Financial Analysis of Boral Limited for CO5122 Assignment Report

This report provides a comprehensive financial analysis of Boral Limited, a multinational construction materials company. The analysis covers various aspects of the company's financial performance, including its business activities, equity composition, and the relationship between share price and share capital. The report examines the company's debt structure, categorizes its fixed and intangible assets, and reviews its financial operations, including changes in retained earnings, dividend distributions, and share capital. The study assesses the variance in share price and the factors influencing it, such as events after the balance sheet date and strategic decisions like selling subsidiaries. The conclusion synthesizes the key findings, highlighting the impact of financial statement changes on the company's capital structure and share price. The report utilizes the company's annual reports and other financial data to support its findings and conclusions.

Running head: CO5122
CO5122
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Nature of Company Activities.....................................................................................................2
Composition of Company’s Equity.............................................................................................3
Relationship of Share Price and Share Capital............................................................................4
Variance in Share Price...............................................................................................................4
Debt Structure..............................................................................................................................4
Key Elements in Fixed Assets Categories...................................................................................5
Intangible Assets..........................................................................................................................6
Conclusion/Summary......................................................................................................................6
References........................................................................................................................................8

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Introduction
The analysis of the company has been well done by analysing the current business
operations, equity position of the company, share price of the company and its connection with
the equity share capital of the company. In order to well analyse the financial risk that is in
particular associated with the company, the debt structure of the company has been evaluated.
There are various sources of external financing and the same has been well evaluated with the
help of various external sources of finance that are used by the company. It is crucial to note that
the assets of the company has been well evaluated with the help of proportion of fixed assets the
company has and the intangible assets that the company in particular has reported for analysis
purpose. The financial operations of the company has also been reviewed with the help of
retained earnings, dividend distributions and changes observed in the share capital of the
company.
Discussion
Nature of Company Activities
Boral Limited is a multinational company that is into manufacturing and supplying
building and various construction materials. The company is headquartered in Australia and has
its extensive range of operations in the region of Asia Pacific and United States. The company’s
operations is primarily divided into three strong divisions primarily as high performing, well
positioned of construction material business of Boral Australia, the USG Boral which is
considered as a fast growing joint venture in the Plasterboard products in Asia, Middle East and
Australia. The company has a sound employee base whereby around 26,000 employees are

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directly connected with the company. The operations of the company span into 826 buildings
and other construction materials for operating and distributing on sites on a global basis. The
strategy of the business in particular is to harness sustainable growth whereby the Boral
Company would invest in less energy-intensive, lighter weight and more of the innovative
products which will be in turn reducing the exposure to lower growth, energy intensive and other
high cost of operations.
Composition of Company’s Equity
The composition of company’s equity can be well analyzed based on the various
components that are included in the financials of the company and that has been particularly as
issued capital, reserves and retained earnings which forms up the equity section of the company.
The total value of shareholder’s equity of the company was around $5730.8 in the year 2018
which has increased to around $5858.9. The increase in the company’s equity has been primarily
because of the increase in the reserves balance of the company (Annual Reports | Boral, 2020).
Shareholder's Equity
Particulars 2019 2018
Issued Capital 4265.1 4265.1
Reserves 330 155.8
Retained Earnings 1263.8 1309.9
Total Equity 5858.9 5730.8

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Relationship of Share Price and Share Capital
The share price of Boral Limited as on 30 June 2019 was $5.120 per share. There is no
direct relation between the changes in the stock price and the issued and paid up capital of the
entity. This is because the cost of issuing the share capital is the same and there was no
additional capital issued by the entity during the year. Due to the improved share performance,
the company paid dividend during the year (Boral.com. 2020). This resulted in the reduction in
the overall retained earnings of the entity, which ultimately impacted the overall share capital of
the entity. The dividend paid by the entity has resulted in the decrease in the overall share capital
of the entity (About Boral, 2020).
Variance in Share Price
The share price of the entity one month after the end of the financial year is $5.610 per
share (Asx.com.au. 2020). There has been an improvement in the share price during the course of
the month. One of the main reasons for the same is the events occurring after the Balance Sheet
date. Sale of some of the loss making subsidiaries like Midland Bricks and a new business
venture with USG plasterboard combined with the payment of dividends by the entity may have
73%
6%
22%
Shareholder's Equity (2019)
Issued Capital
Reserves
Retained Earnings
74%
3%
23%
Shareholder's Equity (2018)
Issued Capital
Reserves
Retained Earnings

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resulted in an increased demand for the shares of the entity. This demand would ultimately lead
to an increase in the prices of the entity (Shareholder Information, 2020).
Debt Structure
The debt structure of the company can be well analyzed by analyzing the various external
or non-equity financing approach that the company has applied for the purpose of financing the
operations. The debt structure of the company is primarily divided into two key major sections
primarily as current and non-current borrowings (Dividend Information, 2020). The current
borrowings of the company comprises of unsecured loans and finance lease liabilities which was
around $19.2 million which has increased comparatively for the company to around $339.7
Million. On the other hand, the non-current borrowings of the company are also primarily
classified into unsecured loans and finance lease which was around $2526.8 Million in the year
2018 and has increased to around $2,400.5 Million in the year 2019.
Key Elements in Fixed Assets Categories
The key elements in the fixed assets categories of the company has been primarily non-
current assets of the company which has been classified primarily into Investments that are
accounted using the equity method which was around $1,411.3 Million in the year 2018, which

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has in particular decreased to around $1,290.3 Million in the year 2019. The value of property,
plant and equipment saw a slight increase from $2,782mn to $2,880mn in the year 2018-2019.
On the other hand, the value of intangible assets of the company has been around $3,395mn in
2018, which is having the highest weightage has remained almost the same in the year 2019 to
around $3,372mn (Investor FAQ, 2020). It is important to note that intangible assets plays a
dominant role in the overall fixed assets of the company and is primarily composed of goodwill,
trade names, etc. The key elements in the fixed assets of the company can be well shown below:
Intangible Assets
The intangible assets of the company accounted for around $3,372mn and the value of
these intangible assets has been primarily divided into Goodwill which has been accounted by
the company during the acquisition process. The amount of goodwill represents the difference
that is between the cost of acquisition and the fair value of net identical assets acquired. The
amount of goodwill for the company is stated at the cost value less any accumulated losses. The
impairment of goodwill is done by the company on an annual value by looking at the book value
or the recording value and the market value or value in use that it would be creating for the
company, The difference amount in the book value and realizable value is treated as an
impairment cost which is treated as an expense by the company. Intangible assets that are having
an indefinite useful lives are tested annually for impairment. There are several judgment that are

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made by the management of the company in response to identifying, valuation and estimating the
useful lives of the intangible assets of the company.
Financial Operations
In order to well analyze the financial operations of the company it is important to assess
the changes observed in the capital of the company and that can be as follows:
 Changes observed in the Retained Earnings: The retained earnings of the company
has reduced slightly from $1,309.9mn to around $1,263.8 million in the year 2018-2019.
The decrease in the retained earnings of the company has been primarily because of the
decrease in the net profitability of the company which came down from $441mn to
$272.4mn in the trend period of 2018-19.
 Dividend Distributions: The Company did saw a change in the net profitability for the
year 2019, however it is important to note that the same did not affected the dividend
distribution of the company for the year. The dividends paid by the company on a per
share basis has been around 26.5 Cents in both the year 2018&2019, which makes the
total dividend amount to around $310.7mn in both the financial year.

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 Changes in Capital: The changes in the share capital of the company can be well
analyzed with the help of change in total shareholders capital which was around $5730.8
in the year 2018 which has increased to around $5858.9. The increase in the company’s
equity has been primarily because of the increase in the reserves balance of the
company.
Conclusion
The analysis of the Boral Ltd Company in particular has been carried out with the help of
changes in the financial statement and position of the company whereby key reasons behind the
change in capital were in particularly considered. There are various aspects which lead to the
change in the capital structure of the company and these are primarily in the field of changes in
the retained earnings, reserves and issued capital of the company. Variance in the share price of
the company in relation to the financial report presented was also discussed.

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References
Annual Reports | Boral. (2020). Boral.com. Retrieved 11 January 2020, from
https://www.boral.com/news/annual-reports
Boral.com. (2020) Retrieved 11 January 2020, from
https://www.boral.com/sites/corporate/files/media/field_document/ID-18056-BLD-Boral-
FY19-Annual-Report-FINAL.pdf
Asx.com.au. (2020). Retrieved 11 January 2020, from https://www.asx.com.au/asx/share-price-
research/company/BLD
About Boral. (2020). Boral. Retrieved 11 January 2020, from https://www.boral.com/about
Shareholder Information. (2020). Boral. Retrieved 11 January 2020, from
https://www.boral.com/shareholder-information
Dividend Information. (2020). Boral. Retrieved 11 January 2020, from
https://www.boral.com/shareholder-information/dividend-information
Investor FAQ. (2020). Boral. Retrieved 11 January 2020, from
https://www.boral.com/shareholder-information/investor-faq
Financial Calendar. (2020). Boral. Retrieved 11 January 2020, from
https://www.boral.com/shareholder-information/financial-calendar