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.
James Hardie Industries produces fiber cement products. It has operations in Australia, Asia, the US, and Europe. The document discusses James Hardie's key accounting policies, management flexibility, disclosure strategy, potential questionable accounting, and financial press discussion. Specifically, it evaluates James Hardie's accounting for its asbestos-related liabilities, which are offset against contingent assets and adjusted each year based on actuarial estimates. The quality of disclosure is also assessed.
Dabur Q4FY14 results in line with expectations by Motilal OswalIndiaNotes.com
Dabur’s 4QFY14 results were in-line with expectation on the back of continued robust volume growth of 9.2% in domestic FMCG business and 9.4% in the consolidated entity (est. 10%). Consolidated net sales grew 15.5% to Rs17.7b (est. Rs17.9b).
Analysis of financial statement of asianpaints ltdBrijin Jacob
- Asian Paints discloses its accounting policies in accordance with GAAP and presents its financial statements under the historical cost convention on an accrual basis.
- It uses the weighted average method to value inventories and recognizes revenue upon transferring ownership of goods to buyers. Interest income is recognized proportionately.
- Employee benefits include provident fund, gratuity, pension, and post-retirement medical benefits. Borrowing costs directly related to assets are capitalized while others are recognized as expenses.
20180620 sauc oppenheimer consumer conference widescreen finaldrhincorporated
This document provides an overview of Diversified Restaurant Holdings, Inc. (DRH) for investors attending the Oppenheimer 18th Annual Consumer Conference. It summarizes that DRH is a leading franchisee of Buffalo Wild Wings with 65 locations, and has a current market capitalization of $34 million. The document outlines DRH's business model, growth opportunities through increasing sales and profitability, and potential for shareholder returns through debt reduction, multiple expansion, and EBITDA growth.
The document discusses techniques for analyzing financial statements, including horizontal analysis, vertical analysis, and ratio analysis. It provides examples of applying horizontal analysis to compare line items on Home Depot's balance sheet and income statement from 2006 to 2007. Vertical analysis is also demonstrated by expressing line items as a percentage of total assets or total sales. Key points shown include current assets increasing 33.2% and cost of merchandise sold increasing 16.7% based on the horizontal analysis examples.
This presentation provides a look at Performance-based Equity from three angles: Design, Legal issues (provided by Jennifer George at Orrick) and Administration concerns (provided by Paz Dizon of Gilead). The administrative concerns is especially interesting since Paz drills deep into some of the difficulties and how she handled them.
Daseke, Inc. held an acquisition conference call in September 2017 to discuss consolidating the flatbed and specialized logistics market. They have acquired four companies since May 2017, adding an estimated $218 million in revenue and $26 million in adjusted EBITDA. Daseke has $20 million in cash, a $70 million undrawn credit line, and $23.7 million available on a delayed draw term loan to fund further growth. They remain on track to achieve their 2017 pro forma adjusted EBITDA target of $140 million through continued acquisition execution.
1) The annual report summarizes AIG's financial performance in 2007, which saw a decline from 2006 levels. Net income fell 55.9% to $6.2 billion, while revenues fell 2.9% to $110.1 billion. Book value per share and shareholders' equity also declined.
2) Key events and accomplishments in 2007 included receiving approval to establish a wholly owned general insurance subsidiary in China, expanding operations in other Asian markets like Korea and Vietnam, and making progress on the "Deliver the Firm" customer-focused strategy.
3) Challenges in 2007 included higher losses and expenses in some businesses as well as weaknesses in some product lines and distribution channels that need to be addressed
James Hardie Industries produces fiber cement products. It has operations in Australia, Asia, the US, and Europe. The document discusses James Hardie's key accounting policies, management flexibility, disclosure strategy, potential questionable accounting, and financial press discussion. Specifically, it evaluates James Hardie's accounting for its asbestos-related liabilities, which are offset against contingent assets and adjusted each year based on actuarial estimates. The quality of disclosure is also assessed.
Dabur Q4FY14 results in line with expectations by Motilal OswalIndiaNotes.com
Dabur’s 4QFY14 results were in-line with expectation on the back of continued robust volume growth of 9.2% in domestic FMCG business and 9.4% in the consolidated entity (est. 10%). Consolidated net sales grew 15.5% to Rs17.7b (est. Rs17.9b).
Analysis of financial statement of asianpaints ltdBrijin Jacob
- Asian Paints discloses its accounting policies in accordance with GAAP and presents its financial statements under the historical cost convention on an accrual basis.
- It uses the weighted average method to value inventories and recognizes revenue upon transferring ownership of goods to buyers. Interest income is recognized proportionately.
- Employee benefits include provident fund, gratuity, pension, and post-retirement medical benefits. Borrowing costs directly related to assets are capitalized while others are recognized as expenses.
20180620 sauc oppenheimer consumer conference widescreen finaldrhincorporated
This document provides an overview of Diversified Restaurant Holdings, Inc. (DRH) for investors attending the Oppenheimer 18th Annual Consumer Conference. It summarizes that DRH is a leading franchisee of Buffalo Wild Wings with 65 locations, and has a current market capitalization of $34 million. The document outlines DRH's business model, growth opportunities through increasing sales and profitability, and potential for shareholder returns through debt reduction, multiple expansion, and EBITDA growth.
The document discusses techniques for analyzing financial statements, including horizontal analysis, vertical analysis, and ratio analysis. It provides examples of applying horizontal analysis to compare line items on Home Depot's balance sheet and income statement from 2006 to 2007. Vertical analysis is also demonstrated by expressing line items as a percentage of total assets or total sales. Key points shown include current assets increasing 33.2% and cost of merchandise sold increasing 16.7% based on the horizontal analysis examples.
This presentation provides a look at Performance-based Equity from three angles: Design, Legal issues (provided by Jennifer George at Orrick) and Administration concerns (provided by Paz Dizon of Gilead). The administrative concerns is especially interesting since Paz drills deep into some of the difficulties and how she handled them.
Daseke, Inc. held an acquisition conference call in September 2017 to discuss consolidating the flatbed and specialized logistics market. They have acquired four companies since May 2017, adding an estimated $218 million in revenue and $26 million in adjusted EBITDA. Daseke has $20 million in cash, a $70 million undrawn credit line, and $23.7 million available on a delayed draw term loan to fund further growth. They remain on track to achieve their 2017 pro forma adjusted EBITDA target of $140 million through continued acquisition execution.
1) The annual report summarizes AIG's financial performance in 2007, which saw a decline from 2006 levels. Net income fell 55.9% to $6.2 billion, while revenues fell 2.9% to $110.1 billion. Book value per share and shareholders' equity also declined.
2) Key events and accomplishments in 2007 included receiving approval to establish a wholly owned general insurance subsidiary in China, expanding operations in other Asian markets like Korea and Vietnam, and making progress on the "Deliver the Firm" customer-focused strategy.
3) Challenges in 2007 included higher losses and expenses in some businesses as well as weaknesses in some product lines and distribution channels that need to be addressed
This document provides an analysis and stock recommendation for Credit Corp Group Limited (CCP). It summarizes CCP's most recent financial results, which confirm the momentum of the company's corporate turnaround. The analyst upgrades the price target for CCP stock to A$2.29 based on two potential drivers of excess returns: 1) CCP is positioned for a price-to-book valuation re-rating as its current valuation implies no value for its business franchise; and 2) continued earnings growth driven by increased staff productivity and harvesting older purchased debt ledgers. The analyst maintains a "Buy" recommendation on CCP stock.
The document summarizes Principal Financial Group's third quarter 2017 earnings results. Some key points:
- Operating earnings were $374 million and operating EPS was $1.28. Excluding significant variances, EPS increased 16% year-over-year to $1.42.
- Assets under management reached a record $656 billion, with $5 billion in net cash flows during the quarter.
- 88% of investment options were in the top two Morningstar quartiles over five years.
- The company continued returning capital to shareholders through dividends and share repurchases.
Financial statements analysis of Infosys annual report 2007-08Rahul Kejriwal
Infosys is an Indian multinational corporation that provides business consulting, information technology and outsourcing services. It has over 52 global development centers and received close to 1 million job applications in a year, selecting only 2.3% of applicants. Key factors for Infosys's growth include its global delivery model, superior quality, innovation and leadership. Factors critical for continued growth are effective integration of onsite and offshore work, increasing the depth and breadth of services offered, and making strategic investments in human resources and infrastructure.
In 2006, Lehman Brothers pursued a diversified global growth strategy that identified opportunities worldwide. Its strategy was to continue investing in a diversified mix of businesses, expand its client base, deliver effective services to clients, effectively manage risks and expenses, and strengthen its culture. Financially, Lehman Brothers saw increases in net revenues, net income, total assets, long-term borrowings, stockholders' equity, and other metrics from 2005 to 2006.
This particular project is based on ratio analysis of Coca-Cola International. I have analyzed two years financial performance of Coke i.e. from 2011 to 2012. I hope my this effort will help other interested students.
The relationship between activity based,Arfan Afzal
The Relationship between Activity BasedCosting, Perceived Environmental Uncertaintyand Global Performance
The aim of this paper is to present the main results of an empirical study done in Morocco and highlight the impact of the PEU on the ABC implementation and its performance according to the perceived environmental uncertainty (PEU).
This document discusses various financial ratios used to evaluate a company's financial performance. It provides details of liquidity, leverage, asset management and profitability ratios calculated for ICL for 2016-2017. The document analyzes ICL's current ratio, quick ratio, debt-to-equity ratio, interest coverage ratio and other key financial ratios, comparing them to industry standards. It finds that most of ICL's ratios are weaker than standards, indicating risks to creditors and need for ICL to improve earnings.
- Daseke is the largest owner of flatbed and specialized equipment in North America and has executed a consolidation strategy that has driven 50% Adjusted EBITDA CAGR from 2009 to pro forma 2016 through acquisitions.
- Daseke's management team owns approximately 60% of the company and is on track to achieve its targets of $140 million in pro forma Adjusted EBITDA for 2017 and $200 million for 2019 through continued acquisition growth.
- Daseke has less than 1% market share of the large $133 billion open deck transportation and logistics market in North America, providing significant opportunity for further consolidation.
The document provides an overview of The Principal Financial Group, a Fortune 500 company that offers retirement savings, investment, and insurance solutions. It discusses the company's non-GAAP financial measures and reconciliations, organizational structure with business segments, global presence across 18 countries, and 135 year history of experience in the financial services industry. Forward-looking statements and associated risks are also included.
Costco acquires Target in an all-stock deal valued at $56 billion. Under the terms of the agreement, Target shareholders will receive 0.62 Costco shares for each Target share. The deal is structured as a tax-free reverse triangular merger. The acquisition is expected to generate $1 billion in annual synergies by increasing Target's return on equity from 9.4% to 14%. Target will operate as a subsidiary of Costco and retain its name and management team. The deal requires approval from both companies' shareholders.
This document provides an overview of financial statement analysis. It defines key financial statements like the income statement and balance sheet. It also explains the purpose of financial ratio analysis and identifies common ratios used to evaluate a firm's liquidity, financial leverage, coverage, activity, and profitability. Examples are provided to demonstrate calculating and comparing ratios for a company called Basket Wonders to industry averages. Trend analyses are also shown to identify areas where the company's performance differs from its industry over time.
This document provides financial ratios for State Bank of India for the years ending March 2008, March 2009, and March 2010. Some key ratios that declined over this period include the operating margin, which fell from 19.5% to 16.96% due to higher operating expenses, and the adjusted return on net worth, which declined sharply from 15.74% to -57.84% as profit growth did not keep pace with the increase in shareholders' funds. Liquidity and leverage ratios such as the current ratio and quick ratio improved slightly, while the total debt to equity ratio remained high, reflecting the bank's reliance on external borrowing.
1. Kellogg's key financial ratios show they are stronger than competitors in profitability. Their return on sales increased 79% year-over-year.
2. They sell inventory quicker but collect receivables slower than competitors, taking 5.5 extra days. This could impact liquidity if not improved.
3. They are less liquid than competitors but have made improvements, with their current ratio increasing 13.33% in one year.
4. They are also less risky in 2013 compared to 2012, in a better financial position.
5. Their PE ratio shows the company is underpriced and poised for growth rather than stagnation.
This document analyzes the relationship between working capital, liquidity, profitability, and solvency of ACC Limited, an Indian cement company, from 2000-2010. It finds that despite having negative working capital for most of the period, ACC was able to earn good returns through an aggressive working capital policy, but that this ultimately put its solvency at risk. The study uses various financial ratios and tests to evaluate ACC's liquidity, profitability, and risk over time.
Smart Money January February 2012 SinglesOliver Taylor
The document discusses year-end tax planning tips to help readers get their finances fit for 2012. It provides an overview of key areas to consider such as making use of personal tax allowances, topping up pension contributions, using ISA allowances, planning for inheritance tax, and reducing capital gains tax liability. It also discusses how more people will need to work later in life due to issues of affordability and inadequate retirement savings. The majority of over-50s expect to work past the state retirement age, with the average planning to work an additional 6 years until age 71 for men and 66 for women. Affordability is cited as the key reason over half of over-50s plan to work longer.
This document is Lehman Brothers' 2007 annual report which provides financial and operating results for the fiscal year. It summarizes that 2007 was a record year for Lehman Brothers with record net revenues of $19.2 billion, net income of $4.2 billion, and earnings per share of $7.26. However, the firm's stock price declined for the first time in five years. The report also outlines Lehman Brothers' strategy of diversification and global expansion, and notes challenges faced in fixed income due to the downturn in the mortgage markets.
The document summarizes Principal Financial Group's fourth quarter 2013 earnings call. It provides non-GAAP financial measures to help investors evaluate performance. All business segments saw increased revenue and earnings compared to fourth quarter 2012. Principal Global Investors saw strong performance fees while Principal International had favorable returns, offset by tax law changes. The company deployed over $480 million in 2013 through dividends, share repurchases, and acquisitions and expects $500-700 million in deployment in 2014.
This document provides an overview of financial statement analysis. It discusses the key financial statements, common analysis tools like ratios, and how to compare ratios internally and externally. Ratios can analyze a firm's liquidity, leverage, coverage, and activity. The document also includes examples of calculating and interpreting various ratios for a sample company called Basket Wonders.
This document analyzes the financial position of Coca Cola using ratio analysis over 5 years from 2010-2014. It calculates key ratios such as current ratio, quick ratio, asset turnover ratios, debt ratios, profit margins, returns on assets and equity, price-earnings ratio and market-to-book ratio. The analysis finds that Coca Cola's financial position is stable, though net income has been declining in recent years. Most ratios indicate sound liquidity, solvency and profitability, though returns on assets could be improved. Overall the company appears to be in a stable financial condition.
The document discusses key financial statements and concepts:
1. It defines financial statements, balance sheets, income statements, cash flow statements, and statements of owner's equity. These statements are important for internal and external reporting and analysis of a company's financial performance and position.
2. The balance sheet provides a snapshot of a company's assets, liabilities, and equity. The income statement measures profitability. The cash flow statement shows cash inflows and outflows. Together these statements allow analysis of a company's leverage, liquidity, profitability, and cash generation.
3. Accurate financial reporting is critical for management to understand the business and make informed decisions. It also allows for external control and
Installed on over 5.5 million
homes from coast to coast,
James Hardie® fiber cement siding
products are designed to resist
the most extreme conditions while
romancing the senses. Enjoy the
warm, natural character of wood
with unprecedented peace of mind.
It’s easy to see what makes
James Hardie the market leader.
This document provides an analysis and stock recommendation for Credit Corp Group Limited (CCP). It summarizes CCP's most recent financial results, which confirm the momentum of the company's corporate turnaround. The analyst upgrades the price target for CCP stock to A$2.29 based on two potential drivers of excess returns: 1) CCP is positioned for a price-to-book valuation re-rating as its current valuation implies no value for its business franchise; and 2) continued earnings growth driven by increased staff productivity and harvesting older purchased debt ledgers. The analyst maintains a "Buy" recommendation on CCP stock.
The document summarizes Principal Financial Group's third quarter 2017 earnings results. Some key points:
- Operating earnings were $374 million and operating EPS was $1.28. Excluding significant variances, EPS increased 16% year-over-year to $1.42.
- Assets under management reached a record $656 billion, with $5 billion in net cash flows during the quarter.
- 88% of investment options were in the top two Morningstar quartiles over five years.
- The company continued returning capital to shareholders through dividends and share repurchases.
Financial statements analysis of Infosys annual report 2007-08Rahul Kejriwal
Infosys is an Indian multinational corporation that provides business consulting, information technology and outsourcing services. It has over 52 global development centers and received close to 1 million job applications in a year, selecting only 2.3% of applicants. Key factors for Infosys's growth include its global delivery model, superior quality, innovation and leadership. Factors critical for continued growth are effective integration of onsite and offshore work, increasing the depth and breadth of services offered, and making strategic investments in human resources and infrastructure.
In 2006, Lehman Brothers pursued a diversified global growth strategy that identified opportunities worldwide. Its strategy was to continue investing in a diversified mix of businesses, expand its client base, deliver effective services to clients, effectively manage risks and expenses, and strengthen its culture. Financially, Lehman Brothers saw increases in net revenues, net income, total assets, long-term borrowings, stockholders' equity, and other metrics from 2005 to 2006.
This particular project is based on ratio analysis of Coca-Cola International. I have analyzed two years financial performance of Coke i.e. from 2011 to 2012. I hope my this effort will help other interested students.
The relationship between activity based,Arfan Afzal
The Relationship between Activity BasedCosting, Perceived Environmental Uncertaintyand Global Performance
The aim of this paper is to present the main results of an empirical study done in Morocco and highlight the impact of the PEU on the ABC implementation and its performance according to the perceived environmental uncertainty (PEU).
This document discusses various financial ratios used to evaluate a company's financial performance. It provides details of liquidity, leverage, asset management and profitability ratios calculated for ICL for 2016-2017. The document analyzes ICL's current ratio, quick ratio, debt-to-equity ratio, interest coverage ratio and other key financial ratios, comparing them to industry standards. It finds that most of ICL's ratios are weaker than standards, indicating risks to creditors and need for ICL to improve earnings.
- Daseke is the largest owner of flatbed and specialized equipment in North America and has executed a consolidation strategy that has driven 50% Adjusted EBITDA CAGR from 2009 to pro forma 2016 through acquisitions.
- Daseke's management team owns approximately 60% of the company and is on track to achieve its targets of $140 million in pro forma Adjusted EBITDA for 2017 and $200 million for 2019 through continued acquisition growth.
- Daseke has less than 1% market share of the large $133 billion open deck transportation and logistics market in North America, providing significant opportunity for further consolidation.
The document provides an overview of The Principal Financial Group, a Fortune 500 company that offers retirement savings, investment, and insurance solutions. It discusses the company's non-GAAP financial measures and reconciliations, organizational structure with business segments, global presence across 18 countries, and 135 year history of experience in the financial services industry. Forward-looking statements and associated risks are also included.
Costco acquires Target in an all-stock deal valued at $56 billion. Under the terms of the agreement, Target shareholders will receive 0.62 Costco shares for each Target share. The deal is structured as a tax-free reverse triangular merger. The acquisition is expected to generate $1 billion in annual synergies by increasing Target's return on equity from 9.4% to 14%. Target will operate as a subsidiary of Costco and retain its name and management team. The deal requires approval from both companies' shareholders.
This document provides an overview of financial statement analysis. It defines key financial statements like the income statement and balance sheet. It also explains the purpose of financial ratio analysis and identifies common ratios used to evaluate a firm's liquidity, financial leverage, coverage, activity, and profitability. Examples are provided to demonstrate calculating and comparing ratios for a company called Basket Wonders to industry averages. Trend analyses are also shown to identify areas where the company's performance differs from its industry over time.
This document provides financial ratios for State Bank of India for the years ending March 2008, March 2009, and March 2010. Some key ratios that declined over this period include the operating margin, which fell from 19.5% to 16.96% due to higher operating expenses, and the adjusted return on net worth, which declined sharply from 15.74% to -57.84% as profit growth did not keep pace with the increase in shareholders' funds. Liquidity and leverage ratios such as the current ratio and quick ratio improved slightly, while the total debt to equity ratio remained high, reflecting the bank's reliance on external borrowing.
1. Kellogg's key financial ratios show they are stronger than competitors in profitability. Their return on sales increased 79% year-over-year.
2. They sell inventory quicker but collect receivables slower than competitors, taking 5.5 extra days. This could impact liquidity if not improved.
3. They are less liquid than competitors but have made improvements, with their current ratio increasing 13.33% in one year.
4. They are also less risky in 2013 compared to 2012, in a better financial position.
5. Their PE ratio shows the company is underpriced and poised for growth rather than stagnation.
This document analyzes the relationship between working capital, liquidity, profitability, and solvency of ACC Limited, an Indian cement company, from 2000-2010. It finds that despite having negative working capital for most of the period, ACC was able to earn good returns through an aggressive working capital policy, but that this ultimately put its solvency at risk. The study uses various financial ratios and tests to evaluate ACC's liquidity, profitability, and risk over time.
Smart Money January February 2012 SinglesOliver Taylor
The document discusses year-end tax planning tips to help readers get their finances fit for 2012. It provides an overview of key areas to consider such as making use of personal tax allowances, topping up pension contributions, using ISA allowances, planning for inheritance tax, and reducing capital gains tax liability. It also discusses how more people will need to work later in life due to issues of affordability and inadequate retirement savings. The majority of over-50s expect to work past the state retirement age, with the average planning to work an additional 6 years until age 71 for men and 66 for women. Affordability is cited as the key reason over half of over-50s plan to work longer.
This document is Lehman Brothers' 2007 annual report which provides financial and operating results for the fiscal year. It summarizes that 2007 was a record year for Lehman Brothers with record net revenues of $19.2 billion, net income of $4.2 billion, and earnings per share of $7.26. However, the firm's stock price declined for the first time in five years. The report also outlines Lehman Brothers' strategy of diversification and global expansion, and notes challenges faced in fixed income due to the downturn in the mortgage markets.
The document summarizes Principal Financial Group's fourth quarter 2013 earnings call. It provides non-GAAP financial measures to help investors evaluate performance. All business segments saw increased revenue and earnings compared to fourth quarter 2012. Principal Global Investors saw strong performance fees while Principal International had favorable returns, offset by tax law changes. The company deployed over $480 million in 2013 through dividends, share repurchases, and acquisitions and expects $500-700 million in deployment in 2014.
This document provides an overview of financial statement analysis. It discusses the key financial statements, common analysis tools like ratios, and how to compare ratios internally and externally. Ratios can analyze a firm's liquidity, leverage, coverage, and activity. The document also includes examples of calculating and interpreting various ratios for a sample company called Basket Wonders.
This document analyzes the financial position of Coca Cola using ratio analysis over 5 years from 2010-2014. It calculates key ratios such as current ratio, quick ratio, asset turnover ratios, debt ratios, profit margins, returns on assets and equity, price-earnings ratio and market-to-book ratio. The analysis finds that Coca Cola's financial position is stable, though net income has been declining in recent years. Most ratios indicate sound liquidity, solvency and profitability, though returns on assets could be improved. Overall the company appears to be in a stable financial condition.
The document discusses key financial statements and concepts:
1. It defines financial statements, balance sheets, income statements, cash flow statements, and statements of owner's equity. These statements are important for internal and external reporting and analysis of a company's financial performance and position.
2. The balance sheet provides a snapshot of a company's assets, liabilities, and equity. The income statement measures profitability. The cash flow statement shows cash inflows and outflows. Together these statements allow analysis of a company's leverage, liquidity, profitability, and cash generation.
3. Accurate financial reporting is critical for management to understand the business and make informed decisions. It also allows for external control and
Installed on over 5.5 million
homes from coast to coast,
James Hardie® fiber cement siding
products are designed to resist
the most extreme conditions while
romancing the senses. Enjoy the
warm, natural character of wood
with unprecedented peace of mind.
It’s easy to see what makes
James Hardie the market leader.
Ply Gem Industries presented at the JP Morgan SMid Cap Conference on December 10, 2013. The presentation included the following key points:
- Ply Gem is one of the largest manufacturers of exterior building products in North America with nearly $1.5 billion in annual sales.
- They hold the number one position in key product categories like vinyl siding, aluminum accessories, vinyl and aluminum windows.
- Their strategic priorities include focusing on customers, innovation, profitable growth through acquisitions, and continuous improvement.
- Ply Gem has continued to gain market share despite downturns by focusing on brand management, new products, and operational efficiencies.
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The board of directors is responsible for ensuring the integrity of published financial statements. This includes working with management to set the parameters for accounting quality and internal controls, and retaining an external auditor to test financial statements for material misstatements.
This Quick Guide reviews the process by which the board carries out this function.
It provides answers to the questions:
• What does the audit committee do?
• How does it oversee financial reporting?
• How often do companies restate financials and why?
• What does the external audit do?
• Do auditors have agency problems?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.
This document provides an annual report submission for an MBA course assignment on International Accounting Standards at Bangladesh University. It includes an acknowledgements section, table of contents, and sections on the history and corporate governance of Grameenphone, an annual report for 2011, financial review, and conclusion. The document analyzes Grameenphone's corporate structure, board organization, control environment, board committees, and compliance with accounting standards.
Investment BAFI 1042 Kevin Dorr 3195598 GOODMAN .docxmariuse18nolet
Investment BAFI 1042
Kevin Dorr 3195598
GOODMAN FIELDER LIMITED (GFF)
COMPANY VALUATION REPORT
1
GOODMAN FIELDER
LIMITED
COMPANY VALUATION REPORT
Scope
• The report looks at all publicly available data about the company via
the annual reports and publications
• An analyses of the company’s weakness and strength has been
conducted with detailed look at the fundamentals impacting the company
• The report outlines the ratios in relation to probability, return on
equity, using several modelling techniques
• There are charts and information used form the cash flow statement,
balance sheet and historical data sourced from the ASX
• The analysis of the company is compared to its competitors, industry,
sector and market it operates in.
• The report looks at stock price movement and all assumptions are
made available and are explained.
• Expert opinion and copyrighted material is used in the report and has
been appropriately
referenced.
REPORT
OUTLINE
This report attempt to
provide an analytical
evaluation of
Goodman fielder,
every attempt has
been made to make all
data accessible and
complete. This report
contains financial data,
historical analysis,
forecasts and
estimates based on
best available and
most up to date
information. The aim is
for the reader to be
able to make an
informed decision
about the fair value of
GFF stock and
compare it to GFF
peers in the industry. It
should give reader the
ability to form an
opinion on Goodman
fielder as an
investment based on
financial information
analytics.
2
Executive summary
Goodman fielder is one of the largest producers of food in Australia and it supplies product in many categories,
however it is first or second in every food category it participates in. It owns brands such as such as Nature's
Fresh, Helga's, Praise, Wonder White, Quality Bakers, White Wings, and Meadow Lea with offerings in consumer
brands such as Fresh milk, Meadow White Wings cake mixes, Praise salad dressings, and Leaning Tower frozen
pizza (Yahoo Finance 2012). It reaches over 30000 outlets in and around Australia. There are several major
shareholders of the company such as J. P. Morgan Nominees Australia Limited which owns 19%, HSBC Custody
Nominees (Australia) Limited that owns 17% and National Nominees Limited the owners of 22% of the
company(ASX 2012.)
On 19 August 2011 Goodman Fielder announced a net loss of $166.7 million for the year ended 30 June 2011,
this was attributable to a non-cash impairment charge of $300 million. Revenues from ordinary activities were
$2.56 billion, which is down 3.9% from the year before The New CEO of Goodman Fielder Limited Chris Delaney
is going to implement a strategic review which is focused on improving the performance of the company. There
are significant opportunities to increase efficiency, improve supply chain structure and inno.
This document summarizes a case study on the impact of the global financial crisis on four large Australian construction companies. It finds that all four companies - Centro Properties Group, Valad Property Group, Raptis Group Limited, and CEC Group - reported losses from 2008-2010 after experiencing rapid growth during the real estate boom earlier in the decade. Centro Properties Group in particular is discussed in depth, showing how it expanded aggressively through acquisitions but then faced a collapse in its share price in 2007 when it could not refinance debt. By 2010, Centro's financial ratios indicated severe declines in profitability and efficiency. The crisis overwhelmed these companies and either led to receivership, buyouts, or liquidation of
- Most major US insurers' earnings weakened in Q2 due to investment losses and high catastrophe losses, though underwriting results remained strong.
- AIG reported a $5.4 billion net loss driven by housing market and investment problems. It raised $20 billion in new capital.
- Allstate's net income fell 98% due to investment losses and record catastrophe losses, but underlying underwriting performance was strong.
Stanley Black & Decker is expanding into emerging markets through acquisitions and organic growth. The company aims to acquire companies in China, India, Taiwan, and Indonesia to streamline manufacturing and boost margins. Stanley is also implementing Stanley Fulfillment System 2.0 to increase organic growth and returns for shareholders. However, the company's commercial security segment in Europe has seen slower growth, so Stanley is considering spinning it off.
This document provides key financial data and an analysis of ACE Limited, a property and casualty insurer. It highlights that ACE has a strong record of pricing risk, is expanding globally to spread risk more widely, and has high earnings per share. The analyst recommends an overweight position and believes the stock remains undervalued relative to its fundamentals. Risks include potential weakness in emerging markets or from natural disasters.
Masonite is a global building products company with established leadership positions in residential and non-residential doors. It has transformed itself in recent years through acquisitions, plant closures, and lean initiatives. The interior molded door market has consolidated to two major players in North America through acquisitions. Masonite's vertical integration, product breadth, and replacement value make its business model difficult to replicate.
This document brings together a set
of latest data points and publicly
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Company BackgroundFor more than a century, General Electric (GE), LynellBull52
Company BackgroundFor more than a century, General Electric (GE), has been a global leader and iconic brand known for innovation and leadership in a wide range of endeavors. Its diver-sified portfolio of products is organized into four strategic business units: energy, technology infrastructure, GE Capital, and home and business solutions.GE began in 1878 when Thomas Edison formed the Edison General Electric Company (EGEC). Though Edison was best known for inventing the first incan-descent light bulb, he also pioneered systems design for generating and distributing electricity, eventually holding over 1000 patents. Within a few years, the rival Thomas Houston Company, which held key patents in the same area, challenged EGEC’s posi-tion in the marketplace. In 1892, the two companies merged, forming General Electric. GE then parlayed the demand for electricity into the invention of home heating, stoves and other appliances, and refrigeration, transforming American households, and went on to become an innovator in myriad fields, from medicine, aviation, and transportation to plastics and financial services. GE created the GE Credit Corporation (later GE Capi-tal) in the wake of the Great Depression to facilitate the sale of household appliances and provide the option of extended payments for consumers. Innovation defined the organization, and the commitment to research and development remained key.1
GE was one of the original 12 companies that formed the Dow Jones Industrial Average, and the only one of those companies that was still part of the DJIA in 2012. GE was also recognized for cultivating leaders such as Charles Wilson, Ralph Cordiner, Fred Borch, Reginald Jones, and John Welch.2 In the early 1970s under Fred Borch, GE was one of the first companies with a diversified infrastructure to formalize strategic planning at both corporate and business unit levels with its creation of strategic busi-ness units.3GE always saw itself as striving to create a world that worked better, “making what few in the world can, but everyone needs.”4 The company’s strategic philosophy centered on innovation, superior technology, and demonstrating leadership in growth markets. GE sought to maintain a strong competitive advantage through innovation, smart capital allocation, and solidifying customer relationships. The strategy also included transition-ing from an industrial conglomerate to an infrastructure leader to maximize the core strengths of its existing businesses. Diversification and expansion of its business port-folio was a central focus, designed to minimize volatility and create stability through varying growth cycles. Another facet of GE’s strategy was to invest for the long-term in high-growth market opportunities that were closely related to its core businesses. For instance, in 2010 the company launched the GE Advantage Program that focused on process excellence and innovation to improve margins in industrial projects.5
One of GE’s biggest oper ...
Deutsche bank industrial conference presentation finalmasoniteinvestors
Masonite is a global building products company with established leadership positions in all targeted product categories in its largest market, the United States. It has net sales of $1.7 billion annually and sells approximately 32 million doors each year. Masonite has a large global footprint with 65 manufacturing facilities across 11 countries serving over 7,000 customers in more than 80 countries. It has transformed itself in recent years through restructuring actions, acquisitions, and organic growth initiatives.
1
3
Simon Property Group
Angel Bloodworth
Strategic Planning for Organizations MGT450
University of Arizona
14 March 2022
Achieving a high level of financial stability while operating a profitable company is one of the most challenging tasks a business can face. After all, any firm facing cash flow and budgetary challenges will eventually collapse if these issues are not handled as soon as possible. One organization that has been having financial issues recently is Simon Properties Group. The company's financial woes, which partly has been caused by Covid-19, have damaged the company's reputation, and the public is slowly losing trust in the company's capabilities. Additionally, the fear of bankruptcy has adversely affected the company's long-term creditworthiness. This paper necessitates an analysis of Simon Properties Group, including its leadership, potential competition, and a recent news item posing a challenge to its strategy.
Organization
Established in the United States, Simon Property Group is a real estate investment trust specializing in outlet malls, retail malls, and lifestyle complexes. The company was founded in 1982 and currently has its headquarters in Indianapolis, Indiana. The Simon Property Group was founded in Indianapolis by brothers Herbert and Melvin Simon, who started by developing strip malls in the city. The company has locations around Europe, North America, and Asia, where the firm serves thousands of people every day and earns millions of dollars in sales each year. The company's portfolio includes properties that have gained national and international attention - assets that have proven to be the preferred destination for retailers (Jie & Jianwei, 2021). Simon is also known for its strong financial position, a senior management team that has been in place for many years and is highly regarded, as well as its innovative mindset, which is reflected in the company's history.
The industry
The corporation operates in the real estate business. Real estate has a lengthy history in the United States. The federal government sold and gave the property to private individuals for their own use after the Revolutionary War when it was no longer under the control of England. As the nation grew westward, this practice continued, most notably with the passage of the Homestead Act in 1862, which authorized individual ownership of U.S. property in return for maintaining and developing the area for at least five years (Katzler, 2017). Through the Homestead Act, the United States government granted more than 300 million acres of public land to private landowners, laying the groundwork for the real estate industry, which is currently worth $203.1 billion.
Mission and Vision
The company’s mission is to become the top retail real estate developer, owner, and manager globally.
The company's vision statement is that it wants to be the unchallenged leader in the business.
Values and purpose
Integrity, innovati ...
1
3
Simon Property Group
Angel Bloodworth
Strategic Planning for Organizations MGT450
University of Arizona
14 March 2022
Achieving a high level of financial stability while operating a profitable company is one of the most challenging tasks a business can face. After all, any firm facing cash flow and budgetary challenges will eventually collapse if these issues are not handled as soon as possible. One organization that has been having financial issues recently is Simon Properties Group. The company's financial woes, which partly has been caused by Covid-19, have damaged the company's reputation, and the public is slowly losing trust in the company's capabilities. Additionally, the fear of bankruptcy has adversely affected the company's long-term creditworthiness. This paper necessitates an analysis of Simon Properties Group, including its leadership, potential competition, and a recent news item posing a challenge to its strategy.
Organization
Established in the United States, Simon Property Group is a real estate investment trust specializing in outlet malls, retail malls, and lifestyle complexes. The company was founded in 1982 and currently has its headquarters in Indianapolis, Indiana. The Simon Property Group was founded in Indianapolis by brothers Herbert and Melvin Simon, who started by developing strip malls in the city. The company has locations around Europe, North America, and Asia, where the firm serves thousands of people every day and earns millions of dollars in sales each year. The company's portfolio includes properties that have gained national and international attention - assets that have proven to be the preferred destination for retailers (Jie & Jianwei, 2021). Simon is also known for its strong financial position, a senior management team that has been in place for many years and is highly regarded, as well as its innovative mindset, which is reflected in the company's history.
The industry
The corporation operates in the real estate business. Real estate has a lengthy history in the United States. The federal government sold and gave the property to private individuals for their own use after the Revolutionary War when it was no longer under the control of England. As the nation grew westward, this practice continued, most notably with the passage of the Homestead Act in 1862, which authorized individual ownership of U.S. property in return for maintaining and developing the area for at least five years (Katzler, 2017). Through the Homestead Act, the United States government granted more than 300 million acres of public land to private landowners, laying the groundwork for the real estate industry, which is currently worth $203.1 billion.
Mission and Vision
The company’s mission is to become the top retail real estate developer, owner, and manager globally.
The company's vision statement is that it wants to be the unchallenged leader in the business.
Values and purpose
Integrity, innovati ...
This document provides an analysis of Westlake Chemical Corporation's (WLK) financial statements and competitive positioning. It finds that WLK has a strong balance sheet with low debt, ample cash flow, and consistent earnings growth. Management owns a large stake in the company and has pursued a strategy of strategic acquisitions and capital efficiency. While economic growth overseas has been sluggish, the chemical industry and WLK are positioned well to benefit from growth in key end markets in North America due to low interest rates and commodity prices. The document provides adjustments to WLK's financial statements to reflect a more accurate picture of its financial health and performance.
The document provides an analysis of the marketing policies and strategies of AP Eagers Limited, an automotive retail group in Australia. It conducts an environmental analysis using PEST factors and performs a situational analysis using SWOT. It also does a competitive analysis using Porter's Five Forces model and evaluates AP Eagers' product portfolio using BCG matrix analysis. Key recommendations include creating a strong brand message to differentiate AP Eagers and transforming dealerships into brand identities. It also recommends focusing marketing efforts on new vehicle models.
This document provides an analysis report for the Canadian clothing company Aritzia. It identifies several key issues facing the company, including a recent decline in net revenue due to store closures during the pandemic. It also notes strong competition in the market and Aritzia's heavy reliance on the United States market. The report includes a PESTEL analysis that examines political, economic, social, technological, environmental and legal factors influencing Aritzia. It recommends that Aritzia open unique boutique stores in strategic locations and consider a multi-brand product portfolio to meet changing fashion demands. An action plan is proposed to address the issues.
Legal & General provides life insurance, pensions, investments, and general insurance. This document contains data on its With Profits Sub Fund and details of the bonus declaration on February 18, 2010. It reviews the fund's investment performance in 2009, including strong returns for UK and overseas shares, improving commercial property prices, and better performance of corporate bonds over government bonds. The proportions invested in each asset class varied for different product groups within the fund.
Here is a potential thesis statement for the essay:
Dustin Hoffman's early struggles to find his passion and career path ultimately led him to acting, where his intense preparation techniques and ability to transform himself for roles established him as one of Hollywood's most dedicated method actors of his generation.
Financials_FFH.TO_Hold_03_02_2015-3 (FInal Version)Alfredo Leon
The document provides an analysis of ACE Limited (TSX: FFH.TO) by the Babson College Fund Financials Sector Team. Key points include:
1) FFH.TO is rated "HOLD" with a price target of $699.97, representing potential upside of 6.7% from its current price of $656. The company has a unique investment philosophy and niche insurance products.
2) Strengths include improved underwriting results, uncorrelated market returns providing portfolio hedging, a diversified investment portfolio, and consistent book value growth. However, more analysis is needed due to current price uncertainty.
3) Risks include natural catastrophes, liquidity
1) Companies have accumulated record amounts of cash since the 2008 financial crisis as they focused on reducing debt and rebuilding their balance sheets.
2) Recently, companies have begun shifting their use of cash from shareholder-friendly activities like buybacks and dividends toward business investment to support future growth.
3) Increased business investment will benefit the economy by boosting GDP and supporting the belief that a secular bull market has begun.
Heinz Case Study: ESTIMATING THE COST OF CAPITAL IN UNCERTAIN TIMES sadia butt
H.J. Heinz faced difficulties in estimating its weighted average cost of capital (WACC) due to stock price fluctuations, low interest rates, and uncertainty about consumer risk appetite. This made it hard to accurately evaluate new projects. Specifically, Heinz's stock price fell from $47 to $34 in 2008 but returned to $47 by 2010. Additionally, interest rates remained low, and it was unclear how this affected consumer risk tolerance. As a result, the company struggled to settle on an appropriate WACC value.
Similar to Financial Reporting James Hardie Group Assignment (1) (20)
Heinz Case Study: ESTIMATING THE COST OF CAPITAL IN UNCERTAIN TIMES
Financial Reporting James Hardie Group Assignment (1)
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