exv99w5

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
James Hardie Industries N.V.:

We have reviewed the accompanying condensed consolidated balance sheet of James Hardie Industries N.V. and subsidiaries as of 30 September 2008, and the related condensed consolidated statements of operations for the three-month and six-month periods ended 30 September 2008 and the condensed consolidated statement of cash flows and statement of changes in shareholders’ equity (deficit) for the six-month period ended 30 September 2008, as stated in US dollars. These financial statements are the responsibility of the Company’s management. The balance sheet of James Hardie Industries N.V. and its subsidiaries as of 30 September 2007, and the condensed consolidated statements of operations for the three-month and six-month periods ended 30 September 2007 and the condensed consolidated statement of cash flows for the six-month period ended 30 September 2007 as stated in US dollars were reviewed by other accountants whose report (dated November 12, 2007) stated that they were not aware of any material modifications that should be made to those statements for them to be in conformity with U.S. generally accepted accounting principles.

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 accompanying financial statements at 30 September 2008, and for the three-month and six-month periods then ended for them to be in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Ernst & Young LLP
Orange County, California
14 November 2008

F-3

Item 1. Financial Statements

James Hardie Industries N.V. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)


	(Millions of						(Millions of
	US dollars)						Australian dollars)
	30 September			31 March			30 September		31 March
	2008			2008			2008		2008
Assets
Current assets:
Cash and cash equivalents	$	91.9		$	35.4		A$	114.7	A$	38.6
Restricted cash and cash equivalents		5.2			5.0			6.5		5.5
Restricted cash and cash equivalents — Asbestos		21.9			37.4			27.3		40.8
Restricted short-term investments — Asbestos		66.7			77.7			83.3		84.7
Accounts and notes receivable, net of allowance for doubtful accounts of $1.7 million (A$2.1 million) and $2.0 million (A$2.2 million) as of 30 September 2008 and 31 March 2008, respectively		124.9			131.4			155.9		143.3
Inventories		152.4			179.7			190.2		195.9
Prepaid expenses and other current assets		43.4			28.0			54.2		30.5
Insurance receivable — Asbestos		12.3			14.1			15.4		15.4
Workers’ compensation — Asbestos		6.0			6.9			7.5		7.5
Deferred income taxes		15.6			8.2			19.5		8.9
Deferred income taxes — Asbestos		15.8			9.1			19.7		9.9

Total current assets		556.1			532.9			694.2		581.0
Property, plant and equipment, net		723.2			756.4			902.6		824.7
Insurance receivable — Asbestos		162.5			194.3			202.7		211.8
Workers’ compensation — Asbestos		68.6			78.5			85.6		85.6
Deferred income taxes		5.8			13.2			7.2		14.4
Deferred income taxes — Asbestos		334.7			397.1			417.7		433.0
Deposit with Australian Taxation Office		191.6			205.8			239.1		224.4
Other assets		1.2			1.7			1.5		1.9

Total assets	$	2,043.7		$	2,179.9		A$	2,550.6	A$	2,376.8

Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable and accrued liabilities	$	109.0		$	107.6		A$	136.0	A$	117.3
Short-term debt		104.7			90.0			130.7		98.1
Accrued payroll and employee benefits		32.8			37.0			40.9		40.3
Accrued product warranties		7.9			6.9			9.9		7.5
Income taxes payable		12.9			13.0			16.1		14.2
Asbestos liability		68.7			78.7			85.7		85.8
Workers’ compensation — Asbestos		6.0			6.9			7.5		7.5
Other liabilities		137.2			9.1			171.2		9.9

Total current liabilities		479.2			349.2			598.0		380.6
Long-term debt		161.5			174.5			201.6		190.3
Deferred income taxes		87.4			84.2			109.1		91.8
Accrued product warranties		12.5			10.8			15.6		11.8
Asbestos liability		1,265.9			1,497.8			1,579.9		1,633.1
Workers’ compensation — Asbestos		68.6			78.5			85.6		85.6
Other liabilities		85.0			187.5			106.1		204.4

Total liabilities		2,160.1			2,382.5		A$	2,695.9	A$	2,597.6

Commitments and contingencies (Note 10)
Shareholders’deficit:
Common stock, Euro 0.59 par value, 2.0 billion shares authorised; 432,239,668 shares issued at 30 September 2008 and 432,214,668 issued at 31 March 2008		219.7			219.7
Additional paid-in capital		22.6			19.3
Accumulated deficit		(334.2	)		(454.5	)
Common stock in treasury, at cost, 708,695 shares at 30 September 2008 and 31 March 2008		(4.0	)		(4.0	)
Accumulated other comprehensive (loss) income		(20.5	)		16.9

Total shareholders’deficit		(116.4	)		(202.6	)

Total liabilities and shareholders’deficit	$	2,043.7		$	2,179.9

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

F-4

James Hardie Industries N.V. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)


	Three Months						Six Months
	Ended 30 September						Ended 30 September
(Millions of US dollars, except per share data)	2008			2007			2008			2007
Net sales	$	341.9		$	390.1		$	706.9		$	814.5
Cost of goods sold		(228.7	)		(251.3	)		(469.7	)		(508.8	)

Gross profit		113.2			138.8			237.2			305.7

Selling, general and administrative expenses		(54.7	)		(58.1	)		(108.0	)		(113.6	)
Research and development expenses		(7.1	)		(7.1	)		(14.4	)		(13.4	)
Asbestos adjustments		140.8			(28.9	)		100.3			(59.0	)

Operating income		192.2			44.7			215.1			119.7
Interest expense		(2.3	)		(2.5	)		(4.9	)		(3.8	)
Interest income		2.6			4.5			4.1			6.3

Income before income taxes		192.5			46.7			214.3			122.2

Income tax expense		(39.0	)		(27.6	)		(59.4	)		(64.0	)


Net income	$	153.5		$	19.1		$	154.9		$	58.2


Net income per share — basic	$	0.36		$	0.04		$	0.36		$	0.12

Net income per share — diluted	$	0.35		$	0.04		$	0.36		$	0.12

Weighted average common shares outstanding (Millions):
Basic		432.2			467.2			432.2			467.3
Diluted		433.0			468.3			433.1			468.5

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

F-5

James Hardie Industries N.V. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)


	Three Months						Six Months
	Ended 30 September						Ended 30 September
(Millions of Australian dollars, except per share data)	2008			2007			2008			2007

Net sales	A$	384.5		A$	459.7		A$	771.4		A$	970.0
Cost of goods sold		(257.0	)		(296.3	)		(512.5	)		(605.9	)

Gross profit		127.5			163.4			258.9			364.1

Selling, general and administrative expenses		(61.3	)		(68.6	)		(117.8	)		(135.3	)
Research and development expenses		(8.0	)		(8.4	)		(15.7	)		(16.0	)
Asbestos adjustments		152.3			(34.1	)		109.4			(70.3	)

Operating income		210.5			52.3			234.8			142.5
Interest expense		(6.9	)		(2.9	)		(5.3	)		(4.5	)
Interest income		2.9			5.3			4.5			7.5

Income before income taxes		206.5			54.7			234.0			145.5

Income tax expense		(43.2	)		(32.4	)		(64.8	)		(76.2	)

Net income	A$	163.3		A$	22.3		A$	169.2		A$	69.3


Net income per share — basic	A$	0.38		A$	0.05		A$	0.39		A$	0.15

Net income per share — diluted	A$	0.38		A$	0.05		A$	0.39		A$	0.15

Weighted average common shares outstanding (Millions):
Basic		432.2			467.2			432.2			467.3
Diluted		433.0			468.3			433.1			468.5

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

F-6

James Hardie Industries N.V. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)


	Six Months
	Ended 30 September
(Millions of US dollars)	2008			2007

Cash Flows From Operating Activities
Net income	$	154.9		$	58.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and Amortisation		28.6			27.7
Deferred income taxes		2.9			30.7
Prepaid pension cost		0.4			0.9
Stock-based compensation		3.6			3.1
Asbestos adjustments		(100.3	)		59.0
Other		—			(2.3	)
Changes in operating assets and liabilities:
Restricted cash and cash equivalents		38.5			21.5
Payment to the AICF		(27.4	)		—
Accounts and notes receivable		(2.5	)		(3.6	)
Inventories		21.7			14.6
Prepaid expenses and other current assets		(16.4	)		(4.1	)
Insurance receivable — Asbestos		8.3			9.4
Accounts payable and accrued liabilities		5.9			41.5
Asbestos liability		(48.9	)		(31.2	)
Deposit with Australian Taxation Office		(13.5	)		(3.7	)
Other accrued liabilities and other liabilities		37.5			9.3

Net cash provided by operating activities		93.3			231.0

Cash Flows From Investing Activities
Purchases of property, plant and equipment		(9.4	)		(24.2	)

Net cash used in investing activities		(9.4	)		(24.2	)

Cash Flows From Financing Activities
Proceeds from short-term borrowings		14.7			10.0
Repayments of long-term borrowings		(13.0	)		(75.0	)
Proceeds from issuance of shares		0.1			2.2
Tax benefit from stock options exercised		—			0.2
Treasury stock purchased		—			(47.1	)
Dividends paid		(34.6	)		(70.7	)

Net cash used in financing activities		(32.8	)		(180.4	)

Effects of exchange rate changes on cash		5.4			(27.4	)

Net increase (decrease) in cash and cash equivalents		56.5			(1.0	)
Cash and cash equivalents at beginning of period		35.4			34.1

Cash and cash equivalents at end of period	$	91.9		$	33.1


Components of Cash and Cash Equivalents
Cash at bank and on hand	$	50.0		$	29.5
Short-term deposits		41.9			3.6

Cash and cash equivalents at end of period	$	91.9		$	33.1

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

F-7

James Hardie Industries N.V. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)


	Six Months
	Ended 30 September
(Millions of Australian dollars)	2008			2007

Cash Flows From Operating Activities
Net income	A$	169.2		A$	69.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and Amortisation		31.2			33.0
Deferred income taxes		3.2			36.6
Prepaid pension cost		0.4			1.1
Stock-based compensation		3.9			3.7
Asbestos adjustments		(109.4	)		70.3
Other		—			(2.7	)
Changes in operating assets and liabilities:
Restricted cash and cash equivalents		42.0			25.6
Payment to the AICF		(29.9	)		—
Accounts and notes receivable		(2.7	)		(4.3	)
Inventories		23.7			17.4
Prepaid expenses and other current assets		(17.9	)		(4.9	)
Insurance receivable — Asbestos		9.1			11.2
Accounts payable and accrued liabilities		6.4			49.4
Asbestos liability		(53.4	)		(37.2	)
Deposit with Australian Taxation Office		(14.7	)		(4.4	)
Other accrued liabilities and other liabilities		40.9			11.1

Net cash provided by operating activities		102.0			275.2

Cash Flows From Investing Activities
Purchases of property, plant and equipment		(10.3	)		(28.8	)

Net cash used in investing activities		(10.3	)		(28.8	)

Cash Flows From Financing Activities
Proceeds from short-term borrowings		16.0			11.9
Repayments of long-term borrowings		(14.2	)		(89.3	)
Proceeds from issuance of shares		0.1			2.6
Tax benefit from stock options exercised		—			0.2
Treasury stock purchased		—			(56.1	)
Dividends paid		(37.8	)		(84.2	)

Net cash used in financing activities		(35.9	)		(214.9	)

Effects of exchange rate changes on cash		20.3			(36.3	)

Net increase (decrease) in cash and cash equivalents		76.1			(4.8	)
Cash and cash equivalents at beginning of period		38.6			42.3

Cash and cash equivalents at end of period	A$	114.7		A$	37.5


Components of Cash and Cash Equivalents
Cash at bank and on hand	A$	62.4		A$	33.4
Short-term deposits		52.3			4.1

Cash and cash equivalents at end of period	A$	114.7		A$	37.5

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

F-8

James Hardie Industries N.V. and Subsidiaries
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)


												Accumulated
			Additional									Other
	Common		Paid-in			Accumulated			Treasury			Comprehensive
(Millions of US dollars)	Stock		Capital			Deficit			Stock			Income (Loss)			Total
Balances as of 31 March 2008	$	219.7	$	19.3		$	(454.5	)	$	(4.0	)	$	16.9		$	(202.6	)

Comprehensive loss
Net income		—		—			154.9			—			—			154.9
Pension and post-retirement benefit adjustments		—		—			—			—			0.4			0.4
Unrealised loss on investments		—		—			—			—			(1.4	)		(1.4	)
Foreign currency translation loss		—		—			—			—			(36.4	)		(36.4	)

Other comprehensive loss		—		—			—			—			(37.4	)		(37.4	)

Total comprehensive income																117.5
Stock-based compensation		—		3.6			—			—			—			3.6
Tax benefit from stock options exercised		—		(0.4	)		—			—			—			(0.4	)
Stock options exercised		—		0.1			—			—			—			0.1
Dividends paid		—		—			(34.6	)		—			—			(34.6	)

Balances as of 30 September 2008	$	219.7	$	22.6		$	(334.2	)	$	(4.0	)	$	(20.5	)	$	(116.4	)

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

F-9

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed 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.

Basis of Presentation

The consolidated financial statements represent the financial position, results of operations and cash flows of JHI NV and its current wholly owned subsidiaries and special purpose entities, collectively referred to as either the “Company” or “James Hardie” and JHI NV, 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 2008.

The condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring 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 2008, and the consolidated results of operations for the three months and six months ended 30 September 2008 and 2007 and consolidated cash flows for the six months ended 30 September 2008 and 2007. The results of operations for the three months and six months ended 30 September 2008 are not necessarily indicative of the results to be expected for the full year. The balance sheet at 31 March 2008 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.

The assets, liabilities, statements of operations and statements of cash flows of the Company have been presented with accompanying Australian dollar (A$) convenience translations as the majority of the Company’s shareholder base is Australian. These A$ convenience translations are not prepared in accordance with US GAAP and have not been audited. The exchange rates used to calculate the convenience translations are as follows:

31 March

30 September

(US$1 = A$)

2008

2008

2007

Assets and liabilities

1.0903

1.2480

n/a

Statements of operations

n/a

1.0912

1.1909

Cash flows — beginning cash

n/a

1.0903

1.2395

Cash flows — ending cash

n/a

1.2480

1.1323

Cash flows — current period movements

n/a

1.0912

1.1909

2. Summary of Significant Accounting Policies

Reclassifications

Certain prior year balances have been reclassified to conform to the current year presentation. The reclassifications do not impact shareholder’s equity.

F-10

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated financial Statements
(Unaudited)

Earnings Per Share

The Company is required to disclose 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. Accordingly, basic and dilutive common shares outstanding used in determining net income per share are as follows:

Three Months

Six Months

Ended 30 September

(Millions of shares)

2008

2007

2008

2007

Basic common shares outstanding

432.2

467.2

432.2

467.3

Dilutive effect of stock options

0.8

1.1

0.9

1.2

Diluted common shares outstanding

433.0

468.3

433.1

468.5


(US dollars)	2008		2007		2008		2007

Net income per share — basic	$	0.36	$	0.04	$	0.36	$	0.12
Net income per share — diluted	$	0.35	$	0.04	$	0.36	$	0.12

Potential common shares of 19.2 million and 10.3 million for the three months ended 30 September 2008 and 2007, and 19.0 million and 10.0 million for the six months ended 30 September 2008 and 2007, respectively, have been excluded from the calculation of diluted common shares outstanding because the effect of their inclusion would be anti-dilutive.

Advertising

The Company expenses the production costs of advertising the first time the advertising takes place. Advertising expense was US$3.1 million and US$1.9 million during the three months ended 30 September 2008 and 2007, respectively, and US$6.6 million and US$5.9 million for the six months ended 30 September 2008 and 2007, respectively.

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 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 FFA entered into on 21 November 2006 to provide long-term funding to the Asbestos Injury 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 “Liable Entities”)) are found liable.

Upon shareholder approval of the Amended FFA, in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 46R, the Company consolidated the AICF with the Company resulting in a separate recognition of the asbestos liability and certain other items including the related Australian

F-11

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated financial Statements
(Unaudited)

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 Company’s Performing Subsidiary will be able to claim a taxable 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.

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 Liable Entities were transferred to the AICF. The Company appoints three of the AICF directors and the NSW state government appoints two of the AICF directors. The AICF manages Australian asbestos-related personal injury claims made against the Liable Entities, and makes compensation payments in respect of those proven claims.

AICF

Under the terms of the Amended FFA, James Hardie 117 Pty Ltd (the “Performing Subsidiary”) has a contractual liability to make payments to the AICF. This funding to the AICF results in the Company having a pecuniary interest in the AICF. The interest 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 Liable Entities. Due to the Company’s variable interest in the AICF, it consolidates the AICF in accordance with FASB, Interpretation No. 46R, “Consolidation of Variable Interest Entities”.

The AICF has operating costs that are claims related and non-claims related. Claims related costs incurred by the AICF are treated as reductions to 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.

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 commonly 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 KPMG Actuaries’ assumptions, KPMG Actuaries 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 under SFAS No. 5. 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 is 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.

F-12

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated financial Statements
(Unaudited)

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 only records insurance receivables that it deems to be probable.

Included in insurance receivable is US$11.7 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

Workers’ compensation claims are claims made by former employees of the Liable Entities. 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 Liable Entities.

The portion of the KPMG Actuaries estimate that is expected to be met by the Liable Entities 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 KPMG Actuaries estimate that is expected to be met by the workers’ compensation schemes or policies of the Liable Entities 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.

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.

F-13

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated financial Statements
(Unaudited)

AICF — Other Assets and Liabilities

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 taxation 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.

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

Business Combinations

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations (“SFAS No. 141R”)”, which replaces SFAS No. 141. The statement establishes principles and requirements for how the acquirer in a business combination recognises and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any controlling interest; recognises and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The provisions of SFAS No. 141R are effective for the Company for business combinations for which the acquisition date is on or after 1 April 2009. The Company is currently evaluating the impact that adopting SFAS No. 141R will have on its financial statements.

Noncontrolling Interests in Consolidated Financial Statements — an amendment to ARB No. 51

In December 2007, the FASB approved the issuance of SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements — an amendment to ARB No. 51” (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards that require the ownership interest in subsidiaries held by parties other than the entity be clearly identified and presented in the Consolidated Balance Sheets within equity, but separate from the entity’s equity; the amount of consolidated net income attributable to the entity and the noncontrolling interest be clearly identified and presented on the face of the Consolidated Statement of Earnings; and changes in the entity’s ownership interest while the entity retains its controlling financial interest in its subsidiary be accounted for consistently. The provisions of SFAS No. 160 are effective for the Company on 1 April 2009. The Company is currently evaluating the impact that adopting SFAS No. 160 will have on its financial statements.

Disclosures about Derivative Instruments and Hedging Activities

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 is intended to improve financial reporting of derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for the Company 1 April 2009. The Company is currently evaluating the impact that adopting SFAS No. 161 will have on its financial statements.

F-14

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated financial Statements
(Unaudited)

Hierarchy of Generally Accepted Accounting Principles

In May 2008, the FASB issued SFAS No. 162 “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with U.S. GAAP. This statement shall be effective 60 days following the Securities Exchange and Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The adoption of SFAS No. 162 is not expected to have a material impact on the Company’s financial statements.

3. Fair Value Measurements

On 1 April 2008, the Company adopted SFAS No. 157 “ Fair Value Measurements” (“SFAS No. 157”). This standard defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS No. 157 defines fair value as the prices that would need to be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prescribed by SFAS No. 157 contains three levels as follows:

Level 1 — Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

Level 2 — Other observable inputs available at the measurement date, other than the quoted prices included in Level 1, either directly or indirectly, including:

	§		quoted prices for similar assets or liabilities in active markets;

	§		quoted prices for identical or similar assets in non-active markets;

	§		inputs other than quoted prices that are observable for the asset or liability; and

	§		inputs derived principally from or corroborated by other observable market data.

Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilise management’s estimates of market participant assumptions.

The following table sets forth by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at the fair value on a recurring basis at 30 September 2008 according to the valuation techniques we used to determine their fair values.


			Fair Value Measurements
	Fair Value at		Using Inputs Considered as
(Millions of US Dollars)	30 September 2008		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	91.9	$	91.9	$	—	$	—
Restricted cash and cash equivalents		27.1		27.1		—		—
Restricted short-term investments		66.7		66.7		—		—

Total	$	185.7	$	185.7	$	—	$	—

F-15

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

4. Inventories

Inventories consist of the following components:


	30 September			31 March
(Millions of US dollars)	2008			2008

Finished goods	$	98.1		$	127.4
Work-in-process		6.6			8.4
Raw materials and supplies		54.1			51.0
Provision for obsolete finished goods and raw materials		(6.4	)		(7.1	)

Total inventories	$	152.4		$	179.7

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 Progress			Total

Balance at 1 April 2008:
Cost	$	17.2	$	208.9		$	840.5		$	82.4		$	1,149.0
Accumulated depreciation		—		(52.0	)		(340.6	)		—			(392.6	)

Net book value		17.2		156.9			499.9			82.4			756.4
Changes in net book value:
Capital expenditures		0.7		0.2			18.0			(9.5	)		9.4
Depreciation		—		(4.8	)		(23.8	)		—			(28.6	)
Other movements		—		—			(0.1	)		—			(0.1	)
Foreign currency translation adjustments	—			—			(13.9	)		—			(13.9	)

Total changes		0.7		(4.6	)		(19.8	)		(9.5	)		(33.2	)
Balance at 30 September 2008:
Cost		17.9		209.1			844.5			72.9			1,144.4
Accumulated depreciation		—		(56.8	)		(364.4	)		—			(421.2	)

Net book value	$	17.9	$	152.3		$	480.1		$	72.9		$	723.2

Construction in progress consists of plant expansions and upgrades.

6. Other Current Liabilities

Current other liabilities consist of the following components:


	30 September		31 March
(Millions of US dollars)	2008		2008

Uncertain tax positions	$	116.0	$	—
Other		21.2		9.1

Total current other liabilities	$	137.2	$	9.1

F-16

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

7. Operating Segment Information and Concentrations of Risk

The Company has reported its operating segment information in the format that the operating segment information is available to and evaluated by the Managing Board of Directors. 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 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 and Asia. Research and Development represents the cost incurred by the research and development centres. On 1 April 2008, the Company realigned its operating segments by combining the previously reported segments of USA Fibre Cement and Other, into one operating segment, USA and Europe Fibre Cement. On 22 May 2008, the Company ceased the operation of its pipe business in the United States. The Company’s operating segments are strategic operating units that are managed separately due to their different products and/or geographical location.

Operating Segments

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


	Net Sales to Customers¹				Net Sales to Customers¹
	Three Months				Six Months
	Ended 30 September				Ended 30 September
(Millions of US dollars)	2008		2007		2008		2007

USA & Europe Fibre Cement	$	263.0	$	314.0	$	544.7	$	667.2
Asia Pacific Fibre Cement		78.9		76.1		162.2		147.3

Worldwide total	$	341.9	$	390.1	$	706.9	$	814.5


	Income Before Income Taxes						Income Before Income Taxes
	Three Months						Six Months
	Ended 30 September						Ended 30 September
(Millions of US dollars)	2008			2007			2008			2007

USA & Europe Fibre Cement	$	61.1		$	82.4		$	126.7		$	195.5
Asia Pacific Fibre Cement		14.1			12.4			29.9			24.8
Research and Development		(5.0	)		(4.8	)		(10.0	)		(8.9	)

Segments total		70.2			90.0			146.6			211.4
General Corporate²		122.0			(45.3	)		68.5			(91.7	)

Total operating income		192.2			44.7			215.1			119.7
Net interest income (expense)³		0.3			2.0			(0.8	)		2.5

Worldwide total	$	192.5		$	46.7		$	214.3		$	122.2

F-17

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)


	Total Identifiable Assets
	30 September		31 March
(Millions of US dollars)	2008		2008

USA & Europe Fibre Cement	$	805.8	$	846.4
Asia Pacific Fibre Cement		200.8		218.3
Research and Development		12.8		13.9

Segments total		1,019.4		1,078.6
General Corporate⁴		1,024.3		1,101.3

Worldwide total	$	2,043.7	$	2,179.9

Geographic Areas


	Net Sales to Customers¹				Net Sales to Customers¹
	Three Months				Six Months
	Ended 30 September				Ended 30 September
(Millions of US dollars)	2008		2007		2008		2007

USA	$	257.8	$	310.0	$	534.9	$	659.1
Australia		58.1		51.3		116.6		98.1
New Zealand		13.4		16.3		30.6		33.6
Other Countries		12.6		12.5		24.8		23.7

Worldwide total	$	341.9	$	390.1	$	706.9	$	814.5


	Total Identifiable Assets
	30 September		31 March
(Millions of US dollars)	2008		2008

USA	$	805.0	$	846.6
Australia		122.2		139.0
New Zealand		30.4		26.1
Other Countries		61.8		66.9

Segments total		1,019.4		1,078.6
General Corporate⁴		1,024.3		1,101.3

Worldwide total	$	2,043.7	$	2,179.9


¹		Export sales and inter-segmental sales are not significant.

²		The principal components of General Corporate are officer and employee compensation and related benefits; professional and legal fees; administrative costs; and rental expense, net of rental income, on the Company’s corporate offices. Included in General Corporate for the three months ended 30 September 2008 are favourable asbestos adjustments of US$140.8 million and AICF SG&A expenses of US$0.3 million. Included in General Corporate for the three months ended 30 September 2007 are unfavourable asbestos adjustments of US$28.9 million and AICF

F-18

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)


		SG&A expenses of US$1.1 million. Included in General Corporate for the six months ended 30 September 2008 are favourable asbestos adjustments of US$100.3 million and AICF SG&A expenses of US$0.9 million. Included in General Corporate for the six months ended 30 September 2007 are unfavourable asbestos adjustments of US$59.0 million and AICF SG&A expenses of US$1.7 million.

³		Included in net interest income (expense) for the three and six months ended 30 September 2008 is AICF interest income of US$2.3 million and US$3.2 million, respectively. Included in net interest income (expense) for the three and six months ended 30 September 2007 is AICF interest income of US$2.6 million and US$4.2 million, respectively.

⁴		Asbestos-related assets at 30 September 2008 and 31 March 2008 are US$689.7 million and US$817.1 million, respectively, and are included in the General Corporate segment.

8. Accumulated Other Comprehensive (Loss) Income

Accumulated other comprehensive (loss) income consists of the following components:


	30 September			31 March
(Millions of US dollars)	2008			2008

Pension and post-retirement benefit adjustments (net of US$1.0 million tax benefit)	$	(1.7	)	$	(2.1	)
Unrealised loss on restricted short-term investments		(5.8	)		(4.4	)
Foreign currency translation adjustments		(13.0	)		23.4

Total accumulated other comprehensive (loss) income	$	(20.5	)	$	16.9

9. Asbestos

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

Asbestos Adjustments

The asbestos adjustments included in the consolidated statements of operations comprise the following:


	Three Months					Six Months
	Ended 30 September					Ended 30 September
(Millions of US dollars)	2008		2007			2008		2007

Effect of foreign exchange		140.8		(27.0	)		100.3		(60.2	)
Other adjustments		—		(1.9	)		—		1.2

Total Asbestos Adjustments	$	140.8	$	(28.9	)	$	100.3	$	(59.0	)

F-19

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

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 commonly referred to by the Company as the “Net Amended FFA Liability”.


	30 September			31 March
(Millions of US dollars)	2008			2008

Asbestos liability — current	$	(68.7	)	$	(78.7	)
Asbestos liability — non-current		(1,265.9	)		(1,497.8	)

Asbestos liability — Total		(1,334.6	)		(1,576.5	)

Insurance receivable — current		12.3			14.1
Insurance receivable — non-current		162.5			194.3

Insurance receivable — Total		174.8			208.4

Workers’ compensation asset — current		6.0			6.9
Workers’ compensation asset — non-current		68.6			78.5
Workers’ compensation liability — current		(6.0	)		(6.9	)
Workers’ compensation liability — non-current		(68.6	)		(78.5	)

Workers’ compensation — Total		—			—

Deferred income taxes — current		15.8			9.1
Deferred income taxes — non-current		334.7			397.1

Deferred income taxes — Total		350.5			406.2

Income tax payable (reduction in income tax payable)		22.2			20.4
Other net liabilities		(2.7	)		(3.4	)


Net Amended FFA liability		(789.8	)		(944.9	)

Restricted cash and cash equivalents and restricted short-term investment assets of the AICF		88.6			115.1


Unfunded Net Amended FFA liability	$	(701.2	)	$	(829.8	)

F-20

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

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 2008.

The changes in the asbestos liability for the six months ended 30 September 2008 are detailed in the table below:


	A$			A$ to US$		US$ Millions
	Millions			rate

Asbestos liability — 31 March 2008	A$	(1,718.9	)		1.0903	$	(1,576.5	)

Asbestos claims paid¹		51.6			1.0912		47.3
AICF claims-handling costs incurred¹		1.7			1.0912		1.6
Effect of foreign exchange							193.0

Asbestos liability — 30 September 2008	A$	(1,665.6	)		1.2480	$	(1,334.6	)

Insurance Receivable — Asbestos

The changes in the insurance receivable for the six months ended 30 September 2008 are detailed in the table below:


	A$			A$ to US$		US$ Millions
	Millions			rate

Insurance receivable — 31 March 2008	A$	227.2			1.0903	$	208.4

Insurance recoveries¹		(9.1	)		1.0912		(8.3	)
Effect of foreign exchange							(25.3	)

Insurance receivable — 30 September 2008	A$	218.1			1.2480	$	174.8

Deferred Income Taxes — Asbestos

The changes in the deferred income taxes — asbestos for the six months ended 30 September 2008 are detailed in the table below:


	A$			A$ to US$		US$ Millions
	Millions			rate

Deferred tax assets — 31 March 2008	A$	442.9			1.0903	$	406.2

Amounts offset against income tax payable¹		(5.5	)		1.0912		(5.0	)
Effect of foreign exchange							(50.7	)

Deferred tax assets — 30 September 2008	A$	437.4			1.2480	$	350.5

F-21

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Income Tax Payable

A portion of the deferred income tax asset is applied against the Company’s income tax payable. At 30 September 2008 and 31 March 2008, this amount was US$22.2 million and US$20.4 million, respectively. During the six months ended 30 September 2008, there was a US$3.2 million unfavourable effect of foreign exchange.

Other Net Liabilities

Other net liabilities include a provision for asbestos-related education and medical research contributions of US$2.9 million at 30 September 2008. 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$0.2 million at 30 September 2008. During the six months ended 30 September 2008, there was a US$0.3 million favourable effect of foreign 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. During the six months ended 30 September 2008, no short-term investments were purchased or sold.

The changes in the restricted cash and short-term investments of the AICF for the six months ended 30 September 2008 are detailed in the table below:


	A$			A$ to US$		US$ Millions
	Millions			rate

Restricted cash and cash equivalents and restricted short-term investments — 31 March 2008	A$	125.5			1.0903	$	115.1

Asbestos claims paid¹		(51.6	)		1.0912		(47.3	)
Payment received in accordance with AFFA — on 1 July 2008²		28.7			1.0468		27.4
AICF operating costs paid — claims-handling¹		(1.7	)		1.0912		(1.6	)
AICF operating costs paid — non claims-handling¹		(1.0	)		1.0912		(0.9	)
Insurance recoveries¹		9.1			1.0912		8.3
Interest and investment income¹		3.5			1.0912		3.2
Unrealised gain on investments¹		(1.5	)		1.0912		(1.4	)
Other¹		(0.4	)		1.0912		(0.4	)
Effect of foreign exchange							(13.8	)

Restricted cash and cash equivalents and restricted short-term investments — 30 September 2008	A$	110.6			1.2480	$	88.6


¹		The average exchange rate for the period is used to convert the Australian dollar amount to US dollars based on the assumption that these transactions occurred evenly throughout the period.

²		The spot exchange rate at 1 July 2008 is used to convert the Australian dollar amount to US dollars as the payment was made on that date.

F-22

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Claims Data

The AICF provides compensation payments for Australian asbestos-related personal injury claims against the Liable Entities. The claims data in this section are only reflective of these Australian asbestos-related personal injury claims against the Liable Entities.

The following table, provided by KPMG Actuaries, 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 Year Ended 31 March
	30 September 2008		2008		2007		2006¹		2005

Number of open claims at beginning of period		523		490		564		712		687
Number of new claims		310		552		463		346		489
Number of closed claims		320		519		537		502		464
Number of open claims at end of period		513		523		490		556		712
Average settlement amount per settled claim	A$	174,900	A$	147,349	A$	166,164	A$	151,883	A$	157,594
Average settlement amount per case closed	A$	157,957	A$	126,340	A$	128,723	A$	122,535	A$	136,536
Average settlement amount per settled claim	US$	160,282	US$	128,096	US$	127,163	US$	114,318	US$	116,572
Average settlement amount per case closed	US$	144,755	US$	109,832	US$	98,510	US$	92,229	US$	100,996


¹		Information includes claims data for only 11 months ended 28 February 2006. Claims data for the 12 months ended 31 March 2006 were not available at the time the Company’s financial statements were prepared.

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.

10. Commitment and Contingencies

ASIC Proceedings

In February 2007, the Australian Securities and Investments Commission (“ASIC”) commenced civil proceedings in the Supreme Court of New South Wales (the “Court”) 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 varies between the individual defendants, the allegations against the Company are 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.

F-23

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

In the proceedings, ASIC seeks:

	•		declarations regarding the alleged contraventions;

	•		orders for pecuniary penalties in such amount as the Court thinks fit up to the limits specified in the Corporations Act;

	•		orders that former James Hardie group directors or officers Michael Brown, Michael Gillfillan, Meredith Hellicar, Martin Koffel, Peter Macdonald, Philip Morley, Geoffrey O’Brien, Peter Shafron, Gregory Terry and Peter Willcox be prohibited from managing an Australian corporation for such period as the Court thinks fit; and

	•		its costs of the proceedings.

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

ASIC had previously sought an order that the Company execute a deed of indemnity in favour of ABN 60 providing that the Company indemnify ABN 60 for an amount up to a maximum of A$1.9 billion, for such amount as ABN 60, or its directors, considered, after giving careful consideration, was necessary to ensure that ABN 60 was able to pay its debts, as and when they fell due, and for such amount as ABN 60, or its directors, reasonably believed was necessary to ensure that ABN 60 remained solvent. As disclosed by the Company on 4 September 2008, ASIC has withdrawn this part of its claim against the Company.

ASIC had previously indicated that its investigations into other related matters continued and may result in further actions, both civil and criminal. However, on 5 September 2008 ASIC stated that ASIC’s investigations and the Commonwealth Director of Public Prosecution’s consideration were complete and that no criminal proceedings were proposed.

The hearing of the proceedings in the Supreme Court of New South Wales commenced on 29 September 2008 before his Honour Justice Gzell. The Company presently estimates that the hearing will be completed before the end of the fiscal year 2009 but that it is expected that his Honour may reserve his decision.

The Company has entered into deeds of indemnity with certain of its directors and officers, as is common practice for publicly listed companies. The Company’s articles of association also contain an indemnity for directors and officers and the Company has granted indemnities to certain of it former related corporate bodies which may require the Company to indemnify those entities against indemnities they have granted their directors and officers. To date, claims for payments of expenses incurred have been received from certain former directors and officers in relation to the ASIC investigation, the examination of those persons by ASIC delegates and in respect of their defence costs of the proceedings. The Company has and will continue to incur costs under these indemnities which may be significant. Initially, the Company has obligations, or has offered, to advance funds in respect of defence costs and such advances have been and will continue to be made. Currently, a portion of the defence costs of former directors are being advanced by third parties, with the Company paying the balance. Based upon the information available to it presently, the Company expects this to continue absent any finding of dishonesty against any former director or officer. The Company notes that other recoveries may be available, depending on the outcome of the ASIC proceedings, including either as a result of a costs order being made against ASIC or, if ASIC is successful in securing civil penalty declarations, as a result of repayments by former directors and officers in accordance with the terms of their indemnities. It is the Company’s policy to expense legal costs as incurred.

There remains considerable uncertainty surrounding the likely outcome of the ASIC proceedings in the longer term and there is a possibility that the Company could become responsible for other amounts in

F-24

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

addition to the defence costs. However, at this stage, the Company believes that although such amounts are reasonably possible, the amount or range of such amounts is not estimable.

Environmental and Legal

The operations of the Company, like those of other companies engaged in similar businesses, are subject to a number of federal, state and local 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.

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, 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.

11. Short and Long-Term Debt

Debt consists of the following components:


	30 September		31 March
(Millions of US dollars)	2008		2008

Short-term debt	$	104.7	$	90.0
Long-term debt		161.5		174.5

Total debt¹	$	266.2	$	264.5


¹		Total debt at 3.66% and 3.63% weighted average interest rates at 30 September and 31 March 2008, respectively.

F-25

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

At 30 September 2008, the Company’s credit facilities consisted of :


	At 30 September 2008
	Effective			Total		Principal
Description	Interest Rate			Facility		Drawn

(US$ millions)

364-day facilities, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until December 2008		3.48	%	$	55.0	$	50.0

364-day facilities, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until June 2009		3.49	%		55.0		54.7

Term facilities, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until June 2010		3.80	%		245.0		151.5

Term facilities, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until February 2011		3.49	%		45.0		10.0

Term facilities, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until February 2013		—			90.0		—


Total				$	490.0	$	266.2

Credit facilities as of 30 September 2008 consist of 364-day facilities in the amount of US$55.0 million, which as of 30 September 2008, mature in December 2008. The Company requested extensions of the maturity date of such credit facilities to June 2009. However, the Company declined to extend US$41.7 million of the facilities due to proposed terms which it deemed unacceptable. The Company is continuing to negotiate terms on the remaining US$13.3 million of facilities.

In November 2008, the Company agreed to terms on a new 364-day facility for US$50.0 million. This facility became available to the Company in November 2008 and matures in November 2009.

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. During the three months ended 30 September 2008 and 2007, the Company paid commitment fees in the amount of US$0.2 million and US$0.1 million, respectively, and US$0.4 million and US$0.2 million for the six months ended 30 September 2008 and 2007, respectively. At 30 September 2008, there was US$266.2 million drawn under the combined facilities and US$223.8 million was available.

At 30 September 2008, management believes that the Company was in compliance with all restrictive covenants contained in its credit facility agreements. Under the most restrictive of these covenants, the

F-26

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

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 Pty Limited, Amaca Pty Limited, ABN 60 Pty Limited 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, (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 Pty Limited, Amaca Pty Limited, ABN 60 Pty Limited and Marlew Mining Pty Limited and (iv) has limits on how much it can spend on an annual basis in relation to asbestos payments to the AICF. Such limits are consistent with the contractual liabilities of the Performing Subsidiary and the Company under the Amended FFA.

The Company anticipates being able to meet its future payment obligations for the next 12 months from existing cash, unutilised committed facilities and anticipated future net operating cash flows and proposed new facilities.

12. Income Taxes

FASB Interpretation No. 48

The Company adopted FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109, Accounting for Income Taxes” on 1 April 2007. The adoption of FIN 48 resulted in the reduction of the Company’s consolidated beginning retained earnings of US$78.0 million. As of the adoption date, the Company had US$39.0 million of gross unrecognised tax benefits that, if recognised, would affect the effective tax rate. As of the adoption date, the Company’s opening accrual for interest and penalties was US$39.7 million.

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 1 April 2007	$	39.0		$	39.7
Additions for tax positions of the current year		1.3			—
Additions for tax positions of prior year		16.0			1.8
Foreign currency translation adjustment		5.6			5.5


Balance at 31 March 2008	$	61.9		$	47.0
Additions for tax positions of the current year		0.7			—
Additions for tax positions of prior year		46.8			(21.7	)
Settlements paid during the current period		(3.1	)		(0.3	)
Foreign currency translation adjustment		(11.7	)		(3.0	)


Balance at 30 September 2008	$	94.6		$	22.0

As of 30 September 2008 the total amount of unrecognised tax benefits and the total amount of interest and penalties accrued related to unrecognised tax benefits that, if recognised, would affect the effective tax rate is US$94.6 million and US$22.0 million, respectively.

The Company recognises penalties and interest accrued related to unrecognised tax benefits in income tax expense. During the three months and six months ended 30 September 2008, the total amount of interest and penalties recognised in tax expense as a benefit was US$27.6 million and US$25.0 million, respectively.

F-27

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

The liabilities associated with FIN 48 are included in other non current liabilities on the Company’s consolidated balance sheet.

A number of years may lapse 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.

The Company or one of its subsidiaries files income tax returns in the US federal jurisdiction, and various states and foreign jurisdictions including Australia and The Netherlands. The Company is no longer subject to US federal examinations by US Internal Revenue Service (“IRS”) for tax years prior to and including tax year 2004. The Company is no longer subject to examinations by The Netherlands tax authority, for tax years prior to tax year 2002. With certain limited exceptions, the Company is no longer subject to Australian federal examinations by the Australian Taxation Office (“ATO”) for tax years prior to tax year 2000. The Company is currently subject to audit and review in a number of jurisdictions in which it operates and has been advised that further audits will commence in the next 12 months including without limitation the audits described below. It is anticipated that the audits and reviews currently being conducted will be completed within the next 24 months. Of the audits currently being conducted, none have progressed sufficiently to predict their ultimate outcome. The Company accrues income tax liabilities for these audits based upon knowledge of all relevant facts and circumstances, taking into account existing tax laws, its experience with previous audits and settlements, the status of current tax examinations and how the tax authorities view certain issues.

Internal Revenue Service (IRS) — Notice of Proposed Adjustment (NOPA)

On 23 June 2008, the Company announced that the IRS had issued it with a NOPA that concludes that the Company does not qualify for the United States — Netherlands Treaty Limitations on Benefits (“LOB”) provision and that accordingly it is not entitled to beneficial withholding tax rates on payments from the Company’s United States subsidiaries to its Netherlands companies. The Company does not agree with the conclusions reached by the IRS, and has contested the IRS’ findings by issuing a Protest to the 30 Day Letter on August 8, 2008 to request the Company’s administrative appeals rights and, if unable to reach an acceptable settlement, the Company could possibly consider litigation. If the IRS position ultimately were to prevail, the Company would be liable for a 30% withholding tax on dividend, interest and royalty payments made any time on or after 1 February 2006 by the Company’s US subsidiaries to JHI NV or the Company’s Dutch finance subsidiary. In that event, the Company estimates that it would owe approximately US$37.0 million in additional tax for calendar years 2006 and 2007 plus, as of 30 September 2008, US$3.1 million in interest and US$7.7 million in penalties related to that tax. Interest will continue to accrue and compound daily at the published monthly Federal Funds short term rate plus 3% until the issue is resolved or a deposit of the full amount of the tax, interest and penalties is made with the IRS or a bond for such amounts is posted. Penalties for calendar years 2006 and 2007 will continue to accrue at the rate of one-half percent per month up to a maximum of 25%. The US$7.7 million accrued penalty through 30 September 2008 could continue to accrue to a maximum total of US$13.0 million. Additional tax, interest and penalties would be payable for later calendar years and such amounts could be significantly more per year in later years than the amounts indicated in the 30 Day Letter for calendar years 2006 and 2007.

ATO — 2002 Tax Audit

The ATO is auditing the Company’s Australian income tax returns for the years ended 31 March 2002 and 31 March 2004 through 31 March 2006. On 8 August 2008, the Federal Court of Australia (“ Federal Court”) made orders providing for the reinstatement of the Company’s former wholly-owned subsidiary James Hardie Australia Finance Pty Limited (“JHAF”) to the register of companies and appointing Max Donnelly of Ferrier Hodgson as the new liquidator of JHAF. JHAF was deregistered on 23 August 2005 following a voluntary winding up. The Company understands that the reinstatement of JHAF is a

F-28

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

necessary pre-requisite to the ATO issuing an amended assessment in respect of one of the issues that has been the focus of the ATO’s inquiries during the tax audit of fiscal year 2002. The Company understands that it is the view of the ATO that an amended assessment issued to JHAF would comprise primary tax of A$101.5 million (US$97.6 million), estimated penalties of A$50.8 million (US$48.9 million) and as of 30 June 2008 estimated general interest charges (“GIC”) charges of A$88.0 million (US$84.7 million). GIC would continue to accrue until the issue is resolved or full payment of any amended assessment is made. The new liquidator would need to determine, among other things, whether and to what extent JHAF is able to put itself in a position to meet any ultimate tax liability assessed in respect of it. The Company is considering its position with respect to the merits of the potential amended assessment and any obligations of JHAF to the ATO given its prior winding up.

ATO — 1999 Disputed Amended Assessment

In March 2006, RCI Pty Ltd (“RCI”), a wholly owned subsidiary of the Company, received an amended assessment from the ATO in respect of RCI’s income tax return for the year ended 31 March 1999.

On 30 May 2007, the ATO issued a Notice of Decision disallowing the Company’s objection to the amended assessment. On 11 July 2007, the Company filed an application appealing the Objection Decision with the Federal Court of Australia. The hearing date for RCI’s trial scheduled to commence on 8 December 2008 has been vacated by Court Order and is currently scheduled to be heard no later than September 2009.

The Company believes that it is more likely than not that the tax position reported in RCI’s tax return for the 1999 fiscal year will be upheld on appeal. Therefore, the Company believes that the requirements under FIN 48 for recording a liability have not been met and therefore it has not recorded any liability at 30 September 2008 for the amended assessment.

The Company expects that amounts paid in respect of the amended assessment will be recovered by RCI (with interest) at the time RCI is successful in its appeal against the amended assessment. As a result, the Company has treated all payments in respect of the amended assessment that have been made up to 30 September 2008 as a deposit and it is the Company’s intention to treat any payments to be made at a later date as a deposit.

13. Stock-Based Compensation

At 30 September 2008, the Company had the following equity award plans: the Executive Share Purchase Plan; the Managing Board Transitional Stock Option Plan; the JHI NV 2001 Equity Incentive Plan; the Supervisory Board Share Plan 2006 and the Long-Term Incentive Plan.

Compensation expense arising from equity award grants as estimated using pricing models was US$1.6 million for the three months ended 30 September 2008 and 2007, respectively, and US$3.6 million and US$3.1 million for the six months ended 30 September 2008 and 2007, respectively. As of 30 September 2008, the unrecorded deferred stock-based compensation balance related to equity awards was US$11.3 million after estimated forfeitures and will be recognised over an estimated weighted average amortisation period of 1.9 years.

F-29

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Stock Options

The following table summarises all of the Company’s stock options available for grant and the movement in all of the Company’s outstanding options:

Outstanding Options

Weighted

Average

Available for

Exercise

Grant

Number

Price

Balance at 1 April 2008

15,564,294

22,190,237

7.29

Exercised

—

(25,000

)

5.99

Forfeited

2,856,748

(2,856,748

)

7.40

Balance at 30 September 2008

18,421,042

19,308,489

7.27

The Company accounts for stock options in accordance with the fair value provisions of SFAS No. 123R, which requires the Company to estimate the value of stock options issued and recognise this estimated value as compensation expense over the periods in which the stock options vest.

The Company estimates the fair value of each option grant on the date of grant using either the Black-Scholes option-pricing model or a 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 2008 and 2007, respectively.

Restricted Stock

The Company accounts for restricted stock in accordance with the fair value provisions of SFAS No. 123R, which requires the Company to estimate the value of restricted stock issued and recognise this estimated value as compensation expense over the periods in which the restricted stock vests.

The following table summarises all of the Company’s restricted stock activity:


				Weighted
				Average Grant
	Shares			Date Fair Value
Nonvested at 1 April 2008		—			—

Granted		1,722,305		A$	4.27
Forfeited		(7,280	)	A$	4.93


Nonvested at 30 September 2008		1,715,025		A$	4.26

F-30

James Hardie Industries N.V. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Restricted Stock — time vesting

Under the terms of the JHI NV 2001 Equity Incentive Plan and Long-Term Incentive Plan (LTIP) the Company granted restricted stock units to employees which vest two years from the grant date. The Company granted the following restricted stock units to employees:


		Restricted
		Stock Units
Grant Date	Equity Award Plan	Granted

17 June 2008	JHI NV 2001 Equity Incentive Plan	698,440
15 September 2008	Long-Term Incentive Plan	201,324

		899,764

The fair value of each of these restricted stock units, is equal to the market value of the JHX 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.

The following table includes the assumptions used for restricted stock grants valued during the six months ended 30 September 2008. There were no restricted stock units granted during the six months ended 30 September 2007.


	17 June 2008	15 September 2008
	Grant	Grant

Dividend yield	$ 0.20 per annum	$ 0.20 per annum
Risk free interest rate	2.9 %	1.8 %
Expected life in years	2.0	2.0
JHX stock price at grant date	A$ 4.93	A$ 3.71
Number of restricted stock units	698,440	201,324

Restricted Stock — market condition

Under the terms of the Long-Term Incentive Plan (LTIP) the Company granted 822,541 restricted stock units to members of the Company’s Managing Board. 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, 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, under the Long-Term Incentive Plan, valued during the six months ended 30 September 2008. There were no restricted stock units granted during the six months ended 30 September 2007.

F-31

Item 2. Quantitative and Qualitative Disclosures About Market Risk

James Hardie Industries N.V. and Subsidiaries
(Unaudited)

In this report, James Hardie Industries N.V. and its subsidiaries are collectively referred to as “we,” “us,” or “our,” and the terms “US$”, “A$”, “NZ$”, “PHP”, refer to United States dollars, Australian dollars, New Zealand dollars and Philippine pesos, respectively.

We have operations in foreign countries and, as a result, are exposed to foreign currency exchange rate risk inherent in purchases, sales, assets and liabilities denominated in currencies other than the US dollar. We also are exposed to interest rate risk associated with our long-term debt and to changes in prices of commodities we use in production.

Our policy is to enter into derivative instruments solely to mitigate risks in our business and not for trading or speculative purposes.

Foreign Currency Exchange Rate Risk

We have significant operations outside of the United States and, as a result, are exposed to changes in exchange rates which affect our financial position, results of operations and cash flows. In addition, payments to the AICF are required to be made in Australian dollars which, because the majority of our revenues are produced in US dollars, exposes the Company to risks associated with fluctuations in the US dollar/Australian dollar exchange rate.

For the six months ended 30 September 2008, the following currencies comprised the following percentages of our net sales, cost of goods sold, expenses and liabilities:


	US$			A$			NZ$			Other (1)

Net sales		75.6	%		16.5	%		4.3	%		3.6	%
Cost of goods sold		78.2	%		15.2	%		3.5	%		3.1	%
Expenses⁽²⁾		67.5	%		24.5	%		2.8	%		5.2	%
Liabilities (excluding borrowings)⁽²⁾		24.0	%		73.4	%		0.8	%		1.8	%


⁽¹⁾		Comprises Philippine pesos and Euros.

⁽²⁾		Liabilities include A$ denominated asbestos liability, which was initially recorded in the fourth quarter of fiscal year 2006. Expenses include adjustments to the liability. See Note 6 for further information.

We purchase raw materials and fixed assets and sell some finished product for amounts denominated in currencies other than the functional currency of the business in which the related transaction is generated. In order to protect against foreign exchange rate movements, we may enter into forward exchange contracts timed to mature when settlement of the underlying transaction is due to occur. At 30 September 2008, there were no such material contracts outstanding.

Interest Rate Risk

We have market risk from changes in interest rates, primarily related to our borrowings. At 30 September 2008, all of the Company’s borrowings were variable-rate. From time to time, we may enter into interest rate swap contracts in an effort to mitigate interest rate risk. As of 30 September 2008, the Company had no interest swap contracts outstanding. As of 30 September 2008, the Company had no forward rate agreements outstanding.

F-33

Item 2. Quantitative and Qualitative Disclosures About Market Risk

James Hardie Industries N.V. and Subsidiaries
(Unaudited)

Commodity Price Risk

The Company is exposed to changes in prices of commodities used in its operations, primarily associated with energy, fuel and raw materials such as pulp and cement. Pulp has historically demonstrated more price sensitivity than other raw materials that we use in our manufacturing process. Pulp prices have also been subject to significant price fluctuations in the past. The Company expects that pulp, energy, fuel and cement prices will continue to fluctuate in the near future. To minimise the additional working capital requirements caused by rising prices related to these commodities, the Company may seek to enter into contracts with suppliers for the purchase of these commodities that could fix the Company’s prices over the longer-term. However, if the Company enters into such contracts with suppliers and if such commodity prices decrease, the Company’s cost of sales may be negatively impacted due to the fixed pricing over the longer-term.

F-34

James Hardie Industries N.V. and Subsidiaries
(Unaudited)

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 of results 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, lenders and potential lenders, representatives of the media and others. Examples of forward-looking statements include:

	–		expectations about the timing and amount of payments to the Asbestos Injuries Compensation Fund (AICF), a special purpose fund for the compensation of proven Australian asbestos-related personal injury and death claims;

	–		statements regarding tax liabilities and related audits and proceedings;

	–		statements as to the possible consequences of proceedings brought against the Company and certain of its former directors and officers by the Australian Securities and Investments Commission;

	–		expectations concerning indemnification obligations;

	–		expectations concerning the costs associated with the suspension or closure of operations at any of our 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;

	–		projections of the Company’s results of operations or financial condition;

	–		statements regarding the Company’s plans, objectives or goals, including those relating to competition, acquisitions, dispositions and the Company’s products;

	–		statements about the Company’s future performance; and

	–		statements about product or environmental liabilities.

Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “should,” “aim” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve inherent risks and uncertainties. The Company cautions that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such 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 on 8 July 2008 with the Securities and Exchange Commission, 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 and the effect of foreign exchange on the amount recorded in the Company’s financial statements as an asbestos liability; compliance with and changes in tax laws and treatments; competition and product pricing in the markets in which the Company operates; 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; reliance on a small number of customers; compliance with and changes in environmental and health and safety laws; risks of conducting business internationally; compliance with and changes in laws and regulations; foreign exchange risks; and the effect of natural disasters and changes in our key management personnel. The

F-35


		Page
Item 1. Condensed Consolidated Financial Statements (Unaudited)

Report of Independent Registered Public Accounting Firm		F-3

Condensed Consolidated Balance Sheets as of 30 September 2008 and 31 March 2008		F-4

Condensed Consolidated Statements of Operations for the Three and Six Months Ended 30 September 2008 and 2007		F-5

Condensed Consolidated Statements of Cash Flows for the Six Months Ended 30 September 2008 and 2007		F-7

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended 30 September 2008		F-9

Notes to Condensed Consolidated Financial Statements		F-10

Item 2. Quantitative and Qualitative Disclosures About Market Risk		F-32


	2008

Dividend yield		3.9	%
Expected volatility		34.9	%
Risk free interest rate		2.6	%
Expected life in years		3.0
JHX stock price at grant date	A$	3.71
Number of restricted stock units		822,541