns in 2H

US

G

Bor

al • 2H earnings expected to be lower than 1H due to normal seasonality impacts, but solid year-on-year

growth expected in FY2017• Reflects continued cost and synergy benefits, and volume and price gains in several markets,

including further penetration of Sheetrock® products

Bor

al

US

A • Expected to report continued growth in earnings in FY2017, in line with US market recovery• External forecasters1 are projecting housing starts to increase to ~1.25 million starts in FY2017, a

~10% increase (in line with the market improvement trajectory of the past three years)

1. Average of analysts’ forecasts (Dodge, Wells Fargo, NAR, NAHB, Fannie Mae, Freddie Mac, MBA) from January 2017 32

Group FY2017 EBIT expected to be higher than FY2016, despite adverse ~$6.5m impact of Boral CSR Bricks divestment

For

per

sona

l use

onl

y

Questions

Supplementary slides

For

per

sona

l use

onl

y

6615

19

Boral AustraliaUSG Boral

Boral USA

Boral Limited overview

1. As at 13 February 20172. Includes USG Boral and Meridian Brick joint venture operations, as at 31 Dec 20163. Includes Boral’s 50% share of underlying revenues from the USG Boral and Meridian

Brick joint ventures, which are not included in Group reported revenue. Excludes revenue from Construction Materials business in Boral USA, which is reported under Discontinued Operations

4. Roads, highways, subdivisions and bridges

• Boral is an international building and construction materials group with operations in Australia, North America, Asia and the Middle East

• ~A$6.9b market capitalisation1

• S&P/ASX 100 company

• Operations across 16 countries2

• ~12,000 employees2

by d

ivis

ion,

%by

div

isio

n, %

1H FY2017 external revenue31H FY2017 external revenue3

by e

nd-m

arke

t, %

by e

nd-m

arke

t, %

35

26

12

147

10

10

162 3 Australian RHS&B and

other engineering

Australian detached dwellings

Australian alterations & additions

Australian non-dwellings

Asia

USA dwellings

USA non-dwellings & engineering

Other

Australian multi-dwellings

(fig

ures

may

not

add

due

to

roun

ding

)

Boral’s Fix Execute Transform program

FIX EXECUTE TRANSFORM2 years

4 years6 years +

Fixing things that are holding us back

Improving the way we operate to be more efficient, disciplined and profitable

Transforming Boral for performance excellence and sustainable growth through innovation

Our goal is to transform Boral into a global building and construction materials company that is known for its world-leading safety performance, innovative product platform and superior returns on shareholders’ funds.

36

For

per

sona

l use

onl

y

Our strategic prioritiesTransforming Boral

37

Our vision is to transform Boral for performance excellence and sustainable growth

Our goals are to deliver:

• World class health & safety outcomes based on Zero Harm

• Returns that exceed the cost of capital through the cycle

• More sustainable growth

Boral Australia USG Boral Boral USA

• Protect and strengthen our leading, integrated construction materials position and optimise returns across all businesses

• Benefits from significant pipeline of major roads and infrastructure work

• Organic growth over the medium and long term through:o innovationo Asian economic

growtho product penetration

for interior linings and related products

• Growing earnings through cyclical market recovery and new product development

• Strategically aligned M&A opportunities

QLD

NSW/ACT

VIC/TAS

1

191

61

17

2

26 4

94

12 9

1

162

48

8

SA1

10

110

2

WA1

91

13

3

NT 2

1

Boral AustraliaConcrete, Quarries, Asphalt, Cement, Concrete Placing, Transport, Landfill, Property, Bricks WA & Roofing, Timber

SHA

RE

OF

REV

ENU

E1, %

3. As at November 20164. Includes cement manufacturing plant, bagging plant and lime plant in NSW, a clinker grinding plant in

Vic and a clinker grinding JV in Qld5. Includes 8 Boral Hardwood mills and 1 JV Softwood operation

by s

tate

OPERATING FOOTPRINT (total number of operations3)

Quarries

Concrete

Asphalt

Cement4

4

3

1

42

7

82

227

9

Bricks WA

Roof tiles

Timber5

Masonry

by b

usin

ess

381. Based on 1H FY2017 split of Boral Australia external revenue 2. Bricks & Roofing includes Masonry revenues

44

22

22

12NSW / ACT

QLD

WA / NT

VIC / TAS / SA

Bricks WA & Roofing2

Concrete placing

Cement 42

13

19

9

46

5 2

Concrete

Quarries

Asphalt

OtherTimber

For

per

sona

l use

onl

y

QUARRIESAggregates

and sand

BITUMENBitumen Importers

Australia (JV)

Upstream

Downstream

CEMENT~70% of needs from domestic manufacturing and ~30% from

imports

5-15% Quarry volumes sold internally to

Asphalt

40-50% Quarry volumes sold internally to

Concrete

~50-60% Cement volumes sold internally to

Concrete

~35% of plants supplied bitumen

from 50/50 JV

~35-55% Quarry volumes sold

externallyCONCRETEPer m3 concrete

~0.3t cementitious material

~1.0t aggregates~0.9t sand

ASPHALT Per tonne asphalt

~0.055t bitumen~0.7t aggregates

~0.2t sand

39

Boral AustraliaWell positioned with strategic reserves and integrated downstream operations

-

2.5

5.0

7.5

10.0

199

119

93

199

519

97

199

920

01

200

320

05

200

720

09

201

120

13

201

520

17

201

920

21

-

40,000

80,000

120,000

199

119

93

199

519

97

199

920

01

200

320

05

200

720

09

201

120

13

201

520

17

201

920

21

-

40,000

80,000

120,000

199

119

93

199

519

97

199

920

01

200

320

05

200

720

09

201

120

13

201

520

17

201

920

21

Boral Australiaexternal revenue by end-market1, %

Boral Australiaexternal revenue by end-market1, %

17

10

14

16

33

6 4

RHS&B2Multi-dwellings

Other engineering

Non-residential

Other Detached dwellings

Alterations& additions

1. Based on split of 1H FY2017 Boral Australia external revenues2. Source: BIS Shrapnel forecast, 2013/14 dollarsNote charts are for financial years and have been based on 2014/15 dollars unless otherwise noted

-

10.0

20.0

30.0

40.0

199

1

199

3

199

5

199

7

199

9

200

1

200

3

200

5

200

7

200

9

201

1

201

3

201

5

201

7

201

9

202

1

Non-residential4, VWD A$ billions Alterations & additions4, VWD A$ billions

Multi-dwellings5, # starts

Detached dwellings5, # starts

3. Roads, highways, subdivisions and bridges4. Source: ABS, BIS Shrapnel and Macromonitor forecasts, 2013/14 dollars5. Source: ABS, BIS Shrapnel, Macromonitor and HIA forecasts

-

5.0

10.0

15.0

20.0

25.0

199

1

199

3

199

5

199

7

199

9

200

1

200

3

200

5

200

7

200

9

201

1

201

3

201

5

201

7

201

9

202

1

RHS&B3,4, VWD A$ billions

- 20.0 40.0 60.0 80.0

100.0 120.0

199

1

199

3

199

5

199

7

199

9

200

1

200

3

200

5

200

7

200

9

201

1

201

3

201

5

201

7

201

9

202

1

Other engineering2, VWD A$ billions

40

Boral AustraliaRevenues are derived from various market segments

For

per

sona

l use

onl

y

Concrete demand in Australia

41

Industry demand forecast to remain at high levels

Macromonitor forecast1 pre mix concrete demand across all Australian construction markets(‘000) m3

1. Source: Macromonitor, Construction Materials forecast, September 20162. Compound annual growth rate3. Roads, highways, subdivisions & bridges

• ~0.9% CAGR2 in concrete volumes forecast from FY2016 to FY2021

• Year-on-year decline in FY2017 forecast volumes largely driven by WA / NT and regional markets

• Growth in RHS&B3 activity forecast to offset the decline in resources sector engineering work and softening in multi-dwellings

QLD

NSW / ACT

VIC / TAS / SA

WA / NT

-

5,000

10,000

15,000

20,000

25,000

30,000

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20

FY

21

Forecast volumes

Asphalt demand in Australia

42

Industry demand forecast to increase and remain at high levels

Macromonitor forecast1 asphalt demand across all Australian construction markets(‘000) tonne3

1. Source: Macromonitor, Construction Materials forecast, September 20162. Compound annual growth rate

• ~4.3% CAGR2 in asphalt volumes forecast from FY2016 to FY2021, with significant increases forecast in FY2017 and FY2018

• Growth in major roads infrastructure underpins increase in forecast demand

• Forecast growth in demand driven by Qld and Vic in FY2017, and Qld and WA in FY2018

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20

FY

21

QLD

NSW / ACT

VIC / TAS / SA

WA / NT

Forecast volumes

For

per

sona

l use

onl

y

Australian major road projects pipelineMulti-year growth trajectory for major roads and infrastructure

43

Boral’s Australian project pipelineAs at January 2017

Projects committed Timing

Perth Stadium, WA Est. completion mid-2017

Mitchell Freeway, WA Est. completion mid-2017

Wheatstone LNG, WA Est. completion end 2017

NorthLink stage 1, WA Est. completion 2018

Bringelly Road Stage 1, NSW Est. completion 2018

Pacific Hwy, Nambucca, NSW Est. completion 2018

Toowoomba Second Range, Qld Est. completion 2018

Gateway Motorway North, Qld Est. completion 2019

NorthConnex, NSW Est. completion 2019

Forrestfield – Airport Link, WA Est. completion 2019

Amrun Project, Qld Est. completion 2019

Projects under tender Status

Kingsford Smith Drive, Qld Currently tendering

Northern Road, NSW Currently tendering

Pacific Motorway M1 Widening, NSW Currently tendering

Pacific Hwy W2B, NSW Currently tendering

Roe 8, Mains Roads, WA Currently tendering

Northern Connector, SA Currently tendering

NorthLink stages 2 & 3, WA Currently tendering

Melbourne Metro, Vic Currently tendering

Western Distributor, Vic Currently tendering

Sydney Metro, City & SW, NSW Currently tendering

Warrego Highway, Qld Currently tendering

Brisbane Airport Runway, Qld Currently tendering

Outer Suburban Arterial Roads, Vic Currently tendering

Western Sydney Stadium, NSW Pre-tendering

Sunshine Coast Airport, Qld Pre-tendering

WestConnex (stage 3), NSW Pre-tendering

Bandon Road Link, NSW Pre-tendering1. Projects recently awarded to Boral are highlighted in grey

44

For

per

sona

l use

onl

y

Boral Australia – Property is managed as an integrated and ongoing feature of the business

45

Integrated Property Life

Cycle

New need defined

Site opportunitylocated

Developmentapproval

Capitalapproval

Operationsplanning

Operationallife

End usestrategy

Rehabilitation

New landuse approvals

Development /disposal

QLD

NSW/ACT

VIC/TAS

1

191

61

17

2

26 4

94

12 9

1

162

48

8

SA1

10

110

2

WA1

91

13

3

NT 2

1

Boral Australia has a large land bank and harvests property on a continual basis

461. As at November 2016. Includes cement manufacturing plant, bagging plant and lime plant in NSW, clinker grinding plant in Vic& clinker grinding JV in Qld. Note: Approximately 40% of sites are leased and 60% are company owned

Propertyend usePurchased land Australian

operationsAustralian operations

• Growth corridors, generally in outer suburbs or regional areas

• Major landholdings eg. new quarries typically have 50+ year life cycles

• Other landholdings eg. concrete and asphalt sites could have 10-30 year life cycles

Major developments• Residential• Industrial / employment

generating• Landfill

Surplus buffer lands• eg. land surrounding brick,

cement, and quarry operations that have appreciated in value

Discrete lower value, replacement sites• eg. older (or redundant)

concrete and asphalt sites in low growth areas

Refreshed land purchases

~400 OPERATING SITES1

(total number of operations)

Quarries

Concrete

Asphalt

Cement

4

3

1

42

7

82

227

9

Bricks WA

Roof tiles

Timber

Masonry

For

per

sona

l use

onl

y

56 54

47

3228

12

28

8

46

28

59

FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 1HFY2016

1HFY2017

Boral has a solid track record of maximising returns from property assets

47

10-year averageProperty/QEU

earnings: $34m5-year average

Property earnings:$24m

1. Excludes signficant items. FY2007 – FY2010 includes earnings from significant multi-year developments at Moorebank and Nelsons Ridge, and initial earnings from the Landfill business

Boral Property Group• Partners with business units

as early as possible to maximise value, reduce operational rehabilitation liabilities and create market-based opportunities

• Boral Property Group is an in-house team with extensive property experience internally and externally

- Rezoning / approvals

- Remediation / rehabilitation

- Environmental

- Construction

Property EBIT1, A$m

USG Boral50%-owned joint venture in Australasia, Asia & Middle East

SHARE OF REVENUE1, %

36

22

13

6

10

13Australia

Thailand

Other

Korea

China

Indonesia

Indonesia

South Korea

Malaysia

Australia

Middle East

China

NZ

India Vietnam

Thailand

1 1 3

48

32

13

3 412

113

2

21

22

1

MANUFACTURING FOOTPRINT (total number of operations2)

Plasterboard plants 617m m2 capacity (23 board lines / 6 ceiling lines)

Gypsum mines

Other plants3

mineral fibre ceiling tile, metal ceiling grid, metal products, joint compounds, mineral wool and cornice production

18

3

301. Based on split of 1H FY2017 underlying

revenue for USG Boral2. Certain manufacturing facilities and gypsum

mines held in JV with third parties3. Production of plasterboard and other products

may be at the same physical location 48

For

per

sona

l use

onl

y

48

13

113

2

21

22

1

USG BoralOperations in high growth countries & new products will underpin growth

SHARE OF REVENUE1, %

MANUFACTURING FOOTPRINT (total number of operations2)

Plasterboard plants

Gypsum minesOther plants3

18331

IndiaGDP growth 7.3%

Population 1.25 bn

Population growth 1.2%

Urban population 32.7%

Rate of urbanisation 2.4%

1. Based on split of 1H FY2017 underlying revenue for USG Boral2. Certain manufacturing facilities and gypsum mines held in JV with third parties3. Production of plasterboard and other products may be at the same physical

location

ChinaGDP growth 6.9%

Population 1.37 bn




ThailandGDP growth 2.8%

Population 68.0m



Rate of urbanisation 3.0%IndonesiaGDP growth 4.8%

Population 256.0m




MalaysiaGDP growth 5.0%

Population 30.5m




VietnamGDP growth 6.7%

Population 94.3m




36

22

13

6

10

13Australia

Thailand

Other

Korea

China

Indonesia

Note: GDP growth is real GDP growth rate 2015 | Population figures as at December 2014 | Population growth based on 2014 estimates | Urban population as a percentage of total population for 2014 | Rate of urbanisation based on annual rate of change between 2010 and 2015ESource: CIA World Factbook

Boral USACladding (Stone, Trim & Siding), Roof Tiles, Fly Ash and Bricks JV

3

1

1

3 3

8 22

12

5

1

1

11

41

1

92

5

5

9

61

1

1

1

SOUTH

WEST

NORTH-EASTMIDWEST

1. Based on split of 1H FY2017 external revenue for Boral USA, including Boral’s 50% share of underlying revenue from the Meridian Brick JV which is not included in Group reported revenue. Excludes revenue from Denver Construction Materials

OPERATING FOOTPRINT2

(total number of operations as at November 2016)

2

13

29 Meridian Brick JV

Roof tiles

Cultured Stone

Composites

Concrete & quarries

Fly ash

2

29

9

2. SOUTH consists of AL, AR, DE, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, WV, VA | NORTHEAST consists of CT, MA, ME, NH, NJ, NY, PA, RI, VT | MIDWEST consists of IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI | WEST consists of AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY. States italicised in green are the states in which Boral operates and are included in Boral’s US Revenue chart.

50

SHA

RE

OF

REV

ENU

E1, %

by b

usin

ess

by e

nd-m

arke

t

638

14

123

Single-family dwellings

Multi-family dwellings

Repair & remodel

Non-residential

Other

39

20

27

14Bricks

Fly Ash

Roofing

Cladding (Stone and Trim & Siding)

2

1

1

13Ontario Quebec

For

per

sona

l use

onl

y

51

14

2

1

3

1

3 3

1

1 62 2

5

5 4 5

4

OPERATING FOOTPRINT (total number of operations at August 2016)

12 Clay Bricks

Concrete Bricks

Building Products Distribution Centres

41

Boral Forterra

Combined FY2017 annual proforma EBITDA:

~US$25-$30 million

Manufacturing capacity:2,639 million SBE1

(348m SBE1 mothballed)

Combined employee base:~1,380 full-time equivalent

11

1122

22

55

11

33Ontario

Quebec

2

15

2

Meridian Brick joint ventureForterra and Boral Bricks joint venture formed on 1 November 2016

• Expecting cost synergies of ~US$25m pa by year 4 through:

- Plant network optimisation

- Improved utilisation of freight and distribution

- Streamlined selling, marketing and administration costs

- Procurement cost savings

Underlying result (for first 2 months of JV)

US$m 1H FY2017

Revenue 67

EBIT 0

1. Standard brick equivalent

56

32

6 4 2

US residential construction continues to recover in all regions

0.0

0.5

1.0

1.5

2.0

2.5

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

1. Housing starts forecasts based on the average of Dodge, Wells Fargo, NAR, NAHB, Fannie Mae, Freddie Mac and MBA analysts between Dec 2016 and Jan 2017. Historical data – US Census Bureau2. SOUTH consists of AL, AR, DE, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, WV, VA | NORTHEAST consists of CT, MA, ME, NH, NJ, NY, PA, RI, VT | MIDWEST consists of IA, IL, IN, KS, MI, MN, MO,

ND, NE, OH, SD, WI | WEST consists of AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY. States italicised in green are the states in which Boral operates. Revenue split is based on FY2016 external revenues with ‘Other’ including sales outside of the USA

0200400600800

1,0001,200

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

0100200300400500600

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

0

50

100

150

200

250

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

0

100

200

300

400

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

WEST2 Housing Starts SOUTH2 Housing Starts

NORTHEAST2 Housing Starts MIDWEST2 Housing Starts

FY

FY

FY

FY

TOTAL USA Housing Starts1

FY

million

‘000

‘000 ‘000

‘000

SHARE OF BORAL’S US REVENUE2, %

Other

Forecasters1 expect ~1.25m housing starts in FY2017 and ~1.34m by FY2018

52

For

per

sona

l use

onl

y

Our strategic prioritiesMaking good progress in all divisions

53

Boral Australia USG Boral Boral USA

Divested 40% share of Boral CSR Bricks JV

Ongoing ~$130m of quarry reinvestment projects plus concrete plant investments

Restructuring of Bricks WA in line with market downturn

Plans to improve Boral’s cement position in Victoria

Operational excellence program and Commercial excellence initiatives continuing; early benefits delivered

Sheetrock® technology roll-out ahead of schedule; now produced by 16 board lines

~$US44m invested in technology related capital program; full roll-out expected to be below budget

Sheetrock® adoption on target ~40% of targeted US$50m pa

synergies realised as at Dec-16

Full Sheetrock® technology roll-out to be completed in Dec-17

On track to deliver US$50m pa synergies within 3 yrs of roll-out

Commenced construction of new warehouse to add 30m m2

capacity to Dangjin plant, Korea

Meridian Brick joint venture formed in Nov-16

Announced US$2.6b acquisition of Headwaters; expect to complete by mid-CY2017

Expect Brick JV cost synergies of US$25m within 4 yrs

Expect Headwaters synergies of US$100m pa within 4 yrs of transaction closing

Continued investment in growth of lightweight Trim & Siding business

Targeting divestment of non-core Denver Construction Materials business

1H FY2017 segment revenue and EBIT

External revenue, A$m EBIT3, A$m

1H FY2017 1H FY2016 Var, % 1H FY2017 1H FY2016 Var, %

Boral Australia 1,616 1,681 (4) 164 169 (3)

Boral Gypsum1– – 40 32 25

Boral USA 410 455 (10) 13 0

Unallocated – – (17) (16) 7

Discontinued Operations2 68 58 17 10 14 (30)

TOTAL 2,093 2,194 (5) 211 200 6

1. Boral Gypsum EBIT represents Boral’s 50% post-tax equity accounted income from USG Boral2. Discontinued Operations includes the Boral CSR Bricks joint venture and Denver Construction Materials business3. Excluding significant items

(Figures may not add due to rounding)54

For

per

sona

l use

onl

y

Earnings and dividends per share

Earnings and dividends per share1• 1H FY2017 EPS of 17.2 cents, up 2%

on 1H FY20162

- Adjusted3 EPS of 19.7c, an 8% increase

• Fully franked half year dividend of 12.0 cents, up 9% on 1H FY2016

• Interim dividend payout ratio of 94%

- Exceeds Boral’s Dividend Policy of between 50-70% of earnings before significant items, subject to the Company’s financial position

- In line with Company’s commitment to maintain the level of dividends while the Headwaters acquisition is finalised

A$ cents

1. Earnings per share, excluding significant items2. In accordance with AASB 133, historical EPS has been revised to reflect the bonus element in the equity raising completed Dec-20163. Adjusted EPS excludes the impact of the equity raising completed Dec-2016 55

14.511.0 11.0

15.0 18.022.5

11.0 12.0

22.7

12.7 12.7

20.5

29.733.3

16.9 17.2

18.219.7

FY11 FY12 FY13 FY14 FY15 FY16 1H FY16 1H FY17

DPS EPS Adjusted EPS3

Adjusted EPS calculation

The following earnings per share calculation adjusts for the impact of the equity raising undertaken in December 2016 to fund the Headwaters Inc. acquisition.

Adjusted EPS calculation 1H FY2017 1H FY2016

Net profit attributable to members of the parent entity excluding significant items $149.0m $136.6m

Interest earned from proceeds received from equity raising, net of tax $(2.5)m 0

Net profit attributable to members of the parent entity excluding significant items and impact of equity raise

$146.5m $136.6m

Reported WANOS1 for basic earnings per share 864,902,133 808,322,056

Less: impact of equity raise on reported WANOS1 (121,302,696) (56,723,241)

WANOS1 for basic earnings per share excluding impact of equity raising 743,599,437 751,598,815

Basic earnings per share (excluding significant items) 17.2 cents 16.9 cents

Basic earnings per share (excluding significant items and impact of equity raising) 19.7 cents 18.2 cents

1. Weighted average number of ordinary shares 56

For

per

sona

l use

onl

y

Debt profile

Debt facilities 1H FY2017A$m

1H FY2016A$m

US PP1 1,154 1,157

CHF notes2 203 208

Other3 3 4

Gross debt 1,360 1,369

Net debt / (cash) (1,179) 1,025

79%

21% USD

AUD

Gross debt currency exposure, % As at 31 December 2016

Total = A$1,360m

1. US Private Placement notes 2. Swiss notes issued via EMTN program. Swapped to USD

57

RHS&B activity is increasingGrowth in all regions, with strength in NSW

58

6.4

8.4

2.9 3.2 3.3 3.9

0.9 1.4 1.9 1.9

FY16FY17f FY16FY17f FY16FY17f FY16FY17f FY16FY17f

RHS&B1 – by state FY2017f v FY2016 (value of work done, $b)

RHS&B1 – Australia(value of work done, $b)

+55%

+12%

+32%

+20%

NSW VIC QLD SA WA

+2%

19.6

16.215.2

16.0

19.7

FY13 FY14 FY15 FY16 FY17F

+23%

1. RHS&B refers to roads, highways, subdivisions and bridges. Original series data from ABS. FY17F figures are an average of BIS Shrapnel and Macromonitor forecast data.

For

per

sona

l use

onl

y

29 31 36 3624 25

8 820 15

40 43 35 27

25 26

3 2

85

1HFY16

1HFY17f

1HFY16

1HFY17f

1HFY16

1HFY17f

1HFY16

1HFY17f

1HFY16

1HFY17f

8.47.8 7.8 8.0

8.38.7

7.9

8.7

FY12 FY13 FY14 FY15 FY16 1HFY16

2HFY16f

1HFY17F

90 94 106 117 116 121 110 119

56 70 77102 116 116 117 107

FY12 FY13 FY14 FY15 FY16 1HFY16

2HFY16

1HFY17f

164 183145

218 236

-4%

232 227

Australian residential activity remains strongHousing starts remain at historically strong levels

59

Total housing starts1

(‘000)

1. Original series housing starts from ABS to Sep-16 quarter, HIA forecast for Dec-16 quarter. Six monthly data annualised

2. Original series (constant 2014/15 prices) from ABS. Average of BIS Shrapnel and Macromonitor forecast for Dec-16 quarter. Six monthly data annualised

Detached Other

Alterations & additions (A&A)2

(value of work, $b)

Detached Other

+9%

-28%

-2%

7571 63

49 51

10 10

2921

69

NSW VIC QLD SA WA

-11%

+5%

0%

Housing starts – by state1

1H FY2017f vs 1H FY2016 (‘000)

227

Australian non-residential activity moderatedSofter activity forecast in all regions

601. Original series (constant 2014/15 prices) from ABS. Average of BIS Shrapnel and Macromonitor forecast for Dec-16 quarter. Six monthly data annualised

Non-residential – by state1

FY2015f v FY2014 (value of work done, $b)Non-residential1(value of work done, $b)

35.734.7

36.5 36.6 36.337.8

34.9 35.3

FY12 FY13 FY14 FY15 FY16 1H FY16 2H FY16 1HFY17f

-6%

10.6 10.2 10.49.4

7.2 6.8

2.2 1.9

5.3 4.8

1HFY16

1HFY17F

1HFY16

1HFY17F

1HFY16

1HFY17F

1HFY16

1HFY17F

1HFY16

1HFY17F

NSW VIC QLD SA WA

-16%

-9%-4%

-5%

-11%

For

per

sona

l use

onl

y

US housing activity continues to recoverTotal starts remain below long-term average

61

63 76108 116 127 147 138 157 150

FY11 FY12 FY13 FY14 FY15 FY16 1H FY16 2H FY161H FY17

175 195 237 255 276 293 274 312 292

FY11 FY12 FY13 FY14 FY15 FY16 1H FY162H FY16 1H FY17

570 684877 955 1,055 1,150 1,145 1,150 1,180

FY11 FY12 FY13 FY14 FY15 FY16 1H FY162H FY16 1H FY17

US total housing starts1

(‘000)

US single-family housing startsBoral Brick States2 (‘000)

• Total US housing starts of 1.180m1 in 1H FY2017, up 3% on 1H FY2016- Total housing starts ~21% below (pre GFC) long-term

average of 1.5m starts

• Single-family starts up 6%1

- Single-family starts up 9% in Boral Tiles States2 and up 7% in Boral Brick States2

1. Seasonally adjusted annualised data from US Census. Six monthly data annualised2. Data from McGraw Hill/ Dodge. Boral‘s Brick States include: Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina,

Tennessee, Texas. Boral‘s Tile States include: Arizona, California, Florida, Nevada

US single-family housing starts, Boral Tile States2 (‘000)

+3%

+7%+9%

Non IFRS information

(A$ millions)

Earnings before

significant items

Significant Items Total Continuing

OperationsDiscontinued Operations Total

Sales revenue 2,092.9 - 2,092.9 1,893.9 199.0 2,092.9EBIT 210.9 25.3 236.2 187.8 48.4 236.2Finance costs (27.2) - (27.2) (27.2) - (27.2)Earnings before tax 183.7 25.3 209.0 160.6 48.4 209.0Tax (expense) / benefit (34.7) (20.9) (55.6) (30.5) (25.1) (55.6)Net profit after tax 149.0 4.4 153.4 130.1 23.3 153.4

Boral Limited’s statutory results are reported under International Financial Reporting Standards. Earnings before significant items is a non-IFRS measure reported to provide a greater understanding of the underlying business performance of the Group. Significant items are detailed in Note 6 of the half year financial report and relate to amounts of income and expense that are associated with significant business restructuring, business disposals, impairment or individual transactions.

A reconciliation of earnings before significant items to reported statutory profit is detailed below:

Boral Gypsum division commentary also includes a non-IFRS measure of underlying results excluding significant items, representing the 12 months trading results to assist users to better understand the trading results of this division.

The results announcement has not been subject to review or audit, however it contains disclosures which are extracted or derived from the half year financial report for the half year ended 31 December 2016. This half year Financial Report for the six months ended 31 December 2016 is prepared in accordance with the ASX listing rules and should be read in conjunction with any announcements to the market made by the Group during the year.

62

For

per

sona

l use

onl

y

The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 15 February 2017. It is provided in summary form and does not purport to be complete. It should be read in conjunction with the Group’s periodic reporting and other announcements lodged with the Australian Securities Exchange (ASX).

To the extent that this document may contain forward-looking statements, such statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this release.

This document is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor.

Disclaimer

63

Boral Limitedwww.boral.com.au

For

per

sona

l use

onl

y

Boral Limited Level 3, 40 North Sydney NSW 2060 PO Box ... · Strong 2Q . catch-up following...

Documents

Transcript of Boral Limited Level 3, 40 North Sydney NSW 2060 PO Box ... · Strong 2Q . catch-up following...