The document provides a financial report and analysis of James Hardie Industries Limited (JHX). It includes: 1. An executive summary of JHX's activities in the building materials sector, annual revenue of $1.5B+, and the impact of its 2001 asbestos compensation liability. 2. Sections analyzing JHX's key accounting policies, management flexibility, disclosure and accounting strategies, and potential issues with numbers. 3. The accounting strategy aims to minimize tax through positions in Ireland and the US. The asbestos liability, a unique provision, is partially contingent but made legal through a complex funding agreement, and reduced on the balance sheet through adjustments.

1. J A M E S
H A R D I E
I N D U S T R I E S
L I M I T E D
2 2 7 4 8
F I N A N C I A L R E P O R T I N G &
A N A L Y S I S
S T E P H E N L I M
W E D N E S D A Y 6 P M
S h a u n S t e w a r t
J o s h u a C h u o y
L u k e R o w l e s
X i n X i a o
R a e d A l B a d e r
M d F a i z u l K a b i r

2. Contents
EXECUTIVE SUMMARY .....................................................................................................................................................................2
1. Summary of JHX..........................................................................................................................................................................3
1.1 Activities & Strategies...........................................................................................................................................................3
1.2 Market Segment.......................................................................................................................................................................4
2. JHX Key Relevant Accounting Policies..................................................................................................................................5
2.1 Key Accounting Policies.......................................................................................................................................................5
2.2 Related Accounting Standards and Rules....................................................................................................................5
4. JHX Accounting Strategy..............................................................................................................................................................8
4.2 Management Remuneration Policy ................................................................................................................................9
4.3 Accounting Strategy............................................................................................................................................................10
4.3.1 Balance Sheet Strategy..............................................................................................................................................10
4.3.2 Income Statement Strategy ....................................................................................................................................11
5. Quality of Disclosure ..................................................................................................................................................................12
6. Potential questionable accounting numbers..................................................................................................................13
7. Undoing Distortions in the Numbers Provided.............................................................................................................14
8. Summarise any financial press discussion of the company’s performance and accounting numbers.
....................................................................................................................................................................................................................15
References............................................................................................................................................................................................16

3. EXECUTIVE SUMMARY
James Hardie Industries (JHX, James Hardie), a Public Limited Company operates in the construction and
building materials sector holding an estimated 15.5% market share, with $1.5b+ annual revenue and
operating in over 5 major markets worldwide.
The company shot to infamy in 2001 when it became synonymous with the major Asbestos compensation
class action in Australia, which affected the market in general finding manufacturer liability for dust borne
disease linked to its asbestos based product range.
The financial fallout, which is one of the main topics of this paper, was a significant accounting liability
linked to a complex legal, actuarial and accounting estimation and provisioning process – noted to be on
the fringe of triple-bottom line reporting due to it’s uniqueness and pioneering approach. The ‘Asbestos
Liability’ as it is identified is underpinned by a large complex legal agreement (AFFA), a compensation fund
(AICF) and an actuarial estimation paper.
Whilst the underlying business of JHX as a building product manufacturer appears to be surviving well, it is
certainly the intention of the AFFA to allow it to survive the heavy debt burden so that it may survive long
enough to finally see its dues paid, the shadow of the asbestos liability looms large on its balance sheet for
the long term.
Unravelling the true and fair view of JHX involves the following two topics:
1. Understanding the accounting methods used in presenting the underlying operations
2. Understanding the impact or posture of the accounting strategy relating to the Asbestos Liability
Ultimately we see a challenging set of accounts and annexures. With all the subtleties of the fairly standard
treatment of the underlying business, the major issue presents to be a large and material one, the
elephant in the room, the estimate of the asbestos liability.

4. 1. Summary of JHX
1.1 Activities & Strategies
James Hardie Industries Public Limited Company (James Hardie) operates in the construction and building
materials sector, generating the majority of its income from Non-Metallic Mineral Product Manufacturing
(IBIS, 2015a). Originally founded in Melbourne, Australia in 1888 the company is now incorporated in
Ireland, as well as having shares on the New York Stock Exchange and the Australian Stock Exchange. Being
domiciled in Ireland is primarily for the tax advantages, due to the majority of its revenue now being
derived from the United States and European markets (Janda,
2009) this is illustrated in figure 1.
Core to the strategy of James Hardie has been to invest in high-
return organic growth with a focusing on capacity expansion across
the US and Australian businesses as well as investing in its
organisational capability (Hardie, 2015). The concrete product
manufacturing segment of the construction and building materials
sector in which James Hardie primarily operates is dominated by
several large building material manufacturing companies with the
concentration in this industry at a medium level (IBIS, 2015a).
Fletcher Building Limited is the major player in this industry with a
market share of close to 22% compared to James Hardie’s 15.5%.
Fletcher Building however has a more diversified portfolio of
products in this segment including insulation and roof tiling.

5. 1.2 Market Segment
James Hardie (JHX) has traditionally dominated the fibre cement building board market in this segment
although its market share has been eroded by strong competition from CSR with a market share of 13%
(IBIS, 2015a). This segment is dependent largely on demand from building construction and industry
revenue is expected to grow by the relatively low annualised rate of 1.4% over the next five years (IBIS,
2015b). It can also be seen in figure 2 that the domestic market is not favourable, with a high level of
competition stemming from a high threat of substitute products and high price sensitivity.
James Hardie has therefore
streamlined its core business
to focus primarily on the key
profit driver of manufacturing
and distributing fibre cement
products throughout Australia
and the Asian Pacific region
while also increasing its
international expansion in the
United States and Europe (IBIS,
2015a). This focus has led to a
major restructuring of its core
assets with the sale of its
roofing, window and building
systems business (MarketLine,
2015). This has enabled the
company to establish a
competitive advantage through the development of its research capabilities to develop differentiated,
unique and superior products. Developing these products with superior features is combating the issues of
a high threat of substitute products, and this impact is evident in increasing sales volume while also
increasing the selling price of their products (Hardie, 2015).
A major issue has however hampered James Hardie, in the form of its Asbestos Liability. Since 2001 James
Hardie has provided A$1 billion towards compensation, research and education and KPMG Actuarial
estimate the liability will be approximately a further A$1.8b. This commitment extends to at least 2045,
with the possibility of automatic extensions (Hardie, 2015). In order to provide certainty to shareholders
and lenders a set contribution of 35% of its annual free cash flow is contributed each year.

6. 2. JHX Key Relevant Accounting Policies
2.1 Key Accounting Policies
The following accounts are significant due to their materiality impacting the balance sheet, income
statement and cash flow.
Table 2.1 Key accounting policies relevant to James Hardie ($ USD in million)
Number Key Accounting Polices 2014 2013 Changes Change in%
1 Inventory $190.7 $172.1 +$18.6 +10.81%
2
Property, Plant &
Equipment
$711.2 $658.9 +$52.3 +7.94%
3 Cash flow hedge $0.9 - +$0.9 -
4 Warranties $31.4 $27.1 +$4.3 +15.87%
5 Revenue Recognition $1,493.8 $1,321.3 +$172.5 +13.06%
Sources: Financial statement of James Hardie 2014
Some considered accounting policies including inventory, PPE, warranty and cash flow hedge are $ 934.2
million, which accounted for nearly 44% of total assets of JHX in the FY2014. To applying these accounting
policies because considered important due to the high level of estimation involved. Revenue recognition
accounting policy is the most important policy because of the percentage of the James Hardie’s income.
2.2 Related Accounting Standards and Rules
Table 2 shows the applicable AASB accounting standards relevant to the each accounting policies of James
Hardie in FY2014, and provides a briefly summery of the standard to James Hardies.
Table 2.2 Key accounting policies relate to the James Hardie’s success
Key
Accounting
policies
AASB accounting
standard & rules
Notes in
FY2014
Comments related James Hardie
Inventory AASB 102 Inventories
Paragraph 23 “FIFO”
Paragraph 23-25
“Write-Off, Write-Down”
Notes
2(f)
Inventories are valued at the lower of cost or market
and are using the first-in, first-out method (FIFO).
Cost includes the costs of materials, labour and
applied factory overhead. On a regular basis, the
Company evaluates its inventory balances for excess
quantities and obsolescence by analysing demand,
inventory on hand, sales levels and other
information. Based on these evaluations, inventory
costs are written down or write off.
Property,
Plant &
Equipment
AASB 116 PPE
Paragraph 43-49
“Depreciation”
Paragraph 62
Notes
2(g)
PPE are record as cost. The depreciation of the PPE
and equipment is computed using the straight-line
method. The estimated useful life of PPE is three to
ten years not include the buildings. Buildings have

7. “Straight-line method”
Paragraph 30 “Cost
Model”
40 years useful life. Useful life is depending on the
how long it will be used for company. The PPE
indicate might be impaired because the carry amount
may not be recoverable. It record as impairment. The
carrying value and the recoverable amount are
periodically evaluated for an impairment test. In 2014,
there has no impairment charge for PPE, however in
2013, the assets impairment is $16.9million.
Financial
Instruments
AASB 139 Financial
instruments:
Recognition and
measurement.
Paragraph 95 “Cash flow
hedge”
Notes
2(o)
When the fair value is different from the carrying
value, company calculates the fair value of financial
instruments and includes this additional information
in the notes to the consolidated financial statements
of financial instruments.
Warranties AASB 137 Provisions,
Contingent liabilities,
Contingent Assets.
Notes
2(m)
The future warranty costs is recorded based on an
analysis by the company, which includes the
historical relationship of warranty costs to installed
product.
Revenue
Recognition
AASB 118 Revenue Notes
2(k)
James Hardie recognizes revenue when the risks and
obligations of ownership have been transferred to
the customer, it is occurs when delivery to the
customer. the company use volume, promotional,
cash and other discounts for records estimated
reductions in sales for customer discounts and
rebates. When products are sold, rebates and
discounts are records based on management’s best
estimate. The estimates are based on historical
experience programs and products. Last but not
least, part of company revenue is made under
agreement call “Vendor Managed Inventory”. Which
mean that revenue recognized upon the transfer of
title and risk of loss, after customer acknowledges
receipt of the goods.

8. 3. Management Flexibility in Selecting Key Accounting Principles
James Hardy management is compelled to work within the accounting standards and rules outlined in the
previous section; however they still have varying levels of flexibility to allocate transactions.
KEY ACCOUNTING
POLICY
FLEXIBILITY AVAILABLE TO MANAGEMENT
Inventories
MEDIUM – the management value the inventory regularly
and based on sales forecasts can write-down stock for sale
or obsolescence. However they are limited to FIFO.
Property, plant &
Equipment
MEDIUM – the management value the PP&E quarterly and
based on use and condition can write-down equipment or
sell.
Financial
Instruments &
Hedging
LOW - dependent on market valuation
Product Warranties
HIGH - due to the variety of products and the need to
constantly develop new products. Management discretion
is high.
Revenue
Recognition
HIGH - due to Revenue not being dependent on cash
receipt, the management may alter trade terms on
receivables in order to pull more sale forward.

9. 4. JHX Accounting Strategy
The main drivers of Accounting Strategy appear to be:
STRATEGIC AREA DRIVER
DISCLOSURE
High level of disclosure
Asbestos issue & public image
INCENTIVISATION
Management Remuneration Policy
The Amended & Restated Final Funding Agreement (AFFA)
POLICY SELECTION Tax Minimisation
4.1 Disclosure Strategy
The management have opted for a high level of disclosure due to the delicate nature of the Asbestos debt.
The following detailed supplements to the annual report are publicly available:
DOCUMENT DETAIL
Amended & Restated Final Funding Agreement
This agreement is intended to ensure “JHISE Group's
commercial viability and success will provide the
basis for the long term funding of the claims which
are to be subject to those funding arrangements”
Valuation of Asbestos-Related Disease Liabilities of
former James Hardie entities (“the Liable Entities”)
to be met by the AICF Trust Prepared for Asbestos
Injuries Compensation Fund Limited (“AICFL”):
This actuarial estimation of the Asbestos Liability is
the detailed basis for the liability appearing on
balance sheet.
Asbestos Injuries Compensation Fund Limited
(“AICFL”) Statutory Financial Statements
The annual report for the Asbestos compensation
fund, which also forms part of the JHX consolidated
annual report. JHX is required to pay annually 35%
of Free Cash Flow as defined by the agreement as
“net cash provided by operating activities (as
calculated in accordance with US GAAP1, paid to the
AICF.
1
Amended & Restated Final Funding Agreement (AFFA), 20 Dec 2013, Atanaskovic Hartnell Lawyers

10. 4.2 Management Remuneration Policy
Management remuneration is focused on measures relating to the performance of the business based on
its core operations and individual performance, being the inclusion of:
 Song Term Incentives (STI) and Long Term Incentives (LTI)
 Individual Performance Measures based on business stream managed
 Peer Comparison
STI
20%
Individual Performance Plan (STI): 1 -3 year performance targets set internally via
matrix dependent upon business stream
80%
Company Performance Plan: 1 -3 year performance targets set internally via matrix
with industry peer comparison.
 Revenue Growth
 EBIT (indexed to housing starts) excluding asbestos, asset impairments, ASIC
expenses and New Zealand product liability.
 Above the 75th
percentile (top 25%) of peer group performance in Revenue and
Profitability.
LTI
40%
Return on Capital Employed (ROCE) RSUs – an indicator of growth in the value of the
Company’s capital efficiency over time;
30%
Relative Total Shareholder Return (TSR) RSUs – an indicator of the Company’s performance
relative to its US peers; Above the 75th
percentile (top 25%) of peer group performance
in Revenue and Profitability.
30%
Internal Individual Scorecard LTI – an indicator of each senior executive’s contribution
to the Company achieving its long-term strategic goals.
As such, the management have limited incentive for manipulation, however the ROCE calculation below
suggests that an increase in Current Liabilities would improve this measure.
RETURN ON CAPITAL EMPLOYED =
EBIT
TOTAL ASSETS – CURRENT LIABILITIES

11. 4.3 Accounting Strategy
The Group Accounting Strategy appears fixed around Tax minimisation, in particular positioning itself in
Ireland and United States of America where a double taxation treaty exists. Further explanation of the Tax
strategy is noted below:
4.3.1 Balance Sheet Strategy
ASBESTOS LIABILITY ON BALANCE SHEET:
ITEM NOTE STRATEGY OUTCOME
Asbestos Liability
&
Workers Comp
Asbestos Liability
11
Asbestos Liability is a
unique type of provision
which is noted as a liability
held on balance sheet,
separated between
‘Asbestos Liability’ and
‘Workers Comp Asbestos’.
“The quantification and
subsequent disclosure of
asbestos liabilities is
problematic owing to
uncertainty about the
timing and incidence of
disease and the cost of
claims and the time
needed to settle them”2
.
This liability is partly
contingent based on the
complexity of the
estimation process and
dependency on future
events, however by way of
the AFFA the liability
becomes legal.
The AFFA allows a framework to partial
quantification. The combined liability is
forecast annually by external KPMG
Actuaries for a central estimate, then NPV
adjustments are disclosed for:
 Inflation (discounted for future inflation)
 Discounted (return on funds in escrow
and operations owed but not yet paid)
 Net of anticipated Insurance Recoveries
The impact of such adjustments reduces
the liability by almost half in 2014 from
Gross Amount $3,132m to $1,870m3
.
(US $billions) 2012 2013 2014
Central
Estimate
$1.58 $1.69 $1.87
Management
Adopted
Estimate
$1.66 $1.69 $1.71
Management uses discretion and presents
the Asbestos Liability as Uninflated,
Undiscounted and Pre-Insurance Recovery
as they deem these effects to be too
difficult to forecast. This implies that:
 the Asbestos Liability will change
upward with inflation and return rates
and that these changes are likely to be
yearly.
 This allows annual transfer to P&L via
Non-Cash Expense Items when the
Actuarial Estimate is reassessed EOFY.
Despite this US GAAP requirements are quire aggressive being:
 75% or greater probability – which is higher than IFRS of 50%
 Amount of loss can be reasonably estimated
 Use best estimate, or Lowest Range – where IFRS requires a Mid-Range if no best estimate
2
Moerman, L & Van Der Laan S, (2013), Accounting and long-tail liabilities: the case of asbestos, Certified Accountants
Educational Trust (London),
3
Page 96, Valuation of Asbestos-Related Disease Liabilities of former James Hardie entities (“the Liable Entities”) to be met by
the AICF Trust Prepared for Asbestos Injuries Compensation Fund Limited (“AICFL”), KPMG Actuarial Pty Ltd, 30 March 2014

12. NON CASH RECEIVABLES:
ITEM NOTE STRATEGY OUTCOME
Income Tax
Receivable
&
Insurance Receivable
nil
Offsetting the large
Asbestos Liability held on
balance sheet
No further detail or explanation of the Tax
Receivable estimate was supplied, however
this is clearly a theoretical asset dependent
upon future income. Under US GAAP are
allowed to be recognised in full and
revalued over time.
Insurance Receivable is Audited under
terms of the AFFA as it was seen as a
measure which could be manipulated to
reduce the cash outflow to ACIF due to a
clause in the AFFA in which JHX must
maintain capital acceptable to undertake its
business.
4.3.2 Income Statement Strategy
NON-CASH ADJUSTMENTS: non-cash expense items are recognised offsetting Net Profit decreasing Tax.
The following items are purely for Tax benefit as both reduce calculable Net Profit. Neither the AFFA Nor
the Directors Remuneration Policy as detailed earlier in this segment rely on the Net Profit result, hence
this is purely tax motivated.
ITEM NOTE STRATEGY OUTCOME
Asbestos
Adjustments
2
Actuarial estimates of the
Asbestos liability are
reassessed each year and
changes in the liability
estimate are expensed each
year.
Changes to the Actuarial Estimate of
Asbestos Liability are expensed each
year. This decreases Net Profit creating a
Tax Shield, and often originates
unrealised Tax income to offset against
Tax Expenses in current and future
trading years. The company uses the
‘Asset and Liability method’ to assess
deferred Tax Assets and Liabilities.
Asset Impairments 7
Quarterly Impairment testing
generally leading to
recognition of unserviceable or
redundant equipment, and
plant closure.
This creates a Tax Shield, and often
originates unrealised Tax income to
offset against Tax Expenses in current
and future trading years. The company
uses the ‘Asset and Liability method’ to
assess deferred Tax Assets and
Liabilities.

13. 5. Quality of Disclosure
In general, the 2014 Financial Report of James Hardie provides information that is true, fair and provides a
clear insight of the overall performance. Value-add additional information is abundant.
FINANCIAL
INFORMATION:
The complete set of relevant statements befitting a Public, ‘Large’ Proprietary, ASX
Listed were included as below:
 Statement of Financial Position
 Statement of Comprehensive Income
 Statement of Changes in Equity
 Statement of Cash Flows
 Notes comprising a summary of significant accounting principles and explanatory
information
 Statement of Financial Position of the earliest comparative period when
retrospective restatement applies
 Directors Declaration – reasonable grounds to pay debts, and compliance with
accounting standards – received declaration from CEO and CFO
The Financial Statements are prepared and disclosed in accordance with US GAAP as
a result the management is required to make assumptions and estimates that affect
the amounts of the assets and liabilities. (There might be a difference between actual
and estimated results).
Operating review, financial review and financial statements were disclosed with all
the required numbers.
US dollar is the presentation currency:
 Assets and Liabilities are converted to US dollars at the current exchange rate.
 Revenues and Expenses are converted at average exchange rates.
NON-FINANCIAL
INFORMATION:
The required information such as the Directors report, remuneration report,
Corporate governance report, Sustainability report and auditors report by Ernst &
Young have been disclosed.
OTHER
INFORMATION:
James Hardie provide in their annual statements detailed information on their
operations scope, production, risk management, Asbestos Injuries Compensation
Fund (AICF) funding, board structure and shareholder information.
SUPPLEMENTARY
MATERIAL:
 Amended & Restated Final Funding Agreement (AFFA)
 Valuation of Asbestos-Related Disease Liabilities of former James Hardie
entities (“the Liable Entities”) to be met by the AICF Trust Prepared for Asbestos
Injuries Compensation Fund Limited (“AICFL”) As at 31 March 2014
 AICF Annual Financial Statements

14. 6. Potential questionable accounting numbers
In order to identify questionable accounting numbers the following model has been used;
DISTORTION POTENTIAL
1.
CHANGES IN ACCOUNTING POLICY
LOW
Nil detected
2.
UNUSUAL CHANGES ACCOUNTS RECEIVABLE AND/OR INVENTORY WITH
CORRESPONDING SALES
(accounts receivable increased vs sales)
(accounts payable vs Operating Profit) MEDIUM
Accounts Receivable vs sales: sales increase and Acct receivable decrease
Accounts Payable vs Operating Profit: Increased profitability in FY’14 linked to
increase in Accounts payable disproportionate to FY’13.
3.
GAP BETWEEN CASH FLOWS AND LIABILITIES (Cash Flow vs Total Liability Ratio)
LOWTotal liabilities appear to move in sync with Final Cash position which is a rational
relationship as liabilities increase less cash leaves the business.
4.
GAP BETWEEN INCOME & TAX LIABILITY (Net Profit vs Tax Expense ratio)
HIGH
Net Profit swings sharply due to Tax Benefits related to Asbestos Adjustments.
5.
OVERSTATEMENT OR UNDERSTATEMENT OF LIABILITIES
HIGH
Asbestos Estimate
6.
UNEXPECTED WRITE OFF BEHAVIOUR
MEDIUM
Lack of PP & E Write-off concurrent with a large Currency Translation Loss
7.
RELATED PARTY TRANSACTION:
LOWAICF is fully disclosed as a separate set of accounts and consolidated into the main
entity.

15. 7. Undoing Distortions in the Numbers Provided
The Asbestos Liability is at high risk of being understated, for two reasons:
1. Management uses discretion and presents the Asbestos Liability as Uninflated, Undiscounted and Pre-
Insurance Recovery as they deem these effects to be too difficult to forecast4
. The inclusion of such
adjustments reduces the liability by almost half in 2014 from Gross Amount $3,132m to $1,870m5
.
(US $billions) 2012 2013 2014 Assumptions
Central Estimate by Actuary $1.58 $1.69 $1.87
Inflated
Discounted
Post-Insurance Recovery
Management
Adopted Estimate
$1.66 $1.69 $1.71
Uninflated
Undiscounted
Pre-Insurance Recovery
2. The Asbestos liability is offset against related assets Insurance Receivable and Unrealized Tax Assets,
that are heavily contingent on the liability itself and other future events such as Net Profit and Claims.
THE CORRECTION: Asbestos Liability should be increased from $1.805b to the pre adjusted amount of
$3.132b being the pre-adjusted amount.
CURRENT ASBESTOS ASSETS 109.1 CURRENT ASBESTOS LIABILITIES 185.8 CORRECTION
Restricted Cash & Equivalents -
Asbestos
60.2 Current Portion of Long Term
Debt- Asbestos
47.0
Restricted Short Term Investments
- Asbestos
0.1 Asbestos Liability 134.5
Insurance Receivable - Asbestos 28.0 Workers Compensation - Asbestos 4.3 4.3
Workers Compensation - Asbestos 4.3
Deferred Income Taxes - Asbestos 16.5
NON-CURRENT ASBESTOS ASSETS 700.9 NON - CURRENT ASBESTOS
LIABILITIES
1,619.3
Insurance Receivable - Asbestos 198.1 Asbestos Liability 1,571.7 3,132.0
Workers Compensation - Asbestos 47.6 Workers Compensation - Asbestos 47.6 47.6
Deferred Income Taxes 455.2
TOTAL ASBESTOS ASSETS 810.0 TOTAL ASBESTOS LIABILITIES 1,805.1 3,183.9
NET ASBESTOS LIABILITIES 995.1 2,373.9
This would recognize the inflated value upfront, reducing the likelihood of large annual adjustments to the
central estimate leading to smaller Asbestos Liability expense on the P&L.
4
Note 11, James Hardie FY 2014 20-F, Page 141
5
Page 96, Valuation of Asbestos-Related Disease Liabilities of former James Hardie entities (“the Liable Entities”) to be met by
the AICF Trust Prepared for Asbestos Injuries Compensation Fund Limited (“AICFL”), KPMG Actuarial Pty Ltd, 30 March 2014

16. 8. Summarise any financial press discussion of the company’s performance and
accounting numbers.
Recent financial press discussion of James Hardie has focused on the company’s increased performance,
while other reports highlight the increasing asbestos liability and the burden this may have on taxpayers,
as well as the tax minimisation practices of the entity.
Binsted (2015a) in the Sydney Morning Herald highlights the 11% rise in third-quarter adjusted profit to
$US48.6m, even in light of an underwhelming United States housing recovery. The article emphasises the
company’s performance has been solid over the last year, with increasing sales volume and higher average
prices in the US, with expectations this will continue on the back of an expected increase in new home
building in James Hardie’s markets.
Binsted (2015b) in a further article in the Sydney Morning Herald illustrates that taxpayers may need to
cover any asbestos related payouts if contributions from James Hardie were insufficient to cover claims.
This issue generated much press with Letts (2014) of ABC News highlighting that actual claims were
exceeding actuarial estimates by up to 19% for the quarter, and this could lead to a $184m shortfall by
2017. The report further highlights James Hardie’s ongoing commitment of 35% of its annual operating
cashflow to the Asbestos Injuries Compensation Fund, and that this may need to be increased.
Towards the end of 2014 there was much discussion around James Hardie’s tax minimisation efforts, with
Aston (2014) highlighting in the Sydney Morning Herald that James Hardie has “paid an average of $0 in
corporate tax over the past decade”. The financial press around this issue investigated the use of low-tax
jurisdictions such as Bermuda, as well as the impact of being domiciled in Ireland.

17. References
 Amended & Restated Final Funding Agreement (AFFA), 20 Dec 2013, Atanaskovic Hartnell Lawyers
 IFRS and US GAAP: similarities and differences, 2014, Price Waterhouse Coopers
 Janda, M. 24 jun 2009. James Hardie to Try its Luck in Ireland. ABC Online Business News.
 James Hardie Industries FY 2014 20-F, (2014)
 Moerman, L & Van Der Laan S, (2013), Accounting and long-tail liabilities: the case of asbestos,
Certified Accountants Educational Trust (London),
 Valuation of Asbestos-Related Disease Liabilities of former James Hardie entities (“the Liable
Entities”) to be met by the AICF Trust Prepared for Asbestos Injuries Compensation Fund Limited
(“AICFL”), KPMG Actuarial Pty Ltd, 30 March 2014