Exhibit 99.5

James Hardie Industries SE
and Subsidiaries
Condensed Consolidated Financial Statements
as of and for the Period Ended 30 September 2010

James Hardie Industries SE and Subsidiaries
Index

		Page
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Report of Independent Registered Public Accounting Firm			F-3
Consolidated Balance Sheets as of 30 September 2010 and 31 March 2010			F-4
Consolidated Statements of Operations for the Three and Six Months Ended 30 September 2010 and 2009			F-5
Consolidated Statements of Cash Flows for the Six Months Ended 30 September 2010 and 2009			F-6
Consolidated Statements of Changes in Shareholders’ Deficit for the Six Months Ended 30 September 2010			F-7
Notes to Consolidated Financial Statements			F-8

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
James Hardie Industries SE:

We have reviewed the accompanying condensed consolidated balance sheet of James Hardie Industries SE and subsidiaries as of 30 September 2010, and the related condensed consolidated statements of operations for the three-month and six-month periods ended 30 September 2010 and 2009, and the condensed consolidated statements of cash flows for the six-month periods ended 30 September 2010 and 2009. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with US generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of James Hardie Industries SE and subsidiaries as of 31 March 2010, and the related consolidated statements of operations, cash flows and shareholders’ deficit for the year then ended (not presented herein) and in our report dated 27 May 2010, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of 31 March 2010, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Orange County, California
15 November 2010

Item 1. Financial Statements

James Hardie Industries SE and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

		(Millions of US dollars)
		30 September				31 March
		2010				2010
Assets
Current assets:
Cash and cash equivalents		$	17.6			$	19.2
Restricted cash and cash equivalents			0.6				0.6
Restricted cash and cash equivalents — Asbestos			98.1				44.5
Restricted short-term investments — Asbestos			5.3				13.3
Accounts and other receivables, net of allowance for doubtful accounts of $2.9 million and $2.3 million as of 30 September 2010 and 31 March 2010, respectively			137.2				155.0
Inventories			146.7				149.1
Prepaid expenses and other current assets			35.4				25.6
Insurance receivable — Asbestos			17.6				16.7
Workers’ compensation — Asbestos			0.1				0.1
Deferred income taxes			20.9				24.0
Deferred income taxes — Asbestos			15.6				16.4
Total current assets			495.1				464.5
Restricted cash and cash equivalents			4.7				4.7
Property, plant and equipment, net			708.5				710.6
Insurance receivable — Asbestos			176.7				185.1
Workers’ compensation — Asbestos			104.3				98.8
Deferred income taxes			12.5				3.2
Deferred income taxes — Asbestos			433.7				420.0
Deposit with Australian Taxation Office			—				247.2
Other assets			45.3				44.7
Total assets		$	1,980.8			$	2,178.8
Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable and accrued liabilities		$	94.0			$	100.9
Current portion of long-term debt			45.0				95.0
Accrued payroll and employee benefits			30.7				42.1
Accrued product warranties			6.1				6.7
Income taxes payable			—				34.9
Asbestos liability			112.6				106.7
Workers’ compensation — Asbestos			0.1				0.1
Other liabilities			21.0				27.7
Total current liabilities			309.5				414.1
Long-term debt			112.0				59.0
Deferred income taxes			104.5				113.5
Accrued product warranties			17.2				18.2
Asbestos liability			1,548.6				1,512.5
Workers’ compensation — Asbestos			104.3				98.8
Australian Taxation Office — unpaid amended assessment			178.2				—
Other liabilities			38.5				80.6
Total liabilities			2,412.8				2,296.7
Commitments and contingencies (Note 9)
Shareholders’ deficit:
Common stock, Euro 0.59 par value, 2.0 billion shares authorised; 435,726,268 shares issued at 30 September 2010 and 434,524,879 shares issued at 31 March 2010			221.2				221.1
Additional paid-in capital			45.1				39.5
Accumulated deficit			(756.5	)			(437.7	)
Accumulated other comprehensive income			58.2				59.2
Total shareholders’ deficit			(432.0	)			(117.9	)
Total liabilities and shareholders’ deficit		$	1,980.8			$	2,178.8

The accompanying notes are an integral part of these consolidated financial statements.

James Hardie Industries SE and Subsidiaries
Consolidated Statements of Operations
(Unaudited)

		Three Months								Six Months
		Ended 30 September								Ended 30 September
(Millions of US dollars, except per share data)		2010				2009				2010				2009
Net sales		$	287.6			$	304.2			$	606.0			$	588.7
Cost of goods sold			(194.2	)			(186.6	)			(395.8	)			(360.7	)
Gross profit			93.4				117.6				210.2				228.0
Selling, general and administrative expenses			(35.1	)			(49.0	)			(81.0	)			(90.4	)
Research and development expenses			(6.7	)			(6.7	)			(13.7	)			(13.0	)
Asbestos adjustments			(107.8	)			(62.7	)			(44.7	)			(182.5	)
Operating (loss) income			(56.2	)			(0.8	)			70.8				(57.9	)
Interest expense			(2.2	)			(1.5	)			(4.0	)			(3.0	)
Interest income			1.3				1.1				2.0				1.9
Other (expense) income			(2.9	)			(1.0	)			(7.3	)			3.8
(Loss) income before income taxes			(60.0	)			(2.2	)			61.5				(55.2	)
Income tax expense			(363.7	)			(17.4	)			(380.3	)			(42.3	)
Net loss		$	(423.7	)		$	(19.6	)		$	(318.8	)		$	(97.5	)
Net loss per share — basic and diluted		$	(0.97	)		$	(0.05	)		$	(0.73	)		$	(0.23	)
Weighted average common shares outstanding (Millions):
Basic and diluted			435.5				432.5				435.1				432.4

The accompanying notes are an integral part of these consolidated financial statements.

James Hardie Industries SE and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

		Six Months
		Ended 30 September
(Millions of US dollars)		2010				2009
Cash Flows From Operating Activities
Net loss		$	(318.8	)		$	(97.5	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortisation			31.0				29.8
Deferred income taxes			(15.9	)			24.1
Pension cost			—				0.2
Stock-based compensation			4.8				4.0
Asbestos adjustments			44.7				182.5
Tax benefit from stock options exercised			(0.5	)			—
Changes in operating assets and liabilities:
Restricted cash and cash equivalents			17.8				37.0
Restricted short-term investments			9.2				—
Payment to the AICF			(63.7	)			—
Accounts and other receivable			21.6				(11.8	)
Inventories			4.3				4.9
Prepaid expenses and other assets			(10.2	)			(11.2	)
Insurance receivable — Asbestos			17.3				5.3
Accounts payable and accrued liabilities			(32.1	)			(8.0	)
Asbestos liability			(44.7	)			(46.1	)
Deposit with Australian Taxation Office			241.7				(6.8	)
Australian Taxation Office — unpaid amended assessment			178.2				—
Other accrued liabilities			(76.9	)			45.7
Net cash provided by operating activities		$	7.8			$	152.1
Cash Flows From Investing Activities
Purchases of property, plant and equipment		$	(24.8	)		$	(20.9	)
Proceeds from sale of property, plant and equipment			0.6				—
Net cash used in investing activities		$	(24.2	)		$	(20.9	)
Cash Flows From Financing Activities
Repayments of short-term borrowings			—				(102.3	)
Proceeds from long-term borrowings			392.0				15.0
Repayments of long-term borrowings			(389.0	)			(24.7	)
Proceeds from issuance of shares			0.4				2.0
Tax benefit from stock options exercised			0.5				—
Net cash provided by (used in) financing activities		$	3.9			$	(110.0	)
Effects of exchange rate changes on cash		$	10.9			$	(17.8	)
Net (decrease) increase in cash and cash equivalents			(1.6	)			3.4
Cash and cash equivalents at beginning of period			19.2				42.4
Cash and cash equivalents at end of period		$	17.6			$	45.8
Components of Cash and Cash Equivalents
Cash at bank and on hand		$	17.5			$	19.1
Short-term deposits			0.1				26.7
Cash and cash equivalents at end of period		$	17.6			$	45.8

The accompanying notes are an integral part of these consolidated financial statements.

James Hardie Industries SE and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Deficit
(Unaudited)

														Accumulated
						Additional								Other
		Common				Paid-in				Accumulated				Comprehensive
(Millions of US dollars)		Stock				Capital				Deficit				(Loss) Income				Total
Balances as of 31 March 2010		$	221.1			$	39.5			$	(437.7	)		$	59.2			$	(117.9	)
Comprehensive income:
Net loss			—				—				(318.8	)			—				(318.8	)
Unrealised gain on investments			—				—				—				1.1				1.1
Foreign currency translation loss			—				—				—				(2.1	)			(2.1	)
Other comprehensive loss			—				—				—				(1.0	)			(1.0	)
Total comprehensive loss																			(319.8	)
Stock-based compensation			—				4.8				—				—				4.8
Tax benefit from stock options exercised			—				0.5				—				—				0.5
Equity awards exercised/released			0.1				0.3				—				—				0.4
Balances as of 30 September 2010		$	221.2			$	45.1			$	(756.5	)		$	58.2			$	(432.0	)

The accompanying notes are an integral part of these consolidated financial statements.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

1. Background and Basis of Presentation

Nature of Operations

The Company manufactures and sells fibre cement building products for interior and exterior building construction applications primarily in the United States, Australia, New Zealand, the Philippines and Europe.

Background

On 21 August 2009, JHI NV shareholders approved a plan to transform the Company into a Societas Europaea (“SE”) and, subsequently, change its domicile from The Netherlands to Ireland. On 19 February 2010, the Company was transformed from a Dutch “NV” company to a Dutch “SE” Company, and on 17 June 2010, the Company moved its corporate domicile from The Netherlands to Ireland and, in so doing, became an Irish “SE” Company. The Company became an Irish tax resident on 29 June 2010 and operates under the name of James Hardie Industries Societas Europaea (“JHI SE”).

Basis of Presentation

The consolidated financial statements represent the financial position, results of operations and cash flows of JHI SE and its wholly-owned subsidiaries and a special purpose entity, collectively referred to as either the “Company” or “James Hardie” and “JHI SE”, together with its subsidiaries as of the time relevant to the applicable reference, the “James Hardie Group,” unless the context indicates otherwise. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, included in the Company’s Annual Report on Form 20-F for the fiscal year ended 31 March 2010, filed with the United States Securities and Exchange Commission on 30 June 2010.

The condensed consolidated financial statements included herein are unaudited; however, they contain all adjustments which, in the opinion of the Company’s management, are necessary to state fairly the consolidated financial position of the Company at 30 September 2010, and the consolidated results of operations for the three months and six months ended 30 September 2010 and 2009 and consolidated cash flows for the six months ended 30 September 2010 and 2009. Except for the adjustment to the consolidated financial statements relating to RCI’s 1999 disputed amended assessment with the Australian Taxation Office (“ATO”), which is fully set forth in Note 10, all adjustments are normal and recurring for the periods noted above.

The results of operations for the three months and six months ended 30 September 2010 are not necessarily indicative of the results to be expected for the full year. The balance sheet at 31 March 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“US GAAP”) for complete financial statements in this interim financial report.

2. Summary of Significant Accounting Policies

Reclassifications

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Certain prior year balances have been reclassified to conform to the current year presentation. The reclassifications do not impact shareholders’ deficit.

Accounting Principles

The consolidated financial statements are prepared in accordance with US GAAP. The US dollar is used as the reporting currency. All subsidiaries and qualifying special purpose entities are consolidated and all significant intercompany transactions and balances are eliminated.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Foreign Currency Translation

All assets and liabilities are translated into US dollars at current exchange rates while revenues and expenses are translated at average exchange rates in effect for the period. The effects of foreign currency translation adjustments are included directly in other comprehensive income in shareholders’ equity. Gains and losses arising from foreign currency transactions are recognised in income currently.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents relate to amounts subject to letters of credit with insurance companies which restrict the cash from use for general corporate purposes.

Revenue Recognition

The Company recognises revenue when the risks and obligations of ownership have been transferred to the customer, which generally occurs at the time of delivery to the customer. The Company records estimated reductions in sales for customer rebates and discounts including volume, promotional, cash and other discounts. Rebates and discounts are recorded based on management’s best estimate when products are sold. The estimates are based on historical experience for similar programs and products. Management reviews these rebates and discounts on an ongoing basis and the related accruals are adjusted, if necessary, as additional information becomes available.

Depreciation and Amortisation

The Company records depreciation and amortisation under both cost of goods sold and selling, general and administrative expenses, depending on the asset’s business use. All depreciation and amortisation related to plant building, machinery and equipment is recorded in cost of goods sold.

Advertising

The Company expenses the production costs of advertising the first time the advertising takes place. Advertising expense was US$1.7 million and US$2.7 million during the three months ended 30 September 2010 and 2009, respectively, and US$4.9 million and US$4.5 million during the six months ended 30 September 2010 and 2009, respectively.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Earnings Per Share

The Company discloses basic and diluted earnings per share (“EPS”). Basic EPS is calculated using net income divided by the weighted average number of common shares outstanding during the period. Diluted EPS is similar to basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares calculated using the Treasury Method that would have been outstanding if the dilutive potential common shares, such as options, had been issued.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Accordingly, basic and dilutive common shares outstanding used in determining net loss per share are as follows:

		Three Months								Six Months
		Ended 30 September								Ended 30 September
(Millions of shares)		2010				2009				2010				2009
Basic common shares outstanding			435.5				432.5				435.1				432.4
Dilutive effect of stock awards			—				—				—				—
Diluted common shares outstanding			435.5				432.5				435.1				432.4

(US dollars)		2010				2009				2010				2009
Net loss per share — basic and diluted		$	(0.97	)		$	(0.05	)		$	(0.73	)		$	(0.23	)

Potential common shares of 15.4 million and 14.1 million for the three months ended 30 September 2010 and 2009, respectively, and 10.3 million and 16.3 million for the six months ended 30 September 2010 and 2009, respectively, have been excluded from the calculation of diluted common shares outstanding because the effect of their inclusion would be anti-dilutive.

Unless they are anti-dilutive, restricted stock units (“RSUs”) which vest solely based on continued employment are considered to be outstanding as of their issuance date for purposes of computing diluted EPS and are included in the calculation of diluted EPS using the Treasury Method. Once these RSUs vest, they are included in the basic EPS calculation on a weighted-average basis.

RSUs which vest based on performance or market conditions are considered contingent shares. At each reporting date prior to the end of the contingency period, the Company determines the number of contingently issuable shares to include in the diluted EPS, as the number of shares that would be issuable under the terms of the RSU arrangement, if the end of the reporting period were the end of the contingency period. Once these RSUs vest, they are included in the basic EPS calculation on a weighted-average basis.

Asbestos

At 31 March 2006, the Company recorded an asbestos provision based on the estimated economic impact of the Original Final Funding Agreement (“Original FFA”) entered into on 1 December 2005. The amount of the net asbestos provision of US$715.6 million was based on the terms of the Original FFA, which included an actuarial estimate prepared by KPMG Actuaries as of 31 March 2006 of the projected future cash outflows, undiscounted and uninflated, and the anticipated tax deduction arising from Australian legislation which came into force on 6 April 2006. The amount represented the net economic impact that the Company was prepared to assume as a result of its voluntary funding of the asbestos liability which was under negotiation with various parties.

In February 2007, the shareholders approved the Amended Final Funding Agreement (“Amended FFA”) entered into on 21 November 2006 to provide long-term funding to the

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Asbestos Injuries Compensation Fund (“AICF”), a special purpose fund that provides compensation for Australian-related personal injuries for which certain former subsidiary companies of James Hardie in Australia (being Amaca Pty Ltd (“Amaca”), Amaba Pty Ltd (“Amaba”) and ABN 60 Pty Limited (“ABN 60”) (collectively, the “Former James Hardie Companies”)) are found liable.

Amaca and Amaba separated from the James Hardie Group in February 2001. ABN 60 separated from the James Hardie Group in March 2003. Upon shareholder approval of the Amended FFA in February 2007, shares in the Former James Hardie Companies were transferred to the AICF. The AICF manages Australian asbestos-related personal injury claims made against the Former James Hardie Companies and makes compensation payments in respect of those proven claims.

AICF

In February 2007, the shareholders approved a proposal pursuant to which the Company provides long-term funding to the AICF. The Company owns 100% of James Hardie 117 Pty Ltd (the “Performing Subsidiary”) that funds the AICF subject to the provisions of the Amended FFA. The Company appoints three of the AICF directors and the NSW Government appoints two of the AICF directors.

Under the terms of the Amended FFA, the Performing Subsidiary has an obligation to make payments to the AICF on an annual basis, depending on the Company’s net operating cash flow. The amounts of these annual payments are dependent on several factors, including the Company’s free cash flow (as defined in the Amended FFA), actuarial estimations, actual claims paid, operating expenses of the AICF and the annual cash flow cap. JHI SE guarantees the Performing Subsidiary’s obligation. As a result, the Company considers it to be the primary beneficiary of the AICF.

The Company’s interest in the AICF is considered variable because the potential impact on the Company will vary based upon the annual actuarial assessments obtained by the AICF with respect to asbestos-related personal injury claims against the Former James Hardie Companies.

Although the Company has no legal ownership in the AICF, the Company consolidates the AICF due to its pecuniary and contractual interests in the AICF as a result of the funding arrangements outlined in the Amended FFA. The Company’s consolidation of the AICF resulted in a separate recognition of the asbestos liability and certain other items including the related Australian income tax benefit. Among other items, the Company recorded a deferred tax asset for the anticipated tax benefit related to asbestos liabilities and a corresponding increase in the asbestos liability. As stated in “Deferred Income Taxes” below, the Performing Subsidiary is able to claim a tax deduction for contributions to the asbestos fund. For the year ended 31 March 2007, the Company classified the expense related to the increase of the asbestos liability as asbestos adjustments and the Company classified the benefit related to the recording of the related deferred tax asset as an income tax benefit (expense) on its consolidated statements of operations.

For the six months ended 30 September 2010, the Company did not provide financial or other support to the AICF that it was not previously contractually required to provide. Future

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

funding of the AICF by the Company continues to be linked under the terms of the Amended FFA to the Company’s long-term financial success, specifically the Company’s ability to generate net operating cash flow.

The AICF has operating costs that are claims related and non-claims related. Claims related costs incurred by the AICF are treated as reductions in the accrued asbestos liability balances previously reflected in the consolidated balance sheets. Non-claims related operating costs incurred by the AICF are expensed as incurred in the line item Selling, general and administrative expenses in the consolidated statements of operations. The AICF earns interest on its cash and cash equivalents and on its short-term investments; these amounts are included in the line item Interest income in the consolidated statements of operations.

See Asbestos-Related Assets and Liabilities below and Note 7 for further details on the related assets and liabilities recorded in the Company’s consolidated balance sheet under the terms of the Amended FFA.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Asbestos-Related Assets and Liabilities

The Company has recorded on its consolidated balance sheets certain assets and liabilities under the terms of the Amended FFA. These items are Australian dollar-denominated and are subject to translation into US dollars at each reporting date. These assets and liabilities are referred to by the Company as Asbestos-Related Assets and Liabilities and include:

Asbestos Liability

The amount of the asbestos liability reflects the terms of the Amended FFA, which has been calculated by reference to (but is not exclusively based upon) the most recent actuarial estimate of projected future cash flows prepared by KPMG Actuaries. Based on their assumptions, they arrived at a range of possible total cash flows and proposed a central estimate which is intended to reflect an expected outcome. The Company views the central estimate as the basis for recording the asbestos liability in the Company’s financial statements, which under US GAAP, it considers the best estimate. The asbestos liability includes these cash flows as undiscounted and uninflated on the basis that it is inappropriate to discount or inflate future cash flows when the timing and amounts of such cash flows are not fixed or readily determinable.

Adjustments in the asbestos liability due to changes in the actuarial estimate of projected future cash flows and changes in the estimate of future operating costs of the AICF are reflected in the consolidated statements of operations during the period in which they occur. Claims paid by the AICF and claims-handling costs incurred by the AICF are treated as reductions in the accrued balances previously reflected in the consolidated balance sheets.

Insurance Receivable

There are various insurance policies and insurance companies with exposure to the asbestos claims. The insurance receivable determined by KPMG Actuaries reflects the recoveries expected from all such policies based on the expected pattern of claims against such policies less an allowance for credit risk based on credit agency ratings. The insurance receivable generally includes these cash flows as undiscounted and uninflated on the basis that it is inappropriate to discount or inflate future cash flows when the timing and amounts of such cash flows are not fixed or readily determinable. The Company records insurance receivables that are deemed probable of being realised.

Included in insurance receivable is US$10.1 million recorded on a discounted basis because the timing of the recoveries has been agreed with the insurer.

Adjustments in insurance receivable due to changes in the actuarial estimate, or changes in the Company’s assessment of recoverability are reflected in the consolidated statements of operations during the period in which they occur. Insurance recoveries are treated as a reduction in the insurance receivable balance.

Workers’ Compensation

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Workers’ compensation claims are claims made by former employees of the Former James Hardie Companies. Such past, current and future reported claims were insured with various insurance companies and the various Australian State-based workers’ compensation schemes (collectively “workers’ compensation schemes or policies”). An estimate of the liability related to workers’ compensation claims is prepared by KPMG Actuaries as part of the annual actuarial assessment. This estimate contains two components, amounts that will be met by a workers’ compensation scheme or policy, and amounts that will be met by the Former James Hardie Companies.

The portion of the estimate that is expected to be met by the Former James Hardie Companies is included as part of the Asbestos Liability. Adjustments to this estimate are reflected in the consolidated statements of operations during the period in which they occur.

The portion of the estimate that is expected to be met by the workers’ compensation schemes or policies of the Former James Hardie Companies is recorded by the Company as a workers’ compensation liability. Since these amounts are expected to be paid by the workers’ compensation schemes or policies, the Company records an equivalent workers’ compensation receivable.

Adjustments to the workers’ compensation liability result in an equal adjustment in the workers’ compensation receivable recorded by the Company and have no effect on the consolidated statements of operations.

Asbestos-Related Research and Education Contributions

The Company agreed to fund asbestos-related research and education initiatives for a period of 10 years, beginning in fiscal year 2007. The liabilities related to these agreements are included in “Other Liabilities” on the consolidated balance sheets.

Restricted Cash and Cash Equivalents

Cash and cash equivalents of the AICF are reflected as restricted assets, as the use of these assets is restricted to the settlement of asbestos claims and payment of the operating costs of the AICF. The Company classifies these amounts as a current asset on the face of the consolidated balance sheet since they are highly liquid.

Restricted Short-Term Investments

Short-term investments consist of highly liquid investments held in the custody of major financial institutions. All short-term investments are classified as available for sale and are recorded at market value using the specific identification method. Unrealised gains and losses on the market value of these investments are included as a separate component of accumulated other comprehensive income. Realised gains and losses on short-term investments are recognised in Other Income on the consolidated statement of operations.

AICF – Other Assets and Liabilities

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Other assets and liabilities of the AICF, including fixed assets, trade receivables and payables are included on the consolidated balance sheets under the appropriate captions and their use is restricted to the operations of the AICF.

Deferred Income Taxes

The Performing Subsidiary is able to claim a tax deduction for its contributions to the AICF over a five-year period from the date of contribution. Consequently, a deferred tax asset has been recognised equivalent to the anticipated tax benefit over the life of the Amended FFA. The current portion of the deferred tax asset represents Australian tax benefits that will be available to the Company during the subsequent twelve months.

Adjustments are made to the deferred income tax asset as adjustments to the asbestos-related assets and liabilities are recorded.

Foreign Currency Translation

The asbestos-related assets and liabilities are denominated in Australian dollars and thus the reported values of these asbestos-related assets and liabilities in the Company’s consolidated balance sheets in US dollars are subject to adjustment depending on the closing exchange rate between the two currencies at the balance sheet date. The effect of foreign exchange rate movements between these currencies is included in Asbestos Adjustments in the consolidated statements of operations.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (“VIEs”). This accounting guidance eliminates the exemption for qualifying special purpose entities and establishes a new approach for determining the primary beneficiary of a VIE based on whether the entity (a) has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (b) has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The guidance requires an ongoing reconsideration of the primary beneficiary, and amends the events that trigger a reassessment of whether an entity is a VIE. Enhanced disclosures are also required to provide information about an enterprise’s involvement in a VIE. The guidance was effective for the first annual reporting period beginning after 15 November 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.

In January 2010, the FASB issued ASU No. 2010-06, which requires new fair value disclosures pertaining to significant transfers in and out of Level 1 and Level 2 fair value measurements and the reasons for the transfers and activity. For Level 3 fair value measurements, purchases, sales, issuances and settlements must be reported on a gross basis. Further, additional disclosures are required by class of assets or liabilities, as well as inputs used to measure fair value and valuation techniques. ASU No. 2010-06 is effective for interim and annual reporting periods beginning after 15 December 2009, except for the disclosures about purchases, sales, issuances and settlements on a gross basis, which is effective for fiscal years beginning after 15 December 2010. The adoption of the effective portions of this ASU did not result in a material impact on the Company’s consolidated financial position, results of operations or cash flows. The Company does not anticipate that the

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

adoption of the remaining portions of this ASU will result in a material impact to its consolidated financial position, results of operations or cash flows.

In April 2010, the FASB issued ASU No. 2010-13, which provides additional guidance concerning the classification of an employee share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. This update clarifies that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments included in this update do not expand the recurring disclosure requirements already in effect. The amendments in this update are effective for fiscal years and interim periods beginning on or after 15 December 2010. The Company does not anticipate that the adoption of this ASU will result in a material impact on its consolidated financial position, results of operations or cash flows.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

3. Restricted Cash

Included in restricted cash and cash equivalents is US$5.3 million related to an insurance policy at 30 September 2010 and 31 March 2010, which restrict the cash from use for general corporate purposes.

4. Inventories

Inventories consist of the following components:

		30 September				31 March
(Millions of US dollars)		2010				2010
Finished goods		$	94.4			$	99.8
Work-in-process			5.0				4.8
Raw materials and supplies			54.4				52.0
Provision for obsolete finished goods and raw materials			(7.1	)			(7.5	)
Total inventories		$	146.7			$	149.1

5. Property, Plant and Equipment

Property, plant and equipment consist of the following components:

										Machinery
										and				Construction
(Millions of US dollars)		Land				Buildings				Equipment				In Progress1				Total
Balance at 31 March 2010:
Cost		$	18.1			$	215.9			$	939.6			$	47.7			$	1,221.3
Accumulated depreciation			—				(71.1	)			(439.6	)			—				(510.7	)
Net book value			18.1				144.8				500.0				47.7				710.6
Changes in net book value:
Capital expenditures			—				0.8				34.0				(10.0	)			24.8
Retirements and sales			—				—				(0.6	)			—				(0.6	)
Depreciation			—				(4.8	)			(26.2	)			—				(31.0	)
Foreign currency translation adjustments			—				—				4.7				—				4.7
Total changes			—				(4.0	)			11.9				(10.0	)			(2.1	)
Balance at 30 September 2010:
Cost			18.1				216.7				977.7				37.7				1,250.2
Accumulated depreciation			—				(75.9	)			(465.8	)			—				(541.7	)
Net book value		$	18.1			$	140.8			$	511.9			$	37.7			$	708.5

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

6. Short and Long-Term Debt

At 30 September 2010, the Company’s credit facilities consisted of:

		Effective				Total				Principal
Description		Interest Rate				Facility				Drawn
(US$ millions)
Term facilities, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until February 2011			1.28	%		$	45.0			$	45.0
Term facilities, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until December 2012			3.25	%			130.0				22.0
Term facilities, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until February 2013			1.16	%			90.0				90.0
Total						$	265.0			$	157.0

The weighted average fixed interest rate on the Company’s interest rate swap contracts is set forth in Note 8. The weighted average interest rate on the Company’s total debt was 1.49% and 0.92% at 30 September 2010 and 31 March 2010, respectively, and the weighted average term of all debt facilities is 2.0 years at 30 September 2010.

For all facilities, the interest rate is calculated two business days prior to the commencement of each draw-down period based on the US$ London Interbank Offered Rate (“LIBOR”) plus the margins of individual lenders and is payable at the end of each draw-down period. At 30 September 2010, there was US$157.0 million drawn under the combined facilities and US$108.0 million was unutilised and available.

On 16 June 2010, US$161.7 million of the Company’s term facilities matured, which included US$95.0 million of term facilities that were outstanding at 31 March 2010. The Company did not refinance these facilities; accordingly, amounts outstanding under these facilities were repaid by using longer-term facilities.

At 30 September 2010, the Company was in compliance with all restrictive debt covenants contained in its credit facility agreements. Under the most restrictive of these covenants, the Company (i) is required to maintain certain ratios of indebtedness to equity which do not exceed certain maximums, excluding assets, liabilities and other balance sheet items of the AICF, Amaba, Amaca, ABN 60 and Marlew Mining Pty Limited, (ii) must maintain a minimum level of net worth, excluding assets, liabilities and other balance sheet items of the AICF; for these purposes “net worth” means the sum of the par value (or value stated in the books of the James Hardie Group) of the capital stock (but excluding treasury stock and capital stock subscribed or unissued) of the James Hardie Group, the paid in capital and retained earnings of the James Hardie Group and the aggregate amount of provisions made by the James Hardie Group for asbestos related liabilities, in each case, as such amounts would be shown in the consolidated balance sheet of the James Hardie Group if Amaba, Amaca, ABN

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

60 and Marlew Mining Pty Limited were not accounted for as subsidiaries of the Company, (iii) must meet or exceed a minimum ratio of earnings before interest and taxes to net interest charges, excluding all income, expense and other profit and loss statement impacts of the AICF, Amaba, Amaca, ABN 60 and Marlew Mining Pty Limited, and (iv) must ensure that no more than 35% of Free Cash Flow (as defined in the Amended FFA) in any given Financial Year is contributed to the AICF on the payment dates under the Amended FFA in the next following Financial Year. The limit does not apply to payments of interest to the AICF. Such limits are consistent with the contractual liabilities of the Performing Subsidiary and the Company under the Amended FFA.

7. Asbestos

The Amended FFA was approved by shareholders in February 2007 to provide long-term funding to the AICF. The accounting policies utilised by the Company to account for the Amended FFA are described in Note 2.

Asbestos Adjustments

The asbestos adjustments included in the consolidated statements of operations comprise unfavourable foreign currency movements of US$107.8 million and US$62.7 million for the three months ended 30 September 2010 and 2009, respectively, and unfavourable foreign currency movements of US$44.7 million and US$182.5 million for the six months ended 30 September 2010 and 2009, respectively.

Asbestos-Related Assets and Liabilities

Under the terms of the Amended FFA, the Company has included on its consolidated balance sheets certain asbestos-related assets and liabilities. These amounts are detailed in the table below, and the net total of these asbestos-related assets and liabilities is referred to by the Company as the “Net Amended FFA Liability”.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

		30 September				31 March
(Millions of US dollars)		2010				2010
Asbestos liability — current		$	(112.6	)		$	(106.7	)
Asbestos liability — non-current			(1,548.6	)			(1,512.5	)
Asbestos liability — Total			(1,661.2	)			(1,619.2	)
Insurance receivable — current			17.6				16.7
Insurance receivable — non-current			176.7				185.1
Insurance receivable — Total			194.3				201.8
Workers’ compensation asset — current			0.1				0.1
Workers’ compensation asset — non-current			104.3				98.8
Workers’ compensation liability — current			(0.1	)			(0.1	)
Workers’ compensation liability — non-current			(104.3	)			(98.8	)
Workers’ compensation — Total			—				—
Deferred income taxes — current			15.6				16.4
Deferred income taxes — non-current			433.7				420.0
Deferred income taxes — Total			449.3				436.4
Income tax payable			17.3				16.5
Other net liabilities			(1.2	)			(1.7	)
Net Amended FFA liability			(1,001.5	)			(966.2	)
Restricted cash and cash equivalents and restricted short-term investment assets of the AICF			103.4				57.8
Unfunded Net Amended FFA liability		$	(898.1	)		$	(908.4	)

On 1 July 2010, the Company contributed US$63.7 million to the AICF in accordance with the terms of the Amended FFA.

Asbestos Liability

The amount of the asbestos liability reflects the terms of the Amended FFA, which has been calculated by reference to (but is not exclusively based upon) the most recent actuarial estimate of the projected future asbestos-related cash flows prepared by KPMG Actuaries. The asbestos liability also includes an allowance for the future claims-handling costs of the AICF. The Company receives an updated actuarial estimate as of 31 March each year. The last actuarial assessment was performed as of 31 March 2010.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

The changes in the asbestos liability for the six months ended 30 September 2010 are detailed in the table below:

		A$				A$ to US$				US$
(Millions of US dollars)		Millions				rate				Millions
Asbestos liability — 31 March 2010		A$	(1,768.0	)			1.0919			$	(1,619.2	)
Asbestos claims paid1			48.7				1.1190				43.5
AICF claims-handling costs incurred1			1.3				1.1190				1.2
Loss on foreign currency exchange											(86.7	)
Asbestos liability — 30 September 2010		A$	(1,718.0	)			1.0342			$	(1,661.2	)

Insurance Receivable — Asbestos

The changes in the insurance receivable for the six months ended 30 September 2010 are detailed in the table below:

		A$				A$ to US$				US$
(Millions of US dollars)		Millions				rate				Millions
Insurance receivable — 31 March 2010		A$	220.3				1.0919			$	201.8
Insurance recoveries1			(19.4	)			1.1190				(17.3	)
Gain on foreign currency exchange											9.8
Insurance receivable — 30 September 2010		A$	200.9				1.0342			$	194.3

Deferred Income Taxes — Asbestos

The changes in the deferred income taxes — asbestos for the six months ended 30 September 2010 are detailed in the table below:

		A$				A$ to US$				US$
(Millions of US dollars)		Millions				rate				Millions
Deferred tax assets — 31 March 2010		A$	476.5				1.0919			$	436.4
Amounts offset against income tax payable1			(11.2	)			1.1190				(10.0	)
AICF earnings1			(0.6	)			1.1190				(0.5	)
Gain on foreign currency exchange											23.4
Deferred tax assets — 30 September 2010		A$	464.7				1.0342			$	449.3

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Income Taxes Payable

A portion of the deferred income tax asset is applied against the Company’s income tax payable. At 30 September 2010 and 31 March 2010, this amount was US$10.0 million and US$15.3 million, respectively. During the six months ended 30 September 2010, there was a US$1.0 million favourable effect of foreign currency exchange.

Other Net Liabilities

Other net liabilities include a provision for asbestos-related education and medical research contributions of US$2.8 million and US$2.6 million at 30 September 2010 and 31 March 2010, respectively. Also included in other net liabilities are the other assets and liabilities of the AICF including trade receivables, prepayments, fixed assets, trade payables and accruals.

These other assets and liabilities of the AICF were a net asset of US$1.4 million and US$0.9 million at 30 September 2010 and 31 March 2010, respectively. During the six months ended 30 September 2010, there was a US$0.1 million unfavourable effect of foreign currency exchange on the other net liabilities.

Restricted Cash and Short-term Investments of the AICF

Cash and cash equivalents and short-term investments of the AICF are reflected as restricted assets as these assets are restricted for use in the settlement of asbestos claims and payment of the operating costs of the AICF.

At 30 September 2010, the Company revalued the AICF’s short-term investments available-for-sale resulting in a positive mark-to-market fair value adjustment of US$1.1 million. This appreciation in the value of the investments was recorded as an unrealised gain in Other Comprehensive Income.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

The changes in the restricted cash and short-term investments of the AICF for the six months ended 30 September 2010 are detailed in the table below:

		A$				A$ to US$				US$
(Millions of US dollars)		Millions				rate				Millions
Restricted cash and cash equivalents and restricted short-term investments — 31 March 2010		A$	63.1				1.0919			$	57.8
Asbestos claims paid1			(48.7	)			1.1190				(43.5	)
Payments received in accordance with AFFA2			72.8				1.1430				63.7
AICF operating costs paid — claims-handling1			(1.3	)			1.1190				(1.2	)
AICF operating costs paid — non claims-handling1			(1.1	)			1.1190				(1.0	)
Insurance recoveries1			19.4				1.1190				17.3
Interest and investment income1			2.0				1.1190				1.7
Unrealised gain on investments1			1.2				1.1190				1.1
Other1			(0.5	)			1.1190				(0.4	)
Gain on foreign currency exchange											7.9
Restricted cash and cash equivalents and restricted short-term investments — 30 September 2010		A$	106.9				1.0342			$	103.4

Claims Data

The AICF provides compensation payments for Australian asbestos-related personal injury claims against the Former James Hardie Companies. The claims data in this section are reflective of these Australian asbestos-related personal injury claims against the Former James Hardie Companies.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

The following table shows the activity related to the numbers of open claims, new claims and closed claims during each of the past five years and the average settlement per settled claim and case closed:

		Six Months Ended				For the Years Ended 31 March
		30 September 2010				2010				2009				2008				2007
Number of open claims at beginning of period			529				534				523				490				564
Number of new claims			256				535				607				552				463
Number of closed claims			195				540				596				519				537
Number of open claims at end of period			590				529				534				523				490
Average settlement amount per settled claim		A$	193,889			A$	190,627			A$	190,638			A$	147,349			A$	166,164
Average settlement amount per case closed		A$	172,014			A$	171,917			A$	168,248			A$	126,340			A$	128,723
Average settlement amount per settled claim		US$	173,270			US$	162,250			US$	151,300			US$	128,096			US$	127,163
Average settlement amount per case closed		US$	153,721			US$	146,325			US$	133,530			US$	109,832			US$	98,510

Under the terms of the Amended FFA, the Company has obtained rights of access to actuarial information produced for the AICF by the actuary appointed by the AICF (the “Approved Actuary”). The Company’s future disclosures with respect to claims statistics are subject to it obtaining such information from the Approved Actuary. The Company has had no general right (and has not obtained any right under the Amended FFA) to audit or otherwise require independent verification of such information or the methodologies to be adopted by the Approved Actuary. As such, the Company will need to rely on the accuracy and completeness of the information and analysis of the Approved Actuary when making future disclosures with respect to claims statistics.

8. Fair Value Measurements

Assets and liabilities of the Company that are carried at fair value are classified in one of the following three categories:

Level 1		Quoted market prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date;
Level 2		Observable market-based inputs or unobservable inputs that are corroborated by market data for the asset or liability at the measurement date;
Level 3		Unobservable inputs that are not corroborated by market data used when there is minimal market activity for the asset or liability at the measurement date.

Fair value measurements of assets and liabilities are assigned a level within the fair value hierarchy based on the lowest level of any input that is significant to the fair value measurement in its entirety.

The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash and cash equivalents, restricted short-term investments, trade receivables, trade payables, debt and interest rate swaps.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Cash and cash equivalents, Restricted cash and cash equivalents, Trade receivables and Trade payables — These items are recorded in the financial statements at historical cost. The historical cost basis for these amounts is estimated to approximate their respective fair values due to the short maturity of these instruments.

Restricted short-term investments — Restricted short-term investments are recorded in the financial statements at fair value. The fair value of restricted short-term investments is based on quoted market prices. Changes in fair value are recorded as other comprehensive income and included as a component in shareholders’ deficit. Restricted short-term investments are held and managed by the AICF and are reported at their fair value. The Company recorded an unrealised gain on these restricted short-term investments of US$1.1 million for the six months ended 30 September 2010. This unrealised gain is included as a separate component of accumulated other comprehensive income.

Debt — Debt is generally recorded in the financial statements at historical cost. The carrying value of debt provided under the Company’s credit facilities approximates fair value since the interest rates charged under these credit facilities are tied directly to market rates and fluctuate as market rates change.

Interest Rate Swaps — Interest rate swaps are recorded in the financial statements at fair value. Changes in fair value are recorded in the statement of operations in Other Income. At 30 September 2010, the Company had interest rate swap contracts with a total notional principal of US$200.0 million. For all of these interest rate swap contracts, the Company has agreed to pay fixed interest rates while receiving a floating interest rate. The purpose of holding these interest rate swap contracts is to protect against upward movements in US$ LIBOR and the associated interest the Company pays on its external credit facilities.

The fair value of interest rate swap contracts is calculated based on the fixed rate, notional principal, settlement date and present value of the future cash inflows and outflows based on the terms of the agreement and the future floating interest rates as determined by a future interest rate yield curve. The model used to value the interest rate swap contracts is based upon well recognised financial principles, and interest rate yield curves can be validated through readily observable data by external sources. Although readily observable data is used in the valuations, different valuation methodologies could have an effect on the estimated fair value. Accordingly, the interest rate swap contracts are categorised as Level 2.

At 30 September 2010 the weighted average fixed interest rate of these contracts is 2.4% and the weighted average remaining life is 3.1 years. These contracts have a fair value of US$9.8 million, which is included in Accounts Payable. For the six months ended 30 September 2010, the Company included in Other Income an unrealised loss on interest rate swaps of US$7.3 million. Included in Interest Expense is a realised loss on settlements of interest rate swap contracts of US$1.8 million for the six months ended 30 September 2010.

The following table sets forth by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis at 30 September 2010 according to the valuation techniques the Company used to determine their fair values.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

						Fair Value Measurements
		Fair Value at				Using Inputs Considered as
(Millions of US dollars)		30 September 2010				Level 1				Level 2				Level 3
Assets
Cash and cash equivalents		$	17.6			$	17.6			$	—			$	—
Restricted cash and cash equivalents			103.4				103.4				—				—
Restricted short-term investments			5.3				5.3				—				—
Total Assets		$	126.3			$	126.3			$	—			$	—
Liabilities
Interest rate swap contracts			9.8				—				9.8				—
Total Liabilities		$	9.8			$	—			$	9.8			$	—

9. Commitment and Contingencies

The Company is involved from time to time in various legal proceedings and administrative actions incidental or related to the normal conduct of its business. Although it is impossible to predict the outcome of any pending legal proceeding, management believes that such proceedings and actions should not, except as it relates to asbestos, the Australian Securities and Investments Commission (“ASIC”) proceedings and income taxes as described in these financial statements, individually or in the aggregate, have a material adverse effect on its consolidated financial position, results of operations or cash flows.

ASIC Proceedings

In February 2007, ASIC commenced civil proceedings in the Supreme Court of New South Wales against the Company, ABN 60 and ten then-present or former officers and directors of the James Hardie Group. While the subject matter of the allegations varied between individual defendants, the allegations against the Company were confined to alleged contraventions of provisions of the Australian Corporations Act/Law relating to continuous disclosure and engaging in misleading or deceptive conduct in respect of a security.

The Company defended each of the allegations made by ASIC and the orders sought against it in the proceedings, as did the other former directors and officers of the Company.

The proceedings commenced on 29 September 2008 before his Honour Justice Gzell. On 23 April 2009, Justice Gzell issued judgment against the Company and the ten former officers and directors of the Company. All defendants other than two lodged appeals against Justice Gzell’s judgments, and ASIC responded by lodging cross appeals against the appellants. The appeals lodged by the former directors and officers were heard in April 2010 and the appeal lodged by the Company was heard in May 2010. A final judgment has not been rendered.

Depending upon the outcome of the appeals and cross-appeals, further or different findings may be made as to the liability of each defendant-appellant, any banning orders, fines payable, and as to the costs of the appeal and the first instance proceedings that the Company may become liable for either in respect of its own appeal or the appeals of other

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

defendants-appellants under indemnities. As with the first instance proceedings, the Company has agreed to pay a portion of the costs of bringing and defending appeals, with the remaining costs being met by third parties, including former directors and officers, in accordance with the terms of their indemnities.

On 30 September 2010, the Company entered into agreements with third parties and subsequently received payment for US$10.3 million by 8 October 2010 relating to the costs of the ASIC proceedings for certain of the ten former officers and directors. These recoveries are included within Accounts and Other Receivables at 30 September 2010 with a corresponding reduction to selling, general and administrative expenses for the three months and half-year ended 30 September 2010. The Company notes that other recoveries may be available, including as a result of successful appeals or repayments by third parties, including former directors and officers, in accordance with the terms of their indemnities.

It is the Company’s policy to expense legal costs as incurred. Losses and expenses arising from the ASIC proceedings could have a material adverse effect on the Company’s financial position, liquidity, results of operations and cash flows.

As a result of the above uncertainties, it is not presently possible for the Company to estimate the amount or range of amounts, including costs that it might become liable to pay as a consequence of the appeal proceedings. Accordingly, as of 30 September 2010, the Company has not recorded any related loss reserves.

Environmental and Legal

The operations of the Company, like those of other companies engaged in similar businesses, are subject to a number of laws and regulations on air and water quality, waste handling and disposal. The Company’s policy is to accrue for environmental costs when it is determined that it is probable that an obligation exists and the amount can be reasonably estimated. In the opinion of management, based on information presently known except as set forth above, the ultimate liability for such matters should not have a material adverse effect on either the Company’s consolidated financial position, results of operations or cash flows.

10. Australian Taxation Office — Amended Assessment

In March 2006, RCI Pty Ltd (“RCI”), a wholly-owned subsidiary of the Company, received an amended assessment from the ATO with respect to RCI’s income tax return for the year ended 31 March 1999. The amended assessment related to the amount of net capital gains arising as a result of an internal corporate restructure carried out in 1998 and was issued pursuant to the discretion granted to the Commissioner of Taxation under Part IVA of the Income Tax Assessment Act 1936. The amended assessment issued to RCI was for a total of A$412.0 million. However, after subsequent remissions of general interest charges (“GIC”) by the ATO the total was changed to A$368.0 million, comprising primary tax after allowable credits, penalties, and GIC.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

During fiscal year 2007 RCI agreed with the ATO that in accordance with the ATO Receivable Policy, RCI would pay 50% of the total amended assessment being A$184.0 million (US$152.5 million), and provide a guarantee from James Hardie Industries SE (formerly James Hardie Industries N.V.) in favour of the ATO for the remaining unpaid 50% of the amended assessment, pending outcome of the appeal of the amended assessment. RCI also agreed to pay GIC accruing on the unpaid balance of the amended assessment in arrears on a quarterly basis.

The ATO conceded that RCI has a reasonably arguable position that the amount of net capital gains arising as a result of the corporate restructure carried out in 1998 was reported correctly in the fiscal year 1999 tax return and that Part IVA does not apply.

On 30 May 2007, the ATO issued a Notice of Decision disallowing RCI’s objection to the amended assessment (“Objection Decision”). On 11 July 2007, RCI filed an application appealing the Objection Decision and the matter was heard before the Federal Court of Australia in September 2009.

On 1 September 2010, the Federal Court of Australia dismissed RCI’s appeal.

Prior to the Federal Court’s decision on RCI’s appeal, the Company believed it was more-likely-than-not that the tax position reported in RCI’s tax return for the 1999 fiscal year would be upheld on appeal. As a result, the Company treated the payment of 50% of the amended assessment, GIC and interest accrued on amounts paid to the ATO with respect to the amended assessment as a deposit on its consolidated balance sheet.

As a result of the Federal Court’s decision, the Company re-assessed its tax position with respect to the amended assessment and concluded that the ‘more-likely-than-not’ recognition threshold as prescribed by US GAAP was no longer met. Accordingly, the Company removed the deposit with the ATO from its consolidated balance sheet and recognised a non-cash expense of US$345.2 million (A$388.0 million) on its consolidated statement of operations for the six months ended 30 September 2010. In addition, the Company recognised an uncertain tax position of US$178.2 million (A$184.3 million) on its consolidated balance sheet relating to the unpaid portion of the amended assessment.

RCI strongly disputes the amended assessment and is pursuing an appeal of the Court’s judgment before the Full Court of the Federal Court of Australia.

Prospectively, the Company will expense future payments of GIC to the ATO until RCI ultimately prevails on the matter or the remaining outstanding balance of the amended assessment is paid.

11. Income Taxes

Due to the size and nature of its business, the Company is subject to ongoing reviews by taxing jurisdictions on various tax matters. The Company accrues for tax contingencies based upon its best estimate of the taxes ultimately expected to be paid, which it updates over time as more information becomes available. Such amounts are included in taxes

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

payable or other non-current liabilities, as appropriate. If the Company ultimately determines that payment of these amounts is unnecessary, the Company reverses the liability and recognises a tax benefit during the period in which the Company determines that the liability is no longer necessary. The Company records additional tax expense in the period in which it determines that the recorded tax liability is less than the ultimate assessment it expects.

The Company or its subsidiaries files income tax returns in various jurisdictions including the United States, Ireland, The Netherlands, Australia, New Zealand and the Philippines. The Company is no longer subject to US federal examinations by US Internal Revenue Service (“IRS”) for tax years prior to tax year 2007. The Company is no longer subject to examinations by The Netherlands tax authority, for tax years prior to tax year 2005. The Company is no longer subject to examinations by the Australian Taxation Office (“ATO”) for tax years prior to tax year 2007.

Unrecognised Tax Benefits

A reconciliation of the beginning and ending amount of unrecognised tax benefits and interest and penalties are as follows:

		Unrecognised				Interest and
(US$ millions)		tax benefits				Penalties
Balance at 31 March 2010		$	7.7			$	(26.9	)
Additions for tax positions of the current year			—				—
Additions for tax positions of prior year			153.2				191.9
Other reductions for the tax positions of prior periods			(0.8	)			(0.3	)
Foreign currency translation adjustment			13.3				15.1
Balance at 30 September 2010		$	173.4			$	179.8

As of 30 September 2010, the total amount of unrecognised tax benefits and the total amount of interest and penalties accrued or prepaid by the Company related to unrecognised tax benefits that, if recognised, would affect the effective tax rate is US$173.4 million and US$179.8 million, respectively.

The Company recognises penalties and interest accrued related to unrecognised tax benefits in income tax expense. During the six months ended 30 September 2010, the total amount of interest and penalties recognised in tax expense was US$191.6 million.

Except for the liability associated with the ATO amended assessment as disclosed in Note 10, the liabilities associated with uncertain tax benefits are included in other non-current liabilities on the Company’s consolidated balance sheet.

A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognised tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the settlement of ongoing litigation, the completion of ongoing examinations, the expiration of the statute of limitations, or other circumstances. At this time, an estimate of the range of the reasonably possible change cannot be made.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

12. Stock-Based Compensation

Compensation expense arising from equity-based award grants as estimated using pricing models was US$3.0 million and US$2.0 million for the three months ended 30 September 2010 and 2009, respectively, and US$4.8 million and US$4.0 million for the six months ended 30 September 2010 and 2009, respectively. As of 30 September 2010, the unrecorded deferred stock-based compensation balance related to equity awards was US$12.7 million after estimated forfeitures and will be recognised over an estimated weighted average amortisation period of 2.0 years.

Stock Options

The Company estimates the fair value of each stock option on the date of grant using either the Black-Scholes option-pricing model or a binomial lattice model that incorporates a Monte Carlo Simulation (the “Monte Carlo method”). There were no stock options granted during the six months ended 30 September 2010 and 2009.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

The following table summarises the Company’s stock options available for grant and the movement in the Company’s outstanding options during the noted period:

						Outstanding Options
										Weighted
		Shares								Average
		Available for								Exercise
		Grant				Number				Price (A$)
Balance at 31 March 2010			25,288,048				14,444,438				7.44
Exercised							(98,643	)			3.85
Forfeited							(638,523	)			7.74
Forfeitures available for re-grant			638,523
Balance at 30 September 2010			25,926,571				13,707,272				7.45

Restricted Stock

The Company estimates the fair value of restricted stock on the date of grant and recognises this estimated fair value as compensation expense over the periods in which the restricted stock vests.

The following table summarises the Company’s restricted stock activity during the noted period:

						Weighted
						Average Fair
						Value at Grant
		Shares				Date (A$)
Non-vested at 31 March 2010			4,736,721				4.57
Granted			1,758,651				5.90
Vested			(742,815	)			4.94
Forfeited			(681,753	)			5.16
Non-vested at 30 September 2010			5,070,804				4.89

Restricted Stock — performance vesting

The Company granted 807,457 restricted stock units with a performance vesting condition under the LTIP to senior executives of the Company for the six months ended 30 September 2010. The vesting of the restricted stock units is deferred for two years and the amount of restricted stock units that will vest at that time is dependent on the scorecard rating of the award recipient. The scorecard reflects a number of key qualitative and quantitative performance objectives and the outcomes the Board expects to see achieved at the end of the vesting period.

When the scorecard is applied at the conclusion of fiscal year 2012, the award recipients may receive all, some, or none of their awards. The scorecard can only be applied by the

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Board to exercise discretion at the percentage of restricted stock units that will vest. The scorecard may not be applied to enhance the maximum award that was originally granted to the award recipient.

The fair value of each restricted stock unit (performance vesting) is equal to the market value of the Company’s common stock on the date of grant, adjusted for the fair value of dividends as the restricted stock holder is not entitled to dividends over the vesting period.

Restricted Stock — market condition

Under the terms of the LTIP, the Company granted 951,194 restricted stock units with a market vesting condition to members of the Company’s senior executive team during the six months ended 30 September 2010. The vesting of these restricted stock units is subject to a market condition as outlined in the LTIP rules.

The fair value of each of these restricted stock units (market condition) granted under the LTIP is estimated using a binomial lattice model that incorporates a Monte Carlo Simulation (the “Monte Carlo method”).

The following table includes the assumptions used for restricted stock grants valued during the six months ended 30 September 2010:

Date of grant		15 Sep 2010				7 Jun 2010
Dividend yield (per annum)		$	0.00			$	0.00
Risk free interest rate1			n/a				n/a
Expected life in years			3.0				2.0
JHX stock price at grant date (A$)			5.94				7.23
Number of restricted stock units			951,194				807,457

Scorecard LTI — Cash Settled Units

Under the terms of the LTIP, the Company granted awards equivalent to 821,459 Scorecard LTI units during the six months ended 30 September 2010, which provide recipients a cash incentive based on JHI SE’s common stock price on the vesting date. The vesting of awards is measured on individual performance conditions based on certain performance measures. Compensation expense recognised for awards are based on the fair market value of JHI SE’s common stock on the date of grant and recorded as a liability. The liability is adjusted for subsequent changes in JHI SE’s common stock price at each balance sheet date.

13. Operating Segment Information

The Company has reported its operating segment information in the format that the operating segment information is available to and evaluated by senior management. USA and Europe Fibre Cement manufactures fibre cement interior linings, exterior siding and related accessories products in the United States; these products are sold in the United

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

States, Canada and Europe. Asia Pacific Fibre Cement includes all fibre cement manufactured in Australia, New Zealand and the Philippines and sold in Australia, New Zealand, Asia, the Middle East, and various Pacific Islands. Research and Development represents the cost incurred by the research and development centres.

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Operating Segments

The following are the Company’s operating segments and geographical information:

		Net Sales to Customers1								Net Sales to Customers1
		Three Months Ended 30 September								Six Months Ended 30 September
(Millions of US dollars)		2010				2009				2010				2009
USA & Europe Fibre Cement		$	200.7			$	229.0			$	433.7			$	452.2
Asia Pacific Fibre Cement			86.9				75.2				172.3				136.5
Worldwide total		$	287.6			$	304.2			$	606.0			$	588.7

		Income (Loss) Before Income Taxes								Income (Loss) Before Income Taxes
		Three Months Ended 30 September								Six Months Ended 30 September
(Millions of US dollars)		2010				2009				2010				2009
USA & Europe Fibre Cement2		$	39.4			$	65.3			$	95.5			$	134.1
Asia Pacific Fibre Cement2			17.9				16.2				40.0				27.1
Research and Development2			(5.0	)			(4.8	)			(10.0	)			(8.8	)
Segments total			52.3				76.7				125.5				152.4
General Corporate3			(108.5	)			(77.5	)			(54.7	)			(210.3	)
Total operating income (loss)			(56.2	)			(0.8	)			70.8				(57.9	)
Net interest expense4			(0.9	)			(0.4	)			(2.0	)			(1.1	)
Other (expense) income			(2.9	)			(1.0	)			(7.3	)			3.8
Worldwide total		$	(60.0	)		$	(2.2	)		$	61.5			$	(55.2	)

		Total Identifiable Assets
		30 September				31 March
(Millions of US dollars)		2010				2010
USA & Europe Fibre Cement		$	750.6			$	780.8
Asia Pacific Fibre Cement			220.4				216.9
Research and Development			14.6				14.2
Segments total			985.6				1,011.9
General Corporate5, 6			995.2				1,166.9
Worldwide total		$	1,980.8			$	2,178.8

Geographic Areas

		Net Sales to Customers1								Net Sales to Customers1
		Three Months Ended 30 September								Six Months Ended 30 September
(Millions of US dollars)		2010				2009				2010				2009
USA		$	194.9			$	223.6			$	421.4			$	442.7
Australia			67.9				55.6				131.2				98.8
New Zealand			13.8				12.2				27.0				22.8
Other Countries			11.0				12.8				26.4				24.4
Worldwide total		$	287.6			$	304.2			$	606.0			$	588.7

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

		Total Identifiable Assets
		30 September				31 March
(Millions of US dollars)		2010				2010
USA		$	750.6			$	783.6
Australia			143.4				131.6
New Zealand			44.5				49.8
Other Countries			47.1				46.9
Segments total			985.6				1,011.9
General Corporate5, 6			995.2				1,166.9
Worldwide total		$	1,980.8			$	2,178.8

James Hardie Industries SE and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

14. Accumulated Other Comprehensive Income

Accumulated other comprehensive income consists of the following components:

		30 September				31 March
(Millions of US dollars)		2010				2010
Pension and post-retirement benefit adjustments		$	(1.6	)		$	(1.6	)
Unrealised gain on restricted short-term investments			2.3				1.2
Foreign currency translation adjustments			57.5				59.6
Total accumulated other comprehensive income		$	58.2			$	59.2

James Hardie Industries SE and Subsidiaries

This Financial Report forms part of a package of information about the Company’s results. It should be read in conjunction with the other parts of this package, including the Media Release, Management Presentation and Management’s Analysis of Results.

Disclaimer

This Financial Report contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the United States Securities and Exchange Commission on Forms 20-F and 6-K, in the annual reports to shareholders, in offering circulars, invitation memoranda and prospectuses, in media releases and other written materials and in oral statements made by the Company’s officers, directors or employees to analysts, institutional investors, existing and potential lenders, representatives of the media and others. Statements that are not historical facts are forward-looking statements and such forward-looking statements are statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include:

	•		statements about the Company’s future performance;
	•		projections of the Company’s results of operations or financial condition;
	•		statements regarding the Company’s plans, objectives or goals, including those relating to its strategies, initiatives, competition, acquisitions, dispositions and/or its products;
	•		expectations concerning the costs associated with the suspension or closure of operations at any of the Company’s plants and future plans with respect to any such plants;
	•		expectations that the Company’s credit facilities will be extended or renewed;
	•		expectations concerning dividend payments;
	•		statements concerning the Company’s corporate and tax domiciles and potential changes to them, including potential tax charges;
	•		statements regarding tax liabilities and related audits, reviews and proceedings;
	•		statements as to the possible consequences of proceedings brought against the Company and certain of its former directors and officers by the ASIC;
	•		expectations about the timing and amount of contributions to the AICF, a special purpose fund for the compensation of proven Australian asbestos-related personal injury and death claims;
	•		expectations concerning indemnification obligations;
	•		statements about product or environmental liabilities; and
	•		statements about economic conditions, such as the levels of new home construction, unemployment levels, the availability of mortgages and other financing, mortgage and other interest rates, housing affordability and supply, the levels of foreclosures and home resales, currency exchange rates and consumer confidence.

Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “aim,” “will,” “should,” “likely,” “continue” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Readers are cautioned not to place undue reliance on these forward-looking statements and all such forward-looking statements are qualified in their entirety by reference to the following cautionary statements.

Forward-looking statements are based on the Company’s current expectations, estimates and assumptions and because forward-looking statements address future results, events and conditions, they, by their very nature, involve inherent risks and uncertainties, many of which are unforeseeable and beyond the Company’s control. Such known and unknown risks, uncertainties and other factors may cause the Company’s actual results, performance or other achievements to differ materially from the anticipated results, performance or achievements expressed, projected or implied by these

James Hardie Industries SE and Subsidiaries

forward-looking statements. These factors, some of which are discussed under “Key Information - - Risk Factors” beginning on page 6 of the Form 20-F filed with the US Securities and Exchange Commission on 30 June 2010, include, but are not limited to: all matters relating to or arising out of the prior manufacture of products that contained asbestos by current and former James Hardie subsidiaries; required contributions to the AICF, any shortfall in the AICF and the effect of currency exchange rate movements on the amount recorded in the Company’s financial statements as an asbestos liability; proposed governmental loan facility to the AICF; compliance with and changes in tax laws and treatments; competition and product pricing in the markets in which the Company operates; seasonal fluctuations in the demand for our products; the consequences of product failures or defects; exposure to environmental, asbestos or other legal proceedings; general economic and market conditions; the supply and cost of raw materials; the success of research and development efforts; the potential that competitors could copy our products; reliance on a small number of customers; a customer’s inability to pay; compliance with and changes in environmental and health and safety laws; risks of conducting business internationally; compliance with and changes in laws and regulations; the effect of the Company’s transfer of its corporate domicile from The Netherlands to Ireland to become an Irish SE including employee relations, changes in corporate governance, potential tax benefits and the effect of any negative publicity; currency exchange risks; the concentration of the Company’s customer base on large format retail customers, distributors and dealers; the effect of natural disasters; changes in the Company’s key management personnel; inherent limitations on internal controls; use of accounting estimates; and all other risks identified in the Company’s reports filed with Australian, Irish and US securities agencies and exchanges (as appropriate). The Company cautions that the foregoing list of factors is not exhaustive and that other risks and uncertainties may cause actual results to differ materially from those in forward-looking statements. Forward-looking statements speak only as of the date they are made and are statements of the Company’s current expectations concerning future results, events and conditions.

James Hardie Industries SE
Directors’ Report
for the half year ended 30 September 2010

Directors

For part of the half year ended 30 September 2010 the Company had a two-tiered board structure consisting of a Supervisory Board of non-executive directors and a Managing Board of executive directors. As a result of the Company’s re-domicile from The Netherlands to Ireland, the Company has had a single-tier Board of directors (Board) since 17 June 2010.

At the date of this report the members of the Board are: Mr MN Hammes (Chairman), Mr DG McGauchie AO (Deputy Chairman), and Messrs BP Anderson, D Dilger, D Harrison, J Osborne, RMJ van der Meer and Mr L Gries (CEO).

The changes in the composition of the Board between 1 April 2010 and the date of this report were:

	•		Messrs MN Hammes, DG McGauchie AO, BP Anderson, D Dilger, D Harrison, J Osborne and RMJ van der Meer ceased to be members of the Supervisory Board and became members of the Board on 17 June 2010 when the Supervisory Board ceased to exist; and
	•		Messrs L Gries, RL Chenu and RE Cox ceased to be members of the Managing Board on 17 June 2010 when the Managing Board ceased to exist. Mr Gries became a member of the Board on 17 June 2010. Messrs Chenu and Cox continue as executive employees from 17 June 2010.

Review of Operations

Please see Management’s Analysis of Results relating to the period ended 30 September 2010.

Auditor’s Independence

The Directors obtained an annual independence declaration from the Company’s auditors, Ernst & Young LLP.

This report is made in accordance with a resolution of the Board.

MN Hammes		L Gries
Chairman		Chief Executive Officer

Dublin, Ireland, 15 November 2010

The accompanying notes are an integral part of these consolidated financial statements.

James Hardie Industries SE and Subsidiaries

James Hardie Industries SE

Board of Directors’ Declaration
for the half year ended 30 September 2010

The Board of James Hardie Industries SE declares that with regards to the attached:

a)		the Report complies with the accounting standards in accordance with which it was prepared;
b)		the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company; and
c)		in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This report is made in accordance with a resolution of the Board.

MN Hammes		L Gries
Chairman		Chief Executive Officer

Dublin, Ireland, 15 November 2010