Boral's financial framework

Boral’s new Financial Framework was articulated in February 2021 and is intended to guide the Group’s decision making and ensure alignment with the interests of our shareholders. The key financial objective of the Financial Framework is to achieve a Total Shareholder Return (TSR) in the top quartile of the S&P/ASX100. To achieve this, Boral is targeting an ‘earnings per share’ growth in the top quartile of the S&P/ASX 100.

To meet these objectives, there are three core pillars to the Financial Framework:

1. Maintaining an optimal capital structure, which means having the right amount of debt for our business. The optimal net debt range of 2-2.5 times EBITDA is where Boral’s cost of capital is at its lowest.
2. Ensuring return on funds employed (ROFE) is greater than our weighted average cost of capital (WACC). Targeting ROFE greater than 10% will help us deliver ROFE >WACC throughout the cycle.
3. Being disciplined about how we allocate our capital. Maintaining an optimal capital structure and achieving ROFE > WACC will generate surplus capital. How we allocate that capital will drive our success.

This means we will:

• reinvest in the business to ensure we maintain a sustainable competitive advantage
• seek to divest assets where we do not have a sustainable competitive advantage and do not see a realistic prospect of building one, and
• return surplus capital to our shareholders in the most efficient form.

The decision taken by the Board to not pay a final dividend for FY2021 reflects a disciplined approach in line with Boral’s Financial Framework. As at 30 June 2021, Boral’s debt was within the targeted range and there was no surplus capital available to return to shareholders. However, following receipt of proceeds from the divestment of Boral North America Building Products, Meridian Brick and the Australian Timber business, the Group will have a significant surplus. In addition, a decision to divest the Fly Ash business in North America has also been announced and once this is complete, it will add to that surplus. Subject to prevailing conditions and other reinvestment opportunities, surplus capital will be available for distribution to shareholders taking into account the availability of franking credits, the prevailing share price and what is in the best interest of shareholders as a whole. It is important to note that if surplus capital was currently available to return to shareholders, Boral does not currently have adequate franking credits available to pay franked dividends. 

Dividend Reinvestment Plan

For information on the DRP, please read the following important documents:

ASX Announcement (10 February) - Re-activation of Dividend Reinvestment Plan (DRP)
ASX Announcement (13 February) - Letters to Shareholders - Re-activation of DRP
Boral Limited - DRP Rules
DRP - Frequently Asked Questions