James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Non-Deal Roadshow (May 2005)
48 slides from James Hardie Industries's roadshow presentation, May 31, 2005
Slide 1: Building On Proven Performance
@) James Hardie James Hardie Building On Proven Performance UK Roadshow May/June 2005
Slide 2: A Growth Focussed Company
@® James Hardie’ A Growth Focussed Company Annual net sales US$1,210m Total assets US$1,089m Operations in North America, South America, Asia Pacific and Europe 3000 employees Market cap US$2.2 billion ASX S&P 50 company Note: Net sales and total assets are at 31 March 2005
Slide 3: Investment highlights
| James Hardie » High growth Unique proprietary technology » Sustainabie competitive advantage » Strong cashflows and balance sheet » Growth not reliant on strong housing market
Slide 4: ®) James Hardie
®) James Hardie
Slide 5: Business Overview
i) James Hardie Business Overview
Slide 6: Product applications
nt i James Hardie External siding/soffit lining Internal wail/floor wet area lining Trim and fascia Ceiling lining and flooring External/internal wall systems Commercial facades Drainage pipes Roofing
Slide 7: Competitive advantages in manufacturing and products
a) James Hardie’ Unique plant engineering and proprietary process technology and product formulations Superior capital cost efficiency — plant capital cost less than ’%% that of competitors Largest, lowest cost manufacturer — plant operating cost 20-30% lower than competitors Only national producer
Slide 8: Research and development
i) James Hardie Capabilities and resources 131 scientists, engineers and technicians US$27 million spend — 2.2% of net sales Core projects new proprietary engineered raw materials = new proprietary product formulations new engineering and proprietary process technologies lightweight and durable prod
Slide 9: Growth strategy
f)|/ James Hardie = Aggressively grow the market Secure differentiated position Generate strong top line growth Win high shares of large segments » Sustain attractive margins
Slide 10: Operations Overview
i) James Hardie Operations Overview 10
Slide 11: James Hardie Business Portfolio
@ James Hardie’ James Hardie Business Portfolio — FY 05 Total Identifiable Sales EBIT'# Assets USA — Established high growth/high 12% 78% 87% return Asia Pacific — Established high return 20% 19% 17% Other — Potential growth opportunities 8% 3% (4%) (Pipes, Roofing, Europe, Chile) * Excludes general
Slide 12: Fibre cement plants in North America
ll : li ene : i a ee Dw lf ii ik S nt iL oo fibre cement in North America JH Plant Design Capacity Flat Sheet Capacity Plants (mmsf?)} * Fontana, California 480 Plant City, Florida 300 Cleburne, Texas es _ Tacoma, Washington Peru, Iilinois® Waxahachie, Texas eee Ce : ee Blandon, Pennsylvania 200 Sum
Slide 13: Production Capacity Per Line
i dames Hardie’ Production Capacity Per Line 300 200 mmsf! 150 100 1990 1994 1998 2001 2004 13
Slide 14: Capital Cost/Unit of Capacity
i) James Hardie Capital Cost/Unit of Capacity USD/Isf' 1990 1995 1997 1998 2000 2004 14
Slide 15: Fibre cement more durable than wood and engineered wood
i) James Hardie ihr Fibre Cement is more durable than wood and engineered wood Superior Fibre Cement Durability Engineered Wood Moisture Resistant vw Fire Resistant ms «Weather Resistant a Termite Proof a Won't Warp a Won't Crack 4 Won't Rot Holds Paint Longer 15
Slide 16: Fibre cement benefits
@ James Hardie Fibre Cement ¥ Fire Resistant v Hail Resistant 7 wv Won't Warp P wv Won't Buckle : ~“ Colour Lasts Longer ¥ Dimensional Stability “Can Be Repainted 16
Slide 17: Volume growth by product
i) James Hardie Siding Growth Soffit Growth Retail Volume Growth Fyoo FYO01 FY02 FYO3 FY04 FYOS FYOO FYOQ1 FY02 FY03 FY04 FYO5 FYOO FY01 FY02 FY03 FY04 FY05 Trim Growth 1/4" Backer Growth 1/2" Backer Growth FYOO FYO01 FY02 FY03 FY04 FY05 FYoO FY01 FY02 FYO03 FY04 FY05 FY00 FY01 FY02 FY03 FY04 FYO5 1
Slide 18: Average price growth
i James Hardie’ Average price growth driven by mix and market price increases 520 5 500 | 480 4 “ | Bit | ) — oe seen 42050 S 400 4 380 + 360 US$ per MSF* FY99 FYOO FY01 FY02 FYO3 FY04 FY05 18
Slide 19: Top Line Growth
i James Hardie a UU Top Line Growth $1,000.0 mn E $900.0 re — 3 $800.0 = 3 j=) s wo g $700.0 3. wn 2 $6000 2 = $500.0 & z E wom JH Volume —+— Housing Starts $400.0 E $300.0 Ss . 3 . JH Revenue $2000 $100.0 $0.0 19
Slide 20: EBIT Compound Annual Growth Rate
i James Hardie EBIT’ Compound Annual Growth Rate FY01 — FY05 35% G2 EBIT EBIT/Sales EBIT US$M EBIT MARGIN % FY01 FY02 FY03 FY04 FY05 *Excludes US$12.6m restructuring and other operating expenses incurred in FYO2 20
Slide 21: Revenue per employee
i James Hardie’ $495 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FYOO FYO1 FY02 FY03 FY04 FYOS [=] Revenue Hga# of Employees —e Revenue Per Employee -
Slide 22: Estimated Market Size by Product Category
Product Category i) James Hardie Estimated Market Size (bsf') New Construction - Siding, Fascia & Soffits 5.4 - Trim 0.8 “Total New 7 —— 6.2 _ “Repair & Remodel 7 — ~ - Siding, Fascia & Soffits 6.2 _- Trim _ __ 0.2 _ Total R&R 6.4 Grand Total 12.6 Source: National Association of Home Builders — Buil
Slide 23: Market growth
i James Hardie US$M Actual Compound Annual Growth Rate 28 nual Growth FY02 FY03 FY04 FY05 FY06 FYO7 23
Slide 24: Housing market drivers
i James Hardie NN « Positive demographic factors * Immigration Internal migration Household formation Low mortgage rates Strong house prices Growing economy 24
Slide 25: USA Interior Cement Board Market
i James Hardie’ USA Interior Cement Board Market . (est. 1bsf') » Net sales growing strongly — James Hard ames Hardie CAGR* 27% (FY01-FY04) 25% - 30% = Leading position in 1/4” market — technology advantage for floor applications * Hardibacker 500 is driving penetration on wall applications Growing
Slide 26: Asia Pacific
cy James Hardie’ FY05 net sales US$210m —up 8% FY05 EBIT' up 20% to US$42m Higher value differentiated products Lower delivered cost Shift to growth model 26
Slide 27: Philippines
Manufacturing plant commissioned 1999 FY05 net sales US$26 million up 25% EBIT' positive Fibre cement as substitute for plywood Established low cost regional manufacturing hub Low GDP per capita is an obstacle for generating unique financial returns @) James Hardie’ 27
Slide 28: Chile
ic) James Hardie icc in il, Ti ' ne "0 Chile » Manufacturing plant commissioned 2001 = Low cost manufacturing, rapid market penetration, strong growth © Positive EBIT! a ‘ » Differentiated products introduced » Limited scale opportunity 28
Slide 29: USA Pipes
@ James Hardie’ USA manufacturing plant commissioned 2001 Market recognises product has advantages over reinforced steel concrete pipes in mid- diameters — light, long, strong Lower cost to make and install Manufacturing targets not met but progress being made Cash breakeven — nearing EBIT breakeven
Slide 30: Artisan Roofing
i) James Hardie icc in il, Ti ' ne "0 Artisan Roofing US$15M USA pilot plant commissioned FY04 Proving scalability of roofing technology Product design Product performance Manufacturing capability Market positioning 30
Slide 31: Europe Market Development
i James Hardie AN Europe Market Development = Initially pursuing a low cost, low risk strategy » Differentiated products imported from US » G2 Backer * XLD Trim * ColorPlus Siding Focussed market development UK and France » JH business model differentiated from current industry approach 31
Slide 32: Financials
@) James Hardie Financials 32
Slide 33: FY05 financial results
ee James Hardie US$Million Net Sales 1,210.4 Up 23% Gross Profit 426.4 Up 19% EBIT'* 196.2 Up 14% Operating Profit'” 127.9 Up 2% * Excluding costs related to NSW Government Special Commission of Inquiry of US$28.1m EBIT increased 30% to US$224.3m and operating profit increased 20% to US$150.2m. 33
Slide 34: USA Fibre Cement
@ James Hardie USA Fibre Cement USSMillion Net Sales 939.2 EBIT" 241.5 Volume 1855 mmsf' EBIT Margin' 25.7% Down 27% 24% 22% 0.8pts 34
Slide 35: Other Businesses
ee James Hardie Other Businesses ANZ net sales up 8%. EBIT* up 20% Philippines sales up 25%. EBIT' positive USA Pipes nearing cashflow breakdown — nearing EBIT breakeven Chile — EBIT' positive Europe — EBIT' negative, as expected 35
Slide 36: Key financial ratios
EPS (Diluted) Dividend Paid Return on Shareholders Funds"* Return on Capital Employed* EBIT'/Sales Gearing Ratio’ Net Interest Expense Cover Net Interest Paid Cover* Net Debt Payback** * Total Company ** Net Debt/Net cash provided by operating activities # Annualised + Adds back capitalised interest
Slide 37: High Growth and Attractive Returns Targeted
i James Hardie’ Long os fl F al ia 6 rie High Growth and Attractive Returns Targeted Target Actual FY04 Actual FY05 Revenue Growth > 15% p.a. 25% 23% EBIT Margin' > 15% 18% 16%* Return On Capital > 15% 23% 23% Employed * Includes costs related to the SCI and related matters of US$28.1 million. 37
Slide 38: Asbestos Related Progress
i) James Hardie Asbestos Related Progress 38
Slide 39: Background
Background inquiry into establishment of Medical Research and Compensation Foundation (MRCF) announced by NSW Government — February 2004 Inquiry report released September 2004: * Establishment of MRCF legally effective » No legal liability for MRCF funding shortfall » Risk of adverse legislative, re
Slide 40: Heads of Agreement
es hh Heads of Agreement Non-binding agreement signed with NSW Government, union and claimants representatives — December 2004 « Funding arrangement intended to allow James Hardie to remain profitable, financially strong and to fund growth 40
Slide 41: Key Elements
@) James Hardie’ Key Elements = Special Purpose Fund (SPF) to be established — James Hardie to appoint majority of Board Initial funding based on KPMG Actuaries updated report— discounted central estimate A$1.68bn at 31 March 2005 Annual contribution to SPF based on annual actuarial assessments = A
Slide 42: Actuarial Estimates Overview
@) James Hardie Actuarial Estimates Overview A$Billions Central Estimate — Discounted Central Estimate — Undiscounted Range — Undiscounted 2004 30 June 1.536 3.586 2.0-5.7 2005 31 March 1.685 3.604 2.0-5.9 42
Slide 43: Likely Accounting for Asbestos Liability
he) James Hardie Likely Accounting for Asbestos Liability No provision for proposed liability at 31 March 2005 — not probable and estimable at this time (SFAS5) Subject to completion, accounting treatment for take-up of provision likely to be: » Based on undiscounted Central Estimate as calculated b
Slide 44: Timing Update
eh) James Hardi Timing Update Satisfactory progress on Principal Agreement * no significant departures from Heads of Agreement Estimated completion date of Principal Agreement June — legal complexities Timetable for late July EGM appearing ambitious 44
Slide 45: Australian Media
| James Hardie Australian Media » Has suggested claims outside Australia (New Zealand, Asia and USA) could jeopardise SPF » SPF only available to Australian-based personal injury claims against former Australia James Hardie subsidiaries In New Zealand — compensation paid by Accident Compensation Com
Slide 46: Summary
i) James Hardie’ » We have a strong, well established, high growth and return business We have sustainable competitive advantage Our model for continued strong growth is based on: » Large market opportunity * Superior value proposition * Proprietary and/or protected technology » Large upsides due to
Slide 47: Forward-looking statements
This Presentation contains forward-looking statements. We may from time to time make forward-jooking statements in our periodic reports filed with the Securities and Exchange Commission on Forms 20-F and 6-K, in our annual reports to shareholders, in offering circulars and prospectuses, in media rel
Slide 48: EBIT and EBIT Margin definitions
i) James Hardie EBIT and EBIT Margin - EBIT is defined as operating income. EBIT margin is defined as EBIT as a percentage of our net sales. We believe EBIT and EBIT margin to be relevant and useful information as these are the primary measures used by our management to measure the operating profit
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