It’s not business as usual at Boral

Boral Limited Shareholder Review 2008

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The Annual General Meeting of Boral Limited will be held at the City Recital Hall, Angel Place, Sydney on Friday 24 October at 10.30am.

Boral Annual ReportBoral’s Annual Review (including the Sustainability Report) and the Financial Report (detailed financial statements) can be accessed on Boral’s website www.boral.com.au or requested free of charge by contacting Boral’s share registry on the contact details listed on the back cover of this Review.

ContentsIts not business as usual at Boral 1Chairman’s Review 4Managing Director’s Review 6Financial Results 10Summary of Reporting Groups 12Review of Operating Divisions 14Board of Directors 20Remuneration Report 21Sustainability 22Shareholder Information Back cover

Front Cover: The 20km long Gateway Motorway upgrade project in Brisbane includes the duplication of the Gateway Bridge. The new 1.6km long bridge will link both sides of the Brisbane River with its 130 metre long and 80 metre high mainspan.

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.

Boral LimitedABN 13 008 421 761

Financial Calendar*Ex dividend share trading commences 25 August 2008Record date for final dividend 29 August 2008Final dividend payable 18 September 2008Annual General Meeting 24 October 2008Half year 31 December 2008Half year profit announcement 11 February 2009Ex dividend share trading commences 23 February 2009Record date for interim dividend 27 February 2009Interim dividend payable 3 April 2009Year end 30 June 2009

* Timing of events is subject to change

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Boral Limited Annual Review 2008

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.

It’s not business as usual at Boral

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

•Netreportedprofitaftertaxdown19%to $243 million•Salesrevenueup6%to $5.2 billion•EBITDA1down10%to$688million –AustralianEBITDAup9%to$657million –OffshoreEBITDAdown82%to$27million•EBITDA1 to sales margin of13.2%•Earningspershare1down17%to41.4cents•Fullyearfullyfrankeddividendmaintainedat 34 cents

1.Excludingsignificantitem

1 UShousingactivitydown45%fromits2006peakTomanagethe major downturn in us housing activity, Boral is implementing a rigorous cost saving and plant slowdownprogram,butstillinvestingformarketrecovery.•US$42.5mcostsavingprogramunderway.•Plantutilisation~40%inbricksand~30%inrooftiles.

2 Energyandotherinputcostsincreasedramatically during 2008Tomanageenergy, fuel and other cost increases, Boral is increasing prices, investing in alternative fuel strategies and deliveringPEPcostsavings.•Concrete($12.50/m3),quarries($1-$3/tonne),cement($15/

tonne)priceincreaseseffectiveAugust/September2008.•PEPsavingsof$151min2007/08.

3 NSWhousingactivityat 40 year lowsDespitetheprotracted housing downturn in Australia, especiallyinNSW,Boral’spricemanagementandcapacityplanning strategies are allowing the Company to remain competitive.•Priceincreasesinbuildingproducts.•Brickplantutilisation~75%onEastCoast.•~119mnetinvestmentinnewplasterboardplantinQld.

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.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.

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4 DemandforconcreteinAustralia at record levelsInfrastructureactivityisdeliveringrecord levels of demand for concrete in Australia (outside NsW), with Boral investing tosupplygrowingmarkets.•~45%ofA$2.3billiongrowthspendsincedemergeron

construction materials.•$85millioninvestmenttoincreaseSunstateCement’s

capacityinQldcurrentlyunderway.

5 Despiteplasterboardgrowth,Asianprofits declined by A$5 millionWithmixed conditions across Asia, cost disciplines, price increases (where possible) and investments to strengthen Boral’s leading positions are continuing.•US$70millioninnewlycommissionedLBGAplantsplusa

new US$48 million plant in Baoshan underway.•$31.9millionofgoodwillinThailandconstructionmaterials

written off due to continued challenging conditions.

7 Governmentprogressesemissionstrading schemeTomanagetheimpactoftheintroduction of an Australian emissions trading scheme, Boral is improving its energy and emissions reporting, and investing in emissions abatement programs.•FocusonrecognitionforEITEindustries.•3.79milliontonnesCO2-ein2007/08.•Emissionspertonneofcementiousmaterialsolddown

13%since1990.

6 Globalcreditcrisisimpactsliquidityand borrowingsDespitetheglobal credit crisis, Boral maintains a robust balance sheet and continues its value adding capital management initiatives.•Debt/equityof52%withintargetrange.•$114millionoff-marketbuy-backcomplete.•Boral’sdebtfacilitiesextended,averagematurity~6years.

3

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.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.

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Chairman’s Review

A solid result in challenging conditions2007/08wasachallengingyearfor many of Boral’s businesses, particularly our building products businesses in the USA and construction materials operationsinAsia.InAustralia,ourbusinessesinNewSouthWalescontinuedtofacelowlevels of activity but elsewhere around the country strong levelsofinfrastructureandnon-dwellings activity saw volume lifts and solid improvements in earnings.

Wereporteda6%increaseinsales revenue to $5.2 billion buta10%declineinBoral’sunderlyingEBITDA1 (earnings beforeinterest,tax,depreciation&amortisation)to$688million.Ourreportedprofitaftertax(PAT)of$243millionwasdown19%andunderlyingPATof $247million(excludinggoodwillandtaxprovisionadjustments)was17%lower.

Managing through the downturnsNo-oneenjoysreportingadecline in annual earnings or losses from any business, especially those that have historically delivered substantial returns and have very strong manufacturingandmarketpositions.

TheUSbusinesshasbeenvery profitable and a strong contributor to Boral’s earnings overtheyears.Whenmarketconditions were strong in 2005/06thebusinessdeliveredanEBITprofitofA$186millioncompared with a loss of A$27millionin2007/08.

ItiswellunderstoodwithintheCompanythatreducingfixedcosts, increasing prices and avoiding a build in inventory levels by matching production with sales volumes are critically important during the downturn.

Ourplantnetworkoptimisationand structured cost reduction programsinbricksandrooftiles are reducing the adverse impacts of historically low volumes.

WhilstinAustraliathehousingdownturn has been far less severe, it has been a very long and slow downturn that has seen reduced profitability since thepeakin2003/04.Boral’sbusinesses, particularly on the EastCoast,havemanagedthe reduced volumes through an ongoing program of plant slowdowns and temporary closures.Pleasingly,priceshave held or increased through the housing downturn despite volume pressures.

Shareholder returnsA decline in Boral’s share price of37%duringtheyearreflectedthe impacts of the broader equitiesmarketscoupledwiththe earnings impact of the USA andNewSouthWaleshousingdownturns.

Despitecyclicalearningspressures, a full year fully frankeddividendof34.0centsper share has been maintained forfouryears.Thefullyeardividend represents a grossed updividendyieldof7.3%perannum(afterfranking)onBoral’sweighted average share price for theyearof$6.65.

Boral’s Board and PeopleDrBobEverywasappointedasanon-executiveDirectorofBoralLimitedinSeptember2007.Hisappointment was confirmed atthe2007AnnualGeneralMeeting.

ElizabethAlexander,whojoinedtheBoardin1994,willretireasaDirectoratthisyear’sAnnualGeneralMeeting.TogetherwiththeBoard,IacknowledgethesignificantcontributionthatElizabethhasmade to Boral including her valued contribution as Chair of the Audit Committee. At this year’sAnnualGeneralMeetingshareholderswillbeaskedtoconfirm the appointment of a newDirectorwithappropriatefinancialexpertisetoreplaceElizabeth.1.Excludingsignificantitemsreflectinga$31.9millionwrite-downofgoodwillin

Thailandconstructionmaterials,whichwaslargelyoffsetbya$28.1millionwrite-back oftaxprovisions.

5

TheBoardremainsconfidentintheabilityofBoral’sCEOandManagingDirector,RodPearse,to deliver Boral’s strategic imperatives.TheBoardalsoremains confident in the ability of the Management Committee to deliver Boral’s strategy.

InAugust2008,Boral’slong-serving Company Secretary and GeneralManagerofCorporateServices, Michael Scobie, announced his intention to retire. On behalf of the Board IthankMichaelforhisvaluedcontribution.

MargaretTaylorwilltakeovertheroleofGeneralCounselandCompany Secretary of Boral LimitedinNovember2008.

IthankBoral’smanagementteam and all of Boral’s employeesfortheirhardworkand contribution over the past year.

Corporate governance and remunerationOnpage32to37ofBoral’sAnnual Review, we report on our corporate governance activities in accordance with the PrinciplesofGoodCorporateGovernanceandBestPracticeRecommendations of the ASX.

A separate Remuneration Report for shareholders as part oftheDirectors’Reportisalsoin Boral’s Annual Review (on pages42to49).

Inreviewingtheremunerationreport, shareholders should

bemindfulthatexecutiveremuneration is not driven solely byCompanyprofits.Executivesare rewarded for managing their business according to pre-approvedobjectives,plansand budgets and sometimes budgeted earnings are lower than previous years due to the cyclicalnatureofourmarkets.

During2007/08,theBoardofDirectorsspenttimemeetingwith Boral’s customers, shareholders,marketanalysts,managersandemployees.Wealso spent time visiting Boral’s USbrickandrooftileoperationsand Boral’s construction materials and plasterboard operations in Brisbane.

Whilstconditionsremainchallenging in some of Boral’s keymarkets,theDirectorsbelieve that the Company is well positioned to deliver long-termshareholdervaluethrough the economic cycles. WelookforwardtoarecoveryinBoral’skeymarketswhichwill strengthen Boral’s ability to deliver improved returns for shareholders.

Ken Moss Chairman

“ItiswellunderstoodwithintheCompanythatreducingfixedcosts,increasingpricesandavoidinga build in inventory levels by matching production with sales volumes are critically important during the downturn. ”

Ken Moss, CHAIRMAN

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It’s not business as usual at BoralIaminmyninthyearasBoral’sCEOandManagingDirectorandmy14thyearwiththeCompany.IhaveseenBoralperform in good times and in challengingtimes.Inmanyrespects managing through the challenging times is business as usualforacompanylikeBoralthatoperatesincyclicalmarkets,but2007/08wasnot business as usual.

Severalextraordinaryexternalfactors coincided to create a particularly challenging business environment.

Managing through a “generational” downturn in US housing activityThedramaticdeclineinUS housing activity is a “generational” downturn. Some 45%belowitspeakin2006andlikelytofalltoaroundhalfofsustainable underlying demand in2008/09,theUSAhasnotexperiencedsuchaseveredecline in housing activity for atleast25years.Thisisnot business as usual.

Boral’s USA earnings before interestandtax(EBIT)decreasedfromaA$95millionprofittoaA$27millionloss.Significantly lower volumes, increased raw material costs andone-offcosts(US$5millionassociatedwithaspecialtybrickplantwrite-downand

US$4 million of costs to reconfigureourbrickandrooftile plants) contributed to the severe fall in earnings.

Despitetheshort-termimperative to streamline the business to reduce costs and minimise the impacts of the downturn, we continue to manage the business for thelongerterm.WehaveconfidenceinUSmarketsandwe believe that the underlying levelofdemandoverthenexttenyearsisaround1.8millionstarts per annum.

Duringtheyear,wecommissioned a new US$55millionbrickplantinTerreHaute,Indiana,andanewUS$30 million clay tile plant inIone,California.Thesenewplants position Boral well when themarketrecovers.Inthemeantime, we will operate these low cost plants at high utilisation rates allowing older high cost capacity to be mothballed.

The protracted Australian housing downturn continues especially in New South WalesAustralian housing approvals ofaround155,000startsperannumare15%to20%belowunderlyingdemand.TheNewSouthWalesmarketis40%belowunderlyingdemand.NewSouthWalesisBoral’slargeststatemarket,andrepresentsaround40%ofourAustralianrevenues.NewSouthWalesis

experiencinghousingactivityat40yearlowlevels.Thisisnot business as usual and is having a considerable impact on Boral’s earnings.

WhilstactivityinVictoria,QueenslandandSouthAustraliaincreased during the year, activity in all Australian states is below underlying demand. FurtherdeclinesinNewSouthWalestogetherwithcontinuedweakeningintheWesternAustralian detached housing marketimpactedBoral’sbusinesses.

Wehavebeenrespondingto the challenges of the protracted downturn through disciplined price management and a relentless focus on cost reductionprograms.Pleasingly,despitevolumepressures,EBITfromBuildingProductswasup15%to$114millionin2007/08.

Wehavealsobeendirectinggrowth investments to higher growth states including Boral’s newlow-costplasterboardinQueensland,whichwascommissioned during the year. Thenewplantinvolvedanetinvestment of around $119millionandwillsupplyagrowingQueenslandmarketand support broader supply constraints.

ManagingDirector’sReview

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Record levels of demand for concrete in AustraliaWhilstconcretevolumesinNewSouthWalesarebelowwhere they were ten years ago, concrete demand nationally hasincreasedbyaround40%over the same period, with volumes running at record levelsin2007/08.Solidlevelsofinfrastructureandnon-dwellingactivityunderpinneda7%liftinindustry concrete volumes and a 10%liftinBoral’sConstructionMaterialsEBITto$351million.

Since the demerger of the Company in January 2000, around45%ofBoral’sgrowthspend of around $2.3 billion has gone into construction materials businesses in Australia to strengthen our leading positions and meet growing demand.

Wearecontinuingtoinvestfurther, including an $85 million investmentinBoral’s50%ownedSunstateCementjointventure,toincreaseclinkerstorage and cement grinding capacityby50%to1.5milliontonnes per annum.

Mixed conditions across AsiaWhilstconstructionmaterialsdemand has been strong in Australia, in Asia we have seen very challenging trading conditions for our concrete and quarrybusinessesinIndonesiaandThailand.

PoliticaluncertaintyinThailandhas constrained investment inmajorprojectworkandan

oversupply of cement capacity and significant input cost increases has led to substantial marginerosion.InIndonesia,where Boral has operated for more than 30 years, we are seeing some improvements but inThailandweexpectdifficultconditions to continue. Our focus is on delivering improved results through targeted volume growth, cost disciplines and where possible price increases.

Conditionsforour50%-ownedplasterboardjointventurebusiness,LBGA,arefarmorefavourable.A29%increaseinresults(beforeexchangerateimpacts)fromLBGAwerebetterthanexpected,but with declining results from construction materials offsetting some of the gains, overall, Boral’s earnings from Asia decreased by A$5 million to A$7millionin2007/08.

LBGA’sleadingplasterboardposition in Asia continues to strengthenthroughvalue-addinggrowth initiatives. A total of US$70millionwasinvestedintonewplantsinDangjin(Korea),Chengdu(China)andRajasthan(India)withcommissioningof these plants completed in2007/08.InAugust2008,LBGAannouncedafurtherUS$48 million investment inBaoshan(China).LBGAispositionedwelltotakeadvantage of solid growth in theregionofmorethan10% perannuminmostmarkets.

Significant energy, fuel and other cost increasesAcross our entire portfolio of businesses in Asia, in the USA and in Australia, we have been feeling the impacts of higher input costs including record high energy and fuel prices, which peakedinJune2008.Oilpricesare highly volatile but we are assuming energy and fuel prices will stay at high levels and we are focused on recovering those costs through price increases and levies.

Duringtheyear,ourcostbaseincreased by A$284 million including higher fuel and energy costs, raw materials and labour costs.Thisincreaserepresentsanaverage6.5%increaseonour compressible costs, which is higher than any year since demerger.

Wearestronglyfocusedonrecoveringextraordinarycost increases through price increasesinAustralia.Thuswehave announced a second round of price increases for concrete

“ThedramaticdeclineinUShousingactivityisa‘generational’downturn.Some45%belowitspeakin2006,theUSAhasnotexperiencedsucha severe decline in housing activity for at least 25 years.Thisisnot business as usual.”

RodPearse,CEOANDMANAGINGDIRECTOR

8

ManagingDirector’sReviewcontinued

of$12.50percubicmetre,forquarryproductsof$1-$3pertonne,andforcementof$15pertonne,effectiveAugust-September2008.Wehavealsoannounced price increases for bricks,rooftiles,plasterboardand timber products.

A focus on reducing fuel and energy costs is also continuing with a comprehensive alternative fuels strategy underway to reduce reliance on fossil fuels and importantly to reduce costs. Overallaround30%ofourenergy consumption in the US Bricksbusinessistargetedtobesourced from alternative fuels.

Global credit crisisA global credit tightening also addedtotheextraordinaryeconomic headwinds experiencedin2007/08.Diminishedliquidityandhigherborrowing costs flowed through to corporate Australia.

Wehavefocusedon improving cash management, with cash flow from operationsupby$100million to$582millionin2007/08. Stay-in-businesscapitalexpenditurewasmaintained at70%ofdepreciation.

InApril2008,wecompletedtheissuance of US$382 million of 10and12yearunsecurednotesin the US private placement market.InAugust2008,wereplacedaUS$600millionnotefacilityexpiringinAugust2009

withaUS$700millionfacilityexpiringinAugust2011.

Because of Boral’s strong cash flows and balance sheet, we were well positioned to undertakevalueaddingcapitalmanagement initiatives during theyear.InApril2008,wecompletedanoff-marketsharebuy-backof$114million,or3.3%ofissuedshares,at$5.65per share. Our balance sheet remains robust, with gearing (debt/equity)of52%stayingwithinourtargetrangeof40%to70%.

Introduction of an Australian emissions trading schemeInJuly2008,theAustralianGovernmentissuedaGreenPaperindicatingitspreferredoptions for an emissions trading scheme(ETS),whichithasnamedaCarbonPollutionReductionScheme.TheintroductionofanETSisnot business as usual.

WesupporttheintroductionofanETStoreducegreenhousegasemissions.Wearehowever concerned about the potential unintended economic consequences of a poorly designed scheme, especially onemissions-intensivetrade-exposed(EITE)industriessuchasthecementindustry.Itiscritical that Australia does not adoptanETSandanemissionstarget which will undermine our competitiveness compared to trading partners who have not

takensimilarinitiativeswhichwill serve to drive investment and emissions offshore.

Therearemanyviewsonhowascheme could best be designed toavoidthis.Wesupporttheprovision of full compensation toEITEindustriesforemissionsabove a threshold of emission costsof3-5%ofvalueadd(profitspluslabour).ThisoptionstillseesEITEindustrieswearinga significant share of the cost and abatement burden but it provides greater investment certainty and gives industry a better chance to continue to effectively compete with imports and to invest for the future.

Outlook for 2008/09Manyoftheextraordinarychallenges that we faced in 2007/08willstaywithusin2008/09.

WeexpectAustraliandwellingstarts to be broadly in line with lastyearataround155,000starts but a further decline in housing affordability in 2008 andhighinterestratesmakethisquite uncertain.

Ifhousingactivityholdsup,BuildingProductsprofitswillremain steady, with effective price and cost management offsetting the impact of furthersofteninginWesternAustralia and the entry of a new competitorintotheWesternAustralianclaybrickmarket.

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Weanticipateincreasednon-dwelling and infrastructure activityoutsideNewSouthWaleswhichwillfavourablyimpact Construction Materials businessesinAustralia.Thealready announced price increases should offset cost increases. Construction Materials earnings from Australia shouldbestrongerin2008/09.

MarketforecasterscurrentlyexpectUShousingstartstobearound900,000in2008/09compared to annualised starts ofaround1.0millionintheJunehalfof2008.Whilstlower volumes will adversely impactbrickandrooftilesalesvolumes and earnings, increased benefits from significant cost reductionandnetworkefficiencyprograms will be delivered. US construction materials marketsareexpectedtobeweaker.Overall,USearningsareexpectedtobelowerin2008/09.

Weexpectcontinuedcompetitivemarketconditionsand input cost pressures in Asia, particularly in construction materials.

Wehavetargetedtodeliveroperating cost improvements from performance enhancement programsofatleast3%ofcompressible costs, and benefits from growth programs will again enhance earnings.

Itistooearlytocommentfurtheron2008/09expectedfinancialoutcomes.Wewill provide an update for shareholders on trading conditionsattheAnnualGeneralMeeting on 24 October 2008.

Managing the business in a sustainable wayWehavemaintainedmomentumaround our sustainability agenda despitetheexternalchallengesfacedin2007/08.Ourcurrentsustainability priorities, goals and performance are detailed in Boral’s separate Sustainability Report.

Safety remains the highest of priorities across Boral. In2007/08,Boral’ssafetyperformance continued to improve.LTIFRof2.5fortheyearwasan11%improvementon the prior year, and percent hours lost also reduced by 11%to0.08.Thisimprovementwaspleasing.Itwas,however,overshadowed by the death of an employee in South Australia in a heavy vehicle accident in December2007.Wedeeplyregret this tragic accident and remain focused on eliminating all accidentsfromourworkplaces.

IcommendthefocusandhardworkofBoral’smanagementand employees, particularly their commitment and persistence in challenging times.

Rod Pearse CEOandManaging Director

“Despitetheshort-termimperativetostreamlinethe business to reduce costs and minimise the impacts of the downturn, we continue to manage the business for the longer term.”

RodPearse,CEOANDMANAGINGDIRECTOR

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FY04

FY05

FY01

FY02

FY03

FY06

FY07

FY08

4,15

0

4,30

5

3,48

9 3,83

1

4,76

7

4,90

95,

199

3,28

0

FinancialResults

SUMMARyOFFINANCIALRESULTS

A$ million unless stated

yEARENDED30JUNE 2008 2007 %CHANGE

Revenue 5,199 4,909 6EBITDA1 688 762 (10)EBIT1 448 531 (16)Netinterest 112 111 1Profitbeforetax1 336 420 (20)Tax1 90 122 (26)Minority interest 1 0Underlying profit after tax1 247 298 (17)

Netsignificantitems 4 0Profit after tax 243 298 (19)

Cash flow from operating activities 582 482 21Grossassets 5,895 5,817 1Fundsemployed 4,425 4,470 (1)Liabilities 2,985 2,829 6Netdebt 1,515 1,482 2Growthandacquisitioncapitalexpenditure 327 226 45Stay-in-businesscapitalexpenditure 169 192 (12)Depreciation 240 231 4

Employees 15,928 16,194 (2)Sales per employee, $ million 0.326 0.303 8Netassetbacking,$pershare 4.96 4.98Nettangibleassetbacking,$pershare 4.41 4.41EBITDAmarginonsales1,% 13.2 15.5 (15)EBITmarginonsales1,% 8.6 10.8 (20)EBITreturnonfundsemployed1,% 10.1 11.9 (15)Return on equity1,% 8.5 10.0 (15)Gearing(netdebt/equity),% 52 50 Interestcover1, times 4.0 4.8Underlying earnings per share1, ¢ 41.4 50 (17)Dividendpershare,¢ 34.0 34.0 Safety: Losttimeinjuryfrequencyrate 2.5 2.8 Recordableinjuryfrequencyrate 26.7 27.8

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1.Excludinggoodwillandtaxprovisionadjustments. Fy05resultsonwardsrestatedtoreflecttransitiontoA-IFRSaccountingstandards.

2.IncludesBoral’sshareofrevenuesfromAsiaPlasterboardandMonierLifetilejointventures.

Share of revenue2 by market EBITDA by segment

Sales revenue $m EBITDA1 $m Profit after tax1 $m Earnings per share1 c

Share Price

Construction Materials, Australia

USA

Asia

Building Products, Australia

Australian dwellings

Australian engineering and construction

USA engineering and construction

USA non-dwellings

USA dwellings

Asia

Australian non-dwellings

Other

FY04

FY05

FY01

FY02

FY03

FY06

FY07

FY08

794

794

531

672

823

762

688

451

FY04

FY05

FY01

FY02

FY03

FY06

FY07

FY08

370

370

192

283

362

289

247

153

FY04

FY05

FY01

FY02

FY03

FY06

FY07

FY08

63.8

63.4

33.7

49.1

61.7

50.0

41.4

27.0

FY04

FY05

FY01

FY02

FY03

FY06

FY07

FY08

4,15

0

4,30

5

3,48

9 3,83

1

4,76

7

4,90

95,

199

3,28

0

Feb

08

Feb

00

Aug

00

Feb

01

Aug

01

Feb

02

Aug

02

Feb

03

Aug

03

Feb

04

Aug

04

Feb

05

Aug

05

Feb

06

Aug

06

Feb

07

Aug

07

Boral

ASX 100

ASX 100Index$

Aug

08

0

2

4

6

8

10

0

2000

4000

6000

8000

10000

Heading

12

year ended 30 June 2008 2007 change

A$ million unless stated %

Sales revenue 2,960 2,549 16EBITDA 489 454 8EBIT 351 318 10Capitalexpenditure3 180 169 6Fundsemployed3 2,310 2,271 2EBITDAreturnonsales,% 16.5 17.8EBITreturnonsales,% 11.9 12.5EBITreturnonfundsemployed,% 15.2 14.0Employees,number 5,798 5,838 (1)Revenue per employee 0.511 0.437 17

PerformanceStronger asphalt, quarries, cement and lime •volumes were underpinned by high levels of non-dwellingsandinfrastructuremajorprojectactivityinallstatesexceptNewSouthWales.

Improvementsinconcrete,quarriesand•cementpricingtogetherwith$88mofPEPcostreductions contributed to the result.

EBITDAmarginof16.5%wasdowndueto•higher input costs.

QuarryEndUse(QEU)contributed$54mof•EBIT($56minprioryear).

year ended 30 June 2008 2007 change

A$ million unless stated %

Sales revenue 1,357 1,275 6EBITDA 168 151 11EBIT 114 99 15Capitalexpenditure3 125 127 (1)Fundsemployed3 1,178 1,114 6EBITDAreturnonsales,% 12.4 11.8EBITreturnonsales,% 8.4 7.8EBITreturnonfundsemployed,% 9.7 8.9Employees,number 4,080 4,107 (1)Revenue per employee 0.333 0.311 7

PerformanceWhilstNewSouthWaleshousingactivity•remainsveryweak,aliftinactivityinQueenslandandSouthAustraliaoffsetweakerhousingstartsinWesternAustralia.

Stronger pricing outcomes were reported •acrossallbuildingproductsand$29mofPEPcost reduction were delivered.

Earningsincreasedinmostbusinessesexcept•bricksduetolowervolumesinWesternAustralia and temporary plant closures.

Construction Materials, Australia BuildingProducts,Australia

EBITDA1 $mShare of External Revenue EBITDA1 $m Share of External Revenue

SUMMARyOFREPORTINGGROUPS

Concrete

Asphalt

Cement division*

QEU

Other

Quarries38%

13%

22%

2%

6%

19%

Concrete

Asphalt

Cement division*

QEU

Other

Quarries38%

13%

22%

2%

6%

19%

FY04

FY05

FY01

FY02

FY03

FY06

FY07

FY08

8.7

416

237

7.5

410

454

489

208

335

412

*CementdivisionincludesBlueCircle(excl.internalsalestoBoralbusinesses),DeMartin&GaspariniandFormwork&Scaffolding

Bricks

Masonry

Australian Plasterboard

Timber

Windows

Roofing22%

9%

9%

12%

20%

28%

Bricks

Masonry

Australian Plasterboard

Timber

Windows

Roofing22%

9%

9%

12%

20%

28%

FY04

FY05

FY01

FY02

FY03

FY06

FY07

FY08

191

128

162

151

168

110

164

202

13

USA Asia

year ended 30 June 2008 2007 change

us$ million %

Sales revenue 607 699 (13)EBITDA 10 102 (90)EBIT (25) 75 (133)A$millionSales revenue 671 883 (24)EBITDA 11 129 (91)EBIT (27) 95 (129)Capitalexpenditure3 180 100 (81)Fundsemployed3 789 813 (3)EBITDAreturnonsales,% 1.7 14.6EBITreturnonsales,% (4.0) 10.7EBITreturnonfundsemployed,% (3.4) 11.6Employees,number 2,208 2,503 (12)Revenue per employee 0.304 0.353 (14)

Performance UShousingstartsweredown27%to1.13m•comparedto1.55mstartsinFy07andover2.0mstartsinFy06.

Lowervolumes,increasedrawmaterialcosts,•andone-offcoststoreconfigureproductionnetworkscontributedtotheseverefallinearnings.

Priceshelddespitevolumepressures.•

US$24mofPEPandothercostsavingswere•delivered. Significant cost reduction initiatives continue to be implemented.

Oklahomaconstructionmaterialsacquisition•favourably impacted the result.

year ended 30 June 2008 2007 change

A$ million unless stated %

Sales revenue 191 183 5EBITDA4 16 21 (22)EBIT4 7 12 (45)Fundsemployed3 285 376Returnonfundsemployed,% 2.3 3.2

Performance TheBoral/LafargeAsianplasterboardJV,LBGA,•contributedanequityaccountedprofitaftertaxof$18.1m,whichwas12%abovetheprioryear.

BeforeexchangerateimpacttheLBGAresult•wasup29%year-on-yearinUSdollars,reflectingcontinuedmarketimprovementstogether with price lifts, cost reductions and growth benefits.

Construction Materials results were significantly •down.InIndonesiavolumeswereupbutpriceswereflatandcostsincreasedsignificantly.InThailand,volumesweredownby1%andpriceswere down at the same time as cement and diesel costs continued to increase.

WithconditionsremainingdifficultinThailand•the$31.9millionofgoodwillwhicharoseonacquisition of the business in July 2004 was written off during the year.

IncludesBoral’sAsianplasterboardjointventurewithLafarge2andBoral’sIndonesianandThailandconstructionmaterialsbusinesses.

Share of External Revenue Revenue $m EBIT1 $m

*MonierLifetile&TrinidadJVsareequityaccounted–Boral’sshareofrevenuedoes not appear in consolidated accounts but is included in the revenue pie chart.

EBITDA1 $m

NOTES:1.EBITDAandEBITresultsfromFy05onwardshavebeenadjustedforA-IFRS2.Boral’sprofitsfromLBGAareequityaccountedandareafterfinancingand

tax.Boral’sshareofrevenuefromtheLBGAjointventuredonotappearinconsolidatedaccountshowever,Boral’sshareofLBGArevenuesisincludedintherevenuebarchartforAsiafromFy01onwards.

3.Capitalexpenditureandfundsemployedincludeacquisitions4.TheAsiaresultexcludesthe$31.9mwrite-offofThailandgoodwillinFy08

Bricks

Concrete roof tiles*

Construction materials

Fly ash

Clay roof tiles*51%

4%10%

16%

19%

Bricks

Concrete roof tiles*

Construction materials

Fly ash

Clay roof tiles*51%

4%10%

16%

19%

FY04

FY05

FY01

FY02

FY03

FY06

FY07

FY08

177

155

219

129

11

144 15

7

151

FY04

FY05

FY01

FY02

FY03

FY06

FY07

FY08

22

20

23

127

4

24

29

FY04

FY05

FY01

FY02

FY03

FY06

FY07

FY08

300

210

364

396 41

1

98

227 24

1

14 “ Across our construction materials businesses we have been facing acute cost pressures that threaten to erode margins and profitability. Strong commodity prices (particularly steel and diesel) havehurtus.Wecompetewithresourcescompaniesforpeopleand other inputs and this has also added to the cost pressures. Wehavehadtoworkveryhardtorecovertheextraordinarycostincreases and we have been doing that through focused cost reduction programs and by announcing out of the ordinary price increasestothemarket.”

John Douglas, ExECUTIVEGENERALMANAGER

In 2007/08 sales from Australian Construction Materials (ACM) were around 16% higher than the prior year. Performance was underpinned by strong trading conditions including strong non-dwelling and infrastructure activity, particularly in the resource rich states of Queensland, South Australia and Western Australia, and from our participation in Melbourne’s EastLink project.

Robustmarketconditionsinthese states, together with effective price management and disciplined cost reduction programs, more than offset weakermarketconditionsinNewSouthWales.

Boral’s concrete volumes were3%higherthanlastyear.Thiswasduelargelytoourparticipation in infrastructure activity and was despite the ongoing difficult trading conditionsinNewSouthWaleswhere detached dwelling construction activity remains at40-yearlowlevels.Strongpricing outcomes largely offset higher production and cartage costs.

Asphalt performed very strongly during the year with higher volumesunderpinninga26%liftinrevenue.Theimprovedresultwas driven by high levels of infrastructure activity, together withafavourableproductmix.Margins remained at historically high levels despite bitumen cost escalation.

Quarryvolumeswere10%higher than last year due to concreteandasphaltpull-through and participation in a number of infrastructure projects.Highfuelcostsalsoimpactedcosts.Thesecostpressures were largely offset by price increases and cost reduction initiatives.

Boral’sQuarryEndUse(QEU)businesscontributed$54millionofEBIT.Thisyear,QEUearningscamefromtheGeorge’sFair(Moorebank),Nelson’sRidge(Greystanes)andSouthernEmploymentLand(Greystanes)developments,the sale of land at a number oflocationsincludingGillman(South Australia) and from the DeerParkWesternLandfilloperation.

OutlookWeanticipatethathighlevelsofnon-dwellingandinfrastructure activity will continue to favourably impact ACMduring2008/09.Concreteand quarry price increases that wereannouncedeffective1April 2008 will continue to flow throughin2008/09,augmentedby additional increases of $12.50percubicmetreforconcreteand$1-$3pertonnefor quarry products, which were announcedeffective1August2008.QEUforecastearningsofaround $50 million will again be weighted heavily to the second halfof2008/09.

Australian Construction Materials

Large scale infrastructure projects have been a key source of revenue for ACM, with growth in this segment forecast to continue. Major projects for which Boral is currently supplying include the Gateway Bridge in Brisbane, the Deer Park Bypass in Melbourne, the Sturt Highway in South Australia, the Hume Highway upgrade between NSW and Victoria, and the F3 upgrade in NSW. ACM has significant capacity and capability to meet the demands of such projects, as demonstrated by our successful participation in the EastLink motorway project in Melbourne.

15“Themostimportantchallengeforusistoensurethelongtermsustainability of the cement industry in Australia. Cement is emissions-intensiveandtrade-exposedandtheintroductionofanemissions trading scheme is a significant event. A well designed scheme should preserve Australia’s competitiveness, avoid carbon leakageandmotivateactionstofurtherreduceemissions.”

Phil Jobe, ExECUTIVEGENERALMANAGER

Blue Circle Cement volumes were up 6% on last year, underpinned by a substantial lift in Queensland and steady but strong volumes in Victoria. In New South Wales, core cement volumes were up marginally but the New South Wales business benefited from increased wholesale and interstate sales. Average cement prices were up 3%.

Limevolumesimprovedby32%,primarilydrivenbyincreased usage intensity by the steel sector and lime prices were9%higher.

BlueCircle’sEBITDAimproveddue principally to increased volumes and prices as well as improvedkilnoperatinglevels.

Formwork&Scaffoldingexperiencedstrongervolumesduring the period however, the business was impacted by pricingpressureandone-offcosts resulting from branch rationalisationandstockwrite-downs.Thescaleefficienciesthatareexpectedfromthisprogram are necessary because of lower prices driven by low cost imports predominantly from China. Scaffolding utilisation increased during the period. EBITDAwaslower.

DeMartin&Gasparinireportedhigher revenues and relatively steady margins.

EBITDAfromBoralWindowswas up on last year due to higher prices, ongoing tight cost controls and stronger volumes. Revenues increased with stronger sales in South Australia andVictoriainparticular.

Construction Materials results in Asia were significantly down fortheperiod.WhilstconcretevolumesinIndonesiaincreasedby30%,includingmarketshare recovery, prices were flat in an environment where costs increased significantly, particularly diesel and cement. At the end of the year, concrete pricesinIndonesiaincreasedsignificantly resulting in an improved level of margins and profitability.

Thailandconcretevolumeswereslightlydown,withmarketsharemaintained, however, political uncertainty continued to impact largeinfrastructureprojectsspecifically and construction generally.Marginsqueezewasexperiencedaspricesreducedat the same time as cement and diesel costs continued to increase.During2007/08,wewrote-offthe$31.9millionof goodwill which arose on acquisition of the business in ThailandinJuly2004.

OutlookCement demand in Australia should remain well supported by expectedcontinuedstrengthinnon-dwellingsandinfrastructureactivityoutsideofNewSouthWales.Globalcementproduction costs have increased sharply, particularly coal and other energy costs, which has resulted in a higher import parity price, despite the appreciation oftheAustraliandollar.Thishas provided headroom for an increase in cement prices inAustralia.Priceincreasesrangingfrom$10to$15pertonne were implemented on 1September2008.Tradingconditionsareexpectedtoremain challenging in Asia.

Cement

The $85 million (total investment) upgrade of the cement capacity of Boral’s joint venture Sunstate Cement business in Queensland is underway and is expected to continue through to June 2009. The project will see clinker grinding capacity lift by 50% to 1.5 million tonnes p.a together with additional clinker, cement and fly ash storage capacity to meet growth in market demand in Queensland.

16 “OurbusinessesarefairlyheavilyexposedtotheAustralianhousingmarket,whichiscontinuingtotrackwellbelowunderlyingdemandlevels. On the east coast, we have been running our plants at sub-optimallevelsforthepastthreeorfouryears,inanefforttomatchproductiontosalesvolumes.Weareusingperformanceenhancement programs and price management to try to offset some of the lost profitability that comes with low volumes in a highfixedcostbusiness.”

Keith Mitchelhill, ExECUTIVEGENERALMANAGER

Clay&ConcreteProductsDemand for Clay & Concrete Products is primarily driven by Australian dwelling construction, particularly detached housing. Again this year, market conditions varied widely between different states. Total Australian dwelling approvals were up 4% on the prior year, with detached housing starts up 3%. However, the divisions two largest markets were down. Western Australia was down 13% and New South Wales was down 1% to 40 year low levels.

DetacheddwellingactivityinQueensland,VictoriaandSouthAustraliawereallup.Dwellingstartswerearound155,000startsin2007/08,wellbelowunderlying demand levels of around185,000perannum.

Revenueswereup3%onthe prior year driven by a combination of higher selling prices but lower volumes. Duetotheselowervolumes,earnings for the division were slightly down on the prior year.

Brickvolumesweredown2-3%nationally as declining conditions inWesternAustraliaoffsetimprovements in all other states. Rooftilevolumeswereup9%nationally driven by increases inallstatesexceptNewSouthWales.Masonryvolumeswereup1%withdeclinesinNewSouthWalesandVictoriaoffsetby increases in other states. Pricingoutcomeswerepositive

across all businesses. Average pricesimprovedbyaround3%inBricks,1-2%inRoofTiles,andby2%inMasonry.Marketshares were broadly stable throughout the year.

Tomatchproductionlevelstotheweakmarketconditionsa series of plant slowdowns and/orextendedtemporaryshutdowns continued across the EastCoast.WesternAustraliawas adversely impacted by marketdrivenlowerproductionvolumes and unscheduled production interruptions as a result of a clay shed fire and electricity supply interruptions resultingfromtheVaranusIslandgasfire.InRoofing,benefitsarose from the Springvale (Victoria)andCarolePark(Queensland)concretetileplants which have both been upgraded in recent years.

Majorbusinessimprovementprograms continued to deliver inlinewithexpectationsintheEastCoastBricks,RoofingandMasonry businesses.

OutlookWeexpect2008/09dwellingcommencements in Australia to be similar to the forecast level ofaround155,000for2007/08.Earningsareexpectedtodeclinein2008/09drivenbyfurthersofteninginWesternAustraliaresidential dwelling activity and the entry of a new competitor intotheWesternAustralianclaybrickmarket.Effectivepriceand

cost management will provide someoffsettothisdecline.Fuelpricelevies,effective1October2008, have been announced forbrick,rooftilesandmasonryproducts and price increases have also been announced in bricksandroofingwhichwillbenefitthe2008/09result.

During 2008/09, 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 the Cannington and Jandakot production sites, releasing them for redevelopment. The new plant will manufacture a wide range of walling and landscaping products at lower costs. It will also deliver improved environmental and safety outcomes.

17

Whilst market activity levels remain low, Timber’s revenues increased 11% to $273 million during the year, driven primarily by price rises and stronger demand for structural timber products in Queensland, formwork demand from the buoyant Australian concrete market, and an increase in flooring demand in the alterations and additions (A&A) market, particularly in the first half of the year.

Overall,Timberproductpricesimproved6%onaverageasa result of price increases and a favourable product mix.Increasedlogcostsandwage escalation pressures were more than offset by price increases, including an improvement in residue prices and manufacturing efficiency gainsatHeronsCreekandattheengineered flooring operation at Murwillumbah.ThisresultedinTimberdeliveringasignificantimprovementinEBITDAcompared with the prior year, driven primarily by improved softwood and hardwood prices, manufacturing costs and increased sales volumes.

Manufacturing performance continues to improve following the capacity investments during the year at the Oberon softwood mill and the upgrade atHeronsCreekcompletedintheprioryear.Theengineeredflooring operation also showed

significant improvement during the year through improved plantefficiency.However,duetotheoverallmarketsoftnessinventory levels of hardwood and engineered flooring increasedduringtheyear.WithdemandintheNewSouthWalesA&Amarketweakeningin the second half of the year following interest rate rises, cost reduction was the focus.

InJulyandAugust2008,BoralTimberceasedproductionatthehighercostSouthGraftonandWalchahardwoodmillsduetotheweakmarketconditionsexperiencedinNewSouthWalesandhigherinputcosts.

OutlookDemandforsoftwoodandhardwood timber products is expectedtoremainrelativelysteadyin2008/09withactivityinNewSouthWalesremainingdepressed and a softening in QueenslandvolumesoffsetbyaliftinVictoria.Supplyof Australian hardwood and softwood timber products is expectedtoremainconstrainedin the year providing a favourable pricing environment, which is helpful in recovering higher costinputs.PEPcostreductioninitiatives and inventory reductionwillbeamajorareaoffocusfor2008/09.

“OurTimberbusinessisprimarilyNewSouthWalesbasedandis heavily reliant on the housing sector. Because of the long and deepdownturninNewSouthWaleshousingwehaveworkedhard to develop new products, increase interstate sales, reduce manufacturing costs and increase prices to recover cost increases. Thegreatestchallengeindoingthishasbeenthedramaticincreaseinwoodfibreandextractioncosts.Insomepartsofourbusiness,wehaveseenwoodsupplycostsincreasebyover10%duringtheyearwithproductpricestrackingbelowthislevel.”

BryanTisher,ExECUTIVEGENERALMANAGER

Timber

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.

18 “Deliveringongrowthinvestmentsingrowthmarketsisourcurrentpriority.WehavefinishedcommissioningournewplasterboardplantinQueenslandandthework-upphaseisgoingverywell.TheQueenslandhousingmarket,however,wasabitsoftertowardstheendof2007/08,whichcouldcreatevolumepressuresintheshorterterm.InAsia,weareveryhappywithourgrowthinvestmentsandthe improved performance of the business.”

Ross Batstone, ExECUTIVEGENERALMANAGER

Despite continued weakness in New South Wales, Australian demand for plasterboard grew by around 2-3% in the year, reflecting stronger new house construction in Queensland. Sales revenue from the Australian business was up 7% to $376 million, assisted by a 2% lift in average plasterboard selling prices, stronger volumes of plasterboard, cornice and jointing compounds which we manufacture, and higher volumes of resale products.

EBITDAfortheyearwassteady despite stronger sales revenues. A net $3 million restructuring gain in the half year toDecember2007wasoffsetbyone-offcostsinthehalfyearto June 2008 associated with the commissioning of our new Brisbane plasterboard plant and transitioning production from the existingplant.Costreductioninitiatives helped to maintain underlying margins in the face of inflationary cost pressures.

Construction of our new plant in the Brisbane suburb of Pinkenbawascompletedduringthe year at a net cost of up to $119million,12%abovethenet$106millionasbudgeted.Commissioning was completed

at the end of May 2008 which allowedourexistingplasterboardlineatNorthgatetocloseduringJune 2008 and our mothballed plant in the Adelaide suburb ofGillmantobetakenoutofservice permanently and the land sold.

OurAsianPlasterboardJVwithLafarge,LBGA,recordedanequityaccountedaftertaxprofitof$18.1million,12%abovethesame period last year and after a $2.5 million adverse impact due to the appreciation of the Australian dollar. Underlying US dollarprofitsinLBGAwereup29%year-on-year.LBGAsalesvolumes and revenues lifted inallmarketswithimprovedmarketconditionsinSouthKorea,Thailand,IndonesiaandEastChinaandmarketdevelopment activity assisting growthintheCentralWestofChinaandinVietnam.LBGA’scost improvement program, Excellence2008,resultedinenhanced margins despite transport and energy cost pressures.

OutlookA cyclical uplift in building constructionisexpectedto favourably impact on future plasterboard demand, particularlyinQueenslandandNewSouthWales.However,uncertainty in relation to affordabilitycontinuestoworkagainst any early timing of such uplifts.MarketconditionsinKorea,ThailandandChinaareexpectedtoremaincompetitiveoverthenextyear.However,strong underlying plasterboard demandisexpectedtounderpinlonger term Asian returns.

Plasterboard

LBGA is investing a total of US$48 million to purchase land and to construct a new plant at the Baoshan Industrial Zone in Shanghai, China. The new plant is expected to be in operation in the December 2009 quarter. Plasterboard production capacity will be 34 million m2 p.a. initially with site flexibility to increase capacity in the future. The additional plant will strengthen LBGA’s leading position in East China and position the business well to supply the growing market.

19“2007/08hasbeenthemostdifficultyearforBoral’sUSbusinesses since it began trading in the US some 30 years ago. Demandfromthehousingmarkethashalvedoverthepasttwoyearsandinsomemarkets,activityhasreducedbyasmuchas75%from2006peaklevels.Wehavedramaticallyreducedourworkforce,mothballedplants,andoptimisedplantnetworks.WehavebeenrelentlessaroundreducingoverheadandotherfixedcoststominimisetheimpactsonBoral’soverallprofitabilityduring the US downturn.”

EmerySeverin,ExECUTIVEGENERALMANAGER

In the USA, EBITDA earnings decreased by 90% on the prior year to US$10 million. The result was driven by the continued significant deterioration in housing activity, with US housing starts down 27% to 1.13 million.

Lowervolumes,increasedmaterialcosts,andone-off costs (US$4 million) associated with programs to reconfigureBoral’sbrickandrooftileproductionnetworkcontributed to the severe fall in earnings, particularly in the second half. Cost reduction initiativesincludingnetworkoptimisation aimed at reducing fixedcosts,continuetobeimplementedinthebrickandroof tile businesses, with an expectedincrementalbenefitofUS$31.5millionin2008/09.

RevenuefromBrickswasdownby28%duetoa27%declineinsalesvolumes.Averagebrickpricesreducedby2%duetoalessfavourablemix.Brickplantultilisationaveraged56%downfrom79%in2006/07.EBITDAwassignificantlydownas a result of low volumes and related production inefficiencies, aswellasone-offcostsofUS$2.5 million to reconfigure thebrickplantnetworkandaUS$5millionwrite-downofspecialisedplant.Thestrong cost reduction focus is continuingin2008/09,withtargeted incremental benefits of US$24 million.

MonierLifetile(MLT)reportedalossofUS$21millioncomparedto a US$4 million loss last year. Whilstaverageconcreterooftile prices for the year were down5%,June2008priceswereup7%year-on-year.Salesvolumesweredownby42%.Unit production costs increased due to production inefficiencies, with plant utilisation down to 27%comparedto48%intheprioryearandaround75%in2005/06.

Revenue of US$25 million from ClayRoofTileswasdown8%on last year because of lower volumes more than offsetting a 4%increaseinaveragesellingprices.Volumeswere11%lower.EBITDAwaswellbelowlast year as costs were impacted by lower production to avoid inventory build.

ProfitfromBMTIwaslowerthanlastyear.Higherpricesandnewproduct initiatives did not offset lower volumes.

Revenue from the US Concrete&Quarrybusinesses(DenverandOklahoma)ofUS$125millionwas61%upon the prior year primarily due to the newly acquired OklahomaoperationsinAugust2007;EBITDAincreased.InDenver,concretevolumeswere10%lowerthanlastyearascommercial and infrastructure sales only partially offset the impactofaweakresidentialmarketandpoorweatherconditions.

OutlookItremainsunclearwhenaturnaround in US housing activitymayoccur.MarketforecasterscurrentlyexpectUS housing starts to be around 900,000in2008/09comparedto annualised starts of around 1.0millionintheJunehalf2008.Brickutilisationisaround40%atthestartof2008/09andinconcrete roof tiles it remains at around27%.Lowervolumeswilladverselyimpactbrickandrooftile sales volumes and earnings. US construction materials marketsareexpectedtobeweakerin2008/09comparedwith2007/08.Overall,USearningsareexpectedtobelowerin2008/09.

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 Western housing markets recover, it will operate at high utilisation rates during the downturn, allowing higher cost capacity at Corona to be mothballed.

1 One square=100 square feet.

USA

20

Kenneth J Moss, AM (63)NON-ExECUTIVECHAIRMAN.DrMossjoinedtheBoralBoardin1999andbecametheChairmanofDirectorsin2000.HeistheChairmanofCentennial Coal Company LimitedandaDirectorofGPTRELimitedandMacquarieCapitalAllianceGroup.Hewas previously the Managing DirectorofHowardSmithLimitedandisexperiencedinbuilding materials businesses. Hehasadegree(Honours)andaPhDinmechanicalengineeringfromNewcastleUniversity.DrMossisamember of the Remuneration Committee.

Rodney T Pearse (61)MANAGINGDIRECTOR.MrPearsebecametheManagingDirectorandChiefExecutiveOfficerofBoralinJanuary2000.HejoinedBoralastheManagingDirector,Construction Materials group in 1994.HeisaBoardMemberof the Business Council of Australia.Hehasacommercedegree(Honours)fromtheUniversityofNewSouthWalesandanMBA(HighDistinction)fromHarvardUniversity.

NON-EXECUTIVE DIRECTORS

Elizabeth A Alexander, AM (65)MsAlexanderjoinedtheBoralBoardin1994.SheistheChairmanofCSLLimitedandaDirectorofDExUSFundsManagementLimited.Sheisa chartered accountant, and amemberoftheTakeoversPanelandFinancialReportingCouncil. She has a Commerce degree from the University of Melbourne.MsAlexanderisthechair of the Audit Committee.

J Brian Clark (59)DrClarkjoinedtheBoralBoardinMay2007.Hehasexperienceasanon-executiveDirectorinAustraliaandoverseas.HeisaDirectorofAMPLimitedandamemberoftheMerrillLynchAustralian Advisory Board. Hespent10yearswiththeUK’sVodafoneGroupinseniorexecutivepositionsinAustraliaandoverseas.HehasaPhDin physics from the University ofPretoriaandcompletedthe Advanced Management ProgramatHarvardBusinessSchool.DrClarkisamemberofthe Remuneration Committee.

E John Cloney (67)MrCloneyjoinedtheBoralBoardin1998.HeistheChairmanofQBEInsuranceGroupLimitedandaDirectorofMaple-BrownAbbottLimitedandABNAMROAustraliaHoldingsPtyLimited.Hiscareerwas in international insurance and he was previously the ManagingDirectorofQBEInsuranceGroupLimited.Heis a fellow of the Australian InstituteofManagementandtheAustraliaandNewZealandInstituteofInsuranceandFinance.MrCloneyistheChairman of the Remuneration Committee.

Robert L Every (63)DrEveryjoinedtheBoralBoardinSeptember2007.HeistheChairmanofIlukaResourcesLimitedandDeputyChairmanofWesfarmersLimited.HeheldseniorexecutivepositionswithTubemakersofAustraliaandBHPandwastheManagingDirectorandCEOofOneSteelLimited.Hehasasciencedegree (honours)

and a doctorate of philosophy (metallurgy) from the University ofNewSouthWales.DrEveryisamemberoftheRemuneration Committee.

Richard A Longes (63)MrLongesjoinedtheBoralBoardin2004.HeisaDirectorofAustbrokersHoldingsLimitedandMetcashLimited.Heisalawyerandanon-executiveDirectorofInvestecBank(Australia)Limited.HewaspreviouslyanexecutivewithInvestecandapartnerofFreehillslawfirm.Hehasarts and law degrees from the University of Sydney and a MBA from the University of NewSouthWales.MrLongesis a member of the Audit Committee.

J Roland Williams, CBE (69)DrWilliamsjoinedtheBoralBoardin1999.HeisaDirectorofOriginEnergyLimited.Hehad an international career withtheRoyalDutch/ShellGroupfromwhichheretiredasChairmanandChiefExecutiveofShellAustralia.Hehasachemical engineering degree (Honours)andadoctorateofphilosophy from the University ofBirmingham.DrWilliamsis a member of the Audit Committee.

BoardofDirectors

21

Remuneration

Fixedremuneration

Short term incentive Other Equitybenefits

Totalremuneration

Proportionperformance

related

$ $ $ $ $K J Moss (Chairman)

20072008

275,400273,958

––

––

30,60054,792

306,000328,750

––

OtherNon-ExecutiveDirectors20072008

554,021632,477

––

––

61,559159,809

615,580792,286

––

RTPearse(ManagingDirectorandCEO)20072008

2,458,3332,708,333

576,0002,269,953

52,15955,626

1,109,8271,628,424

4,196,3196,662,336

40%59%

EXECUTIVES

JMDouglas(ExecutiveGeneralManager,AustralianConstructionMaterials)20072008

671,442754,200

215,897373,618

29,04730,417

82,721122,337

999,1071,280,572

30%39%

PJJobe(ExecutiveGeneralManager,Cement)20072008

711,960759,977

162,697269,446

29,72330,513

115,236146,891

1,019,6161,206,827

27%34%

KAMitchelhill(ExecutiveGeneralManager,Clay&ConcreteProducts)20072008

636,803685,667

94,732383,227

28,47029,274

104,290134,139

864,2951,232,307

23%42%

WRBatstone(ExecutiveGeneralManager,Plasterboard)20072008

616,217682,320

244,015290,231

26,85127,793

102,740129,698

989,8231,130,042

35%37%

BMTisher(ExecutiveGeneralManager,Timber)20072008

500,940556,133

81,848324,552

20,1839,046

71,43091,692

674,401981,423

23%42%

ESSeverin(President,BoralIndustriesInc)20072008

744,533693,300

156,354243,723

308,232265,324

151,869194,174

1,360,9881,396,521

23%31%

KMBarton(ChiefFinancialOfficer)20072008

635,937697,667

144,320292,569

28,45629,474

95,513127,480

904,2261,147,190

27%37%

MBScobie(GeneralManager,CorporateServices&CompanySecretary)20072008

518,532551,847

96,696182,083

25,45925,934

77,82496,391

718,511856,255

24%33%

RJTown(GeneralManager,HumanResources)20072008

464,333506,570

75,811154,406

24,68825,289

64,43082,798

629,262769,063

22%31%

AIWarburton(GeneralManager,CorporateDevelopment)20072008

112,090441,667

24,000136,845

7,85525,208

10,01740,191

153,962643,911

22%27%

TOTALKEyExECUTIVEREMUNERATION(excludingManagingDirector)20072008

5,612,7876,329,348

1,296,3702,650,700

528,964498,272

876,0701,165,791

8,314,19110,644,111

––

DetailsofBoral’sremunerationpoliciesandpracticesarecontainedintheRemunerationReportwhichformspartoftheDirector’sReportintheAnnualReview.

22

Sustainability

Several extraordinary factors have coincided to create a particularly challenging business environment in 2008, as outlined on pages 2-3 of this report.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.

Boral’soverridingobjectiveisto‘achievesuperiorreturnsina sustainable way’ in a financial, social and environmental sense.Despiteoperatinginachallengingbusinessenvironment that is not business as usual, we have progressed our sustainability programs and delivered solid performance outcomes.

•Losttimeinjuryfrequencyratedown11%to 2.5•Employeeturnoverupfrom21%to23%•Mainswaterconsumptiondown4.6%to 2.82 billion litres•Greenhousegasemissionsup1%to3.79milliontonnesof CO2-e

•By-productsandwastematerialre-usedorrecycledup3.6%to5.56milliontonnes

23

Working in a sustainable way or towards sustainable development requires us to balance the social, environmental and economic needs of today with the needs of tomorrow.

It’salsoaboutbalancingtheneedsofourstakeholders.Notallofourstakeholderssharethesame point of view, but for us it’s about understanding those viewsandultimatelyworkingtowards an outcome that we believe has the best chance of meeting today’s needs without compromising the ability to meet the needs of tomorrow.

Boral’s comprehensive 2008 Sustainability Report shouldhelpourstakeholdersunderstand the challenges that we face and how we are responding to those challenges.

Our Sustainability Report outlines our strategy, approach, andsustainabilitygoals.Italsoprovides data and information on our performance.

Boral’s sustainability Priorities are consistent with the sustainability issues covered by our internally developed Boral SustainabilityDiagnosticTool(BSDT).

Developedin2000/01,theBSDTassistsBoral’sbusinesseswith the adoption of business practices consistent with the principles of sustainable development.

TheBSDTcomprises20sustainability elements. A performance assessment against each of these elements isundertakenacrossBoral’sbusinesseseverytwoyears.In2001,agoalwassettoreachalevel of “industry specific best practice”by2007.ThisgoalwasachievedwhenthelatestBSDTassessments were completed in October2007.

Contents

It’s not business as usual s1Message from the Managing Director s2Sustainability Priorities s4Managing Sustainability s6Human Resources

Our People s12 Health and Safety s16

Our Environment s18Marketplace and Supply Chain s24Social Responsibility

Our Stakeholders s26 Community Investment s28

Divisional Performance Australian Construction Materials s30 Cement s32 Clay & Concrete Products s34 Timber s36 Plasterboard s38 USA s40

Independent Assurance Statement s42Data and Glossary s43

A copy of Boral’s 2008 Sustainability Report can be found at www.boral.com.au/sustainability or for a printed copy of the report, email corporateaffairs@boral.com.au or phone(02)92206300.

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Sustainability priorities

Health, safety and wellbeing

Employeelosttimeinjuryfrequencyratedown11%to2.5

%hourslostimprovedby11%to0.08

One fatality

Employee and labour relations

91%ofemployeesareengagedorhighlyengaged,up1.5%

Staffturnover23%,upfrom21%

2008EOWAEmployerofChoice forWomen

Communications, awareness and training

2,494employeesparticipatedintrainingprograms offered through Boral’s global teams

Energy conservation and climate change

CO2-eemissionsof3.79milliontonnesCO2-e,up1%

Water conservation, extraction and protection

Mainswateruseddown4.6%to2.82 billion litres

Waste and resource management, recycling and re-use

Re-usedorrecycledbetween43%and100%ofBoral’sownproductionwaste

Wasteandby-productsrecycledorre-usedup4%to5.6milliontonnes

Land protection, remediation and rehabilitation

Quarryenduseactivitiesmaturingeg.DeerParkquarry/wasteservicesoperation

Environment and ecosystem protection

15,050trees/stemsplantedand63,700m2weeded/regeneratedthroughLivingGreenprojects

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Community relations and engagement

$591,500 invested in eight key community programs

$443,000 to Juvenile Diabetes Research Foundation through employee fundraising efforts

Business ethics and corporate governance

1,550 staff undertook online Trade Practices Act training in Australia and 902 staff attended face to face

1,739 employees in the US completed Ethics and Compliance online training

97 employees dismissed for serious breach of policy

External relations and communications

Participating in Carbon Disclosure Project (CDP6)

Government submissions and dialogue on emissions trading and reporting

Feedback from stakeholder groups on Sustainability Report used to improve this report

Strategic sourcing and supply chain

Supply Chain Sustainability Survey for all strategically critical suppliers implemented

Midland Brick awarded 2008 HIA GreenSmart award for Resource Efficiency (for brick recycling from customers sites)

Sales and marketing

Participated in the development of product life cycle analysis

A perception study of 682 consumers shows a 28% increase in the number of people who perceive Boral to be “environmentally responsible”

Boral LimitedABN 13 008 421 761Level 39, AMP Centre50 Bridge Street Sydney NSW 2000GPO Box 910 Sydney NSW 2001Telephone: (02) 9220 6300Facsimile: (02) 9233 6605Internet: www.boral.com.auEmail: info@boral.com.au

Shareholder EnquiriesTelephone: (02) 8280 7133Facsimile: (02) 9287 0303Internet: www.linkmarketservices.com.au Email: registrars@linkmarketservices.com.au

Visit Boral’s website www.boral.com.au for a range of shareholder information and company news, information about Boral’s products and services, historical and general information.