Exhibit 99.1

Results for Announcement to the Market
James Hardie Industries N.V.
ARBN 097 829 895

1^st Quarter Ended 30 June 2005

		Three Months Ended 30 June
		2005				2004
Key Information		US$M				US$M				Movement
Net Sales From Ordinary Activities			359.4				306.1			up					17	%
Operating Profit From Continuing Operations After Tax Attributable to Shareholders			55.9				37.1			up					51	%
Operating Profit including Discontinued Operations Attributable to Shareholders			55.9				36.3			up					54	%
Net Tangible Assets per Ordinary Share		US$	1.42			US$	1.12			up					27	%

Dividend Information

Dividends were paid 1 July 2005 of US6.0 cents per share/CUFS and 1 July 2004 of US3.0 cents per share/CUFS.

Movements in Controlled Entities

No entities were incorporated, merged or liquidated during the three months ended 30 June 2005.

Results for the 1st Quarter and three months ended 30 June 2005

Contents

	1.		Media Release
	2.		Results At A Glance
	3.		Management’s Analysis of Results
	4.		Consolidated Financial Statements
	5.		Management Presentation

The consolidated Financial Statements included in this results announcement have been prepared using USGAAP and have not been subject to an independent review by external auditors.

The information contained in the above documents should be read in conjunction with the James Hardie 2005 Annual Report. It should also be read in the context of the public announcements made by James Hardie Industries N.V. in accordance with the continuous disclosure obligations arising under the Corporations Act 2001 and the ASX Listing Rules since the release of that Annual Report. The James Hardie 2005 Annual Report and links to the company’s public announcements can be found on the company website at www.jameshardie.com. James Hardie Industries N.V. is incorporated in The Netherlands with corporate seat in Amsterdam. The liability of members is limited.

media release

		Analyst and Media enquiries about results,
		please contact Steve Ashe on
		Tel: 61 2 8274 5246 Mob: 0408 164 011

19 August 2005

1^st quarter operating profit up 51% to US$55.9 million
USA Fibre Cement EBIT up 49% to US$94.1 million

James Hardie today announced a 51% increase in operating profit from continuing operations to US$55.9 million for the three months ended 30 June 2005.

The strong 1st quarter results included a 17% increase in net sales, a 31% increase in gross profit and a 49% lift in EBIT.

The USA Fibre Cement business continued to perform strongly during the quarter, lifting net sales 19% and expanded margins leading to a 49% increase in EBIT.

Our Asia Pacific Fibre Cement business continued to perform well despite softer market conditions during the quarter, with the Australia and New Zealand business recording a flat EBIT and the Philippines business delivering another positive EBIT result.

Diluted earnings per share from continuing operations increased 49% for the quarter from US 8.1 cents to US 12.1 cents.

The company continued to incur costs related to the Special Commision of Inquiry into the establishment of the Medical Research and Compensation Foundation (the SCI) and other related matters, totalling US$5.2 million for the quarter, along with a related income tax benefit of US$0.2 million.

Operating profit from continuing operations for the quarter includes a US$1.4 million loss related to the sale of our Chilean business in July 2005.

1^st Quarter and Year-To-Date at a Glance

US$ Million		Q1FY06				Q1FY05				%+\(-)
Net Sales		$	359.4			$	306.1				17
Gross Profit			145.3				111.3				31
Special Commission of Inquiry and other related expenses			(5.2	)			(2.9	)			79
Impairment loss on business held for sale			(1.4	)			—				—
EBIT			86.9				58.3				49
Net Interest Expense			(0.7	)			(2.5	)			(72	)
Income Tax Expense			(30.3	)			(18.7	)			62
Operating Profit from continuing operations			55.9				37.1				51
Net Operating Profit including discontinued operations			55.9				36.3				54

Note: Please refer to the Definitions section at the end of this release for an explanation of certain financial terms used within this document. Unless otherwise stated, results are for continuing operations only and comparisons are of the 1^st quarter of the current fiscal year versus the 1^st quarter of the prior fiscal year.

Commentary

James Hardie CEO, Louis Gries, said: “The first quarter results demonstrate strong top-line and bottom-line growth, which has started the year off well and continues the very satisfactory operational performance of the previous year.

“The broader outlook for housing construction in North America is positive with the current healthy level of activity expected to continue.

“Early indications are that demand for our interior and exterior products in the second quarter is in line with our expectations and we’re encouraged about the prospect of meeting our growth targets for the year,” said Mr Gries.

“We’re getting good results with the roll-out of our growth strategy for our ColorPlus™ Collection of products in our emerging North America markets.

“We are still working towards completing the final steps of a Principal Agreement with the NSW Government for a voluntary long term funding arrangement for asbestos compensation. Upon completion we will require shareholder approval,” Mr Gries said.

USA Fibre Cement — Strong Top-Line and Bottom-Line Growth

Net sales increased 19% to US$287.5 million in the 1^st quarter due to a 7% lift in sales volumes to 523.4 million square feet and a 12% increase in the average net sales price to US$549 per thousand square feet.

The higher average sales price reflects price increases for some products during the past fiscal year and sales of higher-priced, differentiated products increasing as a proportion of the sales mix.

Both the new residential housing and the repair and remodel segments remained buoyant during the quarter and demand for our exterior and interior products grew in most regions of our emerging and established markets.

Despite higher unit cost of sales and unit freight costs, EBIT for the quarter was up 49% to US$94.1 million due mainly to higher prices and to a lesser extent, increased sales volumes and lower SG&A expenses. The EBIT margin improved to 32.7%.

Australia and New Zealand (ANZ) Fibre Cement

Net sales increased 8% to US$56.1 million for the quarter due to favourable foreign currency movements and a 1% increase in sales volumes. In Australian dollars, net sales were up 1% despite weaker housing activity in both Australia and New Zealand compared to the same period a year ago. The average net sales price was flat compared to the same quarter last year.

ANZ EBIT was flat at US$11.1 million for the quarter despite the impact of a softer housing market in Australia and New Zealand and continuing effect of product bans and boycotts. The EBIT margin was 19.8%.

Philippines — Increased EBIT

The Philippines recorded another improved EBIT for the quarter despite weaker construction activity due to increased political and economic uncertainty. Higher prices were the driver of the improved result.

Media Release: James Hardie — 1^st Quarter Results FY06

USA Hardie Pipe — Reduced EBIT loss

Net sales were lower compared to the same quarter of the prior year as further price increases had the impact of softening demand. Despite lower sales volumes in the quarter, higher prices and SG&A savings helped further reduce the EBIT loss.

Europe Fibre Cement

Net sales have grown steadily following commencement of our European business in 2003, as we continue to expand our distribution network and increase awareness of our backer and siding products among distributors, builders and contractors.

Artisan™ Roofing

The business continues to focus on proving its longer term business model.

Proposed Voluntary Asbestos Compensation Funding Arrangement

The company is continuing to work towards completion of a Principal Agreement with the NSW Government to establish and fund a special purpose fund to provide compensation on a long-term basis for proven asbestos claims against Amaba, Amaca, ABN 60 and Asbestos Mines (former James Hardie Australian subsidiaries). When we entered into the non-binding Heads of Agreement in December 2004, it specified that tax deductibility of payments to the special purpose fund was a condition precedent to proceeding to a binding agreement. This recognised that all parties to the Heads of Agreement (The Australian Council of Trade Unions, UnionsNSW, the NSW Government, a representative of the asbestos claimants and the Company) agreed that tax deductibility of the payments is a critical factor regarding affordability of the proposed voluntary funding arrangements. We are continuing to discuss tax deductibility of the payments with the Australian Taxation Office and the Commonwealth Treasury.

Under applicable accounting standards, we have not established a provision for asbestos-related liabilities as of 30 June 2005 because at this time such liabilities do not fall within the relevant accounting definitions of being probable and estimable.

The need for the establishment of a provision for asbestos-related liabilities will continue to be reviewed as discussions on the voluntary funding proposal continue.

Readers are referred to Note 8 of our Financial Report as at 30 June 2005 for further information on our voluntary asbestos compensation funding proposal, the Special Commission of Inquiry and other associated developments.

Outlook

A strong economy and favourable market fundamentals suggest the outlook for housing construction and repair and remodelling in North America will remain positive through the remainder of this calendar year despite recent increases in mortgage rates and the prospect of a further modest increase in mortgage rates during the second half.

Indicators of future activity including housing starts, permits and builder confidence are all at high levels and the US-based National Association of Home Builders reports that both housing construction and new home sales are on pace to set new records in 2005.

Media Release: James Hardie — 1^st Quarter Results FY06

In North America, further strong top line growth and profitability is expected as our market initiatives continue to generate demand for our fibre cement products. The EBIT margin is expected to remain at the upper end or above our long-term target of 20% to 25% over the short-term despite high raw material and freight costs.

In the ANZ business, housing construction and renovation activity in Australia is expected to remain weak over the short term. Some product bans and boycotts remain in place and these are not expected to be lifted until agreement is reached on our voluntary long-term asbestos compensation funding proposal. In New Zealand, building consents have declined and this is expected to soften housing construction activity over the short term.

In the Philippines, sales are expected to increase as we enter the seasonally stronger period for building and construction, but demand may be affected by uncertainties associated with the current instability in the political and economic environments.

We are comfortable with the current range of equity analysts’ forecasts of operating profit from continuing operations excluding asbestos related costs for the fiscal year 2006 of between US$175 million and US$240 million¹.

The company is continuing to incur costs associated with the SCI and other related matters including: the negotiation of the Principal Agreement with the NSW Government to provide long-term funding of proven asbestos-related claims for Australian personal injury claimants against former Australian James Hardie subsidiary companies; cooperating with the Australian Securities and Investments Commission’s ongoing investigation into the circumstances surrounding the establishment of the Medical Research and Compensation Foundation; and in providing an updated actuarial assessment of the total asbestos liabilities of the former subsidiary companies. These costs are again likely to be material over the short term.

Ends.

Media/Analyst Enquiries:

Steve Ashe
Vice President Investor Relations
Telephone: 61 2 8274 5246
Mobile: 0408 164 011
Email: [email protected]

Facsimile: 61 2 8274 5218

The release and the accompanying management’s analysis of results and management presentation, along with the audio webcast of the presentation, are available from the Investor Relations section of the company website at www.jameshardie.com

This media release 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 Management’s Analysis of Results, a Management Presentation, a Financial Report and a Results at a Glance document.

Media Release: James Hardie — 1^st Quarter Results FY06

Definitions

Financial Measures — US GAAP equivalents

EBIT and EBIT Margin — EBIT is defined as operating income. EBIT margin is defined as EBIT as a percentage of our net sales. We believe EBIT and EBIT margin to be relevant and useful information as these are the primary measures used by our management to measure the operating profit or loss of our business. EBIT is one of several metrics used by our management to measure the earnings generated by our operations, excluding interest and income tax expenses. Additionally, EBIT is believed to be a primary measure and terminology used by our Australian investors. EBIT and EBIT margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the United States of America. EBIT and EBIT margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies.

EBIT and EBIT margin, as used in this document, are equivalent to the US GAAP measures of operating income and operating income margin.

Operating profit from continuing operations — is equivalent to the US GAAP measure of income from continuing operations.

Net operating profit including discontinued operations — is equivalent to the US GAAP measure of net income.

Disclaimer

This Management’s Analysis of Results contains forward-looking statements. We may from time to time make forward-looking statements in our periodic reports filed with or furnished to the United States Securities and Exchange Commission on Forms 20-F and 6-K, in our annual reports to shareholders, in offering circulars and prospectuses, in media releases and other written materials and in oral statements made by our officers, directors or employees to analysts, institutional investors, representatives of the media and others. Examples of forward-looking statements include:

	•		projections of our operating results or financial condition;
	•		statements regarding our plans, objectives or goals, including those relating to competition, acquisitions, dispositions and our products;
	•		statements about our future performance;
	•		statements about product or environmental liabilities; and
	•		expectations about payments to a special purpose fund for the compensation of proven asbestos-related personal injury and death claims.

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. We caution you 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 “Risk Factors” beginning on page 6 of our Form 20-F filed on 7 July 2005 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 Australian subsidiaries; compliance with and changes in tax laws and treatments; competition and product pricing in the markets in which we operate; 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 our research and development efforts; our reliance on a small number of product distributors; 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; the successful implementation of new software systems; and the successful transition of our new senior management. We caution you that the foregoing list of factors is not exclusive 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.

Media Release: James Hardie — 1^st Quarter Results FY06

results at a glance

1^st Quarter — 30 June 2005

US$Millions

Q1 FY06

James Hardie

Net Sales

Up

17

%

to

US$

359.4

EBIT

Up

49

%

to

US$

86.9

Operating Profit from Continuing Operations

Up

51

%

to

US$

55.9

Net Operating Profit Including Discontinued Operations

Up

54

%

to

US$

55.9

EBIT Margin

Up

4.9pts

to

24.1

%

USA Fibre Cement

Net Sales

Up

19

%

to

US$

287.5

EBIT

Up

49

%

to

US$

94.1

EBIT Margin

Up

6.5pts

to

32.7

%

Volume

Up

7

%

to

523.4 mmsf

Asia Pacific Fibre Cement

Net Sales

Up

8

%

to

US$

61.7

EBIT

Up

3

%

to

US$

12.4

EBIT Margin

Down

0.8pts

to

20.1

%

Volume

Down

2

%

to

92.0 mmsf

Key Ratios

Earnings Per Share (Diluted)

12.1cents

EBIT Margin

24.1

%

Return on Shareholders Funds (Annualised — including discontinued operations)

38.5

%

Return on Capital Employed (Annualised)

39.9

%

Gearing Ratio

(0.2

)%

Net Interest Expense Cover

131.3x

Net Debt Payback

(0.2)months

All comparisons are against the 1^st quarter of the previous fiscal year. All dollar amounts are in US$ millions. Results are for continuing businesses only, unless otherwise stated. Note: This document should be read in conjunction with other 1^st quarter results materials including a Media Release, a Management’s Discussion and Analysis, a Management Presentation and a Financial Report. Please refer to the Definitions section on the next page for an explanation of certain financial terms used above.

Definitions

Financial Measures — US GAAP equivalents

EBIT and EBIT Margin — EBIT is defined as operating income. EBIT margin is defined as EBIT as a percentage of our net sales. We believe EBIT and EBIT margin to be relevant and useful information as these are the primary measures used by our management to measure the operating profit or loss of our business. EBIT is one of several metrics used by our management to measure the cash generated from our operations, excluding interest and income tax expenses. Additionally, EBIT is believed to be a primary measure and terminology used by our Australian investors. EBIT and EBIT margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the United States of America. EBIT and EBIT margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies.

EBIT and EBIT margin, as used in this document, are equivalent to the US GAAP measures of operating income and operating income margin.

Operating profit from continuing operations — is equivalent to the US GAAP measure of income from continuing operations.

Net operating profit including discontinued operations — is equivalent to the US GAAP measure of net income.

Sales Volumes

mmsf — million square feet

Financial Ratios

Net debt payback — Net cash/debt divided by cash flows from operations times 12 months.

Gearing Ratio — is borrowings less cash (net debt) divided by net debt plus shareholders’ equity.

Net Interest Expense Cover — EBIT divided by Net Interest Expense.

management’s analysis of results

     19 August 2005

James Hardie Industries N.V.

Results for the 1^st Quarter Ended 30 June 2005

		Three Months Ended 30 June
US GAAP - US$ Millions		FY 2006				FY 2005				% Change
Net Sales
USA Fibre Cement		$	287.5			$	240.7				19
Asia Pacific Fibre Cement			61.7				57.3				8
Other Fibre Cement			10.2				8.1				26
Total Net Sales			359.4				306.1				17
Cost of goods sold			(214.1	)			(194.8	)			10
Gross profit			145.3				111.3				31
Selling, general and administrative expenses			(45.5	)			(45.1	)			1
Research and development expenses			(6.3	)			(5.0	)			26
Special Commission of Inquiry and other related expenses			(5.2	)			(2.9	)			79
Impairment loss on business held for sale			(1.4	)			—				—
EBIT			86.9				58.3				49
Net interest expense			(0.7	)			(2.5	)			(72	)
Operating profit from continuing operations before income taxes			86.2				55.8				54
Income tax expense			(30.3	)			(18.7	)			62
Operating Profit From Continuing Operations		$	55.9			$	37.1				51
Net Operating Profit Including Discontinued Operations		$	55.9			$	36.3				54
Tax rate			35.2	%			33.5	%
Volume (mmsf)
USA Fibre Cement			523.4				490.4				7
Asia Pacific Fibre Cement			92.0				94.2				(2	)
Average net sales price per unit (per msf)
USA Fibre Cement		US$	549			US$	491				12
Asia Pacific Fibre Cement		A$	873			A$	851				3

In this Management Analysis of Results, we present financial measures that we believe are customarily used by our Australian investors. In each case where we present one of these measures, the equivalent US GAAP financial measure is defined in the Definitions section on page 10. Specifically, these measures include “EBIT”, “EBIT Margin”, “Operating profit from continuing operations before income taxes”, “Operating profit from continuing operations”, and “Net operating profit including discontinued operations”. The Definitions section also includes other terms that we use for measuring our sales volumes (“millions square feet (mmsf)” and “thousand square feet (msf)”); and the financial ratio “Net cash/debt”. Unless otherwise stated, results are for continuing operations only and comparisons are of the 1^st quarter of the current fiscal year versus the 1^st quarter of the prior fiscal year.

Total Net Sales

Total net sales increased 17% compared to the same quarter of the previous year, from US$306.1 million to US$359.4 million.

Net sales from USA Fibre Cement increased 19% from US$240.7 million to US$287.5 million due to continued growth in sales volumes and a higher average net sales price.

Net sales from Asia Pacific Fibre Cement increased 8% from US$57.3 million to US$61.7 million due to favourable foreign currency movements and stronger net sales in New Zealand.

Net sales from Other Fibre Cement increased 26% from US$8.1 million to US$10.2 million as net sales in our Chilean flat sheet business and European Fibre Cement business continued to grow, partly offset by decline in net sales in our USA Hardie Pipe business.

USA Fibre Cement

Net sales increased 19% from US$240.7 million to US$287.5 million due to increased sales volumes and a higher average net sales price.

Sales volume increased 7% from 490.4 million square feet to 523.4 million square feet for the quarter, primarily due to growth in primary demand for fibre cement, market penetration and a favourable housing construction market.

New residential housing construction remained buoyant during the quarter and the US-based National Association of Home Builders (NAHB) reported that demand exceeded the supply of new homes in many markets. The NAHB noted that demand was again fuelled by low interest rates, strong household income and employment growth in most regions. Repair and remodelling activity also remained buoyant due to a combination of increased home sales, increased owner equity and low interest rates.

Following exceptionally strong sales volumes in the previous quarter, sales volumes in April and May were below management’s expectations, but returned to more favourable levels in June. Despite this, demand for our exterior products grew in most regions of our emerging and established markets during the quarter and sales of our interior products continued to grow strongly.

In our emerging markets, we continued to roll-out our strategy of moving sales of our exterior products to pre-painted over the medium to longer-term. This strategy improves our product positioning in vinyl siding dominant markets and increases revenue and contribution per unit.

In our established markets, the business continued to focus on growth strategies, including an increased focus on the repair and remodel segment.

In our exterior products market, our higher priced, differentiated products in the ColorPlus™ Collection of pre-painted siding and Harditrimâ XLDâ Planks grew the strongest. In our interior products market, both our Hardibacker 500â half-inch backerboard and our quarter-inch backerboard products grew strongly during the quarter.

The average net sales price increased 12% from US$491 per thousand square feet to US$549 per thousand square feet. The increase was due to proportionally stronger growth of differentiated, higher-priced products and price increases for some products that were implemented during the past fiscal year.

During the quarter, we commenced the ramp-up of our new trim line at Peru, Illinois and continued the ramp-up of additional pre-finishing capacity at that plant. In addition, we continued the ramp-up of our new west coast manufacturing plant at Reno, Nevada. We expect to construct additional pre-finishing capacity at other plants in our emerging markets during the second half of this fiscal year.

James Hardie 1^st Quarter FY06 Management’s Analysis of Results

Asia Pacific Fibre Cement

Net sales increased 8% from US$57.3 million to US$61.7 million. Net sales were flat in Australian dollars due to a 2% decrease in sales volume from 94.2 million square feet to 92.0 million square feet offset by a 3% increase in the average net sales price.

Australia and New Zealand Fibre Cement

Net sales increased 8% from US$51.8 million to US$56.1 million due to favourable foreign currency movements and a 1% increase in sales volumes. The average net sales price was flat compared to the same quarter last year. In Australian dollars, net sales increased 1%.

In Australia, further weakness in new residential housing activity was reflected in a 14% decline in housing commencements compared to the same period last year. The impact of the weaker market on demand was partly offset by the implementation of strategic initiatives to increase market share, particularly in NSW and Victoria.

During the quarter, we launched our Lineaâ weatherboards in Queensland. Lineaâ weatherboards have generated significant demand in New Zealand following its launch there in 2003 and is now one of our highest volume products in that country.

There has been a progressive lifting of product bans and boycotts following the signing of the Heads of Agreement in December 2004, but we do not believe all bans and boycotts will be lifted until our proposal for a voluntary long term asbestos compensation funding agreement is finalised and approved by shareholders.

Philippines Fibre Cement

Net sales increased 2% from US$5.5 million to US$5.6 million due to a 17% increase in average net sales price largely offset by a 14% decrease in sales volumes. In local currency, net sales were flat.

Demand was adversely affected due to weaker construction activity resulting from uncertainty associated with increased domestic political and economic instability.

Other Fibre Cement

USA Hardie Pipe

Non-residential construction activity in Florida remained buoyant. Despite this, net sales decreased compared to the same quarter last year as increased prices dampened demand.

Europe Fibre Cement

Net sales increased compared to the same quarter last year due to stronger demand and higher average net sales prices. Demand in Europe is continuing to grow as the business expands its distribution network and increases awareness of its products among builders, distributors and contractors.

Artisan™ Roofing

During the quarter, the business continued to work on proving out its longer-term business model.

James Hardie 1^st Quarter FY06 Management’s Analysis of Results

Chile Fibre Cement

Our Chilean business was sold on 11 July 2005 due to its small scale and limited strategic fit.

Gross Profit

Gross profit increased 31% from US$111.3 million to US$145.3 million due mainly to a strong gross profit improvement in our USA Fibre Cement business. The gross profit margin increased 4.0 percentage points to 40.4%.

USA Fibre Cement gross profit increased 35% compared to the same quarter last year due to increased net sales, partly offset by higher unit cost of sales and unit freight costs. The higher unit cost of sales resulted primarily from higher raw material costs, increased sales of higher-priced, differentiated products, and ramp-up costs associated with planned growth initiatives. Higher freight costs were primarily related to an increase in length of haul and fuel surcharges.

Asia Pacific Fibre Cement gross profit increased 5% due to favourable foreign currency movements and a gross profit improvement in our Philippines Fibre Cement business. In local currency, gross profit decreased in our Australia and New Zealand business due to a lower average net sales price in Australia and higher manufacturing costs in New Zealand due to an increased proportion of lower margin products in the sales mix.

Selling, General and Administrative (SG&A) Expenses

SG&A expenses increased slightly compared to the same quarter last year, from US$45.1 million to US$45.5 million. As a percentage of sales, SG&A expenses were 2.0 percentage points lower at 12.7%.

Research and Development Expenses

Research and development expenses include costs associated with “core” research projects that are designed to benefit all fibre cement business units. These costs are recorded in the Research and Development segment rather than being attributed to individual business units. These costs increased 7% for the quarter to US$3.1 million.

Other research and development costs associated with commercialisation projects in business units are included in the business related unit segment results. In total, these costs increased 52% to US$3.2 million.

SCI and Other Related Expenses

In February 2004, the Government of New South Wales in Australia, established a SCI to investigate, among other matters, the circumstances in which the Medical Research and Compensation Foundation was established. Shortly after release of the SCI report on 21 September 2004, we commenced negotiations with the NSW Government, the Australian Council of Trade Unions, UnionsNSW and a representative of asbestos claimants in relation to the our offer to the SCI on 14 July 2004 to provide funds voluntarily for proven Australia-based asbestos-related injury and death claims against certain former group subsidiary companies. On 21 December 2004, we entered into a Heads of Agreement with the above parties to establish and fund a special purpose fund to provide funding for these claims on a long-term basis. We subsequently entered negotiations with the NSW Government on a binding agreement that we intend to put to shareholders for approval upon completion.

James Hardie 1^st Quarter FY06 Management’s Analysis of Results

Further information on the SCI and other related matters can be found in Note 8 of our Financial Report as of 30 June 2005.

Costs incurred during the quarter associated with the SCI and other related matters totalled US$5.2 million.

EBIT

EBIT increased 49% from US$58.3 million to US$86.9 million. The EBIT margin increased 4.9 percentage points to 24.1%. EBIT includes SCI and other related expenses of US$5.2 million.

USA Fibre Cement EBIT increased 49% from US$63.1 million to US$94.1 million. The increase was due to higher prices and to a lesser extent, increased sales volumes and lower SG&A, partly offset by higher unit cost of sales and unit freight costs. The EBIT margin increased 6.5 percentage points to 32.7%.

Asia Pacific Fibre Cement EBIT increased 3% from US$12.0 million to US$12.4 million. The EBIT margin decreased 0.8 of a percentage point to 20.1%.

Australia and New Zealand Fibre Cement EBIT was flat at US$11.1 million. In Australian dollars, EBIT decreased 7% due to lower net sales, mainly as a result of weaker market conditions and an increase in sales of lower margin product. The EBIT margin decreased 1.6 percentage points to 19.8%.

The Philippines Fibre Cement business recorded an increase in EBIT for the quarter due to higher prices.

Our USA Hardie Pipe business continued to reduce its EBIT loss due to higher prices and a decrease in SG&A costs during the quarter.

Our Europe Fibre Cement business incurred an EBIT loss for the quarter as expected.

Our Chilean Fibre Cement business incurred an EBIT loss during the quarter that includes a US$1.4 million impairment loss on business held for sale.

General corporate costs increased US$3.5 million from US$9.4 million to US$12.9 million. This increase was primarily due to a US$2.3 million increase in SCI and other related expenses, a US$1.0 million increase in employee share based compensation expense from stock appreciation rights that have resulted from an increase in our share price, and a net increase of US$0.2 million in other general corporate costs.

Net Interest Expense

Net interest expense decreased by US$1.8 million from US$2.5 million to US$0.7 million, primarily due to higher interest income due to higher average cash balances, lower interest expense due to lower average debt balances, and a higher amount of interest expense capitalised on construction projects in the quarter compared to the same quarter of the previous year.

Income Tax Expense

Income tax expense increased by US$11.6 million from US$18.7 million to US$30.3 million primarily due to an increase in profits and the geographic mix of earnings. Additionally, we derived little tax benefit from the SCI and other related expenses incurred during the quarter due to a portion of the costs being non-deductible.

James Hardie 1^st Quarter FY06 Management’s Analysis of Results

Operating Profit from Continuing Operations

Operating profit from continuing operations increased 51%, from US$37.1 million to US$55.9 million, due mainly to improved performance from our USA Fibre Cement business. Operating profit from continuing operations for the quarter includes SCI and other related expenses of US$5.2 million, and a related tax benefit of US$0.2 million.

Discontinued Operations

We recorded an expense from discontinued operations of US$0.8 million in the prior year that includes additional costs associated with the sale of New Zealand land in March 2004.

Liquidity and Capital Resources

We have historically met our working capital needs and capital expenditure requirements through a combination of cash flow from operations, proceeds from the divestiture of businesses, credit facilities and other borrowings, proceeds from the sale of property, plant and equipment and proceeds from the redemption of investments. Seasonal fluctuations in working capital generally have not had a significant impact on our short-term or long-term liquidity. We believe that we can meet our present working capital requirements for at least the next 12 months based on our current capital resources.

We had cash and cash equivalents of US$161.6 million as of 30 June 2005. At that date we also had credit facilities totalling US$517.4 million of which US$160.1 million was outstanding. Our credit facilities are all uncollateralised and consist of the following:

		Effective Interest								Principal
		Rate at				Total Facility at				Outstanding at
Description		30 June 2005				30 June 2005				30 June 2005
						(US$ millions)
US$ notes, fixed interest, repayable annually in varying tranches from November 2005 through November 2013			7.12	%		$	147.4			$	147.4
US$364-day Facility, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until maturity in June 2006			N/A				355.0				—
US$ line of credit, can be drawn down in Chilean Pesos, variable interest based on Chilean Tasa Activa Bancaria rate plus margin until maturity in March 2006 1			5.11	%			15.0				12.7
Total						$	517.4			$	160.1

 

¹ Included in the liabilities of business held for sale in the consolidated balances sheets.

James Hardie 1^st Quarter FY06 Management’s Analysis of Results

At 30 June we had net cash of US$1.5 million, compared with net debt of US$45.8 million at 31 March 2005. The US$47.3 million improvement in our cash position was the result of net operating cash flows more than covering capital expenditure outflows.

In June 2005, the Company entered into new uncollateralized debt facilities totalling US$355.0 million. These new debt facilities are revolving US dollar cash advance facilities involving bilateral agreements with six banks and replace the Company’s previous revolving and stand-by credit facilities of approximately US$286.0 million. These new facilities are available for general corporate purposes.

Each of these new facilities is for an initial term of 364 days. The interest rate for each facility is the London Inter-Bank Offered Rate (“LIBOR”) for US dollar deposits plus a margin. These facilities also require the Company to maintain certain ratios of debt to equity and net worth and levels of earnings before interest and taxes and have limits on how much the Company can spend on an annual basis in relation to asbestos payments.

Upon completion and execution of the proposed Principal Agreement and it becoming effective within the 364 day initial term, US$245.0 million of these facilities will be extended by four years to a five year term. With the exception of margins and commitment fees, terms of these extended facilities would not change.

If the terms of the final Principal Agreement are materially different from those set forth in the Heads of Agreement, the banks may not agree to extend the facilities as described above, and, in such event, the Company would have to seek alternative financing. At 30 June 2005, there were no amounts outstanding under any of these facilities and management believes that the Company was in compliance with all facility restrictive covenants.

In the future, we may not be able to renew credit facilities on substantially similar terms, or at all; we may have to pay additional fees and expenses that we might not have to pay under normal circumstances; and we may have to agree to terms that could increase the cost of our debt structure. If we are unable to renew our debt on terms which are not materially less favorable than the terms currently available to us, we may have to scale back our levels of planned capital expenditure and /or take other measures to conserve cash in order to meet our future cash flow requirements.

Proposed Voluntary Asbestos Compensation Funding Agreement

During the quarter, we continued to work towards completion of a Principal Agreement with the NSW Government to establish and fund a special purpose fund to provide compensation on a long-term basis for proven asbestos claims against Amaba, Amaca, ABN 60 and Asbestos Mines (former James Hardie Australian Subsidiaries). When we entered into the non-binding Heads of Agreement in December 2004, it specified that tax deductibility of payments to the special purpose fund was a condition precedent to proceeding to a binding agreement. This recognised that all parties to the Heads of Agreement (The Australian Council of Trade Unions, UnionsNSW, the NSW Government, a representative of the asbestos claimants and the Company) agreed that tax deductibility of the payments is a critical factor regarding affordability of the proposed voluntary funding arrangements. We are continuing to discuss tax deductibility of the payments with the Australian Taxation Office and the Commonwealth Treasury.

Readers are referred to Note 8 of the Financial Report for further information on the voluntary funding proposal, and for information on the SCI and related matters.

End.

James Hardie 1^st Quarter FY06 Management’s Analysis of Results

Media/Analysts Enquiries:

Steve Ashe
Vice President Investor Relations
Telephone: 61 2 8274 5246
Mobile: 0408 164 011
Email: [email protected]

Facsimile: 61 2 8274 5218

Management’s Analysis of Results and accompanying release and management presentation, along with an audio webcast of the presentation, will be available from the Investor Relations website at www.jameshardie.com.

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

Definitions

Financial Measures — US GAAP equivalents

EBIT and EBIT Margin — EBIT is defined as operating income. EBIT margin is defined as EBIT as a percentage of our net sales. We believe EBIT and EBIT margin to be relevant and useful information as these are the primary measures used by our management to measure the operating profit or loss of our business. EBIT is one of several metrics used by our management to measure the earnings generated by our operations, excluding interest and income tax expenses. Additionally, EBIT is believed to be a primary measure and terminology used by our Australian investors. EBIT and EBIT margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the United States of America. EBIT and EBIT margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies.

EBIT and EBIT margin, as used in this document, are equivalent to the US GAAP measures of operating income and operating income margin.

Operating profit from continuing operations before income taxes — is equivalent to the US GAAP measure of income from continuing operations before income taxes.

Operating profit from continuing operations — is equivalent to the US GAAP measure of income from continuing operations.

Net operating profit including discontinued operations — is equivalent to the US GAAP measure of net income.

Sales Volumes

mmsf — million square feet

msf — thousand square feet

Financial Ratios

Net cash/debt — is short-term and long-term debt less cash and cash equivalents.

James Hardie 1^st Quarter FY06 Management’s Analysis of Results

Disclaimer

This Management’s Analysis of Results contains forward-looking statements. We may from time to time make forward-looking statements in our periodic reports filed with or furnished to the United States Securities and Exchange Commission on Forms 20-F and 6-K, in our annual reports to shareholders, in offering circulars and prospectuses, in media releases and other written materials and in oral statements made by our officers, directors or employees to analysts, institutional investors, representatives of the media and others. Examples of forward-looking statements include:

	•		projections of our operating results or financial condition;
	•		statements regarding our plans, objectives or goals, including those relating to competition, acquisitions, dispositions and our products;
	•		statements about our future performance;
	•		statements about product or environmental liabilities; and
	•		expectations about payments to a special purpose fund for the compensation of proven asbestos-related personal injury and death claims.

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. We caution you 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 “Risk Factors” beginning on page 6 of our Form 20-F filed on 7 July 2005 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 Australian subsidiaries; compliance with and changes in tax laws and treatments; competition and product pricing in the markets in which we operate; 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 our research and development efforts; our reliance on a small number of product distributors; 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; the successful implementation of new software systems; and the successful transition of our new senior management. We caution you that the foregoing list of factors is not exclusive 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.

James Hardie 1^st Quarter FY06 Management’s Analysis of Results

James Hardie Industries N.V.
And Subsidiaries

Consolidated Financial Statements
For the Period Ended 30 June 2005

James Hardie Industries N.V. and Subsidiaries
Index

		Page
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of 30 June 2005 and 31 March 2005			F-2
Consolidated Statements of Income for the Three Months Ended 30 June 2005 and 2004			F-3
Consolidated Statements of Cash Flows for the Three Months Ended 30 June 2005 and 2004			F-5
Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended 30 June 2005			F-7
Notes to Consolidated Financial Statements			F-8
Item 2. Quantitative and Qualitative Disclosures About Market Risk			F-30

Item 1. Financial Statements

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

		Millions of								Millions of
		US Dollars								Australian Dollars
		30 June				31 March				30 June				31 March
		2005				2005				2005				2005
Assets
Current assets:
Cash and cash equivalents		$	161.6			$	113.5			A$	211.6			A$	146.9
Accounts and notes receivable, net of allowance for doubtful accounts of $1.5 million (A$2.0 million) and $1.5 million (A$1.8 million) as of 30 June 2005 and 31 March 2005, respectively			139.0				122.8				182.0				159.0
Inventories			104.1				98.6				136.3				127.6
Prepaid expenses and other current assets			18.7				12.0				24.5				15.5
Deferred tax assets			21.0				25.8				27.5				33.4
Assets of business held for sale			17.0				17.9				22.3				23.2
Total current assets			461.4				390.6				604.2				505.6
Property, plant and equipment, net			700.6				677.6				917.2				877.2
Deferred tax assets			10.8				10.6				14.1				13.7
Other assets			9.7				10.1				12.7				13.1
Total assets		$	1,182.5			$	1,088.9			A$	1,548.2			A$	1,409.6
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities		$	104.3			$	92.1			A$	136.5			A$	119.2
Current portion of long-term debt			25.7				25.7				33.6				33.3
Dividends payable			27.5				—				36.0				—
Accrued payroll and employee benefits			24.2				35.4				31.7				45.8
Accrued product warranties			8.6				8.0				11.3				10.4
Income taxes payable			47.3				21.4				61.9				27.7
Other liabilities			1.7				1.5				2.2				1.9
Liabilities of business held for sale			15.0				14.3				19.6				18.5
Total current liabilities			254.3				198.4				332.8				256.8
Long-term debt			121.7				121.7				159.3				157.6
Deferred income taxes			80.4				77.5				105.3				100.3
Accrued product warranties			4.4				4.9				5.8				6.3
Other liabilities			63.0				61.7				82.5				79.9
Total liabilities			523.8				464.2				685.7				600.9
Commitments and contingencies (Note 8)
Shareholders’ equity:
Common stock, Euro 0.59 par value, 2.0 billion shares authorised; 461,021,588 shares issued and outstanding at 30 June 2005 and 459,373,176 shares issued and outstanding at 31 March 2005			247.1				245.8
Additional paid-in capital			144.3				139.4
Retained earnings			292.7				264.3
Employee loans			(0.6	)			(0.7	)
Accumulated other comprehensive loss			(24.8	)			(24.1	)
Total shareholders’ equity			658.7				624.7
Total liabilities and shareholders’ equity		$	1,182.5			$	1,088.9

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

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

		Three Months
		Ended 30 June
(Millions of US dollars, except per share data)		2005				2004
Net sales		$	359.4			$	306.1
Cost of goods sold			(214.1	)			(194.8	)
Gross profit			145.3				111.3
Selling, general and administrative expenses			(45.5	)			(45.1	)
Research and development expenses			(6.3	)			(5.0	)
SCI and other related expenses			(5.2	)			(2.9	)
Impairment loss on business held for sale			(1.4	)			—
Operating income			86.9				58.3
Interest expense			(1.7	)			(2.8	)
Interest income			1.0				0.3
Income from continuing operations before income taxes			86.2				55.8
Income tax expense			(30.3	)			(18.7	)
Income from continuing operations			55.9				37.1
Loss on disposal of discontinued operations net of income tax of nil			—				(0.8	)
Net income		$	55.9			$	36.3
Income per share — basic:
Income from continuing operations		$	0.12			$	0.08
Loss from discontinued operations			—				—
Net income per share — basic		$	0.12			$	0.08
Income per share — diluted:
Income from continuing operations		$	0.12			$	0.08
Loss from discontinued operations			—				—
Net income per share — diluted		$	0.12			$	0.08
Weighted average common shares outstanding
(Millions):
Basic			460.6				458.6
Diluted			462.7				460.8

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

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

		Three Months
		Ended 30 June
(Millions of Australian dollars, except per share data)		2005				2004
Net sales		A$	467.6			A$	428.4
Cost of goods sold			(278.5	)			(272.6	)
Gross profit			189.1				155.8
Selling, general and administrative expenses			(59.2	)			(63.1	)
Research and development expenses			(8.2	)			(7.0	)
SCI and other related expenses			(6.8	)			(4.0	)
Impairment loss on business held for sale			(1.8	)			—
Operating income			113.1				81.7
Interest expense			(2.2	)			(3.9	)
Interest income			1.3				0.4
Income from continuing operations before income taxes			112.2				78.2
Income tax expense			(39.4	)			(26.2	)
Income from continuing operations			72.8				52.0
Loss on disposal of discontinued operations net of income tax of nil			—				(1.1	)
Net income		A$	72.8			A$	50.9
Income per share — basic:
Income from continuing operations		A$	0.16			A$	0.11
Loss from discontinued operations			—				—
Net income per share — basic		A$	0.16			A$	0.11
Income per share — diluted:
Income from continuing operations		A$	0.16			A$	0.11
Loss from discontinued operations			—				—
Net income per share — diluted		A$	0.16			A$	0.11
Weighted average common shares outstanding
(Millions):
Basic			460.6				458.6
Diluted			462.7				460.8

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

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

		Three Months
		Ended 30 June
(Millions of US dollars)		2005				2004
Cash Flows From Operating Activities
Net income		$	55.9			$	36.3
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment loss on business held for sale			1.4				—
Depreciation and amortisation			9.4				8.9
Deferred income taxes			7.3				(0.8	)
Prepaid pension cost			0.8				0.7
Tax benefit from stock options exercised			0.6				—
Stock compensation			1.0				0.7
Other			0.3				—
Changes in operating assets and liabilities:
Accounts receivable			(16.2	)			(2.3	)
Inventories			(6.4	)			9.7
Prepaid expenses and other current assets			(7.4	)			32.3
Accounts payable and accrued liabilities			12.4				9.3
Other accrued liabilities and other liabilities			18.1				(23.8	)
Net cash provided by operating activities			77.2				71.0
Cash Flows From Investing Activities
Purchases of property, plant and equipment			(34.0	)			(30.3	)
Collections on loans receivable			0.1				—
Net cash used in investing activities			(33.9	)			(30.3	)
Cash Flows From Financing Activities
Net proceeds from line of credit			0.6				—
Proceeds from issuance of shares			4.6				0.4
Net cash provided by financing activities			5.2				0.4
Effects of exchange rate changes on cash			(0.4	)			(0.5	)
Net increase in cash and cash equivalents			48.1				40.6
Cash and cash equivalents at beginning of period			113.5				72.3
Cash and cash equivalents at end of period			161.6				112.9
Components of Cash and Cash Equivalents
Cash at bank and on hand			53.5				25.7
Short-term deposits			108.1				87.2
Cash and cash equivalents at end of period		$	161.6			$	112.9

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

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

		Three Months
		Ended 30 June
(Millions of Australian dollars)		2005				2004
Cash Flows From Operating Activities
Net income		A$	72.8			A$	50.9
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment loss on business held for sale			1.8				—
Depreciation and amortisation			12.2				12.5
Deferred income taxes			9.5				(1.1	)
Prepaid pension cost			1.0				1.0
Tax benefit from stock options exercised			0.8				—
Stock compensation			1.3				1.0
Other			0.4				—
Changes in operating assets and liabilities:
Accounts receivable			(21.1	)			(3.2	)
Inventories			(8.3	)			13.6
Prepaid expenses and other current assets			(9.6	)			45.2
Accounts payable and accrued liabilities			16.1				13.0
Other accrued liabilities and other liabilities			23.5				(33.3	)
Net cash provided by operating activities			100.4				99.6
Cash Flows From Investing Activities
Purchases of property, plant and equipment			(44.2	)			(42.4	)
Collections on loans receivable			0.1				—
Net cash used in investing activities			(44.1	)			(42.4	)
Cash Flows From Financing Activities
Net proceeds from line of credit			0.8				—
Proceeds from issuance of shares			6.0				0.6
Net cash provided by financing activities			6.8				0.6
Effects of exchange rate changes on cash			1.6				10.9
Net increase in cash and cash equivalents			64.7				68.7
Cash and cash equivalents at beginning of period			146.9				95.1
Cash and cash equivalents at end of period			211.6				163.8
Components of Cash and Cash Equivalents
Cash at bank and on hand			70.0				37.3
Short-term deposits			141.6				126.5
Cash and cash equivalents at end of period		A$	211.6			A$	163.8

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

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

																		Accumulated
						Additional												Other
		Common				Paid-in				Retained				Employee				Comprehensive
(Millions of US dollars)		Stock				Capital				Earnings				Loans				Loss				Total
Balances as of 31 March 2005		$	245.8			$	139.4			$	264.3			$	(0.7	)		$	(24.1	)		$	624.7
Comprehensive income (loss):
Net income			—				—				55.9				—				—				55.9
Other comprehensive income (loss):
Amortisation of unrealised transition loss on derivative instruments			—				—				—				—				0.3				0.3
Foreign currency translation loss			—				—				—				—				(1.0	)			(1.0	)
Other comprehensive loss			—				—				—				—				(0.7	)			(0.7	)
Total comprehensive income																							55.2
Dividends declared			—				—				(27.5	)			—				—				(27.5	)
Stock compensation			—				1.0				—				—				—				1.0
Tax benefit from stock options exercised			—				0.6				—				—				—				0.6
Employee loans movement			—				—				—				0.1				—				0.1
Stock options exercised			1.3				3.3				—				—				—				4.6
Balances as of 30 June 2005		$	247.1			$	144.3			$	292.7			$	(0.6	)		$	(24.8	)		$	658.7

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

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

1.		Basis of Presentation
		The consolidated financial statements represent the financial position, results of operations and cash flows of James Hardie Industries N.V. (“JHI NV”) and its current wholly owned subsidiaries, 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.
		In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of financial position as of 30 June and 31 March 2005 and the results of operations for the three months ended 30 June 2005 and 2004 and cash flows for the three months ended 30 June 2005 and 2004. These consolidated financial statements and notes are to be read in conjunction with the audited consolidated financial statements of James Hardie Industries N.V. and Subsidiaries for the three years ended 31 March 2005. The results of operations for the three months ended 30 June 2005 are not necessarily indicative of the results to be expected for the full fiscal year ending 31 March 2006.
		Convenience Translation
		As the majority of the Company’s shareholder base is Australian, the assets, liabilities, income statement and cash flows of the Company have been presented with accompanying Australian dollar (A$) convenience translations. These A$ convenience translations are not prepared in accordance with accounting principles generally accepted in the United States of America. The exchange rates used to calculate the convenience translations are as follows:

		31 March				30 June
(US$1 = A$)		2005				2005				2004
Assets and liabilities			1.2946				1.3092				1.4510
Income statement			n/a				1.3010				1.3994
Cash flows — beginning cash			n/a				1.2946				1.3156
Cash flows — ending cash			n/a				1.3092				1.4510
Cash flows — current period movements			n/a				1.3010				1.3994

2.		Summary of Significant Accounting Policies
		Reclassifications
		Certain prior year balances have been reclassified to conform with the current year presentation.

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

		Earnings Per Share
		The Company is required to disclose basic and diluted earnings per share (“EPS”). Basic EPS is calculated using 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 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
		Ended 30 June
(Millions of shares)		2005				2004
Basic common shares outstanding			460.6				458.6
Dilutive effect of stock options			2.1				2.2
Diluted common shares outstanding			462.7				460.8

(Continuing operations - US dollar)		2005				2004
Net income per share — basic		$	0.12			$	0.08
Net income per share — diluted		$	0.12			$	0.08

		Potential common shares of 4.5 million and 9.3 million for the three months ended 30 June 2005 and 2004, 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$4.4 million and US$5.1 million for the three months ended 30 June 2005 and 2004, respectively.
		Stock-Based Compensation
		The Company estimates the fair value of its stock option grants on the date of grant using the Black-Scholes option-pricing model and recognises this value as compensation expense over the periods in which the options vest. Accordingly, the Company recognised stock-based compensation expense (included in selling, general and administrative expenses) of US$1.0 million and US$0.7 million for the three months ended 30 June 2005 and 2004, respectively.
		Recent Accounting Pronouncements
		Inventory Costs
		In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 151, “Inventory Costs — an amendment of Accounting Research Bulletin (“ARB”) No. 43, Chapter 4.” SFAS No. 151 requires abnormal amounts of inventory costs related to idle facility, freight handling and wasted material expenses to be recognised as current period charges. Additionally, SFAS No. 151 requires that allocation of fixed production overhead to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 is effective for fiscal years beginning after 15 June 2005. The Company

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

		does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.
		American Jobs Creation Act
		In October 2004, the President of the United States signed into law the American Jobs Creation Act (the “Act”). The Act allows for a US federal income tax deduction for a percentage of income earned from certain US production activities. Based on the effective date of the Act, the Company will be eligible for this deduction in the first quarter of fiscal year 2006. Additionally, in December 2004, the FASB issued FASB Staff Position (“FSP”) No. 109-1, “Application of FASB Statement No. 109, Accounting for Income Taxes (“SFAS No. 109”), to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004.” FSP No. 109-1, which was effective upon issuance, states the deduction under this provision of the Act should be accounted for as a special deduction in accordance with SFAS No 109. The Company applied the guidance in FSP No. 109-1 upon recognition of this tax deduction beginning 1 April 2005. The application of FSP No. 109-1 did not have a material impact on the Company’s consolidated financial statements.
		The Act also allows for an 85% dividends received deduction on the repatriation of certain earnings of foreign subsidiaries. In December 2004, the FASB issued FSP No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004.” FSP No. 109-2, which was effective upon issuance, allows companies time beyond the financial reporting period of enactment to evaluate the effect of the Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying SFAS No. 109. Additionally, FSP No. 109-2 provides guidance regarding the required disclosures surrounding a company’s reinvestment or repatriation of foreign earnings. The Company continues to evaluate this provision of the Act and as such, has not yet quantified the impact this provision will have on the Company’s consolidated financial statements.
		Exchanges of Non-Monetary Assets
		In December 2004, the FASB issued SFAS No. 153, “Exchange of Non-Monetary Assets — An Amendment of ARB Opinion No. 29,” which requires non-monetary asset exchanges to be accounted for at fair value. The Company is required to adopt the provisions of SFAS No. 153 for non-monetary exchanges occurring in fiscal periods beginning after 15 June 2005. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
		Share-Based Payment
		In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123R”). SFAS No. 123R replaces SFAS No. 123 and supersedes Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” Generally, SFAS No. 123R is similar in approach to SFAS No. 123 and requires that compensation cost relating to share-based payments be recognized in the financial statements based on the fair value of the equity or liability instruments issued. SFAS No. 123R is effective as of the beginning of the first interim or annual reporting period that begins after 15 June 2005. In April 2005, the United States Securities and Exchange Commission delayed the effective date of SFAS No. 123R until fiscal years beginning after 15 June 2005. The Company adopted SFAS No. 123 in fiscal year 2003 and does not expect the adoption of SFAS No. 123R to have a material effect on the Company’s consolidated financial statements.
		Conditional Asset Retirement Obligations
		In March 2005, the FASB issued FASB Interpretation No. (“FIN”) 47, “Accounting for Conditional Asset Retirement Obligations.” FIN 47 clarifies the term “conditional asset retirement obligation” used in SFAS No. 143, “Accounting for Asset Retirement Obligations.” FIN 47 is effective no later than the end of the fiscal year ending after 15 December 2005. The adoption of this interpretation beginning 1 April 2005 did not have a material impact on the Company’s consolidated financial statements.

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

		Accounting Changes and Error Corrections
		In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections — a replacement of APB Opinion No. 20 and FASB Statement No. 3.” SFAS No. 154 requires retrospective application to prior periods’ financial statements of a voluntary change in accounting principle unless it is impracticable. APB Opinion No. 20, “Accounting Changes,” previously required that most voluntary changes in accounting principle be recognised by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after 15 December 2005. The Company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.
3.		Inventories
		Inventories consist of the following components:

		30 June				31 March
(Millions of US dollars)		2005				2005
Finished goods		$	72.5			$	70.1
Work-in-process			7.9				8.4
Raw materials and supplies			25.7				22.1
Provision for obsolete finished goods and raw materials			(2.0	)			(2.0	)
Total inventories		$	104.1			$	98.6

4.		Retirement Plans
		The Company sponsors a retirement plan for its Australian employees that is accounted for as a defined benefit plan. Pension expense for this plan is determined using the projected unit credit method to estimate the total benefits ultimately payable to participants and allocates this cost to service periods. The actuarial assumptions used to calculate pension costs are reviewed annually. The Company made contributions of US$0.4 million for the three months ended 30 June 2005. The Company expects to make a contribution to the pension plan of approximately US$1.2 million for the remainder of fiscal year 2006.
		The following are the components of net periodic pension cost for this plan:

		Three Months
		Ended 30 June
(Millions of US dollars)		2005				2004
Service cost		$	0.5			$	0.8
Interest cost			0.6				0.6
Expected return on plan assets			(0.7	)			(0.8	)
Recognised net actuarial loss			0.1				0.1
Net periodic pension cost			0.5				0.7
Settlement loss			0.3				—
Net pension cost		$	0.8			$	0.7

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

5.		Business Held For Sale
		In June 2005, the Company approved a plan to dispose of its Chile Fibre Cement business to Compania Industrial El Volcan S.A. (“Volcan”). Assets expected to be sold and liabilities expected to be assumed have been reclassified to current assets of business held for sale and current liabilities of business held for sale and consist of the following:

		30 June				31 March
(Millions of US dollars)		2005				2005
Assets of business held for sale
Accounts receivable, net		$	3.7			$	4.4
Inventories			1.7				1.3
Property, plant and equipment, net			8.1				8.1
Intangible assets, net			1.5				2.2
Deferred tax assets			1.9				1.9
Other			0.1				—
		$	17.0			$	17.9
Liabilities of business held for sale
Accounts payable and accrued liabilities		$	1.8			$	1.9
Short-term debt			12.7				11.9
Other			0.5				0.5
		$	15.0			$	14.3

		Short-term debt will be repaid in full from the gross proceeds of the sale of the Chile Fibre Cement business.
		The carrying value of assets held for sale has been reduced by a non-cash impairment charge of US$1.4 million as of 30 June 2005. This impairment charge is based upon expectations of proceeds from the eventual sale of the business and is classified as an impairment loss on business held for sale in the Company’s consolidated statement of income for the three months ended 30 June 2005.

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

As part of the terms of the eventual sale of the Chile Fibre Cement business to Volcan, the Company will enter into a two year take or pay purchase contract for fibre cement product manufactured by Volcan. The first year of the contract amounts to a purchase commitment of approximately US$2.8 million and the second year amounts to a purchase commitment of approximately US$2.1 million. As this contract qualifies as continuing involvement per SFAS No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets,” the operating results of the Chile Fibre Cement business are included in the Company’s income from continuing operations and are comprised of the following components:

		Three Months
		Ended 30 June
(Millions of US dollars)		2005				2004
Chile Fibre Cement
Net sales		$	4.6			$	2.2
Cost of goods sold			(3.1	)			(1.7	)
Gross profit			1.5				0.5
Selling, general and administrative expenses			(1.0	)			(0.4	)
Impairment loss on business held for sale			(1.4	)			—
Operating income			(0.9	)			0.1
Interest expense			(0.2	)			(0.1	)
Net income		$	(1.1	)		$	—

The sale to Volcan of the Chile Fibre Cement business was completed in July 2005 for gross proceeds of US$15.8 million.

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

6.		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 Board of Directors. USA Fibre Cement manufactures and sells fibre cement interior linings, exterior siding and related accessories products in the United States. 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. Other includes the manufacture and sale of fibre cement products in Chile, the manufacture and sale of fibre cement reinforced pipes in the United States, fibre cement operations in Europe and roofing operations in the United States. The Company’s reportable 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 Customers
		Three Months
		Ended 30 June
(Millions of US dollars)		2005				2004
USA Fibre Cement		$	287.5			$	240.7
Asia Pacific Fibre Cement			61.7				57.3
Other			10.2				8.1
Worldwide total from continuing operations		$	359.4			$	306.1

		Income From
		Continuing Operations
		Three Months
		Ended 30 June
(Millions of US dollars)		2005				2004
USA Fibre Cement		$	94.1			$	63.1
Asia Pacific Fibre Cement			12.4				12.0
Research and Development			(3.2	)			(4.1	)
Other			(3.5	)			(3.3	)
Segments total			99.8				67.7
General Corporate			(12.9	)			(9.4	)
Total operating income			86.9				58.3
Net interest expense			(0.7	)			(2.5	)
Worldwide total from continuing operations		$	86.2			$	55.8

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

		Total Identifiable Assets
		30 June				31 March
(Millions of US dollars)		2005				2005
USA Fibre Cement		$	716.8			$	670.1
Asia Pacific Fibre Cement			183.8				181.4
Other			66.2				63.7
Segments total			966.8				915.2
General Corporate			198.7				155.8
Assets of business held for sale			17.0				17.9
Worldwide total		$	1,182.5			$	1,088.9

Geographic Areas

		Net Sales to Customers
		Three Months
		Ended 30 June
(Millions of US dollars)		2005				2004
USA		$	291.2			$	245.6
Australia			42.5				40.8
New Zealand			13.6				11.0
Other Countries			12.1				8.7
Worldwide total from continuing operations		$	359.4			$	306.1