James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Hardie James Industries — Corporate Update (December 2004)
27 slides from James Hardie Industries's corporate update, Dec 21, 2004
Slide 1: James Hardie signs Heads of Agreement
For media enquiries please contact James Rickards on Tel: 61 2 8274 5304 Mob: 0419 731 371. For investor/analyst enquiries please contact Steve Ashe on Tel: 61 2 8274 5246 or Mob: 0408 164 011 21 December 2004 James Hardie signs Heads of Agreement James Hardie Industries NV (JHINV) today announced i
Slide 2: Timetable
For this reason, the outcome of the recently-announced NSW Government Review of Legal Costs and Administrative Costs in Dust Diseases Compensation Claims is expected to have a critical impact on the long-term financial strength of the proposed Special Purpose Fund and the affordability and sustainab
Slide 3: Long-term funding of personal injury claims against former subsidiary companies
Long-term funding of personal injury claims against former subsidiary companies 21 December 2004
Slide 4: Overview
Overview Background Heads of Agreement Key Elements Special Purpose Fund Funding Arrangements Other Matters Impact on James Hardie Other Matters Conditions Timing
Slide 5: Background
Background Special Commission of Inquiry into Establishment of Medical Research and Compensation Foundation (MRCF) reported 21 September 2004 Establishment of MRCF legally effective No legal liability for MRCF funding shortfall Did not restructure nor move to Netherlands to avoid liability for asbes
Slide 6: Funding arrangement intended to allow James Hardie to remain profitable, financially strong and to
Heads of Agreement Funding arrangement intended to allow James Hardie to remain profitable, financially strong and to fund growth Funding arrangement intended to allow payments to be made by Special Purpose Fund (SPF) to all existing and future proven claimants - but no absolute assurance can be giv
Slide 7: Key Elements
Heads of Agreement Key Elements Non-binding Heads of Agreement for voluntary long-term funding signed 21st December 2004 Key elements include: Establishment of a SPF Initial funding of SPF by James Hardie to be based on KPMG Actuaries report at 30 June 2004 - discounted central estimate A$1.5bn Jame
Slide 8: Special Purpose Fund
Heads of Agreement - Special Purpose Fund Structure of SPF under consideration Majority of SPF Board to be appointed by James Hardie SPF likely to be accounted for as a James Hardie subsidiary in consolidated financials
Slide 9: Funding Arrangements: Actuarial Data
Heads of Agreement - Funding Arrangements Actuarial Data Annual contribution to SPF to be based on latest actuarial data - annual actuarial assessments Initial funding based on KPMG Actuaries 30 June 2004 report. James Hardie and KPMG also to consider: Outcome of NSW Government Review of legal and a
Slide 10: Funding Arrangements: Fund Buffer and Initial Payment
Heads of Agreement - Funding Arrangements Fund Buffer and Initial Payment A 2 year rolling buffer to be established plus annual contribution Initial contribution: Discounted central estimate for claims (gross) in 2 year period ending 31 March 2007 Discounted central estimate for claims (gross) for Y
Slide 11: Funding Arrangements: Ongoing Annual Payment
Heads of Agreement - Funding Arrangements Ongoing Annual Payment Buffer and 3rd year payment process re-occur at start of each year Revised actuarial assessment undertaken at 31 March each year (contributions due 1 July each year) SPF expected to have between 2 and 3 years of funding at any one poin
Slide 12: Funding Arrangements: Annual Funding Cap
Heads of Agreement - Funding Arrangements Annual Funding Cap Expressed as a % of net operating cashflow Defined as: operating cashflow after tax, interest and changes in working capital and asbestos payments, but before capital expenditure and dividends Not less than 65c in each $1 of net operating
Slide 13: Funding Arrangements: Annual Funding Cap Step-Down
Heads of Agreement - Funding Arrangements Annual Funding Cap "Step-Down" Takes account of actual level of claims and JHINV's operational performance Maximum cap of 35% and minimum cap of 10% Cap can reduce in 5% increments - but no reduction before YE 31 March 2012 Step-down permitted if previous 4
Slide 14: Funding Arrangements: Funding Term Cap
Heads of Agreement - Funding Arrangements Funding Term Cap A final payment can be made at 2045 - subject to NSW Government approval If parties unable to agree final payment, term will extend a further 10 years - then agreement on final payment sought again In absence of any agreement on final paymen
Slide 15: Other Matters: Releases from Civil Liability
Heads of Agreement - Other Matters Releases from Civil Liability James Hardie and associated entities/persons to be released from civil claims relating to the manufacture of asbestos and corporate actions in respect of establishment of MRCF/ABN60 Release for James Hardie group companies conditional
Slide 16: Impact on James Hardie: KPMG Claims Profile
Impact on James Hardie KPMG Claims Profile 0 20 40 60 80 100 120 140 160 180 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 2051 2053 2055 2057 2059 2061 2063 2065 2067 2069 2071 KPMG Claims Payment Profile (Gross) KPMG Claims Payme
Slide 17: Impact on James Hardie: Initial Payment
Impact on James Hardie Initial Payment - expected in FY06 All figures as at 31 March 2005 A$m Initial "smoothing" payment 71 3 years projected gross claims to 2008 (discounted) 239 Required 2 year buffer 156 Year 3 discounted payment 83 Less reduction of discounted gross claims due to "smoothing" (4
Slide 18: Impact on James Hardie: Expected Payments to SPF
Impact on James Hardie Expected Payments to SPF Assumes net operating cashflow of James Hardie is sufficient to ensure cashflow cap does not operate 0 20 40 60 80 100 120 140 160 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 2052 2
Slide 19: Impact on James Hardie: Annual Cashflow Caps
Impact on James Hardie Annual Cashflow Caps - Best Case Scenario Note: Annual contribution is lesser of payment based on annual actuarial assessment and annual cashflow cap 0% 5% 10% 15% 20% 25% 30% 35% 40% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 202
Slide 20: Impact on James Hardie: Expected Net Assets of SPF
Impact on James Hardie Expected Net Assets of SPF Note: Assumes contribution is always below annual cashflow cap 0 50 100 150 200 250 300 350 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 2052 2054 2056 2058 2060 2062 2064 2066 206
Slide 21: Impact on James Hardie: Balance Sheet
Impact on James Hardie Balance Sheet FAS 5: probable and estimable Provisions for 5 -15 year's of asbestos liabilities normal in US Options under US GAAP to be assessed: Amount Timing Discounted/undiscounted basis James Hardie's funding obligations to SPF will rank behind senior lenders
Slide 22: Impact on James Hardie: Taxation
Impact on James Hardie Taxation Tax deductibility of payments by James Hardie to SPF has been assumed Confident of being achieved
Slide 23: Other Matters: Education Program and Medical Research
Other Matters Education Program and Medical Research James Hardie will contribute to an asbestos education program in Australia James Hardie will commit to continue funding medical research into asbestos-related diseases
Slide 24: Conditions
Conditions The voluntary long-term funding agreement is subject to: Completion and implementation of NSW Government Review of legal and administrative costs The NSW Government to provide legislative change to adopt efficiencies and facilitate implementation of agreement JHINV Board determination tha
Slide 25: Estimated Timing
Estimated Timing NSW Government Costs Review - February/March 2005 Negotiation of binding agreement - to March 2005 Explanatory memorandum including independent experts report sent to JHINV shareholders and commencement of EGM notice period - May 2005 JHI NV shareholder meeting and subsequent enactm
Slide 26: Disclaimer
Disclaimer This presentation contains forward-looking statements. We may from time to time make forward-looking 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, i
Slide 27: Long Term Funding of Personal Injury Claims Against Former Subsidiary Companies
Long Term Funding of Personal Injury Claims Against Former Subsidiary Companies
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