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ANNUAL REPORTYear EndedMarch 31, 2009

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TABLE OF CONTENT

PART I Letter to Shareholders and Business Review 3

PART II Financial Statements for the Fiscal Year Ended March 31, 2009 27

PART III Corporate Governance 105

PART IV Shareholders’ Information 123

PART ILETTER TO SHAREHOLDERS AND BUSINESS REVIEW

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LETTER TO SHAREHOLDERS AND BUSINESS REVIEW

LETTER TO SHAREHOLDERS

July 22, 2009

Dear Shareholders,

During the past year, we and many others, have been caught in an economic downturn of an unprecedented severity and it isdifficult to predict when it will end.

The financial crisis gradually spread to the real economy across all industries, and confronted us and our portfolio companieswith tremendous challenges. Yet our involvement with our portfolio companies as an industrial partner has proved to beefficient: we sold D&M Holdings Inc. at an attractive price amid financial market turbulence, yielding an absolute return of 120%on invested capital.

The case of D&M Holdings demonstrates our hands-on approach and emphasizes our involvement as a manager in any venturewe undertake, beyond the role of a mere financial investor.

However, the economic downturn has significantly affected the financial performance of most of our portfolio companies. Theimpact of the economic recession on their financial performance and declining market valuations in their relevant industries,lead us to revisit the recoverable amounts of our investments in our non-consolidated financial statements, and to record animpairment charge of EUR 671 million. This impairment charge is in part driven by what we believe to be a conservative stanceon the timing and the extent of the recovery of the global economy, and could therefore be partly or wholly reversed in the futureif the reasons for recognising the impairment loss in our investments cease to be valid.

The financial and economic crisis particularly caused enormous disruption in the global automotive industry. Sagging customerconfidence and tightening consumer credit resulted in the near collapse of two of the largest US auto-manufacturers, whichfiled for bankruptcy protection. Our automotive assets, which account for more than 60% of the total invested capital, sufferedthe effects of severe and rapid volume declines.

While Asahi Tec, Niles and Honsel all started to implement thorough restructuring plans to respond to collapsing demand,liquidity shortfalls were inevitable.

Asahi Tec suffered from decreasing exports to emerging Asian economies and domestic demand for cars and trucks, and it wasno longer able to support its US subsidiary Metaldyne which ultimately filed for protection under Chapter 11 in May 2009.

Facing similar challenges, Niles successfully strengthened its capital structure, with one of its main stakeholders investingalongside us.

Honsel also reached an agreement with RHJ International, its customers and its lenders, on a capital restructuring whichinvolved a significant deleveraging of its balance sheet and the injection of new capital to allow for a significant operationalrestructuring.

In all instances, the support from customers in the financial and operational restructuring of some of our automotiveinvestments was essential to our decision to renew our commitment to these companies which are in many cases key parts ofthe car manufacturing supply chain. We now believe they are in a better position to weather the current economic downturn, andto emerge stronger when the global economy recovers.

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Support to our portfolio companies is made on a voluntary basis only and as a result of the merits of their respective individualbusiness plans, that take a conservative view on the future and reflect current market reality. We remain prudent in ourinvestment approach and need to be reassured of long-term returns before committing to new funding. A significantdeleveraging of the balance sheet, stringent operational restructuring and the support of key customers are a prerequisite forany new capital injection from RHJ International.

The intense focus on the existing portfolio companies does not mean we are not pursuing new investment opportunities. RHJInternational remains determined to deploy most of its cash to create new investment platforms.

With a strong cash position, which was recently strengthened by the partial sale of our stake in Commercial International Bankof Egypt, and a dedicated and committed team of investment professionals, we believe we are well positioned to take advantageof opportunities created by the market dislocation in the face of fundamental changes, particularly in, but not limited to, theEuropean financial services sector. We remain disciplined and prudent in our aim to build strong investment platforms on whichto grow, and have confidence in our capacity to create long-term shareholder value, in an ever-challenging environment.

That same, continuous confidence of our shareholders is essential to implement our long-term strategy. I would therefore liketo thank all of RHJ International’s shareholders for their continued interest and trust in the company in these turbulent times.

I look forward to what we can accomplish over the next year and to welcoming you to our Annual General Meeting onSeptember 15.

Leonhard FischerChief Executive Officer

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BUSINESS REVIEW

This Business Review presents a business and financial reviewof the Company’s activities for the fiscal years ended March 31,2008 and 2009. Unless otherwise noted herein, RHJInternational SA, a Belgian limited company, is referred to as“RHJI” or “RHJ International”. RHJ International SA and itsbusiness are referred to collectively as the “Company”.

RHJ International is a diversified holding company focused oncreating long-term value for its shareholders by acquiring andoperating businesses. It seeks to create sustainable competitiveadvantage by acting as a catalyst in industries that have apositive long-term outlook and that are undergoing fundamentalchanges. RHJ International generally acquires businesses thatare under-managed but possess key strengths and stronggrowth potential, and adds management with global experiencewhich it sources from its network of industrial executives. Giventhis strategy, RHJ International’s respective businesses are invarious stages of operational improvement.

The Company’s portfolio consists of five controlling ownershipinterests, three investments in associates and several non-controlling minority ownership interests. The interests in Asahi

Tec Corporation (“Asahi Tec”), Honsel InternationalTechnologies SA (“HIT”), Niles Co., Ltd. (“Niles”), D&M HoldingsInc. (“D&M”), Columbia Music Entertainment, Inc. (“CME”),Phoenix Resort K.K. (“Phoenix Seagaia Resort”) and ShakleeGlobal Group, Inc. (“Shaklee”), were contributed to the Companyin connection with the initial offering and listing of its ordinaryshares on Euronext Brussels in March 2005. The investments inU-shin Ltd. (“U-shin”) and SigmaXYZ Inc.("SigmaXYZ") weremade during the fiscal years ended March 31, 2007 and 2009,respectively.

Automotive Components

Cast AutoParts

Cast AutoParts

Electronics

Media &Entertainment

Hospitality Nutrition,Automotive,Other

Financial Services &Other

Asahi Tec60.1%

Honsel51%

Niles77.3%

CME25.5%

PhoenixSeagaiaResort100%

Associates OtherInterests

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The evolution of the book value of the Company’s portfolio since March 31, 2008, can be summarized as follows:

Evolution of book value

The table above reflects the Company’s investments’ book values as reflected in the non-consolidated financial statements, except forthe other investments which are reflected at fair market value.

The Company believes that the non-consolidated financial statements provide for the most relevant measure of its liquidity andfinancial position as the consolidated financial statements are merely an aggregation of its consolidated subsidiaries that operate indiverse industries. Furthermore, the consolidated financial statements for the year ended March 31, 2009, include losses andnegative equity contributions from certain consolidated subsidiaries that the Company and its shareholders will not be exposed to asthere is no binding obligation to cover such losses. Except for a guarantee of up to JPY 3,400 million (EUR 26.1 million) on the debt ofPhoenix Seagaia Resort, RHJI’s financial exposure from its investments is limited to the invested capital. This exposure is reflected bythe book values reflected in the non-consolidated financial statements.

(In JPY millions)

Fiscal year ended March 31 2008 Additions DisposalsFair value

adjustmentsImpairment 2009

Investments in subsidiaries – At cost less impairmentAsahi Tec 25,984 7,769 - - (19,753) 14,000CME 7,817 - - - (4,817) 3,000D&M 10,515 - (10,515) - - - HIT 32,993 - - - (32,993) - Niles 16,619 - - - - 16,619Phoenix Seagaia Resort 21,709 1,000 - - (17,209) 5,500

115,637 8,769 (10,515) 0 (74,772) 39,119Investments in associates – At cost less impairmentShaklee 12,244 276 - - (6,050) 6,470SigmaXYZ - 1,085 - - - 1,085U-shin 8,038 - - - (4,838) 3,200

20,282 1,361 0 0 (10,888) 10,755Other investments - At fair value 21,530 897 (9,030) (5,016) (2,299) 6,082Total investments 157,449 11,027 (19,545) (5,016) (87,959) 55,956Cash and cash equivalents (parent company only) 50,347 8,379 - - - 58,726Loans 2,361 2,584 - - - 4,945Total portfolio 210,157 21,990 (19,545) (5,016) (87,959) 119,627Book value per share (in JPY) 2,457 257 (229) (59) (1,028) 1,398

(In EUR millions)

Fiscal year ended March 31 2008 Additions DisposalsFair value

adjustmentsImpairment 2009

Investments in subsidiaries – At cost less impairmentAsahi Tec 198.1 59.2 - - (150.6) 106.7 CME 59.6 - - - (36.7) 22.9 D&M 80.2 - (80.2) - - - HIT 251.5 - - - (251.5) - Niles 126.7 - - - - 126.7 Phoenix Seagaia Resort 165.5 7.6 - - (131.2) 41.9

881.6 66.9 (80.2) 0.0 (570.0) 298.2 Investments in associates – At cost less impairmentShaklee 93.3 2.1 - - (46.1) 49.3 SigmaXYZ - 8.3 - - - 8.3 U-shin 61.3 - - - (36.9) 24.4

154.6 10.4 0.0 0.0 (83.0) 82.0 Other investments - At fair value 164.1 6.8 (68.8) (38.2) (17.5) 46.4 Total investments 1,200.3 84.1 (149.0) (38.2) (670.6) 426.6 Cash and cash equivalents (parent company only) 383.8 63.9 - - - 447.7 Loans 18.0 19.7 - - - 37.7Total portfolio 1,602.2 167.6 (149.0) (38.2) (670.6) 912.0Book value per share (in EUR) 18.7 2.0 (1.7) (0.4) (7.8) 10.7

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Investments and disposalsThe evolution in terms of total invested capital of the Company’sportfolio during the fiscal year ended March 31, 2009, can besummarized as follows:

• The Company increased the capital of Asahi Tec by JPY 7,769million (EUR 59.2 million) for purposes of (a) curing a breachof covenants by its US based subsidiary Metaldyne (JPY1,800 million or EUR 13.7 million), (b) providing Metaldynewith additional liquidity (JPY 1,051 million or EUR 8 million)and (c) funding Metaldyne’s bond tender (JPY 4,918 millionor EUR 37.5 million);

• The Company subscribed to JPY 1,000 million (EUR 7.6million) of new shares of Phoenix Seagaia Resort to coverscheduled reimbursement of its debt as well as to provideliquidity for working capital requirements;

• The Company invested JPY 1,085 million (EUR 8.3 million) inSigmaXYZ, a newly formed joint venture in IT consulting withMitsubishi Corporation;

• The Company acquired 457,000 additional existing shares ofShaklee for an aggregate consideration of JPY 276 million(EUR 2.1 million), increasing its ownership to 42.5 %;

• The Company closed the sale of D&M to K.K. BCJ-2, acorporation owned by investment funds advised by BainCapital Partners, LLC, for cash consideration of JPY 23,115million (EUR 176.2 million);

• The Company disposed of a non-controlling minorityinvestment for JPY 9,030 million (EUR 68.8 million), initiallyacquired for JPY 5,600 million (EUR 42.7 million). The otherinvestments also include a new investment of JPY 730million (EUR 5.6 million).

Fair value adjustmentsOther investments consist of several non-controlling ownershipinterests and certain undisclosed investments. The non-controlling ownership interests are “available for sale financialassets”, and are reported at fair market value. The downwardadjustment since March 31, 2008, is attributable to a decrease inthe fair market value of the investment in CommercialInternational Bank (Egypt) SAE (“CIB”) by JPY 5,016 million (EUR38.2 million). Subsequent to year-end, on July 8, 2009, 63% ofthe stake in CIB was sold for cash consideration of JPY 5,235million (EUR 40.2 million).

ImpairmentThe Company prepares both consolidated and non-consolidatedfinancial statements. The consolidated financial statements areprepared in accordance with International Financial ReportingStandards ("IFRS"), while the non-consolidated financialstatements are prepared in accordance with Belgian GenerallyAccepted Accounting Principles (“Belgian GAAP”). An

impairment review was carried out for both the consolidated andthe non-consolidated financial statements. It should be notedthat there are significant differences in the valuation approach,nature and outcome of these reviews resulting from divergentmethodologies of determining an asset’s recoverable amountbetween IFRS and Belgian GAAP. IFRS defines the recoverableamount of an asset as the higher of (a) the asset’s fair value lesscost to sell or (b) its value in use. The value in use is based onthe discounted cash flows projected to be derived from theasset’s continuing use. Belgian GAAP requires the recognition ofimpairment of an asset if its carrying value is projected topermanently exceed its recoverable amount, which can bedetermined using undiscounted cash flow estimates.

As a result, the impairment charges in the consolidated and thenon-consolidated financial statements for the fiscal year endedMarch 31, 2009, are different, and amounted to JPY 123,259million (EUR 939.7 million) and JPY 87,959 million (EUR 670.6million), respectively.

Non-consolidated Financial StatementsThe Company reviewed the carrying value of its investments asreflected in the non-consolidated financial statements for thefiscal year ended March 31, 2009, prepared in accordance withBelgian GAAP. In particular, the Company assessed whether thecarrying value of each individual investment was in excess of theirfuture recoverable amount. The assessment included a reviewand analysis of (a) publicly observed market prices for the publiclylisted investments, (b) valuation multiples for groups of publiclylisted, comparable companies, and with respect to theconsolidated subsidiaries, (c) the projected financial performancebased on budgets and business plans prepared by their respectivemanagements. It should be noted that the future recoverableamount of the Company’s consolidated subsidiaries has beendetermined by applying currently applicable valuation multiples tothe consolidated subsidiaries’ undiscounted projected earnings,and that the resulting amounts do not purport to indicate thecurrent realizable value of the Company’s investments inconsolidated subsidiaries.

The impact of the economic recession on the consolidatedsubsidiaries’ financial performance, together with the Company’sstance, which it believes to be conservative, on the timing and theextent of the recovery of the global economy, and the currentmarket valuations in general and in the industries relevant to theCompany’s investments in particular, resulted in the recognitionof impairment charges at March 31, 2009, of JPY 87,959 million(EUR 670.6 million) as reflected in the table on the previous page.The Company will continue to monitor the recoverable amount ofits investments and in the event that the reasons underlying therecognition of the impairment are no longer valid, the impairmentcharges could be reversed in the future. In addition to theimpairment above, the Company adjusted the carrying value in itssubsidiary RHJI Services SA by JPY 6,937 million (EUR 52.9million) to reflect its net asset value of JPY 5,156 million (EUR 39.3million). RHJI Services SA is a management subsidiary thatprovides advisory services and engages in intra-group financing.

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Consolidated Financial StatementsFor purposes of preparing the consolidated financial statements, in accordance with IFRS, as of and for the fiscal year ended March31, 2009, and in light of the global economic downturn, the Company analyzed the performance of its consolidated businesses in orderto determine whether or not there was any indication of impairment of their respective long-lived assets. The analysis included areview of the industry perspective, and the impact of lower than expected performance of certain portfolio companies on therecoverable amount of goodwill and other long-lived intangible assets. The analysis resulted in an aggregate impairment charge ofJPY 123,259 million (EUR 939.7 million) for the fiscal year ended March 31, 2009. JPY 95,290 million (EUR 726.5 million) wasattributable to goodwill and intangible assets and mainly related to Metaldyne and HIT in view of the significant global downturn of theautomotive industry. Cumulative impairment of goodwill and intangible assets at March 31, 2009, amounted to JPY 136,491 million(EUR 1,040.6 million). Total intangible assets at March 31, 2009, amounted to JPY 50,808 million (EUR 387.3 million), compared to JPY161,245 million (EUR 1,229 million) at March 31, 2008. In addition to the impairment of goodwill and intangible assets, underutilizedproperty, plant and equipment, mainly at Phoenix Seagaia Resort, HIT and Metaldyne, were written down by JPY 27,969 million (EUR213.2 million). Finally, the Company recognized an impairment charge of JPY 10,888 million (EUR 83 million) on its investments inShaklee and U-shin.

The impairment charges related to the consolidated subsidiaries can be broken down as follows:

All impairment charges referenced in the review of the consolidated subsidiaries’ individual results, relate to the impairment chargesreflected in the Company’s consolidated financial statements for the fiscal year ended March 31, 2009 as reflected in the table above.

The allocation of the Invested Capital (excluding cash) per industry as atMarch 31, 2009 is as follows:

(In JPY millions)

Fiscal year ended March 31 2009

Asahi Tec HIT Niles CMEPhoenix Seagaia Resort

Total

Property, plant and equipment 7,045 6,699 232 - 13,993 27,969

Goodwill 30,849 6,957 9,770 3,247 - 50,823

Intangible assets other than goodwill 14,892 25,186 - 4,398 (9) 44,467

52,786 38,842 10,002 7,645 13,984 123,259

Automotive Components 60%

Hospitality 10%

Nutrition 11%

Financial Services 9%

Media 5%

Other 5%

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Cash and cash equivalentsNon-consolidated cash flows for the parent holding company for the fiscal year ended March 31, 2009, can be summarized as follows:

Non-consolidated cash-flows from investing activities reflected:

• The proceeds from the sale of D&M and a non-controlling minority investment for JPY 32,145 million (EUR 245.1 million) inaggregate;

• Additional investments in Asahi Tec, Phoenix Seagaia Resort and Shaklee of JPY 9,045 million (EUR 69 million);• Funding of the Company’s management subsidiary RHJI Services for JPY 4,158 million (EUR 31.7 million), used to, among other

things, provide financing to certain consolidated subsidiaries;• The formation of SigmaXYZ for JPY 1,085 million (EUR 8.3 million);• A new non-controlling investment of JPY 730 million (EUR 5.6 million);• The repurchase of 627,247 of its own shares for JPY 536 million (EUR 3.5 million). The Company repurchased the shares to be

allocated to the Company’s employees under its incentive compensation plan. At March 31, 2009, the Company held 1,145,004treasury shares. Subsequent to March 31, 2009, the Company bought an additional 1,122,085 shares as part of the purchase of 2%of total outstanding shares, announced on March 17, 2009.

Total non-consolidated cash of JPY 58,726 million or EUR 447.7 million is predominantly invested in government and governmentbacked securities in EUR, USD and JPY.

(In millions) JPY EUR

Fiscal year ended March 31 2009 2008 2009 2008

Net cash used in operating activities (7,015) (1,691) (53.5) (12.9)

Net cash from (used in) investing activities 17,599 (21,299) 134.2 (162.4)

Net cash used in financing activities (392) (2,329) (3.0) (17.8)

Net increase (decrease) in cash and cash equivalents 10,192 (25,319) 77.7 (193.0)

Cash and cash equivalents at the beginning of the fiscal year 50,347 79,887 383.8 609.0

Effect of exchange rate fluctuation on cash held (1,813) (4,221) (13.8) (32.2)

Cash and cash equivalents at the end of the fiscal year 58,726 50,347 447.7 383.8

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Asahi Tec Corporation• Headquarters: Japan• Industry: Automotive Components – Cast Auto Parts Segment• Tokyo Stock Exchange ticker: 5606.T• Total Shares Outstanding: 476,717,658• RHJI ownership as of March 31, 2009: 60.1% (286,314,061 shares)• Contribution price per share (March 23, 2005): JPY 250• Closing share price on March 31, 2008: JPY 88• Closing share price on March 31, 2009: JPY 35

Overview of ActivitiesAsahi Tec (www.asahitec.co.jp) primarily designs, manufacturesand sells ductile iron cast auto parts for truck and constructionmachinery OEMs, aluminum casting parts for truck andpassenger car OEMs and aluminum wheels for automobileOEMs. Asahi Tec also designs, manufactures and sellsenvironmental systems, equipment and developmenttechnologies used by municipalities and electrical hardware andequipment used by electricity generators.

Key figuresCondensed consolidated income statement for the fiscal year ended March 31 (1)

(1) Excluding the effect of the purchase price allocation carried out in connection with the contribution of the ownership interests to the Company at March 31, 2005.

Consolidated cash and financial debt for the fiscal year ended March 31

Geographic distribution of revenue Revenue by operating segment

U.S. 36%

Japan 35%

Europe 18%Asia (excl. Japan) 6%Americas (excl. U.S.) 5%

Chassis 30%

Powertrain 31%

Devices& Equipment 5%

General Casting& Forging Parts 34%


2009 2008 2009 2008

Revenue 218,815 315,768 1,668.2 2,407.3

Gross profit 18,848 29,528 143.7 225.1

Gross margin 8.6 % 9.4 % 8.6 % 9.4 %

EBITDA 13,655 24,744 104.1 188.6

EBITDA margin 6.2 % 7.8 % 6.2 % 7.8 %

Operating loss (52,294) (25,074) (368.7) (191.2)

Loss for the year (23,958) (41,059) (182.6) (313.0)


2009 2008 2009 2008

Cash 5,350 6,530 40.8 49.8

Financial debt 79,366 117,457 605.1 895.5

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Despite a significant deleveraging of its balance sheet, unprecedented volume declines forced AsahiTec’s US subsidiary Metaldyne into Chapter 11. Asahi Tec also suffered from collapsing demand and islikely to breach financial covenants during the fiscal year ending March 31, 2010 Asahi Tec’s consolidated revenue fell by 30.7% from JPY 315,768million during the fiscal year ended March 31, 2008 to JPY218,815 million during the fiscal year ended March 31, 2009. Theglobal economic recession had a severe impact on Japan’sexport driven economy. Asahi Tec’s Asian activities experiencedsignificant volume declines, particularly driven by decreasedexport of motorcycles to emerging markets and continuouslyfalling domestic demand for cars and trucks. Despite increasedsales of parts for construction machines and electric powertransmission equipment, Asian consolidated sales fell by 39%compared to the previous year.

In the US, the effect of the downturn was even more devastating.U.S. sales at Asahi Tec’s US based subsidiary Metaldyne fell by41.4%. Sagging customer confidence and the lack of creditavailability resulted in continuously falling demand. Metaldyne’smain customers shut down production for several weeks in anattempt to respond to the contraction of the US auto market thatultimately resulted in Chrysler’s and General Motor’s filing forChapter 11 bankruptcy protection.

During the 2nd and 3rd quarter of the fiscal year ended March31, 2009, Metaldyne responded to the decreasing sales bycontinuous adjustment of its cost structure, and was able tosignificantly deleverage its balance sheet following thesuccessful tender for most of its outstanding senior and seniorsubordinated bonds with an aggregate principal amount of USD361.3 million (JPY 35,621 million). Metaldyne reduced itsoutstanding debt from approximately USD 830.2 million (JPY82,529 million) at March 31, 2008, to USD 536.3 million (JPY52,878 million), including the cancellation, effective September26, 2008, of approximately USD 31.0 million (JPY 3,134 million) ofsecured subordinated notes pursuant to a debt cancellationagreement entered into between Chrysler Corporation("Chrysler") and Metaldyne. In addition, upon completion of thetender offer, Chrysler agreed to cancel the 97,098 Class CPreferred shares it held in Asahi Tec with a face value of JPY6,082 million. The bond tender was financed by a USD 50 millioninvestment from Asahi Tec, funded by the Company’ssubscription to newly issued shares of Asahi Tec for JPY 4,917million, increasing its ownership in Asahi Tec from 45.3% to60.18%. In addition, certain of Metaldyne’s leading customersprovided Metaldyne with USD 60 million funding for the bondtender offer, in the form of loans to Metaldyne. From the totalproceeds of USD 110 million, Metaldyne used USD 60.1 millionto pay for the tendered bonds. Previously, on July 15, 2008, theCompany, via a capital subscription of JPY 1,800 million in AsahiTec, also funded a cure of Metaldyne’s breach of financialcovenants at June 30, 2008. On October 14, 2008, a capitalinjection of JPY 1,051 million by the Company into Asahi Tecfurther supported Metaldyne’s liquidity.

Throughout the fiscal year ended March 31, 2009, Asahi Tec andMetaldyne increased their efforts to maintain profitabilitythrough cost reductions, plant closures, successfully negotiated

price revisions and other measures designed to contain theeffects of continuously falling order volumes, but thecombination of the unprecedented sales decline and increasedmaterial prices resulted in a gross profit of JPY 18,848 millionfor the fiscal year ended March 31, 2009, compared to JPY29,528 million a year earlier.

The operating loss for the fiscal year ended March 31, 2009, ofJPY 52,294 million, was negatively impacted by an impairmentcharge of JPY 49,309 million on certain property, plant andequipment and intangible assets, including goodwill, ofMetaldyne in view of its deteriorated financial performance andthe uncertainty around its ability to operate as a going concernthat existed at March 31, 2009 (1). Excluding impairment lossesfor both years, the operating loss for the fiscal year ended March31, 2009, amounted to JPY 2,985 million, compared to anoperating profit of JPY 4,175 million for the previous fiscal year.The impairment losses were partly offset by the gain of JPY39,768 million on the redemption of bonds following thesuccessful bond tender and the cancellation of debt by Chrysler,resulting in a net loss for the fiscal year ended March 31, 2009 ofJPY 23,958 million, compared to JPY 41,059 million last year.

Despite Asahi Tec’s continued support and the resultingreduction of Metaldyne’s indebtedness, Metaldyne’s financialperformance was heavily affected by car production in the USthat continued to fall beyond expectations. Faced with its ownchallenges, Asahi Tec was no longer in a position to furthersupport Metaldyne, which on May 27, 2009, filed a voluntarypetition to reorganize under Chapter 11 of the U.S. BankruptcyCode, shortly after Chrysler, one of its main customers, alsofiled for protection under Chapter 11.

Given that its assets and capital structure are completelyringfenced from Metaldyne, Asahi Tec will now focus on its ownneeds and opportunities. Without Metaldyne, which will bedeconsolidated, Asahi Tec projects net sales of JPY 60,200million and an operating loss of JPY 300 million, based on itsmanagement forecast prepared under J-GAAP for the fiscal yearending March 31, 2010.

Asahi Tec is likely to breach certain financial covenants under itscredit agreements in the course of the fiscal year ending March31, 2010. Asahi Tec is currently seeking a waiver of covenantsfrom its lenders. In the event that Asahi Tec were not successfulin obtaining such a waiver, it would be in default of itsobligations under its credit agreements, which would castsignificant doubt on Asahi Tec’s ability to operate as a goingconcern.

(1) The total impairment charge recorded in the consolidated financial statements forthe fiscal year ended March 31, 2009, amounted to JPY 52,786 million as a resultof an additional impairment loss of JPY 3,477 million recorded by the Company ongoodwill resulting from the purchase price allocation.

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Given that Asahi Tec was not in a position to further supportMetaldyne as it required focus on its own needs in acontinuously challenging automotive industry, the Companyentered into an agreement to purchase a majority of Metaldyne’sassets under a court-supervised sales process pursuant toSection 363 of the U.S. Bankruptcy Code.

The purchase agreement was however not approved by thebankruptcy court and has terminated on July 27, 2009. Underthe Section 363 process, interested parties will have anopportunity to submit better and higher offers for the Metaldyne

assets. The Company may elect to participate in the sale auctionscheduled to be held on August 5, 2009.

To fund its continuing operations during the restructuring,Metaldyne has secured a USD 19.85 million debtor-in-possession (DIP) financing facility from certain customers. TheDIP credit facility will be used for the company's normal workingcapital requirements, including employee wages and benefits,supplier payments, and other operating expenses during thereorganization process.

RHJI's purchase agreement to buy certain assets from Metaldyne was not retained by the bankruptcycourt

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Honsel International Technologies SA• Headquarters: Belgium• Industry: Automotive Components – Cast Auto Parts

Segment• Privately Held• RHJI ownership as of March 31, 2009: 82 % (1)

Overview of ActivitiesHIT (www.honsel.com) is a leading European supplier of lightmetal products to the automotive and heavy truck industries. HITprincipally designs, manufactures and sells aluminum andmagnesium components and assemblies. HIT has four mainproduct categories: engine, transmission, suspension and bodycomponents. HIT has a diverse customer base including a

variety of large automobile and truck OEM manufacturers andother large OEM suppliers that ship directly to vehiclemanufacturers.

HIT competes in the casting, machining and finishing phases ofautomotive light metal components manufacturing. HIT seeks tocapitalize on key trends in the light metal casting segment of theindustry including: demand for new materials and technologiesthat reduce the overall weight of vehicles, increased outsourcingof light metals components manufacturing by automobile OEMs,preference of automobile OEMs for full service global suppliers,increased demand for suppliers with the capability to design andengineer components and assemblies, and consolidationopportunities due to the largely regional and fragmented natureof the Light Metals Casting segment.

Key FiguresCondensed consolidated income statement for the fiscal year ended March 31

(2) Adjusted for non-recurring restructuring costs


(1) Ownership in Honsel was reduced to 51 % following Honsel's capital restructuring, which was completed on July 22, 2009.

Revenue by operating segmentGeographic distribution of revenue

Die Casting 56%

Permanent MoldCasting 17%

Others 18%

Rolling 1%

Extrusion 8%

Europe 93%

Americas 7%


2009 2008 2009 2008

Revenue 93,577 115,193 713.4 878.2

Gross profit 1,246 10,454 9.5 79.7

Gross margin 1.3 % 9.1 % 1.3 % 9.1 %

EBITDA (2) 1,823 11,425 13.9 87.1

EBITDA margin 1.9 % 9.9 % 1.9 % 9.9 %

Operating loss (46,539) (380) (354.8) (2.9)

Loss from continuing operations (49,267) (2,400) (375.6) (18.3)

Profit (loss) from discontinued operations (net of income tax) 1,758 (2,768) 13.4 (21.1)

Loss for the year (47,011) (5,207) (358.4) (39.7)


2009 2008 2009 2008

Cash 1,876 5,194 14.3 39.6

Financial debt 71,631 61,322 546.1 467.5

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Plummeting sales and delayed cost rationalization result in standstill agreement Starting in August, 2008, and reaching its full scale towards theend of the calendar year 2008, the crisis in the Europeanautomotive industry caused HIT’s revenue to decrease from EUR878.2 million during the fiscal year ended March 31, 2008, toEUR 713.4 million for the fiscal year ended March 31, 2009. Therevenue for the fiscal year ended March 31, 2009 included EUR50.2 million from Tafime, acquired in December 2007. ExcludingTafime for both fiscal years, revenue decreased by 29.8 %.

HIT’s operating subsidiaries, hereafter collectively referred to asHonsel, were unable to adjust their variable costs quicklyenough to adjust to the rapidly declining order volumes, andincurred higher than expected labor costs resulting from delaysin the implementation of its restructuring program“Plan4Growth”. As a result, gross profit amounted to EUR 9.5million for the fiscal year ended March 31, 2009, compared toEUR 79.7 million during the previous fiscal year. In addition tothe effects of declining demand and unachieved labor savings,increasing costs of energy, maintenance and waste disposalcaused EBITDA, adjusted for EUR 49 million of non-recurringrestructuring and other costs, to decrease from EUR 87.1million for the fiscal year ended March 31, 2008, to EUR 13.9million for the fiscal year ended March 31, 2009. Given thesignificantly deteriorated financial performance and the

continuing weak economic outlook, HIT recorded an impairmentloss on certain intangible assets and goodwill for the fiscal yearended March 31, 2009 of EUR 199 million. As a result of theunder-utilization of certain manufacturing equipment, EUR 46.6million impairment losses were recognized on tangible assets.Excluding all impairment losses, the operating loss for the fiscalyear ending March 31, 2009, amounted to EUR 109.2 million,compared to an operating loss of EUR 2.9 million a year earlier.The net loss for the fiscal year ended March 31, 2009, increasedto EUR 358.4 million, compared to EUR 39.7 million for the fiscalyear ended March 31, 2008. On December 29, 2008, HIT reachedseveral agreements in view of the liquidity shortfall that resultedfrom collapsing demand. HIT’s lenders agreed to a standstill,originally until March 31, 2009, but extended twice and currentlystill in place. Furthermore, certain of HIT’s main customersprovided for additional liquidity and compensation for reducedvolumes. Finally, the Company provided a financing facility up toEUR 20 million, in the form of factoring - and sale and leaseback arrangements.

Proposed capital restructuring designed to allow Honsel to overcome the economic crisis and confirmits position as a key supplier of light metal components to the automotive industry During the standstill, the Company and a committee of HIT’ssenior lenders agreed to a capital restructuring proposal thatwas approved by HIT’s lenders on May 25, 2009 and completedon July 22, 2009.

As part of the restructuring, the Company invested EUR 50million in exchange for a controlling 51% stake in Honsel. Theremaining 49% of the group is held by Honsel’s former seniorterm lenders following a debt-for-equity swap, which resulted inHIT’s and Honsel’s total outstanding secured term debt ofapproximately EUR 510 million being reduced to EUR 140million, consisting of EUR 110 million senior term loan and EUR30 million mezzanine term loan, all of which is held by Honsel’sformer senior term lenders. Honsel’s other existing fundingarrangements, including its EUR 40 million revolving credit

facility, its EUR 20 million of factoring and leaseback financingfrom RHJI and EUR 30 million from certain of Honsel’s keycustomers and suppliers, will remain in place.

In the event that Honsel would not be able to secure thefinancing of potential future liquidity needs, the Company furthercommitted to a new secured backstop facility of EUR 10 million.

Following the capital restructuring, the shares of Honsel are nolonger held by HIT, but by a newly created holding company,Shelon Holdings Sarl, registered in Luxembourg, in which theCompany holds 51 %.

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Niles Co., Ltd.• Headquarters: Japan• Industry: Automotive Components – Electronics Components

Segment• Privately Held• RHJI ownership as of March 31, 2009: 96.4%

Overview of ActivitiesNiles (www.niles.co.jp) manufactures switches for automobiles.The switches serve as key components in many vehicle systemsthat are typically developed and assembled by larger, morediversified suppliers or by automobile OEMs themselves. Niles’main switch product categories include those related to thesteering column, doors and power-train/pedal. Niles alsomanufactures sensors for automobiles. Niles’ customers areautomobile OEMs, such as Nissan and General Motors, andsuppliers to automobile OEMs. Niles seeks to capitalize on itsproduction engineering capability, its quality control, and itsability to respond quickly to new design demands from itscustomers.




Geographical distribution of revenue (single operating segment)

Japan 75%

US 17%

Asia (excl.Japan) 8%


2009 2008 2009 2008

Revenue 45,444 59,318 346.5 452.2

Gross profit 6,040 10,278 46.0 78.4

Gross margin 13.3 % 17.3 % 13.3 % 17.3 %

EBITDA 2,846 6,299 21.7 48.0

EBITDA margin 6.3 % 10.6 % 6.3 % 10.6 %

Operating profit (loss) (1,265) 2,351 (9.6) 17.9

Profit (loss) for the year (5,771) 1,887 (44.0) 14.4


2009 2008 2009 2008

Cash 2,078 2,957 15.8 22.5

Financial debt 28,326 27,741 215.9 211.5

19


Niles successfully strengthens its capital structureDuring the fiscal year ended March 31, 2009, Niles suffered fromthe US auto market slowdown that gradually expanded to Asia,forcing some of Niles’ main customers into reducing and eventemporarily halting production. In addition to the downturn in theautomotive industry, Niles saw demand for contact switchesdecrease in a challenging global cellular handset market. Niles’revenue for the fiscal year ended March 31, 2009, consequentlydecreased by 23.4 %, from JPY 59,318 million during theprevious fiscal year, to JPY 45,444 million.

Especially in the US, the volume decline was so significant thatNiles’ US operations ran at negative gross profit margins,bringing down the overall gross profit margin from 17.3% duringthe fiscal year ended March 31, 2008 to 13.3% during the fiscalyear ended March 31, 2009. Niles designed and started theimplementation of a series of drastic short term restructuringmeasures focused on mitigating the impact from the volumeshortfall on its financial performance. By the end of March 31,2009, Niles had significantly reduced headcount, cut salariesand bonuses, and limited capital expenditures. Notwithstandingthose cost saving measures, Niles reported an operating loss ofJPY 1,265 million for the fiscal year ended March 31, 2009,compared to an operating profit of JPY 2,351 million a yearearlier. Consequently EBITDA for the fiscal year ended March31, 2009, amounted to JPY 2,846 million, down from JPY 6,299million a year earlier. In addition to the results reported in thetable above, the Company recorded an impairment charge ofJPY 9,770 million on goodwill recorded at the time of the initialcontribution of Niles to RHJI.

Further to the short term restructuring measures, Niles decidedto (a) reduce its manufacturing footprint, mainly in the US, bytransferring production to Japan and Thailand, (b) furtherreduce headcount and (c) scale down capital expenditure to

production levels that are not expected to significantly increaseduring the next twelve months.

Despite the operational restructuring efforts, Niles faced aliquidity shortfall and engaged in discussions with the Company,its main customer and its lenders with a view to securingsufficient liquidity and strengthening its financial position. OnMay 20, 2009, Niles bolstered its capital structure through atotal capital injection of JPY 6 billion of which JPY 3.5 billion wasprovided by the Company and JPY 2.5 billion by a third party,which resulted in the Company's ownership being reduced from96.4% to 77.3%. Part of the proceeds was used to repay JPY 2.5billion of short-term debt that was previously secured by a cashdeposit from the Company. Furthermore, syndicate lendersagreed on a refinancing of the existing debt structure with newbullet loans maturing in June 2011.

20

Columbia Music Entertainment, Inc.• Headquarters: Japan• Industry: Media and Entertainment – Music Entertainment

Segment• Tokyo Stock Exchange ticker: 6791.T• Total Shares Outstanding: 260,870,117• RHJI ownership as of March 31, 2009: 25.5% (66,503,000

shares)• Contribution price per share (March 23, 2005): JPY 118• Closing share price on March 31, 2008: JPY 60• Closing share price on March 31, 2009: JPY 23

Overview of ActivitiesCME (www.columbia.co.jp) is engaged in music production andentertainment in Japan. Music production and entertainment isthe production, marketing and distribution of music. CME seeksto capitalize on its substantial music catalog, which generatescash flow from the sale of its content and the continuousaddition of content to the catalog to ensure it remains dynamic,both in the high-growth music genres such as Japanese-Pop/Rock as well as in Enka, Japanese country music. TheColumbia brand name is one of the most widely recognizedbrand names in music entertainment in Japan, which helpsattract new artists. CME has a strong national Japanese salesforce and established relationships with leading retailers inJapan. CME also distributes music from third party labelsproviding both profits and additional marketing and retailstrength to its operations.





2009 2008 2009 2008

Revenue 18,170 18,569 138.5 141.6

Gross profit 7,061 6,920 53.8 52.8

Gross margin 38.9 % 37.3 % 38.9 % 37.3 %

EBITDA (43) (984) (0.3) (7.5)

EBITDA margin (0.2)% (5.3)% (0.2)% (5.3)%

Operating loss (693) (1,508) (5.3) (11.5)

Loss from continuing operations (707) (1,627) (5.4) (12.4)

Profit from discontinued operations (net of income tax) 188 292 1.4 2.2

Loss for the year (519) (1,335) (4.0) (10.2)


2009 2008 2009 2008

Cash 1,832 2,506 14.0 19.1

Financial debt 1,457 517 11.1 3.9

21


The continuous contraction of CME’s music entertainment market requires further structural reformunder a new management structureDuring the fiscal year ended March 31, 2009, CME reportedrevenue of JPY 18,170 million, compared to JPY 18,569 million ayear earlier. Excluding sales from Creative Core, acquired inNovember 2007, and contributing for a full fiscal year for thefirst time, CME’s revenue for the fiscal year ended March 31,2009, amounted to JPY 15,046 million, down 11.2% compared tothe previous fiscal year. Increased sales of CME’s custom salesbusiness and the growing digital business were offset bydecreasing sales from J-Pop titles as CME considerably reducedthe number of J-Pop artists in an attempt to eliminateunprofitable business in a shrinking CD market.

The operating loss of JPY 693 million during the fiscal yearended March 31, 2009, compared to JPY 1,508 million a yearearlier, was favorably affected by the reversal of estimatedroyalty payments (JPY 456 million). CME’s net loss for the fiscalyear ended March 31, 2009, amounted to JPY 519 million andincluded JPY 434 million restructuring costs associated withearly termination of artist contracts and retirement allowances.

Throughout the fiscal year ended March 31, 2009, CMEcontinued to implement cost rationalization measures tomitigate the effects of a declining CD market. Several structuralreform measures were initiated and will continue to beimplemented during the fiscal year ending March 31, 2010.Among such measures, the number of J-Pop artists wasdrastically reduced and the J-Pop organization was downsizedaccordingly. CME further sharpened its focus on historicallyprofitable segments such as Enka music products and futuregrowth areas such as digital music and the games business.CME rationalized its organizational structure to the scale of itsbusiness by consolidating its sales-and marketing organizationand radically downsizing Creative Core’s educational software

business. Finally, CME is implementing a new voluntaryretirement program and cutting back on its temporary workforce to reduce staff by 78 people.

In addition to the net loss reported in the table on the previouspage, the Company reviewed the recoverable amount of certainintangible assets recorded in its consolidated financialstatements following the purchase price allocation upon thecontribution of CME in March 2005. In view of the deterioratedfinancial performance, the reduced scale of CME’s business andthe uncertainty around the economic recovery and the impactthereof on CME’s business, the Company recorded animpairment charge of JPY 7,645 million in its consolidatedincome statement for the fiscal year ended March 31, 2009, oncertain intangible assets recognized as a result of the initialpurchase price allocation. This impairment charge is onlyrecorded in the Company’s consolidated financial statementsand not reflected in CME’s results shown in the table on theprevious page.

CME’s management expects to return to profitability andpublicly disclosed forecasts for the fiscal year ending March 31,2010, prepared under J-GAAP, which included sales of JPY18,500 million, operating profit of JPY 100 million and net profitof JPY 400 million. The projected net income includes an earlylease termination gain of JPY 590 million, associated withplanned relocation of CME’s head office in September, 2009.

22

Phoenix Resort K.K.• Headquarters: Japan• Industry: Hospitality Segment• Privately Held• RHJI ownership as of March 31, 2009: 100 %

Overview of ActivitiesPhoenix Seagaia Resort (www.seagaia.co.jp) is a resort complexlocated in Miyazaki Prefecture on Kyushu, the southernmost ofthe main islands of Japan. Miyazaki has a suitable climate foryear-round outdoor activities. The principal assets of thePhoenix Seagaia Resort are situated in a historic 750-acre pineforest that extends over 10 kilometers along the Pacific Oceancoastline, which is just outside the city of Miyazaki and 20minutes from the airport. Phoenix Seagaia Resort includes golfcourses, lodging facilities, renovated spa (onsen) and fitnessfacilities, one of the largest convention centers in Japan and atennis club.




Revenue by operating segment (single geographic segment)

Hotel 76%

Golf 21%

Others 3%


2009 2008 2009 2008

Revenue 12,327 14,478 94.0 110.4

Gross profit 1,530 2,260 11.7 17.2

Gross margin 12.4 % 15.6 % 12.4 % 15.6 %

EBITDA 297 989 2.3 7.5

EBITDA margin 2.4 % 6.8 % 2.4 % 6.8 %

Operating loss (701) (112) (5.3) (0.9)

Loss for the year (517) (547) (3.9) (4.2)


2009 2008 2009 2008

Cash 455 644 3.5 4.9

Financial debt 7,144 7,777 54.5 59.3

23


Phoenix Seagaia Resort recorded revenue of JPY 12,327 millionfor the fiscal year ended March 31, 2009, a decrease of 14.9%compared to the previous fiscal year. The global economicdownturn resulted in deferred spending in all tourist marketsegments. The number of foreign visitors to Japan felldrastically and Phoenix Seagaia Resort was particularly exposedto the impact of the weak Korean Won on the number of Koreanvisitors. Phoenix Seagaia Resort also saw domestic travelreduced significantly as companies cut back on budgets forcorporate events, which are critical to the occupancy of PhoenixSeagaia Resort’s five star hotel. The lower occupancy alsoresulted in a decreasing number of golf rounds.

Phoenix Seagaia Resort started the implementation of a drasticcost rationalization program to mitigate the impact of low salesand to ensure compliance with the financial covenants under itscredit agreements at March 31, 2009. The program reducedcosts by approximately JPY 1,500 million on an annualized basis,and identified several additional actions to address the impactfrom a potential further decline of the resort’s occupancy rates.EBITDA for the fiscal year ended March 31, 2009, amounted toJPY 297 million, compared to JPY 989 million during theprevious fiscal year. The decreased hotel occupancy and loweraverage daily rates account for most of the shortfall.Furthermore, the Ocean Dome contributed positively to PhoenixSeagaia Resort’s overall EBITDA for the first half of the previousfiscal year ended March 31, 2008. Although the Ocean Dome wasloss making, the announcement of the closure had a beneficial,non-recurring impact on the number of visitors. The OceanDome was closed on October 1, 2007, and other attractions, such

as the newly developed beach concept, have only graduallycontributed to room sales and will need additional marketing togrow into key attraction points for the resort.

At March 31, 2009, Phoenix Seagaia Resort reviewed therecoverable amount of its property, plant and equipment usingthe income approach, which revealed it to be below the carryingvalue by JPY 13,993 million. Of this impairment loss, JPY 13,640million is recognized on the asset values resulting from theinitial purchase price allocation, and therefore only recorded inthe Company’s consolidated financial statements.

As a result of the deteriorated financial performance and inorder to allow Phoenix Seagaia Resort to make scheduledrepayments under its credit facility, the Company injected JPY300 million in June, 2008, JPY 400 million in September, 2008,and JPY 300 million in January, 2009. The Company expects tomake further capital contributions to Phoenix Seagaia Resortduring the fiscal year ending March 31, 2010, to the extent theywill result in an equivalent reduction of the Company's exposurefrom the guarantee and the intra-group revolving credit facility.

Reduced foreign travel and a weak domestic tourist market drive hotel occupancy significantly lower

Phoenix Seagaia Resort refinances entire debt On September 29, 2008, Phoenix Seagaia Resort entered into anagreement with its lenders to amend certain terms andconditions of its existing credit facility of JPY 7,508 million. Theterm of the amended loan is 3 years. The amendment providesfor quarterly repayments of JPY 195 million and a bulletpayment of JPY 5,497 million on September 30, 2011. In additionto this amended loan agreement, the Company extended therevolving credit facility from JPY 500 million to JPY 1,000 millionuntil September 30, 2011. The outstanding balance of thisintragroup loan at March 31, 2009 amounted to JPY 400 million.

The Company guarantees the quarterly repayments and the totalinterest up to an aggregate amount of JPY 3,400 million. At

March 31, 2009, Phoenix Seagaia Resort had already repaid JPY390 million of the guaranteed principal, and had outstandingfinancial indebtedness of JPY 7,144 million, compared to JPY7,777 at March 31, 2008.

24

Shaklee Global Group, Inc. • Industry: Consumer Products – Nutrition Products Segment• Jasdaq Stock Exchange ticker: 8205.Q• Total Shares Outstanding: 25,920,000• RHJI ownership as of March 31, 2009: 42.5% (10,531,000 shares)• Contribution price per share (March 23, 2005): JPY 1,269• Closing share price on March 31, 2008: JPY 709• Closing share price on March 31, 2009: JPY 635

Overview of ActivitiesShaklee is a leading provider of premium quality and naturalnutrition, personal care, household and air and water treatmentproducts. Shaklee operates in the United States, Japan,Malaysia, Canada and Mexico. The United States is Shaklee’slargest market in terms of sales, with Japan as its secondlargest market. Shaklee uses a sales force of self-employed,independent distributors to sell its products and has over750,000 members and distributors.

Key figuresCondensed consolidated income statement for the fiscal year ended March 31



2009 2008 2009 2008

Revenue 24,685 27,322 188.2 208.3

Operating profit 3,652 2,945 27.8 22.5

EBITDA 4,241 3,499 32.3 26.7

EBITDA margin 17.2 % 12.8 % 17.2 % 12.8 %

Profit for the year 1,705 1,441 13.0 11.0


2009 2008 2009 2008

Cash 5,273 4,699 40.2 35.8

Financial debt 18,529 18,177 141.3 138.6

Shaklee's revenue for the fiscal year ended March 31, 2009amounted to JPY 24,685 million, 9.7% lower than the previousfiscal year virtually entirely due to appreciation of the JPY. Atconstant exchange rates, sales declined only 0.9%. Operatingprofit, for the fiscal year ended March 31, 2009 increased 24% toJPY 3,652 million from JPY 2,945 million principally due to tightmanagement over selling and general administrative expensesin all markets. The profit for the fiscal year ended March 31,2009 increased 51.6% excluding JPY 120 million benefit fromchanges made to the U.S. Retiree Medical Benefit Plancompared to JPY 1,125 million for the previous fiscal year thatexcludes non-recurring pre-tax gains from changes to the U.S.pension plan of JPY 846 million partly offset by the acceleratedamortization of an intangible asset relating to the purchase oftechnology and distribution rights.

Based on its management projections under J-GAAP, Shakleeexpects revenue to decrease from JPY 24,685 million for the

fiscal year ended March 31, 2009 to JPY 23,013 million for thefiscal year ending March 31, 2010. Operating profit inaccordance with J-GAAP is projected to increase from JPY 3,086million for the fiscal year ended March 31, 2009, to JPY 3,132million, for the fiscal year ending March 31, 2010.

25


U-shin Ltd.• Headquarters: Japan• Industry: Automotive Components - Electronics Components

Segment• Tokyo Stock Exchange ticker: 6985.T• Total Shares Outstanding: 31,995,502• RHJI ownership as of March 31, 2009: 20.0% (6,400,000 shares)• Acquisition price per share (April 13, 2006): JPY 1,244• Closing share price on March 31, 2008: JPY 401• Closing share price on March 31, 2009: JPY 259

Overview of ActivitiesU-shin (www.u-shin-ltd.com) is a company engaged inmanufacturing and sales of automobile components such as keysets, door locks, heater control panels and switches, variousinstruments for farm machinery, construction machinery andmachine tools, other industrial machinery, and housingequipment such as locks for houses, hotels and buildings.

Key figuresCondensed consolidated income statement for the fiscal year ended February 28

Consolidated cash and financial debt for the fiscal year ended February 28


2009 2008 2009 2008

Revenue 70,772 77,963 539.5 594.4

Operating profit 3,258 3,357 24.8 25.6

EBITDA 7,343 7,584 56.0 57.8

EBITDA margin 10.4 % 9.7 % 10.4 % 9.7 %

Profit (loss) for the year (282) 339 (2.1) 2.6


2009 2008 2009 2008

Cash 15,997 9,290 122.0 70.8

Financial debt 24,888 22,472 189.7 171.3

As U-shin’s fiscal year ends on November 30, the Company usedfinancial information for the twelve months ended February 28,2009, compiled from publicly disclosed unaudited quarterlyfinancial information, for the purposes of preparing theCompany’s consolidated financial statements as of and for thefiscal year ended March 31, 2009. Financial information for thetwelve months ended February 28, 2008, has been compiled onthe same basis for comparative purposes.

U-shin reported revenue of JPY 70,772 million for the twelvemonths ended February 28, 2009, compared to JPY 77,963million for the same period last year, as a result of difficultmarket conditions in both the automotive industry and theindustrial equipment market. The net loss for the twelve monthsended February 28, 2009 of JPY 282 million compared to a netprofit of JPY 339 million for the same period a year earlier,

which was favorably impacted by gains on the disposal ofinvestment securities of JPY 1,136 million.

Based on its management projections under J-GAAP, andfollowing a difficult 1st quarter of the fiscal year endingNovember 30, 2009, U-shin lowered its outlook for the first halfof the fiscal year, projecting revenue of JPY 24,000 millionversus JPY 29,000 million previously. U-shin’s full year outlookincludes revenue of JPY 60,000 million and a break-even netresult.

PART IIFINANCIAL STATEMENTS FOR THE FISCAL YEAR

ENDED MARCH 31, 2009

28

INTRODUCTIONUnless otherwise noted herein, RHJ International SA, a Belgianlimited liability company, is referred to as “RHJI”. RHJInternational SA and its businesses are referred to collectivelyas the “Company”.

RHJI is a diversified holding company focused on creating long-term value for its shareholders by acquiring and operatingbusinesses. RHJI has several controlling and non-controllinginterests, operating in automotive components, consumerelectronics, consumer products, hospitality and media andentertainment industries. At March 31, 2009, RHJI’s portfolioconsisted of five controlling ownership interests, threeinvestments in associates and several non-controlling minorityownership interests. The interests in Asahi Tec, HIT, Niles, CME,Phoenix Seagaia Resort and Shaklee, were contributed to RHJIon March 31, 2005 in connection with a private placement and aglobal offering of its ordinary shares on Euronext Brussels inMarch 2005. RHJI seeks to enhance the value of thesebusinesses through strategic acquisitions and operatingimprovements through its industrial partnership approach.

ACQUISITIONSNew investments for the fiscal year ended March 31, 2009, canbe summarized as follows:

• On May 9, 2008, RHJI invested JPY 1,085 million inSigmaXYZ, a newly formed joint venture in ICT consultingwith Mitsubishi Corporation;

• RHJI increased the capital of Asahi Tec by JPY 7,769 millionfor purposes of (a) curing a breach of covenants by its USbased subsidiary Metaldyne (JPY 1,800 million on July 15,2008), (b) providing Metaldyne with additional liquidity (JPY1,051 million on October 15, 2008) and (c) fundingMetaldyne’s bond tender (JPY 4,918 million on November 25,2008);

• On June 20, 2008, September 23, 2008 and in January , 2009,RHJI subscribed to new shares of Phoenix Seagaia Resortfor an aggregate amount of JPY 1,000 million, in order tocover scheduled reimbursement of its debt as well as toprovide liquidity for working capital requirements;

• RHJI acquired 457,000 additional existing shares of Shakleefor an aggregate consideration of JPY 276 million, increasingits ownership to 42.5 %.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS FOR THE FISCALYEARS ENDED MARCH 31, 2009 AND 2008

29

FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED MARCH 31, 2009

DISPOSALSDuring the fiscal year ended March 31, 2009, the Companysystematically reviewed various strategic alternatives for someof its holdings which resulted in the following disposals:

• The Company disposed of a non-controlling minorityinvestment for JPY 9,030 million (EUR 68.8 million), initiallyacquired for JPY 5,600 million;

• On September 4, 2008, the Company closed the sale of D&Mto K.K. BCJ-2, a corporation owned by investment fundsadvised by Bain Capital Partners, LLC, for cashconsideration of JPY 23,115 million, yielding a capital gain ofJPY 12,600 million.

• Subsequent to March 31, 2009, on July 8, the company sold63% of its stake in CIB for JPY 5,235 million (EUR 40.2million), representing an absolute return of 107% to theinitial purchase price.

RESULTS OF OPERATIONSThe consolidated income statement for the fiscal year endedMarch 31, 2009, reflected the impact of the economic downturn.The automotive industry was particularly hit by the lack ofcustomer confidence and tightening consumer credit thatresulted in the near collapse of two of the world’s largest carmanufacturers, which filed for bankruptcy protection. TheCompany’s automotive assets suffered the effects of severe andrapid volume declines. Beside the steep decline in automotivesales, the Company’s other consolidated subsidiaries, PhoenixSeagaia Resort and CME, faced equally difficult marketconditions and saw their sales decrease.

For purposes of preparing the consolidated financialstatements, in accordance with IFRS, as of and for the fiscal yearended March 31, 2009, and in light of the global economicdownturn, the Company analyzed the performance of itsconsolidated businesses in order to determine whether or notthere was any indication of impairment of their respective long-lived assets. The analysis included a review of the industryperspective, and the impact of lower than expected performanceof certain portfolio companies on the recoverable amount ofgoodwill and other long-lived intangible assets. The analysisresulted in an aggregate impairment charge of JPY 123,259million for the fiscal year ended March 31, 2009. JPY 95,290million was attributable to goodwill and intangible assets andmainly related to Metaldyne and HIT. Cumulative impairment ofgoodwill and intangible assets at March 31, 2009, amounted toJPY 136,491 million. Total intangible assets at March 31, 2009,amounted to JPY 50,808 million, compared to JPY 161,245million at March 31, 2008. In addition to the impairment ofgoodwill and intangible assets, underutilized property, plant andequipment, mainly at Phoenix Seagaia Resort, HIT andMetaldyne, were written down by JPY 27,969 million. Finally, theCompany recognized an impairment charge of JPY 10,888million on its investments in Shaklee and U-shin.

Revenue for the fiscal year ended March 31, 2009 amounted toJPY 397,300 million, compared to JPY 550,066 million for theprevious fiscal year, a 27.8% decrease, illustrating the severityof the economic downturn that particularly affected theCompany’s consolidated automotive subsidiaries.

30

Gross profit for the fiscal year ended March 31, 2009 amountedto JPY 34,820 million, representing 8.8% of revenue, comparedto 11.1% for the fiscal year ended March 31, 2008. The decreasein gross profit margin is driven by the significant decline inproduction volumes of the car manufacturers and the inability toreduce variable costs accordingly.

Selling, general and administrative expenses amounted to JPY47,961 million for the fiscal year ended March 31, 2009,compared to JPY 52,878 million during the previous fiscal year.The selling, general and administrative expenses partlyreflected the impact from ongoing restructuring efforts thatwere deployed towards the end of the fiscal year ended March31, 2009, including at the level of the Company’s operating coststructure, which is being gradually reduced to approximatelyJPY 3,500 million, compared to JPY 4,935 million for the fiscalyear ended March 31, 2009.

Other income and expenses amounted to JPY 11,041 million forthe fiscal year ended March 31, 2009, compared to JPY 4,594million during the previous fiscal year. The increase mainlyresulted from non-recurring restructuring expenses of JPY5,118 million at HIT and Metaldyne and JPY 1,403 million losseson disposal of certain of Metaldyne’s assets.

Loss from operations for the fiscal year ending March 31, 2009of JPY 154,159 million, included amortization and impairmentcharges of JPY 123,259 million of which JPY 38,096 million wererecognized in the consolidated financial statements only andwhich are not reflected in the individual consolidatedsubsidiaries’ income statements presented in Part I of thisAnnual Report. Excluding those non-cash charges for bothperiods, the operating loss of JPY 30,900 million for the fiscalyear ended March 31, 2009, compared to an operating loss ofJPY 4,662 million for the fiscal year ended March 31, 2008, againclearly reflecting the magnitude of the impact the economicrecession had on the operating performance across allconsolidated subsidiaries.

As a result of the capital restructuring of Honsel, completed inJuly, 2009, and Metaldyne's filing for Chapter 11 bankruptcyprotection, the Company will record significant gains associatedwith the waiver of Honsel’s debt and the deconsolidation ofMetaldyne. These gains will be recorded in the fiscal yearending March 31, 2010, and are currently estimated atapproximately JPY 57 billion or EUR 434.5 million.

Net financial income of JPY 15,269 million for the fiscal yearended March 31, 2009, included (a) a gain of JPY 30,552 millionfollowing Metaldyne’s bond tender, (b) a gain of JPY 3,134million resulting from the agreement between Chrysler andMetaldyne to cancel USD 31.0 million of Metaldyne’s securedsubordinated notes, (c) the gain of JPY 6,082 million from thecancelation of some of the preferred C shares at Asahi Tec and(d) a gain of JPY 3,370 million on the sale of a non-controllingminority investment. These gains were offset by financial costsincluding (a) net interest expense of JPY 19,154 million fromconsolidated subsidiaries, (b) net foreign exchange losses of JPY7,345 million, and (c) JPY 1,045 million of fair value adjustments

on certain financial assets. Last year, financial costs amountedto JPY 32,881 million, and included (a) interest expense of JPY22,301 million, (b) foreign currency exchange losses of JPY 7,438million and (c) the write-off of previously deferred financing feesof JPY 2,526 million.

Income tax benefit for the fiscal year ended March 31, 2009amounted to JPY 6,232 million, compared to JPY 186 million forthe previous fiscal year, and mainly resulted from the reversal ofdeferred tax liabilities of JPY 7,761 million following theimpairment of certain tangible and intangible assets.

Discontinued operations reflect D&M and HIT’s Canadianoperations. The result from D&M includes the net loss of JPY999 million from operations for the six months ended September30, 2008 and the gain on disposal of JPY 11,073 million. The gainon disposal as reflected in the Company’s consolidated incomestatement consists of the gain of JPY 12,600 million over theacquisition cost less JPY 1,527 million of income contributed byD&M to consolidated reserves from April 1, 2005 through thedate of effective disposal. The gain from the liquidation of HIT’sCanadian subsidiary, Amcan, amounted to JPY 1,918 million. Thebreakdown of discontinued operations for the fiscal years endedMarch 31, 2009 and 2008 is as follows:

Loss for the period ended March 31, 2009 amounted to JPY131,271 million, of which JPY 116,043 million is attributable tothe equity holders of the parent company, compared to JPY33,221 million for the fiscal year ended March 31, 2008. JPY10,598 million of losses attributable to the minorityshareholders of HIT and Asahi Tec were attributed to the equityholders of the parent pursuant to the provisions of IAS 27 thatprevent losses to be allocated to the minority shareholders,except if they would have a binding obligation to cover suchlosses.

(in JPY millions) 2009 2008

Revenue 49,553 120,206

Cost of sales (30,372) (76,140)

Gross profit 19,181 44,066

Selling, general and administrative expenses (17,948) (36,817)

Other income (expenses) (1,502) (4,333)

Gain on sale 12,991 -

Profit from operations 12,722 2,916

Net financial expense (729) (1,090)

Share of loss of equity accounted investees (net of income tax) - (55)

Profit before tax 11,993 1,771

Income tax expense (1) (2,948)

Profit (loss) for the period 11,992 (1,177)

Basic and diluted earnings per share (in JPY) 142 (14)

31


LIQUIDITY AND CAPITALRESOURCES

DebtConsolidated financial debt at March 31, 2009 amounted to JPY189,011 million, compared to JPY 228,148 million on March 31,2008. The decrease primarily resulted from (a) the successfulbond tender at Metaldyne, reducing debt by JPY 30,422 million,net of customer loans, (b) the cancellation of JPY 3,133 millionsenior subordinated notes of Metaldyne held by Chrysler and (c)the cancellation of JPY 6,082 million of preferred shares of AsahiTec, also held by Chrysler.

Consolidated financial debt at March 31, 2009 and March 31,2008 can be summarized as follows:

Asahi TecAt March 31, 2009, Asahi Tec had JPY 79,366 million inindebtedness outstanding, of which JPY 52,878 million at its USsubsidiary Metaldyne. The decrease in total indebtedness by JPY38,091 million compared to March 31, 2008, mainly resultedfrom (a) Metaldyne’s successful tender for JPY 30,422 million,net of customer loans, (b) the cancellation of JPY 3,134 millionsenior subordinated notes of Metaldyne held by Chrysler and (c)the cancellation of JPY 6,082 million of preferred shares of AsahiTec, also held by Chrysler.

The bond tender was financed by a USD 50 million investmentfrom Asahi Tec, funded by RHJI’s subscription to newly issuedshares of Asahi Tec for JPY 4,917 million, increasing itsownership in Asahi Tec from 45.3% to 60.18%. In addition,certain of Metaldyne’s leading customers provided Metaldynewith USD 60 million funding for the bond tender offer, in theform of loans to Metaldyne. From the total proceeds of USD 110million, Metaldyne used USD 60.1 million to pay for the tenderedbonds.

Although as of March 31, 2009, Metaldyne was in compliancewith the financial covenants of the term, revolving and letter ofcredit based or synthetic facilities, it defaulted on a payment ofinterest that fell due under its term loan and entered into aforbearance agreement with its lenders until May 30, 2009.Despite this forbearance agreement and Asahi Tec’s continuedsupport and the resulting reduction of Metaldyne’sindebtedness, Metaldyne’s financial performance was heavilyaffected by car production in the US that continued to fall beyondexpectations. Faced with its own challenges, Asahi Tec was nolonger in a position to further support Metaldyne, which on May27, 2009, filed a voluntary petition to reorganize under Chapter11 of the U.S. Bankruptcy Code, shortly after Chrysler, one of itsmain customers, also filed for protection under Chapter 11.

Excluding Metaldyne, Asahi Tec had JPY 26,488 million inindebtedness outstanding at March 31, 2009 compared to JPY34,929 million at March 31, 2008, the decrease mainly resultingfrom the above mentioned cancellation by Chrysler of preferredshares worth JPY 6,082 million. Asahi Tec’s indebtednessincluded (a) JPY 15,356 million senior credit facilities, (b) JPY4,000 million subordinated bank debt, (c) JPY 1,652 millionleasing obligations and (d) JPY 5,203 million preferred securitiesclassified as debt issued to former holders of Metaldyne notes.

Excluding Metaldyne, Asahi Tec’s effective interest rates on itsconsolidated borrowings under its senior and subordinatedcredit facilities at March 31, 2009 were 2.75% and 4.66%respectively.

Asahi Tec is likely to breach certain financial covenants under itscredit agreements in the course of the fiscal year ending March31, 2010. Asahi Tec is currently seeking a waiver of covenantsfrom its lenders. In the event that Asahi Tec were not successfulin obtaining such a waiver, it would be in default of its obligationsunder its credit agreements, which would cast significant doubton Asahi Tec’s ability to operate as a going concern.

32

HITAt March 31, 2009, HIT had outstanding indebtedness of EUR546.1 million (JPY 71,631 million) compared to EUR 467.5 million(JPY 61,326 million) at March 31, 2008.

The credit facilities at March 31, 2009, included EUR 317.5million senior and EUR 99.5 million mezzanine facilities, EUR33.4 million revolving facility and a EUR 90.8 million PIK(Payable in Kind) facility. On December 29, 2008, HIT reachedseveral agreements in view of the liquidity shortfall that resultedfrom collapsing demand. HIT’s lenders agreed to a standstill,originally until March 31, 2009, but extended twice.Furthermore, certain of HIT’s main customers and a keysupplier provided additional liquidity of EUR 30 million andcompensation for reduced volumes. Finally, RHJI provided asecured financing facility up to EUR 20 million, in the form offactoring and sale and lease back arrangements.

During the standstill, the Company and a committee of HIT’ssenior lenders agreed to a capital restructuring proposal thatwas approved by HIT’s lenders on May 25, 2009 and wascompleted on July 15, 2009. As part of the restructuring, theCompany invested EUR 50 million in exchange for a controlling51% stake in Honsel. The remaining 49% of the group is held byHonsel’s former senior term lenders following a debt-for-equityswap, which resulted in HIT’s total outstanding secured termdebt of approximately EUR 507.8 million being reduced to EUR140 million, consisting of EUR 110 million senior term loan andEUR 30 million mezzanine term loan, all of which are held byHonsel’s former senior term lenders. Honsel’s existing EUR 40million revolving credit facility, as well as EUR 50 million offinancing from the Company and certain of Honsel’s keycustomers and suppliers, remained in place.

The interest rates on Honsel’s new senior term are determinedas Euribor plus 5%. According to the terms of the new seniorcredit, Honsel must ensure that, during a period of three yearsafter the closing date, it has hedging arrangements in place tocause at least 66.66% of the outstanding amounts under thesenior debt and the Customer Financing to bear interest at afixed or capped rate.The new mezzanine facility will pay Euribor+ 5% cash interest and 5% PIK interest. Honsel may at any timeduring the life of the Mezzanine Facility elect to have all interestcapitalized at the end of each interest period, provided that,following the exercise of such election, interest shall accrue at afixed rate of 16.00% PIK per annum.

NilesAt March 31, 2009, Niles had JPY 28,326 million of indebtednessoutstanding on a consolidated basis, compared to JPY 27,741million a year earlier The credit facilities included senior termloans (JPY 10,455 million), revolving loans (JPY 7,997 million), anunsecured bullet loan (JPY 2,167 million), finance leases (JPY2,245 million), a bullet loan secured by a cash deposit from RHJI(JPY 2,500 million) and non-bank debt from a major stakeholder(JPY 2,500 million).

On May 20, 2009, Niles bolstered its capital structure through atotal capital injection of JPY 6,000 million of which JPY 3,500million was provided by the Company and JPY 2,500 million bythe major stakeholder that had provided financing of JPY 2,500million previously. Part of the proceeds was used to repay JPY2,500 million of short-term debt that was secured by a cashdeposit from RHJI, and the major stakeholder’s loan of JPY2,500 million. Furthermore, syndicate lenders agreed on arefinancing of the existing debt structure, of which JPY 7,566million was outstanding at March 31, 2009, with new bullet loansmaturing in June 2011.

33


Phoenix Seagaia ResortOn September 29, 2008, Phoenix Seagaia Resort entered into anagreement with its lenders to amend certain terms andconditions of its existing credit facility of JPY 7,508 million. Theterm of the amended loan is 3 years. The amendment providesfor quarterly repayments of JPY 195 million and a bulletpayment of JPY 5,497 million on September 30, 2011. In additionto this amended loan agreement, the Company extended therevolving credit facility from JPY 500 million to JPY 1,000 millionuntil September 30, 2011. The outstanding balance of this intra-group loan at March 31, 2009 amounted to JPY 400 million. TheCompany guarantees the quarterly repayments and the totalinterest up to an aggregate amount of JPY 3,400 million. Theinterest rate is based on the three month Libor plus a marginranging from 260 to 410 basis points, depending on the level ofreported EBITDA. At March 31, 2009, Phoenix Seagaia hadalready repaid JPY 390 million of the guaranteed principal, andhad outstanding financial indebtedness of JPY 7,144 million,compared to JPY 7,777 at March 31, 2008.

More detailed information on the Company’s interest-bearingloans and borrowings is included in note 25 to the ConsolidatedFinancial Statements.

Cash FlowsConsolidated cash flow from investing activities of continuingoperations for the fiscal year ended March 31, 2009, included:

a) the proceeds from the sale of assets, including D&M and anon-controlling minority investment (JPY 33,196 million);

b) dividends received amounting to JPY 916 million;c) investments of JPY 3,153 million, including JPY 1,085 million

in the newly formed joint venture in IT consulting withMitsubishi Corporation; and

d) net capital expenditures of JPY 22,885 million.

Cash flow from financing activities for the fiscal year endedMarch 31, 2009, mainly reflected the:

a) increase of HIT’s debt by JPY 7,711 million resulting from (a)liquidity provided by certain of its customers and (b) the fulldraw down of the revolving credit facility;

b) new borrowings at Metaldyne of JPY 8,697 million, primarilyfrom customers to fund the bond tender;

c) draw down by CME of JPY 1,000 million on a revolvingfacility;

d) the payment of JPY 6,203 million for Metaldyne tenderedbonds;

e) scheduled repayments of JPY 2,936 million by Asahi Tec;f) the repurchase of the Company’s own shares (JPY 536

million).

34

PRINCIPAL RISKS ANDUNCERTAINTIES

Risks associated with strategy andoperationsThe Company, as any commercial enterprise, faces risks anduncertainties in its operations, financial performance, businessstrategy, structure and management.

Strategic riskThe availability of opportunities for additional acquisitions andinvestment is uncertain from time to time due to competitionand macro-economic, political, social and market conditions.The Company may not be able to successfully execute theacquisition component of its business strategy because ofdifficulties in identifying, acquiring, integrating or financingacquisitions, or unanticipated problems, which could negativelyaffect the Company’s prospects, cause its growth to decline andincrease its losses. The Company's ability to financeacquisitions and refinance existing debt of its portfolio holdingsmay be significantly impaired by the restricted availability ofcredit as a result of the global financial crisis. As the Company’sstrategy also includes purchasing non-controlling or minorityinterests in public and private companies and making co-investments in transactions led by third parties, such purchasesor co-investments could be material and may involve relativelymore risks due to its lack of control and may materiallyadversely affect the Company’s financial condition and results ofoperations.

Operational riskThe Company’s business strategy includes the acquisition ofinterests in financially distressed companies and the incurrenceof significant levels of debt by such companies. Improving theperformance of such companies typically takes time, the lengthof which may increase loss from operations and net loss. TheCompany has experienced losses from operations and netlosses since incorporation and many of its portfolio holdingshave experienced such losses in recent years. The Companymay continue to incur losses and its businesses may continue tohave risks associated with high levels of debt.

Execution riskThe Company may not be able to successfully implement itsturnaround strategy for portfolio holdings that it owns or mayacquire due to specific risks and uncertainties relating to eachcompany and to circumstances arising from macro-economic,political, social and market conditions. For the fiscal year endedMarch 31, 2009, approximately 60% of RHJI’s total investedcapital was attributable to four businesses in the automotivecomponents industry and further volatility or weakness in thatindustry may continue to materially adversely affect theCompany’s financial condition and results of operations.

The Company also depends on a limited number of seniormanagement and investment professionals and their departurefrom, or part-time commitment to, the Company, or theCompany’s inability to attract or retain suitable executives couldadversely affect the Company’s ability to execute its businessstrategies and growth.

Other risksThe Company and its portfolio holdings each face a combinationof risks and uncertainties including (i) strategic risks related tomacro-economic and market conditions, corporate and brandreputation, industry focus and business structure, (ii)operational risks (including in the highly competitive automotivecomponents industry) related to competition, innovation,changing customer demand and customer satisfaction, supplyand cost of raw materials, production and distribution,management resources, labor relations, intellectual property,product safety and liability, IT infrastructure, occupational healthand safety, environmental protection, asset and data securityand disaster recovery and (iii) financial risks related to levels ofindebtedness, treasury, tax and audit, accuracy of forecastingand budgeting, timeliness of reporting, integration andcompliance with accounting standards and use of financialmanagement tools such as hedging or derivative strategies.

The Company generally relies on the individual businesses’ riskassessment and monitoring programs to manage the exposureto these and other risks. These programs have been designedbased on the specific nature and size of the individualbusinesses’ activity. While the Company monitors theseprograms and attempts to mitigate the negative effects from anyof these risks through its representation on the businesses’Boards of Directors and through the implementation of certainreporting mechanisms, the Company may face negativeconsequences from inadequate risk assessment and ineffectivecontrol systems of risk detection and prevention at the level ofeach of the individual businesses.

35


Specific risks related to RHJI Interest rate riskBeside their negative impact in connection with the borrowingactivities of the Company’s businesses described in note 30 tothe consolidated financial statements, increasing interest ratesmay have a negative impact on the market valuation of certainCompany assets due to their impact on discount rates and/ormarket multiples.

Currency exchange rate riskBeside the translation and transaction risk arising from changesin currency exchange rates described in note 30 to theconsolidated financial statements, RHJI’s Euro denominatedshare price is exposed to changes in the exchange rate betweenthe Euro and the Japanese Yen as a significant portion of theCompany’s assets are located in Japan and have book valuesdenominated in Japanese Yen.

Liquidity riskAt March 31, 2009, RHJI had approximately JPY 58.7 billionavailable to pursue its business strategy and had noindebtedness. RHJI’s businesses have regular recourse toindependent indebtedness by obtaining credit lines on their ownmerits. Except for an amount up to JPY 3,400 million related tothe debt of Phoenix Seagaia Resort and certain pledges ofshares as disclosed in note 25 to the consolidated financialstatements and a commitment of EUR 10 million to fund abackstop credit facility to the benefit of Honsel, the businessesand their lenders generally do not benefit from any guaranteefrom RHJI. Although RHJI believes it can ensure sufficientliquidity to pursue its acquisition strategy, any shortage thereofmight result in the disposal of certain businesses at unfavorableconditions.

Risk related to the stock marketBeing listed on Euronext Brussels, RHJI is subject to Belgianlegislation and regulation regarding, among others, financial,governance and other disclosure, internal controls and insidertrading. As a result, it will continue to invest necessaryresources to comply with evolving laws, regulations andstandards and manage its risks related to its stock exchange

Further information about risks is provided in note 30 to theConsolidated Financial Statements. The risks and uncertaintiesdescribed in this Annual Report or in information available onRHJI’s website are not the only ones that the Company faces.There may be additional risks of which the Company is unaware,or risks that the directors now believe to be immaterial, butwhich could turn out to have a material adverse effect.

36

(in JPY millions) Note 2009 2008

Continuing operations

Revenue 9 397,300 550,066

Cost of sales (362,480) (488,741)


Selling, general and administrative expenses (47,961) (52,878)

Amortization of intangible assets 16 (6,718) (8,515)

Impairment of property, plant, equipment and intangible assets 12 (123,259) (29,444)

Other income and expenses 10 (11,041) (4,594)

Loss from operations (154,159) (34,106)

Finance income 13 53,969 5,869

Finance expenses 13 (38,700) (32,881)

Net financial income (expense) 13 15,269 (27,012)

Share of profit (loss) of equity accounted investees (net of income tax) 17 (10,605) 858

Loss before income tax (149,495) (60,260)

Income tax benefit 14 6,232 186

Loss from continuing operations (143,263) (60,074)

Discontinued operations

Profit (loss) from discontinued operations (net of income tax) 7 11,992 (1,177)

Loss for the period (131,271) (61,251)

Attributable to:

Equity holders of the Company (116,043) (33,221)

Minority interest (15,228) (28,030)


Earnings per share (in JPY)

Basic and diluted 24 (1,378) (390)

Basic and diluted from continuing operations 24 (1,522) (369)

CONSOLIDATED STATEMENT OF INCOME FOR THE FISCAL YEARS ENDED MARCH 31

37


CONSOLIDATED STATEMENT OF RECOGNIZED INCOME ANDEXPENSE FOR THE FISCAL YEARS ENDED MARCH 31


Foreign exchange translation differences (8,165) (3,168)

Cash flow hedges (1,064) 21

Net change in fair value of available for sale financial assets (5,053) 6,646

Net change in fair value of available for sale financial assets transferred to profit or loss (3,314) -

Others (4) (31)

Income tax on income and expense recognized directly in equity 14 327 (67)

Income and expense recognized directly in equity (17,273) 3,401


Total recognized income and expense for the period 23 (148,544) (57,850)

Attributable to:

Equity holders of the Company (129,236) (28,957)

Minority interest (19,308) (28,893)

Total recognized income and expense for the period (148,544) (57,850)

38


Assets

Property, plant and equipment 15 142,562 192,646

Intangible assets 16 50,807 161,245

Investments in equity accounted investees 17 12,305 22,321

Other investments 18 5,857 23,003

Deferred tax assets 19 4,998 3,934

Others 3,967 2,579

Total non-current assets 220,496 405,728

Inventories 20 25,712 37,736

Trade and other receivables 21 37,508 74,088

Tax assets 1,109 1,141

Cash and cash equivalents 22 72,336 72,523

Others 456 774

Total current assets 137,121 186,262

Assets classified as held for sale - 81,034

Total assets 357,617 673,024

Equity

Share capital 88,491 88,491

Share premium 91,334 91,334

Reserves 18,604 31,743

Retained earnings (158,109) (44,670)

Total equity attributable to equity holders of the Company 40,320 166,898

Minority interest 7,146 38,328

Total equity 23 47,466 205,226

Liabilities

Loans and borrowings 25 93,777 196,769

Employee benefits 26 29,033 33,731

Provisions 28 2,711 3,402

Deferred tax liabilities 19 17,002 24,919

Trade and other payables 29 1,040 1,776

Others 2,255 3,050

Total non-current liabilities 145,818 263,647

Bank overdrafts 25 1 65

Loans and borrowings 25 95,233 31,314

Trade and other payables 29 61,708 97,536

Provisions 28 5,829 3,611

Tax liabilities 983 5,541

Others 579 7,810

Total current liabilities 164,333 145,877

Liabilities classified as held for sale - 58,274

Total liabilities 310,151 467,798

Total equity and liabilities 357,617 673,024

CONSOLIDATED BALANCE SHEET AS AT MARCH 31

39


CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FISCAL YEARS ENDED MARCH 31

(in JPY millions) Note 2009 2008Continuing operations

Operating activitiesLoss from continuing operations (143,263) (60,074)Adjustments for:

Depreciation 15 27,560 29,275Amortization of intangible assets 16 6,718 8,136Impairment losses on intangible assets 12 and 16 95,290 28,449Impairment losses on property, plant and equipment 12 and 15 27,969 - Gain on sale of available for sale financial assets (3,301) - Net financial expense 13 21,082 20,463Share of profit (loss) of equity accounted investees 17 10,605 (858)Loss on sale of property, plant and equipment 1,354 1,580Sale of discontinued operations - 1,837Equity-settled share-based payment transactions 27 1,109 841Income tax benefit 14 (6,232) (213)Debt extinguishments 25 (39,759) - Others 2,753 1,100

Operating profit before changes in working capital 1,885 30,536Change in inventories 8,588 (1,132)Change in trade and other receivables 29,354 9,221Change in trade and other payables (33,855) (1,971)Change in employee benefits (1,417) (3,999)Other changes in working capital (3,730) 1,845Cash generated from the operations 825 34,500Interest paid (9,755) (16,354)Income tax benefit (3,283) (4,571)Net cash from (used in) operating activities (12,213) 13,575

Investing activitiesProceeds from sale of property, plant and equipment 728 1,060Proceeds from sale of subsidiary, net of cash disposed 7 23,115 132Proceeds from sale of investments 18 9,030 - Acquisition of property, plant and equipment 15 (22,323) (26,695)Acquisition of intangibles 16 (1,290) (291)Acquisition of investments (3,153) (2,208)Acquisition of subsidiary, net of cash acquired (36) (14,481)Dividends received 916 434Others 443 5Net cash from (used in) investing activities 7,430 (42,044)

Financing activitiesRepayments of bonds (6,472) (759)Proceeds from (repayments of) borrowings 25 15,419 (269)Payment of finance lease liabilities 25 (1,489) (1,036)Payment of transaction costs (32) (2,648)Payment of dividends (8) (36)Repurchase of treasury shares 23 (536) (2,332)Others 804 1,926Net cash from (used in) financing activities 7,686 (5,154)Net increase (decrease) in cash and cash equivalents 2,903 (33,623)Cash and cash equivalents at April 1 72,458 106,570Effect of exchange rate fluctuations on cash held (3,026) (489)Cash and cash equivalents at March 31 72,335 72,458

Discontinued operations 7Net cash from (used in) operating activities (6,037) 2,671Net cash used in investing activities (1,058) (10,922)Net cash from financing activities 7,288 5,200

Net increase (decrease) in cash and cash equivalents 193 (3,051)Cash and cash equivalents at April 1 (181) 2,981Effect of exchange rate fluctuations on cash held (12) (111)Cash and cash equivalents at March 31 - (181)

TOTALNet increase (decrease) in cash and cash equivalents 3,096 (36,674)Cash and cash equivalents at April 1 72,277 109,551Effect of exchange rate fluctuations on cash held (3,038) (600)Cash and cash equivalents at March 31 22 72,335 72,277

40

Contents

Page1. Reporting entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412. Basis of preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413. Significant accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424. Determination of fair values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525. Use of estimates and judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536. Segment reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537. Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578. Acquisitions of subsidiaries and minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5810. Other income and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5911. Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5912. Impairment of property, plant, equipment and intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6013. Finance income and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6014. Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6115. Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6216. Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6517. Investments in equity accounted investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6818. Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7019. Deferred tax assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7020. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7221. Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7322. Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7323. Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7424. Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7625. Loans and borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7626. Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8027. Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8228. Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8429. Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8530. Financial risk management and related instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8631. Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9432. Capital commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9433. Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9434. Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9435. Group entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9536. Subsequent events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9837. Auditor’s fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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1. REPORTING ENTITYRHJ International SA (“RHJI”) is a company incorporated underthe laws of Belgium, having its registered offices at AvenueLouise, 326 at 1050 Brussels. The consolidated financialstatements for the year ended March 31, 2009 comprise RHJI, itssubsidiaries and its businesses accounted for under the equitymethod (together referred to as the “Company”).

The Company is involved in the following businesses

• Automotive - auto cast parts components with Asahi Tec Corporation

("Asahi Tec") and Honsel International Technologies SA("HIT"); and

- electronic components with Niles Co. Ltd. ("Niles") andU-shin Ltd. ("U-shin").

• Media and entertainment with Columbia MusicEntertainment, Inc. (“CME”) in the music industry.

• Hospitality with Phoenix Resort KK (“Phoenix SeagaiaResort”).

• Consumer products with Shaklee Global Group Inc.("Shaklee").

• ICT consulting services with SigmaXYZ Inc. ("SigmaXYZ").

The financial statements were authorized for issue by the Boardof Directors on July 22, 2009.

2. BASIS OF PREPARATION

2.1. Statement of complianceThe consolidated financial statements have been prepared inaccordance with International Financial Reporting Standards(“IFRS”) as adopted by the European Union up to March 31,2009. The Company was not obliged to apply any Europeancarve-outs from IFRS, meaning that the financial statementsfully comply with IFRS. The Company has not applied anystandards and interpretations issued up to March 31, 2009, butwith an effective date after March 31, 2009. Certain amounts ofthe fiscal year ended March 31, 2008 have been reclassified toconform to the presentation of the fiscal year ended March 31,2009, resulting from new presentation requirements.

The accounting standards applied in the consolidated financialstatements for the year ended March 31, 2009 are consistentwith those used to prepare the consolidated financial statementsfor the year ended March 31, 2008.

2.2. Functional and presentationcurrencyThe financial statements are presented in Japanese Yen ("JPY")which is the functional currency of the Company, rounded to thenearest million.

2.3. Basis of measurementThe financial statements are prepared on the historical costbasis except for derivative financial instruments, investmentsheld for trading and available for sale investments which arestated at fair value. The non-current assets held for sale aremeasured at the lower of their carrying value and fair value lesscost to sell. Investments in equity instruments or derivativeslinked to and to be settled by delivery of an equity instrument arestated at cost when such equity instrument does not have aquoted market price in an active market and for which othermethods of reasonably estimating fair value are clearlyinappropriate or unworkable. Recognized assets and liabilitiesthat are hedged are stated at fair value in respect of the risk thatis hedged.

The accounting policies set out below have been appliedconsistently to all periods presented in the financial statements.

The consolidated financial statements are presented before theeffect of the profit appropriation of RHJI which will be proposedto the shareholders at the Annual Shareholders’ Meeting.

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3. SIGNIFICANT ACCOUNTINGPOLICIES

3.1. Basis of consolidation3.1.1. SubsidiariesSubsidiaries are entities controlled by RHJI. Control exists whenRHJI has the power, directly or indirectly, to govern the financialand operating policies of an entity so as to obtain benefits fromits activities. Control is presumed to exist when RHJI, directly orindirectly through subsidiaries, owns more than half of thevoting power of an entity unless in exceptional circumstances itcan be clearly demonstrated that such ownership does notconstitute control. In assessing control, potential voting rightsthat presently are exercisable or convertible are taken intoaccount. Companies of which the Company holds, directly orindirectly, the majority of the voting rights are fully consolidated.Companies that are less than 50 % owned such as CME in whichthe Company has a de facto control (power to govern thefinancial and operating policies and obtain benefits from itsactivities), are consolidated using the same method.

The financial statements of all subsidiaries are included in theconsolidated financial statements from the date that controlcommences until the date that control ceases.

3.1.2. AssociatesAssociates are those entities in which RHJI has significantinfluence, but not control, over the financial and operatingpolicies. Significant influence is presumed to exist when RHJIowns, directly or indirectly through subsidiaries, between 20 and50% of the voting power of an entity unless it can be clearlydemonstrated that such ownership does constitute control, inwhich case, the associate is considered to be a subsidiary.

The consolidated financial statements include the Company’sshare of the total recognized gains and losses of associates onan equity accounted basis, from the date that significantinfluence commences until the date that significant influenceceases.

When the Company’s share of losses exceeds its interest in anassociate, the Company’s carrying amount is reduced to nil andrecognition of further losses is discontinued except to the extentthat the Company has incurred legal or constructive obligationsor made payments on behalf of an associate.

3.1.3. Joint venturesJointly controlled entities are those enterprises over whoseactivities RHJI has joint control, established by contractualagreements. The Company records its interest in jointlycontrolled entities using the equity method from the date thatjoint control commences to the date that the joint controlceases.

3.1.4. Transactions eliminated on consolidationIntragroup balances and any unrealized gains and losses orincome and expenses arising from intragroup transactions, areeliminated in preparing the consolidated financial statements.

Unrealized gains arising from transactions with associates areeliminated to the extent of RHJI’s interest in the entity.Unrealized losses are eliminated in the same way as unrealizedgains, but only to the extent that there is no evidence ofimpairment.

3.2. Foreign currency3.2.1. Foreign currency transactionsTransactions in foreign currencies other than the functionalcurrency are translated at the foreign exchange rate prevailingat the date of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies at the balance sheet date aretranslated at the foreign exchange rate ruling at that date.Foreign exchange differences arising from the settlement offoreign currency transactions or on translation of monetaryassets and liabilities are recognized in the income statement.

Non-monetary assets and liabilities that are measured in termsof historical cost in a foreign currency are translated using theexchange rate at the date of the transaction. Non-monetaryassets and liabilities denominated in foreign currencies that arestated at fair value are translated at foreign exchange ratesruling at the dates the fair value was determined.

Foreign currency differences arising on retranslation arerecognized in profit or loss, except for differences arising onretranslation of available for sale equity instruments, a financialliability designated as a hedge of net investment in a foreignoperation or qualifying cash flow hedges which are recognizeddirectly in equity.

3.2.2. Foreign operationsThe assets and liabilities of a foreign operation of theconsolidated businesses with a functional currency other thanthe presentation currency of its parent are translated toapplicable presentation currency at foreign exchange ratesprevailing at the balance sheet date. The revenues and expensesof foreign operations are translated to applicable presentationcurrency at exchange rates at the dates of the transactions,which for translated to applicable presentation currency atforeign exchange rates prevailing at practical reasons areapproximated by using average exchange rates for the period.The components of shareholders’ equity are translated athistorical rates. All resulting exchange differences arerecognized directly in the translation reserve, a separatecomponent of equity.

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The translation reserve represents the difference betweentranslating income statement items at average exchange ratesand using the exchange rate at balance sheet date, and inrespect of the opening balance of equity, the difference betweentranslating at the rate at the balance sheet date of the previousperiod and using the rate at balance sheet date of the currentperiod. These differences are released in the income statementupon disposal, in part or in full, of the investment in the relatedforeign operations, as an adjustment to the gain and loss ondisposal.

3.2.3. Exchange ratesThe following major exchange rates have been used in preparingthe financial statements.

3.3. Derivative financial instrumentsThe Company uses derivative financial instruments to hedge itsexposure to foreign exchange and interest rate risks arisingfrom operational, financing and investment activities. TheCompany does not hold or issue derivative financial instrumentsfor trading purposes. However, derivatives that do not qualify forhedge accounting are accounted for as trading instruments.

Derivative financial instruments are recognized initially at cost.Subsequent to initial recognition, derivative financialinstruments are stated at fair value. The gain or loss onremeasurement to fair value is recognized immediately in profitor loss. However, where derivatives qualify for hedgeaccounting, recognition of any resultant gain or loss depends onthe nature of the item being hedged.

The fair value of interest rate swaps is the estimated amountthat the Company would receive or pay to terminate the swap atthe balance sheet date, taking into account current interestrates and the current creditworthiness of the swapcounterparties. The fair value of forward exchange contracts istheir quoted market price at the balance sheet date, being thepresent value of the quoted forward price.

3.4. Hedging3.4.1. Fair value hedgesWhere a derivative financial instrument hedges the changes infair value of recognized assets or liabilities or an unrecognizedfirm commitment, any gain or loss on the hedging instrument isrecognized in the income statement. The hedged item also isstated at fair value in respect of the risk being hedged, with anygain or loss being recognized in the income statement.

3.4.2. Cash flow hedgesWhere a derivative financial instrument is designated as a hedgeof the variability in cash flows of a recognized asset or liability,or a highly probable forecasted transaction, the effective part ofany gain or loss on the derivative financial instrument isrecognized directly in equity through the statement of changesin equity. The ineffective part of any gain or loss is recognizedimmediately in the income statement.

When a hedging instrument expires or is sold, terminated orexercised, or the entity revokes designation of the hedgerelationship but the hedged forecast transaction is still expectedto occur, the cumulative gain or loss at that point remains inequity and is recognized in accordance with the above policywhen the transaction occurs. If the hedged transaction is nolonger expected to take place, the cumulative unrealized gain orloss recognized in equity is recognized immediately in theincome statement.

When the hedged item is a non-financial asset, the amountrecognized in equity is transferred to the carrying amount of theasset when it is recognized. In other cases, the amountrecognized in equity is transferred to profit and loss in the sameperiod that the hedged item affects profit and loss.

3.4.3. DerivativesThe fair value of forward exchange contracts is based on theirlisted market price, if available. If a listed market price is notavailable, then fair value is estimated by discounting thedifference between the contractual forward price and thecurrent forward price for the residual maturity of the contractusing a risk-free interest rate (based on government bonds).

The fair value of interest rate swaps is based on broker quotes.Those quotes are tested for reasonableness by discountingestimated future cash flows based on the terms and maturity ofeach contract and using market interest rates, for a similarinstrument at the measurement date.

100 JPY equals Closing rate Average rate

2009 2008 2009 2008

Euro ("EUR") 0.762 0.635 0.696 0.619

US Dollar ("USD") 1.014 1.005 0.990 0.877

44

3.4.4. Non-derivative financial liabilitiesFair value, which is determined for disclosure purposes, iscalculated based on the present value of future principal andinterest cash flows, discounted at the market rate of interest atthe reporting date. In respect of the liability component ofconvertible notes, the market rate of interest is determined byreference to similar liabilities that do not have a conversionoption.

For finance leases the market rate of interest is determined byreference to similar lease agreements.

3.5. Property, plant and equipment3.5.1. Owned assetsItems of property, plant and equipment are stated at cost lessaccumulated depreciation (see below) and impairment losses(see below for accounting policy on impairment). Cost of an itemof property, plant and equipment comprises its purchase priceas well as any directly attributable costs (for example deliveryand handling costs, installation and assembly costs) and theinitial estimate of the costs of dismantling and removing theitem if the Company is obliged to do so.

Subsequent costs are only capitalized if it is probable that theywill give rise to future economic benefits in excess of theoriginally assessed standard of performance of the asset orwhen it replaces a component that is accounted for separately.Costs incurred simply to restore or maintain the level of futureeconomic benefits are expensed as incurred.

Where parts of an item of property, plant and equipment havedifferent useful lives, they are accounted for as separate itemsof property, plant and equipment.

Borrowing costs related to acquisition, construction orproduction of qualifying assets are recognized in profit or loss asincurred.

3.5.2. Leased assetsLeases in terms of which the Company assumes substantially allthe risks and rewards of ownership are classified as financeleases. Finance leases are capitalized at an amount equal to thelower of its fair value and the present value of the minimumlease payments at inception of the lease, less accumulateddepreciation and impairment losses.

The periodic lease payments should be split into twocomponents: the interest charge for the period and thereduction of the lease liability. The interest charge should bedetermined so that a constant periodic rate of interest isrecognized on the outstanding balance of the liability. The assetunder a finance lease should be depreciated over the shorter ofthe estimated useful life of the asset or the lease term, unless itis reasonable certain that the Company will obtain ownership bythe end of the lease term.

An operating lease is a lease other than a finance lease. Rentexpense for operating leases is recognized in the incomestatement on a straight-line basis over the lease term.

3.5.3. DepreciationDepreciation is charged to the income statement from the datethat the asset is available for use, on a straight-line basis overthe estimated useful lives of each part of an item of property,plant and equipment. Land is not depreciated.

The estimated useful lives are as follows:

3.6. Intangible assets3.6.1. GoodwillAll business combinations are accounted for by applying thepurchase method. Goodwill resulting from acquisition ofsubsidiaries, associates and joint ventures represents thedifference between the cost of the acquisition and the acquirer’sinterest in the fair value of the acquired identifiable assets,liabilities and contingent liabilities recognized.

Goodwill is stated at cost less any accumulated impairmentlosses. Goodwill is not amortized but is tested at least annuallyfor impairment. In respect of associates, the carrying amount ofgoodwill is included in the carrying amount of the investment inthe associate.

Goodwill is expressed in the currency of the subsidiary to whichit relates and is translated to Japanese Yen using the year endexchange rate.

Negative goodwill arising on an acquisition is recognized directlyin the income statement.

3.6.2. Research and developmentExpenditure on research activities, undertaken with the prospectof gaining new scientific or technical knowledge andunderstanding, is recognized in the income statement as anexpense as incurred.

Buildings 3 - 60 years

Machineries and equipments 1 - 20 years

Fixtures and fittings 1 - 20 years

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Expenditure on development activities, whereby researchfindings are applied to a plan or design for the production of newor substantially improved products and processes, is capitalizedif the product or process is technically and commerciallyfeasible and the Company has sufficient resources to completedevelopment. The expenditure capitalized includes the cost ofmaterials, direct labor and an appropriate proportion ofoverheads. Other development expenditure is recognized in theincome statement as an expense as incurred. Capitalizeddevelopment expenditure is stated at cost less accumulatedamortization and impairment losses.

3.6.3. Other intangible assetsOther intangible assets that are acquired are stated at cost lessaccumulated amortization (see below) and impairment losses(see below for accounting policy on impairment).

Expenditure on internally generated goodwill and brands isrecognized in the income statement as an expense as incurred.

Subsequent expenditure on capitalized intangible assets iscapitalized only when it increases the future economic benefitsembodied in the specific asset to which it relates. All otherexpenditure is expensed as incurred.

3.6.4. AmortizationAmortization is charged to the income statement on a straight-line basis over the estimated useful lives. The estimated usefullives are as follows:

Trade names are determined to have an indefinite useful life,because the products are expected to last for the duration of therelated consolidated businesses and are expected to retain theircurrent trade names.

3.7. Investments3.7.1. Investments in securitiesThe Company owns various non-controlling or minority interestsin public companies. The Company has not identified, and in thefuture, may decide not to identify, all the private and publiccompanies in which it acquires non-controlling interests due toconfidentiality, competitive or strategic concerns. All or some ofthe unidentified investments may be material to the Company,individually or in aggregate.

Investments are classified as held-to-maturity when theCompany has a positive intent and ability to hold debt securitiesto maturity.

3.7.2. Financial instrumentsFinancial instruments held for trading are classified as currentassets and are stated at fair value, with any resultant gain orloss recognized in the income statement.

Other financial instruments held by the Company are classifiedas being available for sale and are stated at fair value, with anyresultant gain or loss being recognized directly in equity, exceptfor impairment losses and, in the case of monetary items suchas debt securities, foreign exchange gains and losses. Whenthese investments are derecognized, the cumulative gain or losspreviously recognized directly in equity is recognized in profit orloss. Where these investments are interest-bearing, interestcalculated using the effective interest method is recognized inprofit or loss.

The fair value of financial instruments classified as held fortrading and available for sale is their quoted bid price at thebalance sheet date.

Financial instruments classified as held for trading or available-for-sale investments are recognized/derecognized on the datethe Company commits to purchase/sell the investments. Held-to-maturity securities are recognized / derecognized on the daythey are transferred to/by the Company.

3.8. Investment propertiesInvestment properties are properties which are held either toearn rental income or for capital appreciation or for both.

All investment properties are stated at cost, less accumulateddepreciation and any accumulated impairment losses.

Depreciation charge is charged to the income statement on astraight-line basis over the estimated useful lives of each part ofthe property. The estimated useful lives are those used asrequired for owner-occupied property carried at cost.

Softwares 1 - 7 years

Trademarks and patents 7 - 20 years

Tradenames indefinite

Customer relationships 8 - 25 years

Customer contracts 8 - 15 years

Intellectual properties 3 - 10 years

Capitalized development costs 5 - 9 years

Other rights and agreements 4 - 15 years

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3.9. InventoriesInventories are stated at the lower of cost and net realizablevalue. Net realizable value is the estimated selling price in theordinary course of business, less the estimated costs ofcompletion and selling expenses.

The cost of inventories is based on the weighted averageprinciple and includes expenditure incurred in acquiring theinventories and bringing them to their existing location andcondition. In the case of manufactured inventories and work inprogress, cost includes the direct cost of materials, directmanufacturing expenses and an appropriate, systematicallyallocated share of overheads, based on normal operatingcapacity.

3.10. Trade and other receivablesTrade and other receivables are stated at their cost lessimpairment losses. An estimate is made for doubtful receivablesbased on a review of all outstanding amounts at each balancesheet date. Impairment losses are recorded during the year inwhich they are identified.

3.11. Cash and cash equivalentsCash and cash equivalents comprise cash balances and calldeposits. Bank overdrafts repayable on demand are included ascash and cash equivalents for the purpose of the cash-flowstatement if and when they form an integral part of the entity’scash management.

3.12. Impairment3.12.1. MethodologyThe carrying amounts of the Company’s assets, other thaninventories and deferred tax assets, are reviewed at eachbalance sheet date to determine whether there is any indicationof impairment. If any such indication exists, the asset’srecoverable amount is estimated.

For goodwill, assets that have an indefinite useful life andintangible assets that are not yet available for use, therecoverable amount is estimated at each balance sheet date.

An impairment loss is recognized whenever the carrying amountof an asset or its cash-generating unit exceeds its recoverableamount. Impairment losses are recognized in the incomestatement.

Impairment losses recognized in respect of cash-generatingunits are allocated first to reduce the carrying amount of anygoodwill allocated to cash-generating units (group of units) andthen to reduce the carrying amount of the other assets in theunit (group of units) on a pro rata basis.

3.12.2. Calculation of recoverable amountThe recoverable amount of the Company’s investments in held-to-maturity securities and receivables carried at amortized costis calculated as the present value of estimated future cashflows, discounted at the original effective interest rate (i.e., theeffective interest rate computed at initial recognition of thesefinancial assets). Receivables with a short duration are notdiscounted.

The recoverable amount of other assets is the greater of theirfair value less cost to sell and value in use. In assessing value inuse, the estimated future cash flows are discounted to theirpresent value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risksspecific to the asset. For an asset that does not generate largelyindependent cash inflows, the recoverable amount isdetermined for the cash-generating unit to which the assetbelongs.

3.12.3. Reversals of impairmentA previously recognized impairment loss is reversed if there hasbeen a change in the estimates used to determine therecoverable amount.

An impairment loss is reversed only to the extent that theasset’s carrying amount does not exceed the carrying amountthat would have been determined, net of depreciation oramortization, if no impairment loss had been recognized.

An impairment loss recognized for goodwill shall not bereversed in a subsequent period.

3.13. Share capitalWhen share capital recognized as equity is repurchased, theamount of the consideration paid, including directly attributablecosts, is recognized as a change in equity. Repurchased sharesare classified as treasury shares and presented as a deductionfrom total equity.

Dividends are recognized as a liability in the period in which theyare declared.

Transaction costs related to the issuance of shares areaccounted for as a deduction from equity, net of any tax effects.

47


3.14. Loans and borrowingsLoans and borrowings are recognized initially at fair value lessattributable transaction costs. Subsequent to initial recognition,borrowings are stated at amortized cost with any differencebetween cost and redemption value being recognized in theincome statement over the period of the borrowings on aneffective interest basis.

3.15. Employee benefits3.15.1. Defined contribution plansObligations for contributions to defined contribution pensionplans are recognized as an expense in the income statement asincurred.

3.15.2. Defined benefit plansThe net obligation in respect of defined benefit pension plans,recognized in the balance sheet, is calculated as the presentvalue of the defined benefit obligation (future benefit thatemployees have earned in return for their service in the currentand prior periods), adjusted for the unrecognized actuarial gainsand losses and less any past service costs not yet recognizedand the fair value of any plan assets. The discount rate is theyield at the balance sheet date on high quality credit rated bondsthat have maturity dates approximating to the terms of theobligations. The calculation is performed by a qualified actuaryusing the projected unit credit method.

When the benefits of a plan are improved, the portion of theincreased benefit relating to past service by employees isrecognized as an expense in the income statement on a straight-line basis over the average period until the benefits becomevested. To the extent that the benefits vest immediately, theexpense is recognized immediately in the income statement.

In respect of actuarial gains and losses, to the extent that anycumulative unrecognized actuarial gain or loss exceeds 10% ofthe greater of the present value of the defined benefit obligationand the fair value of plan assets, that portion will be recognizedin the income statement over the expected average remainingworking lives of the employees participating in the plan.Otherwise, the actuarial gain or loss is not recognized.

Where the calculation results in a benefit to the Company, therecognized asset is limited to the net total of any unrecognizedactuarial losses and past service costs and the present value ofany future refunds from the plan or reductions in futurecontributions to the plan.

3.15.3. Other post-retirement obligationsSome consolidated businesses provide post-retirementhealthcare benefits to their retirees. The entitlement to thesebenefits is usually based on the employee remaining in serviceup to retirement age. The expected costs of these benefits areaccrued over the period of employment, using an accountingmethodology similar to that for defined benefit pension plansand determined by independent qualified actuaries.

3.15.4. Equity and equity-related compensationbenefitsThe Company operates a number of share-based compensationplans, allowing Company employees to acquire shares in theirrespective companies. In addition, certain members of theCompany’s management team and other employees receivedRHJI ordinary shares from a significant shareholder of theCompany in the context of the initial public offering.

The fair value of stock options and share grants is measured atgrant date and spread over the period during which theemployees become unconditionally entitled to the options orshares granted. The fair value of the options is measured usinga Black-Scholes-Merton model, taking into account the termsand conditions upon which the options were granted. The fairvalue of share grants is measured using the Finnerty model toreflect transferability restrictions resulting from certain termsand conditions upon which the shares were granted.

The amount recognized as an expense is adjusted to reflect theactual number of stock options and shares that vest.

3.15.5. Termination benefitsTermination benefits are recognized as an expense when theCompany is demonstrably committed, without realisticpossibility of withdrawal, to a formal detailed plan to eitherterminate employment before the normal retirement date, or toprovide termination benefits as a result of an offer made toencourage voluntary redundancy. Termination benefits forvoluntary redundancies are recognized as an expense if theCompany has made an offer of voluntary redundancy, it isprobable that the offer will be accepted, and the number ofacceptances can be estimated reliably.

3.15.6. BonusesBonuses received by employees and management of theCompany are recognized as an expense in the year the relatedservice is provided.

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3.16. ProvisionsA provision is recognized in the balance sheet when theCompany has a present legal or constructive obligation as aresult of a past event, and it is probable that an outflow ofeconomic benefits will be required to settle the obligation and areliable estimate can be made of the amount of the obligation. Ifthe effect is material, provisions are determined by discountingthe expected future cash flows at a pre-tax rate that reflectscurrent market assessments of the time value of money and,where appropriate, the risks specific to the liability.

3.16.1. WarrantiesA provision for warranties is recognized when the underlyingproducts or services are sold. The provision is based onhistorical warranty data and a weighting of all possibleoutcomes against their associated probabilities.

3.16.2. RestructuringA provision for restructuring is recognized when the Companyhas approved a detailed and formal restructuring plan, and therestructuring has either commenced or has been announcedpublicly. Future operating costs are not provided for.

3.16.3. Site restorationIn accordance with the applicable legal requirements, aprovision for site restoration in respect of contaminated land isrecognized when the land is contaminated.

3.16.4. Onerous contractsA provision for onerous contracts is recognized when theexpected benefits to be derived by the Company from a contractare lower than the unavoidable cost of meeting its obligationsunder the contract. The provision is measured at the presentvalue of the lower of the expected cost of terminating thecontract and expected net cost of continuing with the contract.Before a provision is established, the Company recognizes anyimpairment loss on the assets associated with the contract.

3.17. Trade and other payablesTrade and other payables are stated at cost.

3.18. Revenue3.18.1. Goods sold and services renderedRevenue from the sale of goods is measured at the fair value ofthe consideration received or receivable net of returns, tradediscounts and volume rebates. Revenue is recognized when thesignificant risks and rewards of ownership have been

transferred to the buyer, recovery of the consideration isprobable, the associated costs and possible return of goods canbe estimated reliably, there is no continuing managementinvolvement with the goods, and the amount of revenue can bemeasured reliably. Revenue from services rendered isrecognized in the income statement in proportion to the stage ofcompletion of the transaction at the balance sheet date. Thestage of completion is assessed by reference to surveys of workperformed.

3.18.2. Construction contractsContract revenue includes the initial amount agreed in thecontract plus any variations in contract work, claims andincentive payments to the extent that it is probable that they willresult in revenue and can be measured reliably. As soon as theoutcome of a construction contract can be estimated reliably,contract revenue and expenses are recognized in profit or loss inproportion to the stage of completion of the contract. The stageof completion is assessed by reference to surveys of workperformed. When the outcome of a construction contract cannotbe estimated reliably, contract revenue is recognized only to theextent of contract costs incurred that are likely to berecoverable. An expected loss on a contract is recognizedimmediately in profit or loss.

3.18.3. Government grantsGovernment grants are recognized in the balance sheet initiallyas deferred income when there is reasonable assurance thatthey will be received and that the Company will comply with theconditions attaching to them. Grants that compensate theCompany for expenses incurred are recognized as revenue inthe income statement on a systematic basis in the same periodsin which the expenses are incurred. Grants that compensate theCompany for the cost of an asset are recognized in the incomestatement as other operating income on a systematic basis overthe useful life of the asset.

3.18.4. RoyaltiesRoyalties are recognized as revenue when it is probable that theeconomic benefits associated with the transaction will flow tothe Company and can be measured reliably. The income isrecognized in accordance with the substance of the relevantagreement.

49


3.19. Expenses3.19.1. Employee benefitsShort-term employee benefits including short-termcompensated absences are expensed in the period in which theemployees rendered the related services.

3.19.2. Lease paymentsPayments made under operating leases are recognized in theincome statement on a straight-line basis over the term of thelease. Lease incentives received are recognized in the incomestatement as an integral part of the total lease expense.

Minimum lease payments related to finance leases areapportioned between the finance charge and the reduction of theoutstanding liability. The finance charge is allocated to eachperiod during the lease term so as to produce a constantperiodic rate of interest on the remaining balance of the liability.

3.19.3. Finance income and expensesFinance income and expenses comprise interest payable onborrowings calculated using the effective interest rate method,dividends on redeemable preference shares, interest receivableon funds invested, dividend income, foreign exchange gains andlosses and gains and losses on hedging instruments that arerecognized in the income statement.

Interest income is recognized in the income statement as itaccrues, using the effective interest method. Dividend income isrecognized in the income statement on the date the entity’s rightto receive payments is established. The interest expensecomponent of finance lease payments is recognized in theincome statement using the effective interest method.

3.20. Income taxesIncome tax comprises current and deferred tax. Income tax isrecognized in the income statement except to the extent that itrelates to items recognized directly in equity, in which case it isrecognized in equity.

Current tax is the expected tax payable on the taxable incomefor the year, using tax rates enacted or substantially enacted atthe balance sheet date, and any adjustment to tax payable inrespect of previous years.

Deferred tax is provided using the balance sheet liabilitymethod, providing for temporary differences between thecarrying amounts of assets and liabilities for financial reportingpurposes and the amounts used for taxation purposes. Thefollowing temporary differences are not provided for:

• The initial recognition of goodwill;• The initial recognition of assets or liabilities in a transaction

other than a business combination that affect neitheraccounting nor taxable profit;

• Differences relating to investments in subsidiaries to theextent that the Company is able to control the timing of thereversal of the temporary difference and it is probable thatthe temporary difference will not reverse in the foreseeablefuture.

The deferred tax assets and liabilities are offset if there is alegally enforceable right to offset current tax liabilities andassets, and they relate to income taxes levied by the same taxauthority on the same taxable entity.

The amount of deferred tax provided is based on the expectedmanner of realization or settlement of the carrying amount ofassets and liabilities, using tax rates enacted or substantivelyenacted at the balance sheet date.

A deferred tax asset is recognized only to the extent that it isreviewed at each reporting date and probable that future taxableprofits will be available against which the asset can be utilized.Deferred tax assets are reduced to the extent that it is no longerprobable that the related tax benefit will be realized.

Additional income taxes that arise from the distribution ofdividends are recognized at the same time as the liability to paythe related dividend.

50

3.21. Segment reportingA segment is a distinguishable component of the Company thatis engaged either in providing related products or services(business segment), or in providing products or services within aparticular economic environment (geographical segment), whichis subject to risks and returns that are different from those ofother segments. The Company is a diversified holding companyengaged in various industries and has chosen a segmentreporting format based on the businesses it is managing.

Segment assets and liabilities include those operating assetsand liabilities that are directly attributable to a segment or canbe allocated to a segment on a reasonable basis.

3.22. Non-current assets held forsale and discontinued operationsA discontinued operation is a component of the Company’sbusiness that represents a separate major line of business orgeographical area of operations or is a subsidiary acquiredexclusively with a view to resale. Classification as a discontinuedoperation occurs upon disposal or when the operation meets thecriteria to be classified as held for sale, if earlier. A disposalgroup that is to be abandoned may also qualify.

Immediately before classification as held for sale, themeasurement of all assets and liabilities in the disposal group isbrought up-to-date in accordance with applicable IFRSs. Oninitial classification as held for sale, non-current assets anddisposal groups are recognized at the lower of carrying amountand fair value less cost to sell. Impairment losses on initialclassification as held for sale are included in profit or loss. Thesame applies to gains and losses on subsequentremeasurement.

3.23. Recently issued standards andinterpretations not yet adoptedTo the extent that new IFRS requirements are expected to beapplicable in the future, they have been summarized hereafter.For the year ended March 31, 2009, they have not been applied inpreparing the consolidated financial statements.

IFRS 8 Operating Segments introduces the ‘managementapproach’ to segment reporting. IFRS 8, which becomesmandatory for RHJI’s March 31, 2010 financial statements, willrequire the disclosure of segment information based on theinternal reports regularly reviewed by RHJI’s ExecutiveManagement in order to assess each segment’s performanceand to allocate resources to them. Currently RHJI presentssegment information in respect of its geographical and businesssegments. RHJI does not expect that IFRS 8 will trigger amaterial change to our current segment reporting.

Revised IAS 23 Borrowing Costs removes the option to expenseborrowing costs and requires that an entity capitalizesborrowing costs directly attributable to the acquisition,construction or production of a qualifying asset as part of thecost of that asset. The revised IAS 23 will become mandatory forRHJI’s March 31, 2010 financial statements and will constitute achange in accounting policy for RHJI. In accordance with thetransitional provisions RHJI will apply the revised IAS 23 toqualifying assets for which capitalization of borrowing costscommences on or after the effective date of the standard. We donot expect any material impact.

IFRIC 13 Customer Loyalty Programs addresses the accountingby entities that operate, or otherwise participate in, customerloyalty programs for their customers. It relates to customerloyalty programs under which the customer can redeem creditsfor awards such as free or discounted goods or services. IFRIC13, which becomes mandatory for RHJI’s March 31, 2010financial statements, is not expected to have any materialimpact.

Revised IAS 1 Presentation of Financial Statements (2007)introduces the term total comprehensive income, whichrepresents changes in equity during a period other than thosechanges resulting from transactions with owners in theircapacity as owners. Total comprehensive income may bepresented in either a single statement of comprehensive income(effectively combining both the income statement and all non-owner changes in equity in a single statement), or in an incomestatement and a separate statement of comprehensive income.Revised IAS 1, which becomes mandatory for RHJI’s March 31,2010 consolidated financial statements, is not expected to havean impact on the presentation of the consolidated financialstatements. RHJI plans to continue to provide totalcomprehensive income in an income statement and a separatesingle statement of other comprehensive income for its March31, 2010 consolidated financial statements.

Amendments to IAS 32 Financial Instruments : Presentation andIAS 1 Presentation of Financial Statements – Puttable FinancialInstruments and Obligations Arising on Liquidation requiresputtable instruments, and instruments that impose on the entityan obligation to deliver to another party a pro rata share of thenet assets of the entity only on liquidation, to be classified asequity if certain conditions are met. The amendments, whichbecome mandatory for RHJI’s March 31, 2010 consolidatedfinancial statements, with retrospective application required, arenot expected to have any material impact.

Revised IFRS 3 Business Combinations (2008) incorporates thefollowing changes that are likely to be relevant to RHJI’soperations :

• The definition of a business has been broadened, which islikely to result in more acquisitions being treated asbusiness combinations.

• Contingent consideration will be measured at fair value, withsubsequent changes therein recognized in profit or loss.

51


• Transaction costs, other than share and debt issue costs,will be expensed as incurred.

• Any pre-existing interest in the acquiree will be measured atfair value with the gain or loss recognized in profit or loss.

• Any non-controlling (minority) interest will be measured ateither fair value, or at its proportionate interest in theidentifiable assets and liabilities of the acquiree, on atransaction-by-transaction basis.

Revised IFRS 3, which becomes mandatory for RHJI’s March 31,2011 consolidated financial statements, will be appliedprospectively and, will therefore have no impact on priorperiods.

Amended IAS 27 Consolidated and Separate FinancialStatements (2008) requires accounting for changes in ownershipinterests by RHJI in a subsidiary, while maintaining control, tobe recognized as an equity transaction. When RHJI loses controlof a subsidiary, any interest retained in the former subsidiarywill be measured at fair value with the gain or loss recognized inprofit or loss. The amendments to IAS 27, which becomemandatory for RHJI’s March 31, 2011 consolidated financialstatements will be applied prospectively and will therefore haveno impact on prior periods.

Amendment to IFRS 2 Share-based Payment – VestingConditions and Cancellations clarifies the definition of vestingconditions, introduces the concept of non-vesting conditions,requires non-vesting conditions to be reflected in grant-date fairvalue and provides the accounting treatment for non-vestingconditions and cancellations. The amendments to IFRS 2, thatwill become mandatory for RHJI’s 2010 consolidated financialstatements, with retrospective application, are not expected tohave any material impact.

IFRIC 15 Agreements for the Construction of Real Estateconcludes that revenues for real estate construction projectswill have to be recognized using the completed contract methodin many cases, except for specific situations where thepercentage of completion method of revenue recognition can beapplied. This is the case when a contract relates to the sale ofassets, but during the construction of these assets revenuerecognition criteria are met on a continuous basis (in relation tothe completed part of the project). IFRIC 15, which becomesmandatory for RHJI’s 2010 consolidated financial statements,with retrospective application, is not expected to have anymaterial impact.

IFRIC 16 Hedges of a Net Investment in a Foreign Operationdiscusses a number of issues in relation to hedging currencyrisks on foreign operations (net investment hedges). IFRIC 16specifically confirms only that the risk from differences betweenthe functional currencies of the Company and the subsidiary canbe hedged. Additionally, currency risks can only be hedged byevery (direct or indirect) parent company, as long as the risk isonly hedged once in the consolidated financial statements. IFRIC16 also determines that the hedge instrument of a netinvestment hedge can be held by every group company, exceptfor foreign operation itself. IFRIC 16, which becomes mandatory

for RHJI’s March 31, 2011 consolidated financial statements,with prospective application, is not expected to have anymaterial impact.

IFRIC 17 Distributions of Non-cash Assets to Owners addressesthe treatment of distributions in kind to shareholders. Outsidethe scope of IFRIC 17 are distributions in which the assets beingdistributed are ultimately controlled by the same party or partiesbefore and after the distribution (common control transactions).A liability has to be recognized when the dividend has beenappropriately authorized and is no longer at the discretion of theentity, to be measured at the fair value of the non-cash assets tobe distributed. IFRIC 17, which becomes mandatory for RHJI’sMarch 31, 2011 consolidated financial statements, withprospective application, is not expected to have any materialimpact.

IFRIC 18 Transfers of Assets from Customers addresses theaccounting by access providers for property, plant andequipment contributed to them by customers. Recognition of theassets depends on who controls it. When the asset is recognizedby the access provider, it is measured at fair value upon initialrecognition. The timing of the recognition of the correspondingrevenue depends on the facts and circumstances. IFRIC 18,which becomes mandatory for RHJI’s March 31, 2011consolidated financial statements, with prospective application,is not expected to have any material impact .

Amendments to IFRS 1 First-time Adoption of IFRSs and IAS 27Consolidated and Separate Financial Statements – Cost of anInvestment in a Subsidiary, Jointly-controlled Entity or Associate(endorsed by the European Union) revises, amongst others, theaccounting for ‘pre-acquisition dividends’ received fromparticipating interests. Those dividends should be recognized asrevenue, but such dividends may imply an indicator for theimpairment of the participating interest. The amendment, whichbecomes mandatory for RHJI’s March 31, 2011 consolidatedfinancial statements, with prospective application, is notapplicable for the Company.

Amendment to IAS 39 Financial Instruments : Recognition andMeasurement – Eligible Hedged Items provides additionalguidance concerning specific positions that qualify for hedging(‘eligible hedged items’). The amendment to IAS 39, whichbecomes mandatory for RHJI’s March 31, 2011 consolidatedfinancial statements, with retrospective application, is notexpected to have any material impact .

Improvements to IFRSs (2008) is a collection of minorimprovements to existing standards. This collection, whichbecomes mandatory for RHJI’s March 31, 2011 consolidatedfinancial statements, is not expected to have any materialimpact.

52

4. DETERMINATION OF FAIRVALUESA number of the Group’s accounting policies and disclosuresrequire the determination of fair value, for both financial andnon-financial assets and liabilities. Fair values have beendetermined for measurement and disclosure purposes based onthe following methods. Where applicable, further informationabout the assumptions made in determining fair values isdisclosed in the notes specific to that asset or liability.

4.1. Property, plant and equipmentThe fair value of property, plant and equipment recognized as aresult of a business combination is based on market values.

The market value of property is the estimated amount for whicha property could be exchanged on the date of valuation betweena willing buyer and a willing seller in an arm’s lengthtransaction after proper marketing wherein the parties had eachacted knowledgeably, prudently and without compulsion. Themarket value of items of plant, equipment, fixtures and fittings isbased on the quoted market prices for similar items.

4.2. Intangible assetsThe fair value of patents and trademarks acquired in a businesscombination is based on the discounted estimated royaltypayments that have been avoided as a result of the patent ortrademark being owned. The fair value of other intangible assetsis based on the discounted cash flows expected to be derivedfrom the use and eventual sale of the assets.

4.3. InventoriesThe fair value of inventories acquired in a business combinationis determined based on its estimated selling price in theordinary course of business less the estimated costs ofcompletion and sale, and a reasonable profit margin based onthe effort required to complete and sell the inventories.

4.4. Investments in equity and debtsecuritiesThe fair value of financial assets at fair value through profit orloss, held-to-maturity investments and available for salefinancial assets is determined by reference to their quoted bidprice at the reporting date. The fair value of held-to-maturityinvestments is determined for disclosure purposes only.

4.5. Trade and other receivablesThe fair value of trade and other receivables, excludingconstruction work in progress, is estimated as the present valueof future cash flows, discounted at the market rate of interest atthe reporting date.

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5. USE OF ESTIMATES ANDJUDGMENTSThe preparation of its financial statements in conformity withIFRS requires the Company to make judgments, estimates andassumptions that affect the application of policies and reportedamounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based onhistorical experience and various other factors that are believedto be reasonable in the circumstances, the results of which formthe basis of making the judgments about carrying values ofassets and liabilities that are not readily apparent from othersources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on anongoing basis. Revisions to accounting estimates are recognizedin the period in which the estimate is revised if the revisionaffects only that period or in the period of the revision and futureperiods if the revision affects both current and future periods.

In particular, information about significant areas of estimationuncertainty and critical judgments in applying accountingpolicies that have the most significant effect on the amountrecognized in the financial statements are described in thefollowing notes:

• Note 8 – Acquisitions• Note 15 – Measurement of the recoverable amount for

property, plant and equipment of cash-generating units• Note 16 – Measurement of the recoverable amount for

intangible assets of cash-generating units• Note 19 – Utilization of tax losses• Note 26 – Measurement of defined benefit obligations• Note 27 – Measurement of share-based payments• Note 28 – Provisions• Note 30 – Valuation of financial instruments• Note 33 – Contingencies.

6. SEGMENT REPORTINGSegment information is presented with respect to theCompany’s business and geographical segments. The primaryformat, business segments, is based on the Company’smanagement and internal reporting structure.

6.1. Business segmentsThe Company comprises the following main business segments:

• Asahi Tec;• CME;• HIT;• Niles; and• Phoenix Seagaia Resort.

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(in JPY millions) 2009

Asahi Tec CME HIT NilesPhoenixSeagaia Resort

CorporateHeadquarters

Consolidationentries

Continuingoperations


Total

Revenue 218,815 18,170 102,527 45,444 12,327 2,599 (2,582) 397,300 - 397,300

Gross profit (loss) 18,848 7,061 1,364 6,089 1,441 55 (38) 34,820 - 34,820

Loss from operations (55,936) (9,300) (54,540) (11,164) (14,800) (8,189) (230) (154,159) - (154,159)

Net financial income (expense) 29,623 15 (9,494) (1,968) (455) (4,012) 1,560 15,269 - 15,269

Share of profit (loss) of equity accountedinvestees (net of income tax)

408 - - - - (11,013) - (10,605) - (10,605)

Income tax benefit (expense) (1,567) (29) 6,512 (2,446) 3,843 (81) - 6,232 - 6,232

Profit from discontinued operations (net ofincome tax)

- - - - - - - - 11,992 11,992

Minority interest (63) - 530 13 - - 14,574 15,054 174 15,228

Profit (loss) for the period attributable toequity holders of the Company

(27,535) (9,314) (56,992) (15,565) (11,412) (23,295) 15,904 (128,209) 12,166 (116,043)

Non-current assets 97,590 6,771 57,371 24,581 12,649 76,025 (54,491) 220,496 - 220,496

Current assets 40,363 6,763 11,887 14,480 1,304 68,040 (5,716) 137,121 - 137,121

Total assets 137,953 13,534 69,258 39,061 13,953 144,065 (60,207) 357,617 - 357,617

Equity attributable to equity holders of theCompany

1,942 1,114 (42,247) (4,554) 3,454 138,226 (57,615) 40,320 - 40,320

Minority interest 1,132 - 1,187 392 - - 4,435 7,146 - 7,146

Non-current liabilities 97,434 6,127 16,538 16,809 7,678 1,231 1 145,818 - 145,818

Current liabilities 37,445 6,293 93,780 26,414 2,821 4,608 (7,028) 164,333 - 164,333

Total equity and liabilities 137,953 13,534 69,258 39,061 13,953 144,065 (60,207) 357,617 - 357,617

Cash flow from operating activities (672) (1,006) (2,615) 2,060 (361) (11,247) 1,628 (12,213) (6,037) (18,250)

Cash flow from investing activities (15,405) (432) (9,965) (3,547) (525) 16,808 20,496 7,430 (1,058) 6,372

Cash flow from financing activities 15,237 763 8,940 708 697 2,212 (20,871) 7,686 7,288 14,974

Net change in cash and cash equivalents (840) (675) (3,640) (779) (189) 7,773 1,253 2,903 193 3,096

Cash and cash equivalents at the beginning of the period

6,465 2,506 6,234 2,957 644 53,652 - 72,458 (181) 72,277

Effect of exchange rate fluctuations on cash held (276) 1 (720) (100) - (678) (1,253) (3,026) (12) (3,038)

Cash and cash equivalents at the end of theperiod

5,349 1,832 1,874 2,078 455 60,747 - 72,335 - 72,335

Depreciation of property, plant andequipment

14,147 141 8,498 3,633 1,071 70 - 27,560 - 27,560

Amortization of intangible assets 2,658 1,471 2,155 378 29 27 - 6,718 - 6,718

Impairment

Property, plant and equipment 7,045 - 6,699 232 13,993 - - 27,969 - 27,969

Intangible assets 42,264 4,398 28,593 - (9) 20,044 - 95,290 - 95,290

Capital expenditure 9,194 182 9,965 3,693 525 54 - 23,613 - 23,613

Number of employees (Full Time Equivalent) 8,217 459 4,071 3,405 1,551 54 - 17,757 - 17,757

55



Asahi Tec CME HIT NilesPhoenixSeagaia Resort





Total

Revenue 315,772 18,569 141,933 59,318 14,478 4,103 (4,107) 550,066 - 550,066

Gross profit (loss) 29,527 7,133 12,874 10,309 1,694 510 (722) 61,325 - 61,325

Profit (loss) from operations (25,277) (2,707) (461) 2,414 (710) (6,401) (964) (34,106) - (34,106)

Net financial expense (10,618) (62) (10,808) (1,548) (403) (1,064) (2,509) (27,012) - (27,012)

Share of profit of equity accountedinvestees (net of income tax)

204 - - - - - 654 858 - 858

Income tax benefit (expense) (2,849) (816) 8,317 (558) (3,567) (341) - 186 - 186

Loss from discontinued operations(net of income tax)

- - - - - - - - (1,177) (1,177)

Minority interest (267) - (56) (90) - - 29,050 28,637 (607) 28,030

Profit (loss) for the period attributable toequity holders of the Company

(38,807) (3,585) (3,008) 218 (4,680) (7,806) 26,231 (31,437) (1,784) (33,221)

Non-current assets 186,883 12,420 107,775 26,219 27,285 181,880 (136,734) 405,728 - 405,728

Current assets 67,378 9,032 30,896 23,208 1,813 60,645 (6,709) 186,263 81,033 267,296

Total assets 254,261 21,452 138,671 49,427 29,098 242,525 (143,443) 591,991 81,033 673,024

Equity attributable to equity holders of theCompany

48,680 6,969 6,247 1,572 13,870 235,920 (146,360) 166,898 - 166,898

Minority interest 1,291 - 2,053 490 - - 34,494 38,328 - 38,328

Non-current liabilities 138,558 6,519 95,999 9,259 12,120 1,192 - 263,647 - 263,647

Current liabilities 65,732 7,964 34,373 38,106 3,108 5,413 (8,819) 145,877 58,274 204,151

Total equity and liabilities 254,261 21,452 138,672 49,427 29,098 242,525 (120,685) 614,750 58,274 673,024

Cash flow from operating activities 9,772 (1,339) 8,544 3,892 763 (4,343) (3,714) 13,575 2,671 16,246

Cash flow from investing activities (14,814) (1,164) (19,694) (4,056) (330) (21,169) 19,181 (42,046) (10,922) (52,968)

Cash flow from financing activities 3,182 (170) 12,305 (1,672) (823) 1,684 (19,660) (5,154) 5,200 46

Net change in cash and cash equivalents (1,860) (2,673) 1,155 (1,836) (390) (23,828) (4,193) (33,625) (3,051) (36,676)

Cash and cash equivalents at the beginning of the period

8,721 5,233 4,992 4,869 1,034 81,721 - 106,570 2,981 109,551

Effect of exchange rate fluctuations on cash held (396) (54) 87 (76) - (4,241) 4,193 (487) (111) (598)

Cash and cash equivalents at the end of theperiod

6,465 2,506 6,234 2,957 644 53,652 - 72,458 (181) 72,277

Depreciation of property, plant andequipment

16,005 239 9,103 3,875 1,183 57 - 30,462 - 30,462

Amortization of intangible assets 4,371 1,288 2,824 269 47 1 - 8,800 - 8,800

Impairment

Property, plant and equipment 547 - - 23 437 - - 1,007 - 1,007

Intangible assets 29,249 197 - - (2) - - 29,444 - 29,444

Capital expenditure 13,906 168 8,265 4,519 330 273 - 27,461 - 27,461

Number of employees (Full Time Equivalent) 10,585 528 4,611 4,018 1,575 50 - 21,367 - 21,367

56

The table below reconciles (a) the profit (loss) of the consolidated subsidiaries as reported in Part I of the present Annual Report andexcluding the effect of the initial purchase price allocation resulting from the contribution of the consolidated subsidiaries to RHJI inMarch 2005, with (b) the profit (loss) reported on the previous table by business segment.

(1) The EUR denominated revenue and losses have been translated using the average foreign exchange rate for purposes of preparing the consolidated financial statements. The results as reflected in Part I of the Annual Report were translated for convenience using the exchange rate at fiscal year ends.

6.2. Geographical segmentsThe Company is primarily managed on a worldwide basis, but operates in four principal geographical areas, Japan, Asia, Europe andNorth America. Segment assets and liabilities include items directly attributable to a segment as well as those than can be allocatedon a reasonable basis. In presenting information on the basis of geographical segments, segment information is based on thegeographical location of the assets.


Asahi Tec CME HIT (1) NilesPhoenixSeagaia Resort





Total

Revenue 218,815 18,170 102,527 45,444 12,327 2,599 (2,582) 397,300 - 397,300

Loss from operations (52,294) (693) (50,990) (1,265) (701) (8,189) (230) (114,362) - (114,362)

Effect of purchase price allocation (3,642) (8,607) (3,550) (9,899) (14,099) - - (39,797) - (39,797)

Loss from operations (55,936) (9,300) (54,540) (11,164) (14,800) (8,189) (230) (154,159) - (154,159)


Asahi Tec CME HIT (1) NilesPhoenixSeagaia Resort





Total

Revenue 315,772 18,569 141,933 59,318 14,478 4,103 (4,107) 550,066 - 550,066


Effect of purchase price allocation (203) (1,199) - 63 (598) (1,937) - (1,937)


(in JPY millions) Japan Europe Americas Asia Eliminated Consolidated

2009

Revenue 140,376 135,538 105,442 20,263 (4,319) 397,300

Segment assets 58,616 222,642 53,179 26,879 (3,699) 357,617

Capital expenditure 6,002 6,082 7,003 4,565 (39) 23,613

Net debt 58,072 12,342 52,786 5,158 (11,683) 116,675

Number of employees (Full Time Equivalent) 5,634 4,844 3,624 3,655 - 17,757

2008

Revenue 174,879 190,407 170,892 37,072 (23,184) 550,066

Segment assets 187,046 417,832 111,427 35,001 (78,282) 673,024

Capital expenditure 6,713 10,302 5,692 5,789 (1,035) 27,461

Net debt 60,385 17,221 85,349 7,100 (14,430) 155,625

Number of employees (Full Time Equivalent) 6,302 5,598 5,280 4,187 - 21,367

57


7. DISCONTINUED OPERATIONS

7.1. Fiscal year ended March 31,2008CME recognized an additional gain of JPY 292 million resultingfrom the disposal of its CD/DVD pressing business.

HIT’s Canadian subsidiary, which continued to suffer losses as aresult of a continuously weak demand from North American carmanufacturers, went into receivership in October 2007 and inliquidation in May 2008 and was classified as discontinuedoperations. The loss after tax from discontinued operations forthe fiscal year ended March 31, 2008, amounted to JPY 3,415million.

At March 31, 2008, RHJI classified D&M as a current asset heldfor sale in its consolidated financial statements as it had enteredinto a formal process to divest its controlling stake in D&M. Theclassification followed the Company’s assessment of theprobability of a sale after having received several non-bindingoffers in March 2008. On June 20, 2008, the Company enteredinto a binding agreement with an investment fund advised byBain Capital, LLC to tender its shares in D&M at JPY 510 pershare or JPY 23,115 million in aggregate. In accordance with theprovisions of IFRS on non-current assets held for sale, D&M waspresented as discontinued operations in the consolidatedfinancial statements for the fiscal year ended March 31, 2008.

7.2. Fiscal year ended March 31,2009On September 4, 2008, the Company completed the sale of D&M.The result from D&M includes the net loss of JPY 999 millionfrom operations for the six months ended September 30, 2008and the gain on disposal of JPY 11,073 million. The gain ondisposal as reflected in the Company’s consolidated incomestatement consists of the gain of JPY 12,600 million over theacquisition cost less JPY 1,527 million of income contributed byD&M to consolidated reserves from April 1, 2005 through thedate of effective disposal. The gain from the liquidation of HIT’sCanadian operations, initiated in May 2008, amounted to JPY1,918 million.

7.3. Result of discontinuedoperationsThe breakdown of discontinued operations for the fiscal yearsended March 31, 2009 and 2008 is as follows :

7.4. Effect of the disposals on thefinancial positionThe disposal of D&M has impacted the financial position as follows:


Revenue 9 49,553 120,206

Cost of sales (30,372) (76,140)


Selling, general and administrativeexpenses (17,948) (36,817)

Other income (expenses) (1,502) (4,333)

Gain on sale 12,991 -

Profit from operations 12,722 2,916

Net financial expense (729) (1,090)

Share of loss of equity accountedinvestees (net of income tax) - (55)

Profit before tax 11,993 1,771

Income tax expense (1) (2,948)


Attributable to:

Equity holders of the Company 12,166 (1,784)

Minority interest (174) 607


Basic and diluted earnings per share(in JPY) 142 (14)


Cash flow from (used in) discontinued operations

Cash and cash equivalents at the beginning of the period (181)

Net cash used in operating activities (6,037)

Net cash from investing activities 1,712

Net cash from financing activities 7,288

Effect of exchange rate fluctuations on cash held (12)

Cash and cash equivalents at the date of the disposal 2,770

Consideration received, satisfied in cash 23,115

Cash disposed of (2,770)

Net cash inflow 20,345

58

8. ACQUISITIONS OF SUBSIDIARIES AND MINORITY INTERESTS

8.1. Fiscal year ended March 31, 2008On December 14, 2007, HIT completed the acquisition of Tafime, a high-end supplier of high-pressure die-cast aluminum andthermoplastic injection components based in Madrid, Spain. The purchase price of JPY 14,163 million (EUR 90 million) was allocated tospecific assets and liabilities based on their estimated fair values as of the acquisition date, with JPY 7,987 million (EUR 50.7 million)recorded as goodwill. The estimated fair values of assets and liabilities as of the acquisition date were based on preliminary estimatesof fair value and were subject to subsequent revisions. The purchase price for the acquisition of Tafime was partly funded by a capitalincrease at HIT of JPY 5,337 million, which was fully subscribed by the Company and which resulted in additional goodwill of JPY 2,972million. The allocation of the purchase price for the acquisition of Tafime was finalized during the fiscal year ended March 31, 2009 andresulted in a reduction of goodwill of JPY 4,975 million, including JPY 985 million resulting from exchange rate fluctuations.

CME acquired 100% of TDK core, renamed Creative Core, from TDK Corporation. Creative Core is engaged in the production and saleof music, game and educational software and was acquired to diversify CME’s activity and support further growth.

Following the acquisition in February 2006 of 66% of Techno-Metal, formerly known as Mitsubishi Fuso Techno-Metal, and inaccordance with the stock purchase agreement, Asahi Tec purchased the remaining 34% of Techno-Metal on August 29, 2007 for anamount of JPY 1,670 million.

8.2. Fiscal year ended March 31, 2009RHJI increased the capital of Asahi Tec by JPY 7,769 million for purposes of (a) curing a breach of covenants by its US based subsidiaryMetaldyne (JPY 1,800 million on July 15, 2008), (b) providing Metaldyne with additional liquidity (JPY 1,051 million on October 15, 2008),and (c) funding Metaldyne's bond tender (JPY 4,918 million on November 25, 2008). The additional paid in capital in Asahi Tec resultedin additional goodwill of JPY 1,685 million.

On June 20, 2008, September 23, 2008 and January 29, 2009, RHJI subscribed to new shares of Phoenix Seagaia Resort for anaggregate amount of JPY 1,000 million, in order to cover scheduled reimbursements of its debt as well as to provide liquidity forworking capital requirements.

9. REVENUE

(in JPY millions) Continuing operations Discontinued operations Consolidated

2009 2008 2009 2008 2009 2008

Sales 395,060 547,781 49,553 120,206 444,613 667,987

Construction contract revenue 2,145 1,658 - - 2,145 1,658

Property rental income 95 84 - - 95 84

Other revenue - 543 - - - 543

Total 397,300 550,066 49,553 120,206 446,853 670,272

59


10. OTHER INCOME ANDEXPENSES

The restructuring costs of JPY 5,504 million and JPY 2,874million for the years ended March 31, 2009 and 2008 related tothe following subsidiaries:

The loss on disposal of property, plant and equipment of JPY1,764 million and JPY 1,532 million for the years ended March31, 2009 and 2008 related to the following subsidiaries:

11. PERSONNEL EXPENSES

Personnel expenses are included in the following line items ofthe income statement:

At March 31, 2009 and 2008, the total number of employees wasas follows:


Restructuring costs (5,504) (2,874)

Write-down of inventories (2,729) (75)

Loss on disposal of

Property, plant and equipment (1,764) (1,532)

Intangible assets - (2)

R&D expenses (1,635) (340)

Gain on disposal of property, plant andequipment 410 -

Provisions - (118)

Write-down of trade receivables (150) (1)

Others 331 348

Total (11,041) (4,594)


HIT (4,947) (1,924)

Asahi Tec (542) (950)

Niles (15) -

Total (5,504) (2,874)


Asahi Tec (1,601) (1,263)

Niles (78) (242)

Others (85) (27)

Total (1,764) (1,532)


Wages and salaries 77,242 91,955

Compulsory social securitycontributions 11,011 13,207

Other personnel costs 5,036 10,763

Contributions to definedcontribution plans 26 1,069 2,040

Expenses related to definedbenefit plans 26 1,948 1,103

Equity-settled share-basedpayment transactions 27 1,109 841

Others 1,059 377

Total 98,474 120,286


Cost of sales 77,101 95,150

Selling, general and administrativeexpenses 21,373 25,136

Total 98,474 120,286

(In units) 2009 2008

Employees and management 5,485 10,460

Workers 12,588 11,587

Total 18,073 22,047

60

12. IMPAIRMENT OF PROPERTY, PLANT, EQUIPMENT ANDINTANGIBLE ASSETSFor the fiscal year ended March 31, 2009 and March 31, 2008, the impairment charges related to the following subsidiaries:


Property,plant andequipment

GoodwillIntangible

assets otherthan goodwill

TotalProperty,plant and equipment

GoodwillIntangible


Total

Asahi Tec 7,045 30,849 14,892 52,786 - 11,773 17,476 29,249

CME - 3,247 4,398 7,645 - - 197 197

HIT 6,699 6,957 25,186 38,842 - - - -

Niles 232 9,770 - 10,002 - - - -

Phoenix Seagaia Resort 13,993 - (9) 13,984 - - (2) (2)

Total 27,969 50,823 44,467 123,259 0 11,773 17,671 29,444

13. FINANCE INCOME ANDEXPENSES

13.1. Recognized in profit or loss

13.2. Recognized directly in equity

Attributable to:

Recognized in :


Debt extinguishment 39,759 -

Foreign exchange gains

Unrealized 3,881 847

Realized 4,446 1,678

Gain on sale of available for salefinancial assets 3,301 -

Interest income 1,761 2,971

Others 821 373

Finance income 53,969 5,869

Interest expenses (19,154) (22,301)

Foreign exchange loss

Unrealized (6,181) (3,288)

Realized (9,491) (4,150)

Impairment loss on financial assets (1,298) -

Fair value adjustment on financialassets (1,045) -

Loss on sale of financial assets (333) -

Others (1,198) (3,142)

Finance expenses (38,700) (32,881)

Net financial income (expense) 15,269 (27,012)


Foreign currency translation differences (8,165) (3,168)

Net change in fair value of available forsale financial assets

(5,057) 6,646

Net change in fair value available for salefinancial assets transferred to profit or loss

(3,314) -

Cash flow hedges (1,064) 21

Others - (31)

Income tax on income and expenserecognized directly in equity

327 (67)

Total (17,273) 3,401

Equity holders of the Company (13,193) 4,264

Minority interest (4,080) (863)

Finance income (expense) recognizeddirectly in equity, net of income tax

(17,273) 3,401

Fair value reserve (8,367) 6,732

Hedging reserve (652) 16

Translation reserve (4,174) (2,484)

Total (13,193) 4,264

61


14. INCOME TAX BENEFIT

14.1. Income tax benefit in the income statement

14.2. Reconciliation of effective tax rate


Current tax benefit (expense)

Current year (1,531) (4,486)

Adjustment for prior years 2 (45)

Total (1,529) (4,531)

Deferred tax benefit (expense)

Origination and reversal of temporary differences 13,517 (3,309)

Increase (reduction) of tax rate (318) 4,011

Recognition of previously unrecognized tax losses (3,564) 4,037

Change in unrecognized deductible temporary differences (1,874) (22)

Total 7,761 4,717

Total income tax benefit excluding tax on sale of discontinued operations and share of income tax ofequity accounted investees 6,232 186

Income tax benefit from continuing operations 6,233 3,134

Income tax expense from discontinued operations 7 (1) (2,948)

Total income tax benefit in the income statement 6,232 186

(In JPY millions) 2009 2008

Loss for the period 131,271 61,251

Total income tax benefit (expense) 6,232 (991)

Loss before tax 137,503 60,260

Income tax using the corporation tax rate 35.9 % 49,383 38.8 % 23,358

Non-deductible expenses (1.1)% (1,483) (20.9)% (12,580)

Tax exempt income 5.4 % 7,483 0.2 % 126

Tax incentives - - (6.7)% (4,037)

Effect of tax losses utilized (22.5)% (30,929) 6.1 % 3,684

Current year losses for which no deferred tax asset was recognized (6.4)% (8,769) (17.8)% (10,741)

Recognition of previously unrecognized tax losses (2.7)% (3,747) - -

Change of tax rate (2.5)% (3,502) 4.9 % 2,949

Others (1.6)% (2,204) (4.3)% (2,573)

Total 4.5 % 6,232 0.3 % 186

62

14.3. Income tax recognized directly in equity

15. PROPERTY, PLANT AND EQUIPMENT

15.1. Costs, depreciation and impairment loss


Cash flow hedges 327 (67)

Income tax on income and expense recognized directly in equity 327 (67)

(In JPY millions) 2009

Land andbuildings

Machineries andequipments

Fixtures andfittings

Underconstruction Others Total

Costs

Opening balance 288,163 186,916 70,997 8,972 9,504 564,552

Acquisitions through business combinations 39 2,204 - - - 2,243

Additions 1,928 7,903 4,670 6,721 1,101 22,323

Transfer to investment property (380) - - (4) - (384)

Reclassifications 794 2,981 1,904 (7,427) 1,748 -

Disposals (758) (6,956) (3,491) (490) (1,705) (13,400)

Effect of exchange rates (5,224) (14,197) (2,643) (958) (1,092) (24,114)

Others 132 (201) (84) (42) (319) (514)

Closing balance 284,694 178,650 71,353 6,772 9,237 550,706

Depreciation and impairment loss

Opening balance (207,046) (102,562) (57,883) (12) (4,403) (371,906)

Depreciation charge for the period (2,758) (17,682) (5,231) - (1,889) (27,560)

Impairment losses (15,593) (10,816) (798) (40) (722) (27,969)

Reclassifications (520) 435 89 - (4) -

Disposals 334 5,124 2,991 - 812 9,261

Effect of exchange rates 943 7,481 1,411 - 594 10,429

Others 322 (949) (11) 2 237 (399)

Closing balance (224,318) (118,969) (59,432) (50) (5,375) (408,144)

Carrying amount at March 31, 2009 60,376 59,681 11,921 6,722 3,862 142,562

63



Land andbuildings

Machineries andequipments

Fixtures andfittings

Underconstruction Others Total

Costs

Opening balance 287,954 193,784 73,292 8,133 10,523 573,686

Acquisitions through business combinations 476 3,245 163 - - 3,884

Additions 1,923 6,358 5,769 12,311 1,168 27,529

Revaluations (14) - - - - (14)

Transfer to investment property - - - (271) - (271)

Transfer to assets held for sale or discontinuedoperations 175 (8,963) (3,164) (595) (1,769) (14,316)

Reclassifications - 5,698 536 (6,245) 11 -

Disposals (954) (4,865) (4,553) (574) (231) (11,177)

Effect of exchange rates (1,868) (8,826) (989) (627) (502) (12,812)

Others 471 485 (57) (3,160) 304 (1,957)

Closing balance 288,163 186,916 70,997 8,972 9,504 564,552

Depreciation and impairment losses

Opening balance (199,831) (93,826) (58,303) (200) (5,012) (357,172)

Depreciation charge for the period (3,504) (19,654) (5,632) - (1,672) (30,462)

Impairment losses (619) (365) (10) (13) - (1,007)

Transfer to assets held for sale or discontinuedoperations (4,250) 5,020 2,147 174 1,729 4,820

Disposals 599 2,991 3,227 - 99 6,916

Effect of exchange rates 590 3,461 700 - 99 4,850

Others (31) (189) (12) 27 354 149

Closing balance (207,046) (102,562) (57,883) (12) (4,403) (371,906)

Carrying amount at March 31, 2008 81,117 84,354 13,114 8,960 5,101 192,646

64

15.2. Leased assetsAt March 31, 2009 and 2008, property, plant and equipmentcomprised leased assets amounting to JPY 2,894 million and JPY2,290 million, respectively, net of depreciation.

15.3. Impairment lossesAn impairment test was performed on the carrying values ofcertain property, plant and equipment, for which an indication ofimpairment existed at March 31, 2009.

Following review of the recoverable amount, the Companyrecorded an impairment loss of JPY 27,969 million, broken downby consolidated subsidiary as follows :

The recoverable amounts were determined using the incomeapproach, based on the following assumptions:

• Cash-flows were projected based on the consolidatedsubsidiaries' managements 5-year business plan. For thecalculation of the terminal or residual value for the periodbeyond the discrete projections, the Company used theGordon Growth Model and applied a long-term growth rateof 2.5% for Asahi Tec's US based subsidiary Metaldyne,between (2.0)% and 2.5% for HIT, and 0.5% for PhoenixSeagaia Resort.

• The present value of estimated future cash flows andresidual cash flows was determined using the weightedaverage cost of capital (WACC) of a group of comparable, publicly traded companies. The calculation utilized (a) a peergroup average as pretax required cost of debt and (b) theindustry debt-to-capital ratio and the observed median ofbetas in the group. The resulting WACC, which was used inthe analysis, was between 15.0% and 16% for Asahi Tec's USbased subsidiary Metaldyne, between 7.9% and 11.4% forHIT, and 7.0% for Phoenix Seagaia Resort.

The calculations of the value in use have been based onjudgments, estimates and assumptions. The calculations areparticularly sensitive to above key assumptions. Any change ininterest rates, risk premiums, long-term growth rates andactual operating performance, could have a material adverseimpact on the concluded recoverable amounts.

A decrease of the growth rate by 1% and an increase of thediscount rate by 1% would result in the following additionalimpairment charges as follows:


Asahi Tec 7,045 603

HIT 6,699 -

Niles 232 -

Phoenix Seagaia Resort 13,993 404

Total 27,969 1,007

(in JPY millions) Growth rate Discount rate

Asahi Tec 275 892

HIT - -

Phoenix Seagaia Resort 1,200 2,163

Total 1,475 3,055

65


16. INTANGIBLE ASSETS

16.1. Costs, amortization and impairment loss(in JPY millions) 2009

GoodwillPatents andtrademarks

Developmentcosts

Software Others Total

CostsOpening balance 91,290 132,345 2,320 5,269 618 231,842

Acquisitions through business combinations 1,685 - - - - 1,685Additions - - 1,000 243 47 1,290Reclassifications (3,990) 3,990 - - - -Disposals (801) (388) (129) (89) (22) (1,429)Effect of exchange rates (3,991) (15,331) (737) 75 (2) (19,986)Others 9 (59) (1) 162 - 111

Closing balance 84,202 120,557 2,453 5,660 641 213,513Amortization and impairment lossesOpening balance (11,061) (56,173) (596) (2,603) (164) (70,597)

Amortization charge for the period (1) (4,782) (162) (1,386) (387) (6,718)Impairment losses (50,823) (43,854) (611) (2) - (95,290)Disposals 388 - 127 294 20 829Effect of exchange rates 732 7,965 165 89 2 8,953Others 59 153 1 (96) - 117

Closing balance (60,706) (96,691) (1,076) (3,704) (529) (162,706)Carrying amount at March 31, 2009 23,496 23,866 1,377 1,956 112 50,807


GoodwillPatents andtrademarks

Developmentcosts

Software Others Total

CostsOpening balance 92,485 149,186 4,719 6,151 2,590 255,131

Acquisitions through business combinations 12,776 - - 698 6 13,480Additions - 109 617 427 23 1,176Disposals - - (397) (20) - (417)Transfer to assets held for sale or discontinuedoperations

(7,248) (10,975) (2,618) (1,713) (1,079) (23,633)

Effect of exchange rates (6,830) (6,526) (2) (207) (34) (13,599)Others 107 551 1 (67) (888) (296)

Closing balance 91,290 132,345 2,320 5,269 618 231,842Amortization and impairment lossesOpening balance (621) (37,322) (1,288) (2,640) (140) (42,011)

Amortization charge for the period - (7,173) (260) (1,337) (30) (8,800)Impairment losses (11,773) (17,671) - - - (29,444)Disposals - - 397 33 92 522Transfer to assets held for sale or discontinuedoperations

- 3,273 533 1,320 - 5,126

Effect of exchange rates 1,351 3,072 - 14 - 4,437Others (18) (352) 22 7 (86) (427)

Closing balance (11,061) (56,173) (596) (2,603) (164) (70,597)Carrying amount at March 31, 2008 80,229 76,172 1,724 2,666 454 161,245

66

16.2. Impairment losses16.2.1. AnalysisIn accordance with IAS 36 (Impairment of Assets), the Company reviewed the carrying values of its intangible assets at March 31, 2009and 2008. As a result the Company recorded impairment charges of JPY 95,290 million and JPY 29,444 million, respectively.

The impairment charge for the fiscal year ended March 31, 2009 and March 31, 2008 mainly related to goodwill and intangible assetssuch as patents, tradename and trademark and certain customer relationships.

For the fiscal year ended March 31, 2009 and March 31, 2008, the impairment related to the following subsidiaries:


GoodwillIntangible


Total GoodwillIntangible


Total

Asahi Tec 30,849 14,892 45,741 11,773 17,476 29,249

CME 3,247 4,398 7,645 - 197 197

HIT 6,957 25,186 32,143 - - -

Niles 9,770 - 9,770 - - -

Phoenix Seagaia Resort - (9) (9) - (2) (2)

Total 50,823 44,467 95,290 11,773 17,671 29,444

16.2.2. Impairment testing for cash generatingunits containing goodwillGoodwill is allocated to the Company’s cash generating units(“CGU”). Except for Metaldyne and HIT, the Company identifiedits operating segments as primary business segments asdisclosed in note 6 to the consolidated financial statements asCGU’s. For Metaldyne, goodwill has been allocated to itsoperating segments, which were identified as CGU’s at the timeof the acquisition of Metaldyne by Asahi Tec. HIT identified itstwo main geographical business segments as CGU's.

Goodwill at March 31, 2009 and 2008 can be broken down byCGU as follows :

Goodwill decreased from JPY 80,229 million to JPY 23,496million due to the following:

The Company determined the potential impairment of its CGU'scontaining goodwill by comparing their carrying value, includinggoodwill, with their recoverable amount. The assessment of therecoverable amount included a review and analysis of (a)publicly observed market prices for the publicly listedconsolidated subsidiaries, (b) valuation multiples for groups ofpublicly listed, comparable companies and (c) the projectedfinancial performance based on budgets and business plansprepared by the consolidated subsidiaries' respectivemanagements.

The Company retained the value in use to determine therecoverable amount of the CGU's containing goodwill. The fairvalue of the Company's publicly listed subsidiaries resulted inlower amounts and could not be reliably determined for theprivately held subsidiaries. The value in use for each of AsahiTec, HIT, Niles, CME and Metaldyne's CGU's was determined bydiscounting their future cash flows, based on the subsidiaries'


Asahi Tec

Asahi Tec 1,110 3,986

Metaldyne

Chassis North America - 4,315

European components 2,206 8,108

Vibration control products - 2,384

Sintered products 1,401 11,150

Powertrain - 4,031

CME 1,621 4,868

HIT - -

Europe 10,669 23,909

Americas 4,626 5,844

Niles 1,863 11,634

Total 23,496 80,229


Opening balance 80,229

Impairment losses (50,823)

Final purchase price allocation of Tafime (3,990)

Effect of exchange rates (3,259)

Additional goodwill at Asahi 1,685

Disposals during the period (413)

Others (67)

Closing balance 23,362

67


managements 5 year business plans. For the calculation of the terminal or residual value for the period beyond the discreteprojections, the Company used the Gordon Growth Model. The resulting residual values were validated by comparing the impliedEBITDA valuation multiples with currently applicable market multiples.

The present value of estimated future cash flows and residual cash flows was determined using the WACC of a group of comparablepublicly traded companies. The calculation utilized (a) a peer group average as pre-tax required cost of debt, except for CME for whichthe effective interest rate on its debt was used as a proxy for the cost of debt and (b) the industry debt-to-capital ratio and theobserved median of betas in the group.

The main assumptions used in determining the recoverable amount of the various CGU's can be summarized as follows:

The calculations of the value in use have been based on judgments, estimates and assumptions. The calculations are particularlysensitive to above key assumptions. Any change in interest rates, risk premiums, long-term growth rates and actual operatingperformance, could have a material adverse impact on the concluded recoverable amounts. The conclusions of the income basedapproach were corroborated by the market multiple approach for comparable publicly traded companies.

16.2.3. Impairment testing for intangible assets other than goodwillIn view the economic downturn and its impact on the consolidated subsidiaries’ projected future cash flows, an impairment test hasbeen performed on certain intangible assets.

The Company recorded an aggregate impairment charge of JPY 44,467 million on certain intangible assets of HIT (JPY 25,186 million),Metaldyne (JPY 14,892 million) and CME (JPY 4,398 million). The impairment charges related to various intangible assets and resultedfrom the calculation of their value in use, which was determined using the Gordon Growth model. The main assumptions can besummarized as follows :

(In %) 2009 2008

Growth rate WACC Growth rate WACC

Asahi Tec 0.0 7.1 1.6 8.5

CME 1.0 11.0 4.0 6.2

HIT 1.0 8.9 1.0 8.8

Metaldyne 2.5 21.0 3.0 12.5

Niles 0.0 8.3 0.5 6.4

2009 2008

Growth rate WACC Growth rate WACC

CME Between 0% and (7.0)% 9.0% 0% 9.0%

HIT Between 2.5%and (2.0)%

Between 7.9%and 11.4% - -

Metaldyne 2.5% Between 15.0% and 21.0% 3% Between 12.0%

and 13.5%

68

The calculations of the value in use have been based on judgments, estimates and assumptions. The calculations are particularlysensitive to above the growth rate and WACC used. Any change in interest rates, risk premiums, long-term growth rates and actualoperating performance, could have a material adverse impact on the concluded recoverable amounts.

A decrease of the growth rate by 1% and an increase of the discount rate by 1% would result in the following additional impairmentcharges:

17. INVESTMENTS IN EQUITY ACCOUNTED INVESTEES

17.1. Financial informationsRHJI, through its wholly owned subsidiary RHJ Shaklee Holding S.A., holds a 42.5% equity investment in Shaklee, a provider ofpremium quality and natural nutrition, personal care, household and air and water treatment products. Shaklee is listed on theJasdaq Securities Exchange, Inc. under the ticker 8205. During the fiscal year ended March 31, 2009, RHJI acquired 457,000 additionalexisting shares of Shaklee for an aggregate consideration of JPY 276 million, increasing its total ownership from 40.7%.

RHJI holds a 20.0% ownership interest in U-shin, a Japanese manufacturer of electromechanical components for automobiles. U-shinis listed on the Tokyo Stock Exchange, Inc. under the ticker 6985.T. As U-shin’s fiscal year ends on November 30, the Company usedfinancial information for the twelve months ended February 28, 2009 and 2008, compiled from publicly disclosed quarterly financialinformation, for purposes of preparing the Company’s consolidated financial statements as of and for the fiscal year ended March 31,2009 and 2008.

RHJI holds 49.9% ownership interest in SigmaXYZ, a Japanese ICT consulting venture with Mitsubishi Corporation.

The summary financial information (100%) is as follows:

(in JPY millions) Goodwill Intangible assets other than goodwill Total

Growth rate WACC Growth

rate WACC Growth rate WACC

Asahi Tec - - - - - -

CME 60 119 109 107 169 226

HIT 6,664 6,789 123 660 6,787 7,449

Metaldyne 443 943 207 543 649 1,486

Niles 953 1,811 - - 953 1,811

Total 8,120 9,662 439 1,310 8,558 10,972

(in JPY millions) Shaklee SigmaXYZ U-shin

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

February 28,2009

February 28,2008

Assets

Non-current 19,725 21,325 1,015 - 24,712 30,819

Current 11,725 11,163 374 - 43,614 44,517

Equity and liabilities

Equity 4,139 5,229 417 - 30,653 33,854

Non-current liabilities 19,360 20,258 193 - 13,907 12,976

Current liabilities 7,951 7,001 779 - 23,766 28,506

Revenue 24,685 27,322 1,152 - 70,772 77,963

Profit (loss) for the year 1,705 1,441 (1,529) - (282) 339

69


17.2. Changes during the year

The share of loss of equity accounted investees of JPY 10,605 million is split as follows:

17.3. Goodwill and impairment of goodwillThe goodwill relating to equity accounted investees is as follows:

For purposes of the goodwill impairment test, the Company recognized impairment loss on Shaklee and U-shin for the fiscal yearended March 31, 2009 for respectively JPY 6,050 million and JPY 2,330 million. In addition to the goodwill impairment, the Companyrecognized an impairment on its financial asset held in U-shin for JPY 2,508 million during the fiscal year ended March 31, 2009.

The recoverable amount of RHJI's investments in Shaklee and U-shin was based on the estimation of their fair value, which wasdetermined by applying publicly observed valuation multiples on their current and projected earnings, derived from their publiclydisclosed forecasts for the fiscal year ending March 31, 2010.


Opening balance 22,321 21,633

Acquisitions 1,361 -

Net results 283 858

Impairment losses (10,888) -

Dividends (352) -

Effect of exchange rates (298) (12)

Others (122) (158)

Closing balance 12,305 22,321

(in JPY millions) Profit (loss)for the period

Impairment loss Total

Shaklee 725 (6,050) (5,325)

SigmaXYZ (763) - (763)

U-shin (56) (4,838) (4,894)

Equity accounted investees at Asahi Tec 377 - 377

Total 283 (10,888) (10,605)

(in JPY millions) Note Shaklee SigmaXYZ U-shin

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

Investment 12,520 12,244 1,085 - 8,038 8,038

Equity as of acquisition date 5,139 5,139 2,000 - 28,538 28,538

Ownership 35 42.5% 40.7% 49.0% - 20.0% 20.0%

Goodwill 4,102 10,152 87 - - 2,330

70

18. OTHER INVESTMENTS

The available for sale financial assets are recorded at fair market value for the fiscal year ended March 31, 2009 and March 31, 2008and the details are as follows:

The Company’s exposure to credit, currency and interest rate risks related to other investments is disclosed in note 30. During thefiscal year ended March 31, 2009, RHJI disposed of a non-controlling minority investment for JPY 9,030 million, initially acquired forJPY 5,600 million. At March 31, 2008, this investment was recorded at a fair value that equaled the ultimate selling price.

19. DEFERRED TAX ASSETS AND LIABILITIES

19.1. Recognized deferred tax assets and liabilitiesDeferred tax assets and liabilities are attributable to the following:


Available for sale financial assets 5,636 19,654

Cash guarantees and deposits 104 104

Derivatives used for hedging 117 141

Others - 3,104

Total 5,857 23,003


Commercial International Bank of Egypt ("CIB") 5,353 10,369

Others undisclosed investments 283 9,285

Total 5,636 19,654


Assets Liabilities Net Assets Liabilities Net

Property, plant and equipment (172) (11,933) (12,105) 2,243 (26,028) (23,785)

Intangible assets 6 (10,560) (10,554) 90 (21,595) (21,505)

Other investments 1 (19) (18) 30 (30) -

Inventories 426 (46) 380 529 (331) 198

Loans and borrowings 1 - 1 13 (81) (68)

Employee benefits 3,037 - 3,037 8,659 - 8,659

Provisions 165 - 165 769 (54) 715

Other items 4,762 (2,172) 2,590 3,838 (1,262) 2,576

Tax value of loss carry-forwards 4,500 - 4,500 12,225 - 12,225

Total 12,726 (24,730) (12,004) 28,396 (49,382) (20,985)

Set off of tax (7,728) 7,728 - (24,462) 24,462 -

Net tax assets (liabilities) 4,998 (17,002) (12,004) 3,934 (24,920) (20,985)

71


19.2. Movement in temporary differences during the period

19.3. Unrecognized deferred tax assetsDeferred tax assets have not been recognized in respect of the following items:


Opening balance

Change in theconsolidation

scope

Effect of exchange rates

Recognized in profit or loss

Recognized in equity

Closing balance

Property, plant and equipment (23,785) (643) 871 11,070 382 (12,105)

Intangible assets (21,505) (1,138) 802 10,311 976 (10,554)

Other investments - - - (97) 79 (18)

Inventories 198 - 30 163 (11) 380

Loans and borrowings (68) - 7 62 - 1

Employee benefits 8,659 - (66) (5,556) - 3,037

Provisions 715 - (11) (539) - 165

Other items 2,575 88 92 (343) 178 2,590

Tax value of loss carry-forwards 12,226 - (399) (7,312) (15) 4,500

Net tax assets (liabilities) (20,985) (1,693) 1,326 7,759 1,589 (12,004)


Opening balance

Change in theconsolidation

scope

Effect ofexchange rates

Recognized in profit or loss

Recognized in equity

Othermovements

Closing balance

Property, plant and equipment (31,793) 874 1,330 5,804 - - (23,785)

Intangible assets (30,538) 2,746 1,571 4,716 - - (21,505)

Other investments (761) 148 - 595 18 - -

Inventories 687 (1,089) (35) 635 - - 198

Loans and borrowings - - (14) (54) - - (68)

Employee benefits 9,508 (2,808) (140) 2,099 - - 8,659

Provisions 1,885 (1,044) (5) (121) - - 715

Other items 7,517 (1,530) (1,109) (1,084) (54) (1,165) 2,575

Tax value of loss carry-forwards 20,629 (186) (344) (7,873) - - 12,226

Net tax assets (liabilities) (22,866) (2,889) 1,254 4,717 (36) (1,165) (20,985)


Deductible temporary differences 12,103 6,554

Tax losses 29,696 42,640

Total 41,799 49,194

72

The decrease of the unrecognized deferred tax assets from JPY49,194 million as of March 31, 2008 to JPY 41,799 million as ofMarch 31, 2009 is mainly due to :

19.4. Tax lossesAt March 31, 2009, RHJI and its subsidiaries had net operatinglosses in aggregate of approximately JPY 97,707 million, whichare available to be offset against future taxable income. Theselosses, if not utilized, will expire as follows :

The decrease of the tax losses carried forward from JPY 146,614million as of March 31, 2008 to JPY 97,707 million as of March31, 2009 is mainly due to :


Deductible temporary differences

Tax losses Total

Opening balance 6,554 42,640 49,194

Utilization - (11,168) (11,168)

Additions 4,831 (919) 3,912

Effect of exchangerates

1,133 1,033 2,166

Recognition (415) (1,890) (2,305)

Closing balance 12,103 29,696 41,799


Less than one year 5,291 28,345

Between one and five years 13,286 18,159

More than five years 79,130 103,110

Total 97,707 149,614


Opening balance 149,614

Effect of exchange rates (2,727)

Tax losses expired during the period (28,345)

Tax losses utilized following debt extinguishment at Metaldyne (28,522)

Legal restructuring at HIT (10,421)

Additions for the period 18,257

Others (149)

Closing balance 97,707

20. INVENTORIES

Inventories are stated net of allowances, which amounted to JPY 1,272 million and JPY 1,062 million at March 31, 2009 and 2008,respectively.


Gross Allowance Net Gross Allowance Net

Raw materials and consumables 9,582 (50) 9,532 14,613 (6) 14,607

Work in progress 5,898 (864) 5,034 10,146 (883) 9,263

Finished goods 11,504 (358) 11,146 14,039 (173) 13,866

Total 26,984 (1,272) 25,712 38,798 (1,062) 37,736

73


21. TRADE AND OTHERRECEIVABLES

Trade receivables are shown net of impairment losses whichamounted to JPY 381 million and JPY 372 million at March 31,2009 and 2008, respectively.

The decrease of trade receivables and prepayments is mainlydue to the decrease of revenue and the foreign exchange impactof USD and EUR versus JPY at March 31, 2009.

Certain consolidated businesses have entered into factoringagreements with financial institutions whereby trade receivablesare sold. As of March 31, 2009 and 2008, JPY 12,360 million andJPY 13,422 million worth of receivables were sold under theseagreements and derecognized accordingly as no financial risk isretained.

The construction contracts in progress included in the tradereceivables represented a total amount of JPY 991 million andJPY 1,242 million for the years ended March 31, 2009 and 2008respectively.

Further information on the Company’s exposure to credit-andforeign currency risks related to trade and other receivables isdisclosed in note 30.

22. CASH AND CASHEQUIVALENTS

Further information on the Company’s exposure to credit,interest rate and foreign currency risks related to cash and cashequivalents is disclosed in note 30.


Trade receivables andprepayments 33,584 65,915

Other receivables 3,924 8,173

Total 30 37,508 74,088


Cash at bank and at hand 20,594 19,911

Term deposits 50,472 52,612

Others 1,270 -

Cash and cash equivalents 72,336 72,523

Bank overdrafts (1) (65)

Cash and cash equivalents in thestatement of cash flows 72,335 72,458

74

23. EQUITY

23.1. Reconciliation of movement in equity

(in JPY millions) Attributable to equity holders of the CompanyMinority interest

TotalequityShare

capitalShare

premiumTranslation

reserve

Reserve fortreasuryshares

Fair valuereserve

Other reserves

Retainedearnings

Total

Balance at April 1, 2007 88,491 91,334 3,263 - 2,113 24,011 (12,287) 196,925 64,177 261,102

Share-based payments - - - - - - 838 838 326 1,164

Purchase of treasury shares - - - (2,329) - - - (2,329) - (2,329)

Total recognized income andexpense - - (2,484) - 6,732 16 (33,221) (28,957) (28,893) (57,850)

Scope changes - - 312 - (5) 101 - 408 2,867 3,275

Dividends - - - - - - - - (256) (256)

Others - - - - - 13 - 13 107 120

Balance at March 31, 2008 88,491 91,334 1,091 (2,329) 8,840 24,141 (44,670) 166,898 38,328 205,226

Balance at April 1, 2008 88,491 91,334 1,091 (2,329) 8,840 24,141 (44,670) 166,898 38,328 205,226

Share-based payments - - - - - - 1,285 1,285 126 1,411

Purchase of treasury shares - - - (536) - - - (536) - (536)

Reclassifications - - - - - (1,319) 1,319 - - -

Total recognized income andexpense - - (4,174) - (8,367) (652) (116,043) (129,236) (19,308) (148,544)

Scope changes - - 2,208 - (48) (251) - 1,909 (11,992) (10,083)

Dividends - - - - - - - - (8) (8)

Balance at March 31, 2009 88,491 91,334 (875) (2,865) 425 21,919 (158,109) 40,320 7,146 47,466

23.2. Share capital and share premiumAt March 31, 2009, the share capital of RHJI amounted to EUR664,424,086 and is represented by 85,545,547 shares withoutnominal value. All shares are listed on Euronext Brussels, havethe same rights and par accounting value and are fully paid up.Each share entitles the holder to one voting right.

The Board of Directors is expressly authorized, in the event of apublic takeover bid for the securities of RHJI, to increase RHJI’scapital, in accordance with Article 607 of the Belgian CompaniesCode. Such authority was granted for a period of five yearscommencing April 26, 2005. If the Board of Directors decides toincrease the capital of RHJI pursuant to its authority under thisArticle, such increase will be deducted from the remaining partof the authorized capital, which amounted to EUR 663,955,470(JPY 88,429 million) at March 31, 2009.

The Extraordinary Shareholders' meeting held on September 16,2008, renewed the general share buy-back authorization for an18 month period beginning on September 16, 2008 as well as theshare-buy back authorization for "serious and imminent harm"circumstances, under which the Board of Directors is authorizedto purchase own shares for a period of three years from the dateof publication of an extract of the minutes of the ExtraordinaryShareholders' meeting.

Based on transparency declarations received by RHJI inaccordance with Belgian rules and RHJI’s Articles ofAssociation, five shareholders have notified RHJI of theirholdings (see Shareholders’ Information, p. 124).

23.3. Translation reserveThe translation reserve comprises all foreign currency exchangedifferences arising from the translation of the financialstatements of foreign operations.

23.4. Reserve for treasury sharesThe reserve for the Company's own shares comprises the cost ofthe Company's shares held by RHJI. At March 31, 2009, RHJIheld 1,145,004 shares of its own shares compared to 1,323,513shares as at March 31, 2008. During the fiscal year endedMarch 31, 2009, RHJI purchased 627,247 of its treasury sharesand distributed 805,756 shares as a result of certain sharegrants and the vesting of restricted stock units granted tocertain employees on October 1, 2007.

75


23.5. Fair value reserveThe fair value reserve comprises the gains or losses on availablefor sale financial assets, except for impairment losses andforeign exchange gains and losses, until the financial assets arederecognized.

23.6. Hedging reserveAs at March 31, 2009, and 2008, the hedging reserve is includedin the consolidation reserves for respectively JPY (573) millionand JPY 21 million. The hedging reserve comprises the effectiveportion of the accumulated net change in the fair value of thecash flow hedging instruments related to hedged transactionsthat have not yet occurred.

23.7. Minority interest23.7.1. Breakdown by portfolio company

23.7.2. Movement during the period

In accordance with IAS 27, losses attributable to minorityinterest of HIT and Metaldyne for respectively JPY 6,210 millionand JPY 4,388 million were attributed to the equity holders of theCompany as losses can't be allocated to minority interest,except if they would have a binding obligation to cover suchlosses.


Asahi Tec 5,935 16,365

CME 844 5,206

D&M - 12,671

HIT - 3,396

Niles 271 576

Others 96 114

Total 7,146 38,328



Share of net loss of subsidiaries (25,826) (28,030)

Exit from consolidation scope

D&M

Balance at the beginning of theperiod

(12,671) -

Share of net loss during the period 518 -

Asahi Tec - (638)

HIT (181) -

Impact of IAS 27 10,598 -

Exchange losses (3,938) (681)

Changes in ownership 343 3,505

Others (25) (5)


76

24. EARNINGS PER SHAREThe calculation of basic and diluted earnings per share is based on the loss for the period attributable to shareholders of the Companyand the weighted average number of shares outstanding during the year, net of treasury shares.


Continuing operations

Discontinuedoperations

TotalContinuing operations


Total

Profit (loss) for the period (143,263) 11,992 (131,271) (60,074) (1,177) (61,251)

Less share of minority interest in the profit (loss) for theperiod

(15,054) (174) (15,228) (28,637) 607 (28,030)

Profit (loss) for the period attributable to shareholders ofthe Company

(128,209) 12,166 (116,043) (31,437) (1,784) (33,221)

Issued ordinary shares at April 1, net of treasury shares 84,222,034 84,222,034 84,222,034 85,545,547 85,545,547 85,545,547

Weighted effect of treasury shares

Acquired during the period (381,249) (381,249) (381,249) (445,091) (445,091) (445,091)

Distributed during the period 376,805 376,805 376,805 - - -

Weighted average number of ordinary shares as at March31, net of treasury shares

84,217,590 84,217,590 84,217,590 85,100,456 85,100,456 85,100,456

Basic and diluted profit (loss) per share (in JPY) (1,522) 144 (1,378) (369) (21) (390)

25. LOANS AND BORROWINGSConsolidated indebtedness outstanding consisted of borrowings under (1) senior credit facilities, (2) subordinated credit facilities, (3)term loans from non-banker lenders, (4) other secured and unsecured bank loans and (5) finance leases. At March 31, 2009, JPY129,707 million of borrowings were outstanding under the senior credit facilities compared to JPY 155,356 million at March 31, 2008.The facilities generally contain a number of financial covenants, other customary terms and conditions and/or are collaterized bycertain assets of the business and shares of the subsidiaries. The subordinated debt amounted to JPY 31,217 million at March 31,2009 compared to JPY 57,572 million at March 31, 2008. The subordinated debt generally has secondary claims over the samecollateral as provided for the senior credit facilities, in addition to requiring the consolidated businesses to comply with the same kindof covenants.Term loans from non-banker lenders and other secured and unsecured bank loans amounted to JPY 23,171 million atMarch 31, 2009 compared to JPY 9,810 million at March 31, 2008. Obligations under finance leases amounted to JPY 4,916 million atMarch 31, 2009 compared to JPY 5,410 million at March 31, 2008.

This note provides information about the contractual terms of the Company’s loans and borrowings. For more information about theCompany’s exposure to interest rate and foreign currency risk, see note 30.


Non-current Current Total Non-current Current Total

Bank loans (including bank overdrafts) 75,792 85,132 160,924 184,853 28,075 212,928

Finance lease liabilities 2,665 2,251 4,916 3,292 2,118 5,410

Other loans and borrowings 15,320 7,851 23,171 8,624 1,186 9,810

Total 93,777 95,234 189,011 196,769 31,379 228,148

77


The loans and borrowings are as follows:

25.1. Bank loans25.1.1. Terms and debt repayment scheduleBank loans are payable as follows:



Asahi Tec 73,601 5,765 79,366 110,128 7,329 117,457

CME 217 1,240 1,457 297 220 517

HIT 2,639 68,992 71,631 73,439 137 73,576

Niles 9,824 18,502 28,326 4,722 23,019 27,741

Phoenix Seagaia Resort 6,411 733 7,144 7,106 671 7,777

RHJI and its management companies - 2 2 3 3 6

RHJ Shaklee Holding 1,085 - 1,085 1,074 - 1,074

Total 93,777 95,234 189,011 196,769 31,379 228,148


Senior creditfacilities

Subordinatedcredit facilities

TotalSenior credit

facilitiesSubordinated

credit facilitiesTotal

Less than one year 60,676 24,456 85,132 28,075 - 28,075

Between one and five years 68,910 6,761 75,671 75,292 27,478 102,770

More than five years 121 - 121 51,989 30,094 82,083

Total 129,707 31,217 160,924 155,356 57,572 212,928

25.1.2. Asahi TecAt March 31, 2009, Asahi Tec had JPY 79,367 million inindebtedness outstanding, of which JPY 52,878 million at its USsubsidiary Metaldyne. The decrease in total indebtedness by JPY38,090 million compared to March 31, 2008, mainly resultedfrom (a) Metaldyne’s successful tender for JPY 30,422 million,net of customer loans, (b) the cancellation of JPY 3,134 millionsenior subordinated notes of Metaldyne held by Chrysler and (c)the cancellation of JPY 6,082 million of preferred shares of AsahiTec, also held by Chrysler.

The bond tender was financed by a USD 50 million investmentfrom Asahi Tec, funded by RHJI’s subscription to newly issuedshares of Asahi Tec for JPY 4,917 million, increasing itsownership in Asahi Tec from 45.3% to 60.18%. In addition,certain of Metaldyne’s leading customers provided Metaldynewith USD 60 million funding for the bond tender offer, in theform of loans to Metaldyne. From the total proceeds of USD 110million, Metaldyne used USD 60.1 million to pay for the tenderedbonds.

Although at March 31, 2009, Metaldyne was in compliance withthe financial covenants of the term, revolving and synthetic

facilities, it defaulted on a payment of interest that fell dueunder its term loan and entered into a forbearance agreementwith its lenders until May 30, 2009. Despite this forbearanceagreement and Asahi Tec’s continued support and the resultingreduction of Metaldyne’s indebtedness, Metaldyne’s financialperformance was heavily affected by car production in the USthat continued to fall beyond expectations. Faced with its ownchallenges, Asahi Tec was no longer in a position to furthersupport Metaldyne, which on May 27, 2009, filed a voluntarypetition to reorganize under Chapter 11 of the U.S. BankruptcyCode, shortly after Chrysler, one of its main customers, alsofiled for protection under Chapter 11.

Excluding Metaldyne, Asahi Tec had JPY 26,488 million inindebtedness outstanding at March 31, 2009 compared to JPY34,929 million at March 31, 2008, the decrease mainly resultingfrom the above mentioned cancellation by Chrysler of preferredshares worth JPY 6,082 million. Asahi Tec’s indebtednessincluded (a) JPY 15,356 million senior credit facilities, (b) JPY4,000 million subordinated bank debt, (c) JPY 1,652 millionleasing obligations and (d) JPY 5,203 million preferred securitiesclassified as debt issued to former holders of Metaldyne notes.

78

Excluding Metaldyne, Asahi Tec’s effective interest rates on itsconsolidated borrowings under its senior and subordinatedcredit facilities at March 31, 2008 were 2.75% and 4.66%respectively. Asahi Tec is likely to breach certain financialcovenants under its credit agreements in the course of the fiscalyear ending March 31, 2010. Asahi Tec is currently seeking awaiver of covenants from its lenders. In the event that Asahi Tecwere not successful in obtaining such a waiver, it would be indefault of its obligations under its credit agreements, whichwould cast significant doubt on Asahi Tec’s ability to operate as agoing concern.

25.1.3. HITAt March 31, 2009, HIT had outstanding indebtedness of EUR546.1 million (JPY 71,631 million) compared to EUR 467.5 million(JPY 73,576 million) at March 31, 2008. The credit facilities atMarch 31, 2009, included EUR 317.5 million senior and EUR 99.5million mezzanine facilities, EUR 33.4 million revolving facilityand a EUR 90.8 million PIK (Payable in Kind) facility. OnDecember 29, 2008, HIT reached several agreements in view ofthe liquidity shortfall that resulted from collapsing demand.HIT’s lenders agreed to a standstill, originally until March 31,2009, but extended twice. Furthermore, certain of HIT’s maincustomers and a key supplier provided for additional liquidity ofEUR 30 million and compensation for reduced volumes. Finally,RHJI provided secured financing up to EUR 20 million, in theform of factoring -and sale and lease back arrangements.

During the standstill, the Company and a committee of HIT’ssenior lenders agreed to a capital restructuring proposal thatwas approved by HIT’s lenders on May 25, 2009 and closed inJuly 2009. As part of the restructuring, the Company investedEUR 50 million in exchange for a controlling 51% stake inHonsel. The remaining 49% of the group is held by Honsel’sformer senior term lenders following a debt-for-equity swap,which resulted in HIT’s total outstanding secured term debt ofapproximately EUR 507.8 million being reduced to EUR 140million, consisting of EUR 110 million senior term loan and EUR30 million mezzanine term loan, all of which are held byHonsel’s former senior term lenders. Honsel’s existing EUR 40million revolving credit facility, as well as EUR 50 million offinancing from the Company and certain of Honsel’s keycustomers and suppliers, remained in place.

The interest rates on Honsel’s new senior term are determinedas Euribor plus 5%. According to the terms of the new seniorcredit, Honsel must ensure that, during a period of three yearsafter the closing date, it has hedging arrangements in place tocause at least 66 and 2/3% of the outstanding amounts underthe senior debt and the Customer Financing to bear interest at afixed or capped rate. The new mezzanine facility will pay Euribor+ 5% cash interest and 5% PIK interest. Honsel may at any timeduring the life of the Mezzanine Facility elect to have all interestcapitalized at the end of each interest period, provided that,following the exercise of such election by the Company, interestshall accrue at a fixed rate of 16.00% PIK per annum.

25.1.4. NilesAt March 31, 2009, Niles had JPY 28,326 million of indebtednessoutstanding on a consolidated basis, compared to JPY 27,741million a year earlier. The credit facilities included senior termloans (JPY 10,455 million), revolving loans (JPY 7,997 million), anunsecured bullet loan (JPY 2,167 million), finance leases (JPY2,245 million), a bullet loan secured by a cash deposit from RHJI(JPY 2,500 million) and non-bank debt from a major stakeholder(JPY 2,500 million).

On May 20, 2009, Niles bolstered its capital structure through atotal capital injection of JPY 6,000 million of which JPY 3,500million was provided by the Company and JPY 2,500 million bythe major stakeholder that had provided financing of JPY 2,500million previously. Part of the proceeds was used to repay JPY2,500 million of short-term debt that was secured by a cashdeposit from RHJI, and the major stakeholder’s loan of JPY2,500 million. Furthermore, syndicate lenders agreed on arefinancing of the existing debt structure, of which JPY 7,566million was outstanding at March 31, 2009, with new bullet loansmaturing in June 2011.

At March 31, 2009, the effective interest rate on Niles' seniorcredit facilities amounted to 3.03%.

25.1.5. Phoenix Seagaia ResortOn September 29, 2008, Phoenix Seagaia Resort entered into anagreement with its lenders to amend certain terms andconditions of its existing credit facility of JPY 7,508 million. Theterm of the amended loan is 3 years. The amendment providesfor quarterly repayments of JPY 195 million and a bulletpayment of JPY 5,497 million on September 30, 2011. In additionto this amended loan agreement, the Company extended therevolving credit facility from JPY 500 million to JPY 1,000 millionuntil September 30, 2011. The outstanding balance of this intra-group loan at March 31, 2009 amounted to JPY 400 million. TheCompany guarantees the quarterly repayments and the totalinterest up to an aggregate amount of JPY 3,400 million. Theinterest rate is based on the three month Libor plus a marginranging from 260 to 410 basis points, depending on the level ofreported EBITDA. At March 31, 2009, Phoenix Seagaia Resorthad already repaid JPY 390 million of the guaranteed principal,and had outstanding financial indebtedness of JPY 7,144 million,compared to JPY 7,777 at March 31, 2008.

The effective interest rate on Phoenix Seagaia Resort's creditfacility was 5.04% at March 31, 2009.

79


25.2. Finance lease liabilitiesFinance leases are payable as follows:

Under the terms of the lease agreements, no contingent rents are payable.

25.3. Other loans and borrowingsOther loans and borrowings are payable as follows:

Non-bank debt is broken down as follows :

25.4. Collateralized assetsVarious credit facilities are secured by asset collateral. The carrying value as at March 31, 2009 and 2008 of collateralized assets is as follows:

The decrease of assets that have been collateralized mainly resulted from the foreign exchange impact of JPY 12,838 million and thedebt extinguishment at Metaldyne of JPY 38,966 million.


NoteMinimum

lease payments

Interest PrincipalMinimum

lease payments

Interest Principal

Less than one year 2,340 89 2,251 2,249 131 2,118

Between one and five years 2,662 87 2,575 3,206 123 3,083

More than five years 92 2 90 213 4 209

Total 30 5,094 178 4,916 5,668 258 5,410


Non-bank debts Others Total Non-bank

debts Others Total

Less than one year 2,798 5,053 7,851 282 904 1,186

Between one and five years 2,691 1,486 4,177 120 (1,423) (1,303)

More than five years 11,143 - 11,143 10,517 (590) 9,927

Total 16,632 6,539 23,171 10,919 (1,109) 9,810


Loans from customers 11,038 -

Preferred shares 5,203 10,487

Others 391 432

Total 16,632 10,919



Asahi Tec 43,260 23,503 66,763 79,149 36,597 115,746

CME - - - - 45 45

HIT 56,340 11,886 68,226 51,806 30,674 82,480

Niles 10,220 3,224 13,444 10,615 5,479 16,094

Phoenix Seagaia Resort 10,349 226 10,575 10,764 291 11,055

Total 120,169 38,839 159,008 152,334 73,086 225,420

80

The outstanding borrowings at March 31, 2009 and 2008, forwhich these assets have been collateralized are as follows :

RHJI has pledged certain of its shares in certain businesses ascollateral for these businesses’ respective senior creditfacilities. The following shareholdings (presented as apercentage of RHJI’s ownership) were pledged as at March 31,2009 and March 31, 2008 :

26. EMPLOYEE BENEFITS

26.1. Defined contribution plansThe consolidated businesses have various defined contributionplans and the expenses recognized during the fiscal year endedMarch 31, 2009 are as follows :

The expense is recognized in the following line items in theincome statement :

26.2. Defined benefit obligations andother post-retirement obligations26.2.1. Liability for defined benefit obligations andother post-retirement obligationsThe consolidated businesses have various plans for providingbenefits to retired employees, including defined benefit anddefined contribution pension and retirement plans.

The Company contributes to different defined benefit plans thatprovide pension and medical benefits for employees uponretirement. These plans entitle a retired employee to receive aportion of his final salary for each year of service and to thereimbursement of certain medical costs.


Asahi Tec 62,442 104,054

HIT 64,513 77,265

Niles 14,575 14,197

Phoenix Seagaia Resort 7,144 7,777

Total 148,674 203,293

Pledge shareholdings 2009 2008

Asahi Tec 100.0% 98.7%

HIT 100.0% 100.0%

Phoenix Seagaia Resort 100.0% 100.0%

Shaklee 25.1% 25.1%


Asahi Tec 686 1,666

CME 91 106

Niles 270 268

Corporate headquarters 22 -

Total 1,069 2,040


Cost of sales 779 1,612

Selling, general and administrativeexpenses 290 428

Total 1,069 2,040


Present value of unfunded obligations 18,024 20,728

Present value of funded obligations 42,804 47,355

Total present value of obligations 60,828 68,083

Fair value of plan assets (27,527) (35,276)

Actuarial gains losses (3,690) 1,630

Recognized liability for definedbenefit obligations 29,611 34,437

Total employee benefits 29,611 34,437

81


26.2.2.Present value of the defined benefitobligationsThe movement of the present value is as follows:

26.2.3. Plan assets

26.2.3.1. Present value of plan assetsThe plan assets comprise :

26.2.3.2. Movement of plan assets

26.2.4. Expense recognized in profit or loss

The expense is recognized in the following line items in theincome statement

26.2.5. Principal actuarial assumptions at March 31The weighted average rates utilized for the benefit obligationsare as follows:



Actuarial gains (6,359) (3,216)

Current service costs and interest 3,970 4,330

Benefits paid by the plans (3,200) (3,757)

Effect of exchange rates (1,671) (6,690)

Plan participants' contributions (1,077) (1,084)

Exit from consolidation scope - (5,977)

Reclassification to held for sale - (2,249)

Others 1,082 (1,408)



Equity securities 13,230 20,689

Government bonds 6,679 10,468

Cash 3,639 1,920

Corporate bonds 2,997 794

Insurance contracts 982 1,073

Others - 332

Total 27,527 35,276



Expected return on plan assets (2,421) (2,859)

Benefits paid by the plans (3,200) (3,757)

Actuarial (gains) losses (1,969) 1,005

Contributions paid into the plans 2,154 2,336

Effect of exchange rates (849) (4,236)

Exit from consolidation scope - (1,284)

Others (1,464) (259)



Current service cost 1,118 1,380

Interest on obligation 2,852 3,328

Expected return on plan assets (2,421) (2,859)

Others 399 (746)

Total 1,948 1,103


Cost of sales 1,275 725

Selling, general and administrativeexpenses 673 378

Total 1,948 1,103

2009 2008

Discount rate 4.1 % 4.3 %

Expected return on plan assets 3.3 % 3.8 %

Future salary increases 2.7 % 2.6 %

82

26.2.6. Historical information

The Company expects JPY 2,089 million in contribution to be paid to the funded defined benefit plans and JPY 2,499 million of benefitsto be paid for the unfunded plans during the fiscal year ending March 31, 2010.

(in JPY millions) 2009 2008 2007 2006

Present value of the defined benefit obligation 60,828 68,083 88,134 44,996

Fair value of plan assets (27,527) (35,276) (44,330) (15,571)

Deficit in the plan 33,301 32,807 43,804 29,425

Experience adjustments arising on plan liabilities 91 (104) (25) 293

Experience adjustments arising on plan assets (210) (124) (173) 323

27. SHARE BASED PAYMENTS

27.1. RHJ InternationalAt March 31, 2005, a significant shareholder of RHJI granted2,018,030 shares of RHJI to certain members of the Company’smanagement and other employees. IFRS 2 was applied to1,198,086 shares as they were granted as consideration forfuture services. These shares vest over 5 years and are subjectto a 5 year lock-up. In accordance with IFRS 2, the fair values ofthe stock options and the shares granted as consideration forfuture services have been determined at the date they have beengranted and recognized as employee expenses over the period inwhich they will be earned. At March 31, 2009, 144,447 sharegrants were outstanding, of which 28,890 were unvested.

On October 1, 2007, the Board of Directors approved a long-termshare-based incentive plan. The purpose of the plan is to servethe interests of RHJI and its affiliates by attracting and retainingexceptional employees, consultants and independentcontractors, aligning their interests with the interests of RHJI’sshareholders and reinforcing the creation of long-term value.Awards under the plan are made in the form of restricted stockunits (“RSU”), which shall be vested at such times, in suchmanner and subject to such terms and conditions contained inthe relevant award agreement. For each RSU which vests, theparticipant shall receive one share of RHJI or, in the sole andplenary discretion of the Board, a cash amount equal to the fairmarket value of such share as of the vesting date. During thefiscal year ended March 31, 2008, 1,174,277 RSU’s were granted,of which 513,333 to the Company’s Chief Executive Officer, Mr.Fischer. 512,744 of the awarded RSU’s vest linearly over a periodof 4 years. Following a decision by the Board of Directors onOctober 22, 2008, the vesting of Mr. Fischer's 513,333 restrictedstock units, was accelerated, subject to a lock-up that restricts

the transfer of the shares for a four-year period. On September16, 2008, the Company also granted 90,000 RHJI shares to Mr.Fischer, free and clear of any restrictions.

The fair value of the share grants and the RSU’s at the date ofgrant, has been determined using the Finnerty model, reflectingan illiquidity discount resulting from the transfer restrictionsfollowing provisions of certain lock-up agreements. The totalfair value of the share grants and the RSU’s was calculated,using a share volatility of approximately 27% and risk freeinterest rates based on the EUR swap rates ranging from 3.29%to 5.1%, depending on the lifetime of the different grants.Calculated fair value of the share grants and the RSU’samounted to JPY 1,873 million and JPY 1,770 million,respectively. Expense recognized during the fiscal year endedMarch 31, 2009 for the share grants and the RSU’s amounted toJPY 979 million.

83


27.2. Consolidated subsidiariesCertain consolidated businesses have stock option plans for directors and employees. The stock options are subject to vesting over 1to 8 years and have a life-time of up to 10 years.

Fair values and recognized expense with respect to stock options and shares granted are as follows:

The fair value of granted stock options was calculated using the Black-Scholes-Merton method. The following indicates the range ofassumptions used for the different stock options granted:


Asahi Tec 95 194

CME 35 60

HIT - 76

Niles - 7

Total 130 337

Outstanding at April 1,

2008

Granted during the

year

Forfeited during the

year

Exercised during the

year

Transferred to held for sale

Effect of foreign

exchange

Outstanding at March 31,

2009

Exercisable at March 31,

2009

Asahi Tec

Weighted average exercise price (in JPY) 226 - 265 - - - 218 202

Number of options 6,084,742 - (1,053,691) - - - 5,031,051 2,959,381

Fair value amount (in JPY millions) 1,230 - (222) - - - 1,008 629

CME

Weighted average exercise price (in JPY) 112 74 117 - - - 112 112

Number of options 10,580,000 50,000 (150,000) - - - 10,480,000 8,828,000

Fair value amount (in JPY millions) 714 2 (8) - - - 708 628

HIT

Weighted average exercise price (in JPY) 1,573 - - - - (262) 1,311 1,311

Number of options 733,001 - - - - - 733,001 417,800

Fair value amount (in JPY millions) 1,153 - - - - (192) 961 548

Niles

Weighted average exercise price (in JPY) 419 - 423 186 - - 429 429

Number of options 1,461,050 - (198,700) (55,000) - - 1,207,350 1,207,350

Fair value amount (in JPY millions) 162 - (21) 0 - - 141 141

Phoenix Seagaia Resort

Weighted average exercise price (in JPY) 155,794 - - - - - 155,794 155,794

Number of options 3,961 - - - - - 3,961 3,961

Fair value amount (in JPY millions) - - - - - - - -

84

28. PROVISIONS

28.1. Details of provisions

28.2. Movement of provisions

2009 2008

From To From To

Share volatility 30.0 % 64.0 % 41.0 % 64.0 %

Risk free interest rate 0.3 % 1.9 % 0.3 % 4.5 %

Forfeiture rate 0.0 % 52.0 % 0.0 % 14.7 %

Life-time 50.0 % 100.0 % 50.0 % 100.0 %

Dividend yield 0.0 % 0.0 % 0.0 % 0.0 %



Restructuring - 4,123 4,123 8 1,511 1,519

Warranties 45 749 794 52 854 906

Onerous contracts 103 120 223 216 310 526

Environment 482 - 482 384 6 390

Taxation claims - 74 74 - 19 19

Others

Early retirement obligations 835 278 1,113 967 322 1,289

Long-term service award accrual 739 - 739 762 24 786

Union contract related compensation 276 - 276 736 - 736

Others 231 485 716 277 565 842

Total 2,711 5,829 8,540 3,402 3,611 7,013



Made during the period 6,106 4,056

Used during the period (2,787) (2,200)

Reversed during the period (765) (2,158)

Transfer to liabilities held for sale or discontinued operations - (1,151)

Effect of exchange rates (1,027) (401)


85


29. TRADE AND OTHER PAYABLES

The Company’s exposure to credit, currency and interest rate risks related to trade and other payables is disclosed in note 30.


Non-current 1,040 1,776

Current

Trade payables

Suppliers 33,665 68,456

Accrued expenses 5,739 3,810

Advances received 4,084 2,541

Other payables

Remuneration, social security and pension 5,815 9,059

Accrued interests 4,349 3,418

Acquisition of property, plant and equipment 1,778 3,444

Accrued royalties 1,453 2,600

Derivatives used for hedging 1,028 502

Wage tax payables and VAT 624 611

Allowance for sales return 547 607

Reserve for loss contracts 209 187

Others 2,417 2,301

Total 62,748 99,312

86

30. FINANCIAL RISK MANAGEMENT AND RELATED INSTRUMENTSExposures to a variety of financial risks and market risks arise in the normal course of the Company’s business. As a diversifiedholding company, the Company faces a combination of risks resulting from the commercial activities of its portfolio holdings andspecific risks as a diversified holding company. The portfolio holdings are exposed to risks related to the level of indebtedness such asliquidity and interest rate risk and risks inherent to the nature of their commercial activities such as credit risk and foreign currencyexchange risk. As a holding Company, RHJI is further exposed to risks associated with general, economic and market conditions, suchas the risk of fluctuating interest rates and currency exchange rates, liquidity risk and risks related to the stock market, all of whichmay have a significant effect on the value of the Company’s assets.

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.For purposes of managing the risks associated with the Company’s portfolio holdings, the Company generally relies on the individualbusinesses’ risk assessment and monitoring programs to manage the exposure to these and other risks. These programs have beendesigned based on the specific nature and size of the individual businesses’ activity. While the Company monitors these programs andattempts to mitigate the negative effects from any of these risks through its representation on the businesses’ Boards of Directorsand through the implementation of certain reporting mechanisms, the Company may face negative consequences from inadequaterisk assessment and ineffective control systems of risk detection and prevention at the level of each of the individual businesses.

This note presents information about the Company’s exposure to each of the above risks.

30.1.Credit riskCredit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet itscontractual obligations, and arises principally from the Company’s trade receivables.

30.1.1. Trade receivablesThe Company’s credit risk is primarily attributable to its trade receivables. The Company’s exposure to credit risk is influenced mainlyby the individual characteristics of each customer. The demographics of the Company’s customer base, including the default risk ofthe industry and country in which customers operate, has less of an influence on credit risk.

The amounts presented on the balance sheet are the amounts, net of allowances for doubtful accounts, estimated by the managementof the respective consolidated businesses based on the prior credit loss experience and the current economic environment.

The Company’s largest customers accounted for approximately 21% and 24% of trade accounts receivables as of March 31, 2009 and2008, respectively. At March 31, 2009 and 2008 respectively, the largest customer of the Company accounted for approximately 7 %and 9% of total trade receivables.

The table below shows the outstanding balance of and revenue from the five major customers as of and for the fiscal year endedMarch 31,

(1) No rating available


Rating Balance Revenue Rating Balance Revenue

Nissan Motor Co BBB 2,510 23,507 BBB + 6,461 29,053

Mitsubishi Fuso Truck and Bus Corporation (1) 1,428 29,702 (1) 3,768 35,246

Chrysler CC 1,141 22,582 CC 992 37,331

Ford CCC - 981 24,477 B 1,104 33,171

ZF Group (1) 906 20,916 (1) 1,258 30,585

87


As of March 31, 2009, the total trade and other receivables and revenue for the top 5 customers are broken down by subsidiary asfollows:

(1) Not applicable

30.1.2. Global exposure to credit riskRHJI’s functional currency is the Japanese Yen cash and cash equivalents are maintained in EUR, USD and JPY, and invested primarilyin time deposits, certificates of deposits, direct obligations of the US Treasury and European Zone Government securities for which theRHJI has defined minimum ratings in order to preserve capital and maintain liquidity.

The credit risk on derivative financial instruments is limited because the counterparties to the derivatives are major internationalfinancial institutions with high credit ratings assigned by international credit rating agencies.

The carrying amount of financial assets represents the maximum credit exposure of the Company. The carrying amount is presentednet of impairment losses recognized. The table below shows the maximum exposure to credit risk at balance sheet date:


Trade and other

receivables

Top 5 customers

balance

In % Revenue Top 5 customers revenue

In %

Asahi Tec 19,843 6,258 31.5% 218,815 123,413 56.4%

CME 3,348 846 25.3% 18,170 5,283 29.1%

HIT 6,043 1,871 31.0% 102,527 38,642 37.7%

Niles 5,793 3,387 58.5% 45,444 34,829 76.6%

Phoenix Seagaia Resort 735 193 26.3% 12,327 1,448 11.7%

Total portfolio companies 35,762 12,555 35.1% 397,283 203,615 51.3%

Corporate headquarters 1,746 (1) (1) 17 (1) (1)

Total 37,508 12,555 33.5% 397,300 203,615 51.2%


Gross Impairment Net carryingamount Gross Impairment Net carrying

amount

Non-current

Available for sale financial assets 5,636 - 5,636 19,654 - 19,654

Held-to-maturity investments - - - - - -

Other financial investments 1,990 (1,258) 732 2,102 - 2,102

Trade and other receivables 3,062 (700) 2,362 1,808 (216) 1,592

Cash guarantees and deposits 104 - 104 104 - 104

Hedging instruments 117 - 117 141 - 141

10,909 (1,958) 8,951 23,809 (216) 23,593

Current

Available for sale financial assets 45 - 45 284 - 284

Other financial investments 402 - 402 286 - 286

Trade and other receivables 37,889 (381) 37,508 74,460 (372) 74,088

Hedging instruments 8 - 8 266 - 266

Cash and cash equivalents 72,336 - 72,336 72,523 - 72,523

110,680 (381) 110,299 147,819 (372) 147,447

Total 121,589 (2,339) 119,250 171,628 (588) 171,040

88

The maximum exposure to credit risk for current trade and other receivables at March 31, 2009 by geographic region was:

The maximum exposure to credit risk for current trade and other receivables at March 31, 2009 by type of counterparty was:

30.1.3. Impairment lossesAn allowance for impairment is established when there is objective evidence that the group will not be able to collect all amounts dueaccording to the original terms of the receivables. The allowances for doubtful accounts are estimated by the management of therespective consolidated businesses based on the prior credit loss experience and the current economic environment.

The allowance for impairment recognized during the period per classes of financial assets was as follows:

The aging of current trade and other receivables at March 31, 2009 was:


Japan 16,840

Europe 9,108

Americas 9,481

Asia 2,064

Others 15

Total 37,508


OEM 28,361

End-user customers 3,952

Wholesale customers 3,446

Others 1,749

Total 37,508


Tradereceivable

andprepayments

Otherreceivable

Otherfinancialassets

Total Tradereceivable

andprepayments

Otherreceivable

Total

Opening balance (588) - - (588) (1,974) (1) (1,975)

Impairment losses (259) (331) (1,258) (1,848) (51) - (51)

Reversal of write-off on doubtful accounts 29 - - 29 639 - 639

Derecognition 47 - - 47 19 1 20

Collection from customers - - - - 95 - 95

Effect of movement in exchange rates 21 - - 21 - - -

Transfer to assets held for sale ordiscontinued operations - - - - 684 - 684

Closing balance (750) (331) (1,258) (2,339) (588) - (588)


Not past due 34,348

Past due 0 - 30 days 1,921

Past due 31 - 120 days 805

Past due 121 - 365 days 289

Past due more than 1 year 145

Total 37,508

89


30.2. Liquidity riskLiquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach tomanaging liquidity is to ensure, as far as possible that it will always have sufficient liquidity to meet its liabilities when due, under bothnormal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The contractual maturities of non-derivative financial liabilities, and related derivative financial assets and liabilities are as follows(interest included):

At March 31, 2009, RHJI had JPY 58,726 million available to pursue its business strategy and had no indebtedness at the parentcompany level. RHJI’s businesses have access to financing by obtaining credit lines on their own merits. Except for a guarantee of upto JPY 3,400 million certain pledges of shares as disclosed in note 25 to the consolidated financial statements and a commitment ofJPY 1,300 million (EUR 10 million) to fund a backstop facility to the benefit of Honsel, the businesses and their lenders generally do notbenefit from any guarantee from RHJI.


Contractualcash-flows

Less than one year

Between one and five

years

More than five

years

Contractual cash-flows

Less than one year


years

More than five

years

Non-derivative financial liabilities

Bank loans (231,815) (31,121) (163,034) (37,660) (209,754) (28,653) (100,184) (80,917)

Finance lease liabilities (5,094) (2,340) (2,662) (92) (5,668) (2,249) (3,206) (213)

Other loans (12,021) (2,947) (3,845) (5,229) (2,434) (544) (1,860) (30)

Trade and other payables (65,002) (61,708) (2,505) (790) (99,312) (97,536) (1,252) (524)

(313,933) (98,116) (172,046) (43,771) (317,168) (129,982) (106,502) (81,684)

Derivative financial liabilities

Foreign exchange derivatives

Inflow - - - - 12 12 - -

Outflow - - - - (9) (9) - -

Interest rate derivatives

Inflow 286 286 - - - - - -

Outflow (735) (735) - - - - - -

Commodity derivatives

Inflow 8 8 - - - - - -

Outflow (142) (142) - - - - - -

(583) (583) - - 3 3 - -

Total (314,516) (98,699) (172,046) (43,771) (317,165) (128,979) (106,502) (81,684)

90

30.3. Market riskThe Company’s overall risk management policy focuses on the unpredictability of financial markets and seeks to minimize potentialadverse effects on the Company’s financial performance. Derivative financial instruments can be used to hedge exposure tofluctuations in foreign exchange rates, commodity prices and interest rates.

The following table provides an overview of the derivative financial instruments outstanding at year-end by maturity bucket. Theamounts included in this table are the notional amounts:

30.3.1. Commodity riskCertain consolidated businesses procure raw materials, most significantly aluminum, through a combination of contractcommitments and spot market purchases. They are exposed to commodity risk, which is moderated through the use of customercontracts that typically provide for sales price adjustments related to changes in the cost of light metal alloys. For HIT primarily, theselling prices are however only adjusted periodically and as a result, HIT is exposed to changes in aluminum prices within thecontracts’ price indexation periods. Accordingly, HIT hedges a significant portion of its aluminum purchases by entering into forwardpurchase and sales contracts on the London Metal Exchange. As of March 31, 2009, HIT had forward purchase contracts for notionalamounts of JPY 946 million. The corresponding fair values of these contracts, designated as cash flow hedges for which hedgeaccounting is applied, amounted - JPY 134 million. As of March 31, 2008, HIT had forward purchase contracts for notional amounts ofJPY 3,360 million. The corresponding fair values of these contracts, designated as cash flow hedges for which hedge accounting isapplied, amounted JPY 135 million.

30.3.2. Interest rate riskThe Company is exposed to changes in interest rates primarily as a result of the borrowing activities of its consolidated businesses,which include borrowings used to maintain liquidity and to fund business operations and acquisitions. These borrowings consistprimarily of floating rate debt. The Company intends to maintain a balanced mix of fixed and floating rate borrowings, and accordinglyhas entered into derivative transactions to manage the exposure associated with the floating rate borrowings. All the derivativetransactions, JPY 30,497 million in aggregate at March 31, 2009, compared to JPY 44,405 million at March 31, 2008, are accounted foras cash flow hedges with a fair value of - JPY 449 million.


Less than one year


years

More than five

years

Less than one year


years

More than five

years

Foreign currency

Forward exchange contracts 1,973 250 - 7,160 - -

Interest rate

Interest rate swap 10,756 - - 698 20,023 -

Purchased caps 19,741 - - - 23,684 -

Commodities

Forward purchase contracts foraluminum 946 - - 3,360 - -

Forward sales contracts for aluminum - - - - - -

Total 33,416 250 - 11,218 43,707 -

91


30.3.2.1. Effective interest and maturity schedule

In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effectiveinterest rates at the balance sheet date and the periods in which they reprice.

30.3.2.2. Sensitivity analysisAn increase (decrease) of the interest rate by 1% on the loans and borrowings would have increased (decreased) the interest expenseby JPY 3,030 million and JPY 2,430 million for the fiscal years ended March 31, 2009 and 2008, respectively.

This analysis assumed that all other variables, in particular currency exchange rates, remain constant.

(in JPY millions) Currency Less than one year


years

More than five

years

Total Weighted average

interest rateCash and cash equivalents

EUR 45,500 - - 45,500 0.4 %JPY 17,446 - - 17,446 0.0 %USD 7,626 - - 7,626 0.2 %

OTHERS 1,763 - - 1,763 0.1 %72,335 - - 72,335

Finance leasesEUR (46) - - (46) 0.0 %JPY (2,037) (2,115) (90) (4,242) 2.1 %USD - (444) - (444) 8.8 %

OTHERS (168) (16) - (184) 10.0 %(2,251) (2,575) (90) (4,916)

Senior debtSecured

TermFixed rate USD (13) (16) - (29) 9.5 %Variable rate EUR (40,057) - - (40,057) 7.2 %

JPY (2,237) (8,248) - (10,485) 4.2 %USD (24) (43,086) - (43,110) 8.4 %

OTHERS (114) (1,974) (121) (2,209) 5.6 %Revolver

Fixed rate JPY (229) - - (229) 2.5 %Variable rate JPY (8,265) - - (8,265) 3.8 %

USD (383) - - (383) 9.3 %OTHERS (489) - - (489) 5.1 %

BulletVariable rate JPY (733) (14,229) - (14,962) 4.8 %

UnsecuredTerm

Fixed rate JPY (724) (1,116) - (1,840) 3.3 %Variable rate JPY (240) (94) - (334) 3.6 %

OTHERS (83) - - (83) 4.5 %Revolver

Variable rate JPY (2,821) - - (2,821) 2.7 %Bullet

Fixed rate JPY (1,100) - - (1,100) 4.5 %Variable rate JPY (3,164) - - (3,164) 2.6 %

OtherFixed rate USD - (147) - (147) 11.0 %

(60,676) (68,910) (121) (129,707)Subordinated debt

SecuredEUR (24,456) - - (24,456) 12.0 %JPY - (4,000) - (4,000) 5.7 %

UnsecuredUSD - (2,761) - (2,761) 12.0 %

(24,456) (6,761) - (31,217)Others EUR (4,380) (2,623) - (7,003) 7.3 %

JPY (3,063) (469) (5,228) (8,760) 7.2 %USD - (1,085) (5,915) (7,000) 5.5 %

OTHERS (408) - - (408) 8.1 %(7,851) (4,177) (11,143) (23,171)

Total (22,899) (82,423) (11,354) (116,676)

92

30.3.3. Foreign currency riskThe Company is exposed to market risk from changes in currency exchanges that could impact the results of operations and thefinancial position. The Company is exposed to both translation as well as transaction risk. The translation risk is the risk that theconsolidated financial statements are affected by changes in the prevailing exchange rates of the various currencies of the businessesor their subsidiaries relative to the Japanese Yen. Transaction risk is the risk that the currency structure of the costs and liabilitiesdeviates to some extent from the currency structure of the sales proceeds and assets.

Beside the translation and transaction risk arising from changes in currency exchange rates described above, RHJI’s Eurodenominated share price is exposed to changes in the exchange rate between the EUR and the JPY as a significant portion of theCompany’s assets is located in Japan and have book values denominated in JPY. The Company does not hedge this exposure. RHJI’sfunctional currency is the JPY. Cash and cash equivalents are maintained in EUR, USD and JPY.

The functional currency of the five consolidated businesses headquartered in Japan is the JPY. The EUR is the functional currency forHIT. Companies that transact a material amount of business and have material assets and liabilities in currencies other than theirfunctional currency include Asahi Tec through its acquisition of Metaldyne (USD), HIT (USD, Brazilian Real and Mexican Peso) andNiles (USD). These companies manage their exposures through normal operating and financing activities and, when appropriate, useforward foreign exchange contracts. Derivative financial instruments are not used for speculative purposes, and are accounted for ascash flow hedges. The total notional amount and fair value of cash flow hedges at March 31, 2009 was JPY 2,223 million and JPY 236million, respectively.

A strengthening of JPY against USD and EUR at March 31, 2009, of respectively 28.2% and 22.4% based on the historical volatility ofthose currencies against JPY would have increased (decreased) equity and profit or loss by the amounts shown below. The historicalvolatility was calculated as 95% of the daily standard deviation over the two years ended March 31, 2009. This analysis assumed thatall other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for fiscal year endedMarch 31, 2008.

A weakening of the JPY against the USD and the EUR would have had the equal but opposite effect on the amounts shown below.


Equity Profit or (Loss)

Equity Profit or (Loss)

USD 2,557 4,746 (2,502) 9,125

EUR 9,893 15,160 (3,548) 2,391

93


30.3.4. Fair values30.3.4.1. Comparison of fair values and carrying amountsThe fair values together with the carrying amounts shown in the balance sheet are as follows:

30.3.4.2. Estimation of fair valuesThe following summarizes the major methods and assumptions used in estimating the fair values of financial instruments reflected inthe above table.

Fair value of available for sale securities is primarily obtained from quoted market prices. The carrying amount of both trade accountsreceivable and payable approximates fair value due to their short-term nature. The fair value of long-term loans and borrowings isestimated based on the discounted amount of the future cash flows. The fair value of finance lease liabilities is estimated based on thediscounted cash flows using the current borrowing rates for similar liabilities. The fair value of foreign currency interest rate swaps isbased on quoted prices or appropriate valuation methods.


Carryingamount

Fair value

Carrying amount

Fair value

Available for sale financial assets 5,681 5,681 19,938 19,938

Held-to-maturity investments - - - -

Other financial assets 1,134 1,134 3,390 3,390

Trade and other receivables 39,869 39,869 74,088 74,088

Cash and cash equivalents 72,336 72,336 72,523 72,523

Interest rate swaps:

Assets - - - -

Liabilities (449) (449) (15) (15)

Forward exchange contracts:

Assets 8 8 406 406

Liabilities (579) (579) (68) (68)

Secured bank loans (159,599) (159,599) (144,727) (144,727)

Unsecured bond issues (2,908) (357) (41,574) (21,113)

Redeemable preference shares (4,177) (4,435) (10,487) (10,487)

Finance lease liabilities (4,916) (4,916) (5,410) (5,410)

Loans from associates (3,177) (3,177) (297) (297)

Dividends on redeemable preference shares (1,026) (1,090) (1,045) (1,045)

Unsecured bank facilities (11,841) (11,841) (10,629) (10,629)

Trade and other payables (65,002) (65,002) (99,312) (99,312)

Bank overdraft (1) (1) (65) (65)

(134,647) (132,418) (143,284) (122,823)

Unrecognized gains 2,229 20,461

94

31. OPERATING LEASESNon-cancellable operating lease rentals are payable as follows:

The operating leases are mainly long-term rental contracts ofcars, machinery and equipment. Under the terms of the leaseagreements, no contingent rents are payable. At March 31, 2009and 2008, Metaldyne had an outstanding payable of JPY 2,663and JPY nil million, respectively, related to a sale-and-leasebacktransaction in addition to the operating lease payments.

Future minimum lease payments for property leased out underoperating leases, is as follows:

32. CAPITAL COMMITMENTSAs at March 31, 2009 and 2008, Asahi Tec and HIT had aggregatecommitments to purchase capital equipment amounting torespectively JPY 9,858 and JPY 2,502 million.

33. CONTINGENCIESAt March 31, 2009, the Company is subject to claims andlitigation in the ordinary course of its business but does notbelieve that any such claim or litigation will have a materialimpact on the financial results of the Company.

34. RELATED PARTIES

34.1. Identity of related partiesThe Company has related party relationships with itsconsolidated businesses and business accounted for under theequity method (see note 35), with its Directors and SeniorManagement, and with Ripplewood Holdings LLC and affiliates.

34.2. Transactions with directorsand senior managementTotal remuneration of executive management is included in“Personnel expenses” (see note 11). During the fiscal yearended March 31, 2009, and pursuant to his agreement with RHJI,the Chief Executive Officer, Mr. Fischer, received aggregate fixedcompensation of JPY 14 million, variable compensation relatedto his performance for the fiscal year ended March 31, 2008, ofJPY 216 million, and other remuneration, including privateaircraft usage pursuant to his employment agreement, of JPY109 million. Subsequent to the fiscal year-end, the Board ofDirectors awarded Mr. Fischer a bonus of JPY 219 millionrelated to his performance for the fiscal year ended March 31,2009. Awards made to Mr. Fischer under RHJI's equity-basedcompensation plan are described in note 27.

The compensation of the members of RHJI's executive management,other than Mr. Fischer can be broken down as follows:

The members of RHJI’s executive management other thanMr. Fischer were awarded 177,880 restricted stock units under theequity-based compensation plan adopted by the Board of Directors,on October 1, 2007. Terms and conditions of the restricted stockunit plan are described in note 27. Total share-based compensationexpense associated with the awards to the members of executivemanagement, other than Mr. Fischer, amounted to JPY 103 and 84million for respectively the fiscal years ended March 31, 2009 and2008. On April 1, 2009, as part of the bonus award for the fiscalyear ended March 31, 2009, the members of RHJI's executivemanagement were awarded a further 563,380 restricted stock unitsunder the same equity-based compensation plan.

Non-executive directors received benefits of JPY 192 million andJPY 190 million for the fiscal year ended March 31, 2009 and2008, respectively.

34.3. Other related partytransactionsAs at March 31, 2009 and 2008, net payables of JPY 14 millionand JPY 104 million, respectively, to Ripplewood Holdings LLC("Ripplewood") were outstanding as a result of operating costsand out of pocket expenses. A total expense of JPY 105 millionwas recognized from Ripplewood during the fiscal year endedMarch 31, 2009, compared to JPY 239 million during the fiscalyear ended March 31, 2008. The transactions with Ripplewoodare at arm's length.




More than five years 146 106

Total 3,790 3,567




More than five years 5,551 6,028

Total 20,095 22,417


Aggregate fixed compensation 231 327

Aggregate variable compensation 206 498

Aggregate other remuneration in the form ofpensions, insurance coverage and otherfringe benefits, including allowances

23 29

Total 460 854

95


35. GROUP ENTITIES

35.1. Fully consolidated subsidiaries

Asahi Tec Corporation Japan 60.1 % -Asahi Service Co., Ltd. Japan - 60.1 %Asahi Tec Aluminium (Thailand) Co., Ltd. Thailand - 60.1 %Asahi Tec Environmental Solutions Corporation Co., Ltd Japan - 60.1 %Asahi Tec Metals (Thailand) Co., Ltd. Thailand - 60.1 %Asahi Tec Service Co., Ltd. Japan - 60.1 %Asahi Tec Tohoku Sales Co., Ltd. Japan - 60.1 %ER Acquisition Corp. USA - 60.1 %GMTI Holding Company USA - 60.1 %Guangzhou Asahi Dongling Research & Development Co., Ltd. China - 30.7 %Halyard Aviation Services, Inc. USA - 60.1 %Hoei Industrial Co., Ltd. Japan - 37.4 %Holzer Limited United Kingdom - 60.1 %MascoTech Saturn Holdings Inc. USA - 60.1 %MASG Disposition, Inc. USA - 60.1 %MASX Energy Services Group, Inc. USA - 60.1 %Metaldyne (Suzhou) Automotive Components Co., Ltd. China - 60.1 %Metaldyne Asia, Inc. USA - 60.1 %Metaldyne Chassis Manufacturing (Hangzhou) Co., Ltd. China - 60.1 %Metaldyne Company LLC USA - 60.1 %Metaldyne Componentes Automotivos do Brasil Ltda Brazil - 60.1 %Metaldyne Driveline Co., LLC USA - 60.1 %Metaldyne DuPage Die Casting Corporation USA - 60.1 %Metaldyne Engine Co., LLC USA - 60.1 %Metaldyne Engine Espana, S.L. Spain - 60.1 %Metaldyne Engine Holdings, S.L. Spain - 60.1 %Metaldyne Europe S.a.r.l. Luxembourg - 60.1 %Metaldyne Europe, Inc. USA - 60.1 %Metaldyne GmbH Germany - 60.1 %Metaldyne Grundstucks GbR Germany - 57.0 %Metaldyne Holdings LLC USA - 60.1 %Metaldyne Hong Kong Limited Hong Kong - 60.1 %Metaldyne Industries Limited India - 30.7 %Metaldyne Intermediate Holdco, Inc. USA - 60.1 %Metaldyne International (UK) Ltd United Kingdom - 60.1 %Metaldyne International Deutschland GmbH Germany - 60.1 %Metaldyne International France SAS France - 60.1 %Metaldyne International Holdings B.V. Netherlands - 60.1 %Metaldyne International Sales, Inc. Barbados - 60.1 %Metaldyne International Spain, S.L. Spain - 60.1 %Metaldyne Korea Limited Korea - 60.1 %Metaldyne Lester Precision Die Casting, Inc. USA - 60.1 %Metaldyne Light Metals Company, Inc. USA - 60.1 %Metaldyne Machining and Assembly Company, Inc. USA - 60.1 %Metaldyne Machining and Assembly Mfg. Co. (Canada) Ltd. Canada - 60.1 %Metaldyne Mauritius Limited Mauritius - 60.1 %Metaldyne Mexico, S.A. de C.V. Mexico - 60.1 %Metaldyne Netherlands Holdings B.V. Netherlands - 60.1 %

Country of incorporation

Direct interest

ownership

Indirect interest

ownership

96

Metaldyne Nurnberg GmbH Germany - 60.1 %Metaldyne Oslavany, spol. S.r.o. Czech Republic - 60.1 %Metaldyne Precision Forming - Fort Wayne, Inc. USA - 60.1 %Metaldyne Services, Inc USA - 60.1 %Metaldyne Sintered Components Espana, S.L. Spain - 60.1 %Metaldyne Sintered Components Holdings, S. de R.L. de C.V. Mexico - 60.1 %Metaldyne Sintered Components Mexico, S.de.R.L. de C.V. Mexico - 60.1 %Metaldyne Sintered Components of Indiana, Inc. USA - 60.1 %Metaldyne Sintered Components Services, S.de.R.L. de C.V. Mexico - 60.1 %Metaldyne Sintered Components St. Marys, Inc. (Formerly known as Windfall Products, Inc.) USA - 60.1 %Metaldyne Sintered Components, LLC USA - 60.1 %Metaldyne Tubular Products, Inc. USA - 60.1 %Metaldyne U.S. Holding Co. USA - 60.1 %Metaldyne Zell GmbH & Co. KG Germany - 58.9 %Metaldyne Zell Verwaltungs GmbH Germany - 60.1 %MetaldyneLux Holding S.a.r.l Luxembourg - 60.1 %MetaldyneLux S.a.r.l Luxembourg - 60.1 %NC-M Chassis Systems, LLC USA - 60.1 %Precision Headed Products, Inc. USA - 60.1 %Punchcraft Company USA - 60.1 %R.J. Simpson Private Limited India - 60.1 %Simpson Industries, Ltda Brazil - 60.1 %Stahl Industries, Inc. USA - 60.1 %Techno-Metal Co., Ltd. Japan - 60.1 %W.C. McCurdy Co. USA - 60.1 %Windfall Specialty Powders, Inc. USA - 60.1 %

Columbia Music Entertainment Inc. (1) Japan 25.5 % -C2 Design Japan - 25.5 %CME, Inc. USA - 25.5 %Columbia Artist management Japan - 25.5 %Columbia Songs Inc. Japan - 25.5 %Creative Core Japan - 25.5 %SLG, LLC USA - 25.5 %

Honsel International Technologies SA Belgium 82.0 % -Fonderie Lorraine S.A.S France - 82.0 %Honsel AG Germany - 81.2 %Honsel Beteiligungsverwaltungs GmbH Germany - 82.0 %Honsel Geschäftsführungs GmbH Germany - 82.0 %Honsel Services US Inc. USA - 82.0 %Honsel S.R.L. Romania - 82.0 %Magal Industria e Comercio LTDA Brazil - 53.3 %Tafime Mexico S.A. Mexico - 82.0 %Tafime S.L. Spain - 82.0 %

Niles Co., Ltd. Japan 96.4 % -Akita Niles Co.,Ltd. Japan - 96.4 %Ami Co.,Ltd. Japan - 96.4 %Fuji Electronics Industries Co.,Ltd. Japan - 96.3 %Fuzhou Niles Electronic Co., Ltd. China - 49.2 %

(1) In addition to the direct ownership of 25.5 % of CME, RHJI controls the voting of another 24.1 % of outstanding shares


Direct interest

ownership

Indirect interest

ownership

97


Jonan Industrial Co.,Ltd. Japan - 96.4 %Micro Craft , Inc. USA - 96.4 %Niles (Thailand) Co., Ltd. Thailand - 96.4 %Niles Personnel Service Co.,Ltd. Japan - 96.4 %Niles America Michigan ,Inc. USA - 96.4 %Niles America Wintech ,Inc. USA - 96.4 %Niles Americas Corporation USA - 96.4 %Niles CTE Electronic Co.,Ltd. Taiwan - 49.2 %Niles Europe S.A.S. France - 96.4 %Nitto Manufacturing Co.,Ltd. Japan - 84.1 %

Phoenix Resort KK Japan 100.0 % -Kogen Country Club Japan - 100.0 %

RHJI Services SA Belgium 100.0 % -Cartica Management LLC USA - 30.0 %

Arecon AG Switzerland 50.0 % -Honsel Holdings III LP Cayman 57.9 % -Japan Casting Holdings II Ltd. Cayman 100.0 % -Japan Casting Holdings IV Ltd. Cayman 100.0 % -RHJ International Japan Inc. Japan 100.0 % -RHJ Shaklee Holding Belgium 100.0 % -RHJ US Management Inc. USA 100.0 % -RHJI Swiss Management GmbH Switzerland 100.0 % -Ripplewood Nippon Columbia Holdings Ltd. Cayman 100.0 % -Yoyogi Animation Holdings Japan 100.0 % -

35.2. Equity accounted investees


Direct interest

ownership

Indirect interest

ownership


Ownershipinterest direct

Shaklee Global Group Inc. Japan 42.5 %

SigmaXYZ Inc. Japan 49.0 %

U-shin Ltd. Japan 20.0 %

98

36. SUBSEQUENT EVENTS36.1. Asahi TecOn May 27, 2009, Asahi Tec’s US subsidiary Metaldyne filed avoluntary petition to reorganize under Chapter 11 of the U.S.Bankruptcy Code, shortly after Chrysler, one of its maincustomers, also filed for protection under Chapter 11. Given thatAsahi Tec was not in a position to further support Metaldyne as itrequired focus on its own needs in a continuously challengingautomotive industry, RHJI entered into an agreement to purchasea majority of Metaldyne’s assets under a court-supervised salesprocess pursuant to Section 363 of the U.S. Bankruptcy Code. Thepurchase agreement was however not approved by the bankruptcycourt and has terminated on July 27, 2009. Under the Section 363process, interested parties will have an opportunity to submitbetter and higher offers for the Metaldyne assets. The Companymay elect to participate in the sale auction scheduled to be held onAugust 5, 2009. To fund its continuing operations during therestructuring, Metaldyne has secured a USD 19.85 million debtor-in-possession (DIP) financing facility from certain customers. TheDIP credit facility will be used for the company's normal workingcapital requirements, including employee wages and benefits,supplier payments, and other operating expenses during thereorganization process.

At the date of Metaldyne's filing for bankruptcy protection underChapter 11, Metaldyne will be deconsolidated, resulting in a gainof JPY 8,494 million that will be recorded in the profit or loss forthe fiscal year ending March 31, 2010.

36.2. HITOn July 22, 2009, the capital restructuring that was agreed byRHJI and HIT’s lenders on May 25, 2009, was successfullycompleted. As part of the restructuring, RHJI invested EUR 50million in exchange for a controlling stake in Honsel AG, HIT’soperating subsidiary. The remaining stake of 49% is held byHonsel’s former senior lenders following a debt-for-equityswap, which resulted in HIT’s total outstanding debt ofapproximately EUR 510 million being reduced to EUR 140million, consisting of EUR 110 million senior term loan and EUR30 million mezzanine term loan, all of which is held by Honsel’sformer senior term lenders. Honsel’s existing EUR 40 millionrevolving credit facility, as well as EUR 50 million of financingfrom RHJI, certain of Honsel’s key customers and alonesupplier, remained in place. RHJI also committed to a newsenior backstop facility of EUR 10 million.

36.3. NilesOn May 20, 2009, Niles bolstered its capital structure through atotal capital injection of JPY 6,500 million, of which JPY 3,500million was provided by RHJI and JPY 2,500 million by a majorstakeholder, which resulted in RHJI’s ownership in Niles to bereduced from 96.4% to 77.3%. Part of the proceeds was used torepay JPY 2.5 billion of short-term debt that was previouslysecured by a cash deposit from the Company. Furthermore,syndicate lenders agreed on a refinancing of the existing debtstructure with new bullet loans maturing in June 2011.

36.4. Commercial International BankOn July 8, 2009, RHJI announced that it had entered into anagreement to sell 63% of its stake in CIB for a total cashconsideration of USD 53.1 million, representing a capital gain of107% to its initial purchase price. As part of a consortium led byRipplewood Holdings L.LC., a leading U.S.-based private equityfirm, RHJI had acquired its stake in February of 2006. In addition tothe sale of its stake in CIB, RHJI also disposed of a minority interestfor total cash proceeds of EUR 15.9 million, yielding a capital gain ofEUR 7.5 million and representing an absolute return of 90%.

36.5. OthersOn July, 13, 2009, RHJI announced that it was in negotiationswith General Motors Corporation ("GM") over the acquisition of amajority stake in GM's European subsidiary Adam Opel GmbH,which includes Vauxhall in the UK.

37. AUDITOR'S FEERHJI’s statutory auditor, KPMG Réviseurs d’Entreprises, and anumber of KPMG member firms, received fees amounting toJPY 633 million and JPY 950 million for respectively fiscal yearsended March 31, 2009 and 2008 for the following services:


KPMG Réviseurs d'Entreprises

Audit 40 47

Audit related services 7 3

47 50

KPMG Network

Audit 459 640

Audit related services 116 29

Tax related services 6 182

Other services 5 49

586 900

Total 633 950

99


DIRECTORS' REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE FISCAL YEAR ENDED MARCH 31, 2009

The Directors’ report on the consolidated financial statements for the fiscal year ended March 31, 2009, prepared in accordance withthe Belgian Companies Code is available on request from RHJI’s registered office and on its website (www.rhji.com). All informationcontained in this Directors Report listed below, is presented in the different sections of this Annual Report:

• Business and financial review of the consolidated financial statements for the years ended March 31, 2009 and 2008 (Part I, page 7-25);

• Material events subsequent to March 31, 2009 (Part II, note 36, page 98);• Principal risks and uncertainties (Part II, page 34-35);• Risk management and the use of derivatives financial instruments (Part II, note 30, page 86);• Disclosure required by article 34 of the Belgian Royal Decree of 14 November 2007 (Part III, page 118).

100

STATUTORY AUDITOR’S REPORTTO THE GENERAL MEETING OFSHAREHOLDERS OF RHJINTERNATIONAL SA ON THECONSOLIDATED FINANCIALSTATEMENTS FOR THE YEARENDED MARCH 31, 2009In accordance with legal and statutory requirements, we reportto you on the performance of our audit mandate. This reportincludes our opinion on the consolidated financial statementstogether with the required additional comment.

Unqualified audit opinion on the consolidatedfinancial statementsWe have audited the consolidated financial statements of RHJInternational SA (“the company”) and its subsidiaries (jointly “thegroup”), prepared in accordance with International FinancialReporting Standards, as adopted by the European Union, andwith the legal and regulatory requirements applicable inBelgium. These consolidated financial statements comprise theconsolidated balance sheet as of March 31, 2009 and theconsolidated statements of income, recognized income andexpense and cash flows for the year then ended, as well as thesummary of significant accounting policies and the otherexplanatory notes. The total of the consolidated balance sheetamounts to JPY 357,617 million and the consolidated incomestatement shows a loss for the period of JPY 131,271 million.

The board of directors of the company is responsible for thepreparation of the consolidated financial statements. Thisresponsibility includes: designing, implementing andmaintaining internal control relevant to the preparation and fairpresentation of consolidated financial statements that are freefrom material misstatement, whether due to fraud or error;selecting and applying appropriate accounting policies; andmaking accounting estimates that are reasonable in thecircumstances.

Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audit. We conducted ouraudit in accordance with International Standards on Auditing,legal requirements and auditing standards applicable inBelgium, as issued by the “Institut des Réviseursd’Entreprises/Instituut der Bedrijfsrevisoren”. Those standards

require that we plan and perform the audit to obtain reasonableassurance whether the consolidated financial statements arefree from material misstatement.

In accordance with these standards, we have performedprocedures to obtain audit evidence about the amounts anddisclosures in the consolidated financial statements. Theprocedures selected depend on our judgment, including theassessment of the risks of material misstatement of theconsolidated financial statements, whether due to fraud orerror. In making those risk assessments, we have consideredinternal control relevant to the group’s preparation and fairpresentation of the consolidated financial statements in order todesign audit procedures that are appropriate in thecircumstances but not for the purpose of expressing an opinionon the effectiveness of the group’s internal control. We havealso evaluated the appropriateness of the accounting policiesused, the reasonableness of accounting estimates made by thecompany and the presentation of the consolidated financialstatements, taken as a whole. Finally, we have obtained frommanagement and responsible officers of the company theexplanations and information necessary for our audit. Webelieve that the audit evidence we have obtained provides areasonable basis for our opinion.

In our opinion, the consolidated financial statements give a trueand fair view of the group’s net worth and financial position as ofMarch 31, 2009 and of its results and cash flows for the yearthen ended in accordance with International Financial ReportingStandards, as adopted by the European Union, and with the legaland regulatory requirements applicable in Belgium.

Additional commentThe preparation of the directors’ report on the consolidatedfinancial statements and its content are the responsibility of theboard of directors.

AUDITOR'S REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS FOR THE FISCAL YEAR ENDED MARCH 31, 2009

101


Our responsibility is to supplement our report with the followingadditional comment, which does not modify our audit opinion onthe financial statements:

• The directors’ report on the consolidated financialstatements includes the information required by law and isconsistent with the consolidated financial statements. Weare, however, unable to comment on the description of theprincipal risks and uncertainties which the group is facing,and on its financial situation, its foreseeable evolution or thesignificant influence of certain facts on its futuredevelopment. We can nevertheless confirm that the mattersdisclosed do not present any obvious inconsistencies withthe information that we became aware of during theperformance of our mandate.

Brussels, July 22, 2009

KPMG Réviseurs d’EntreprisesStatutory auditor represented by

Benoit Van RoostRéviseur d’Entreprises

102

In accordance with Article 105 of the Belgian Companies Code, the non-consolidated accounts are presented below in a condensedversion. The full version of the non-consolidated annual accounts, along with the related Directors’ Report and the Statutory Auditors’Report, as they will be presented at the Annual Shareholders’ Meeting, are available on request from RHJI’s registered office and onits website (www.rhji.com). The Statutory Auditor has expressed an unqualified opinion on these annual accounts.

Condensed non-consolidated balance sheet as at March 31


Assets

Tangible fixed assets 78 95

Intangible fixed assets 19 31

Financial fixed assets 61,647 157,450

Total non-current assets 61,744 157,576

Trade and other receivables 943 1,389

Short-term investments 51,979 23,590

Cash and cash equivalents 6,989 28,293

Others 46 418

Total current assets 59,957 53,690

Total assets 121,701 211,266

Equity

Issued capital 88,491 88,491

Share premium 104,604 104,604

Reserves 18,145 18,416


Total equity 120,199 209,789

Current liabilities

Trade and other payables 850 1,019

Others 652 458

Total current liabilities 1,502 1,477

Total equity and liabilities 121,701 211,266

CONDENSED NON-CONSOLIDATED FINANCIAL STATEMENTS FORTHE FISCAL YEAR ENDED MARCH 31, 2009

103


Condensed non-consolidated income statement for the fiscal year endedMarch 31

The appropriation of the loss for the year is as follows:


Revenue

Other operating income 2 1

Cost of sales

Services and other goods (6,298) (3,923)

Depreciation and amortization (34) (31)

Other operating expenses (8) (2)

Operating loss (6,338) (3,955)

Financial income 9,071 4,234

Financial expenses (13,284) (5,916)

Net financing costs (4,213) (1,682)

Extraordinary expenses (78,748) (21)

Loss before tax (89,299) (5,658)

Income tax expense (20) (20)

Loss for the year (89,319) (5,678)

(In JPY millions)

Loss for the year (89,319) (5,678)

Profit (loss) carried forward from last year (1,722) 3,956


PART IIICORPORATE GOVERNANCE

107

CORPORATE GOVERNANCE

The Belgian Corporate Governance Committee formed by the Belgian Banking, Finance and Insurance Commission (“CBFA”),Euronext Brussels and the Federation of Belgian Enterprises published on December 9, 2004 a Code on Corporate Governance, asamended and restated on March 12, 2009, which is a code of best practice containing recommendations and applying to listedcompanies on a non-binding basis. In accordance with the Code, RHJI adopted a Corporate Governance Charter which may be viewedon RHJI’s website at www.rhji.com (1). The Corporate Governance Charter describes the main aspects of the rules and practices underwhich RHJI operates and by which shareholders can expect RHJI to operate.

This section summarizes the corporate governance structure of RHJI and provides certain factual information that the Belgian Codeon Corporate Governance recommends to be included in this Annual Report (2). The section also contains some information required byArticle 34 of the Belgian Royal Decree of 14 November 2007 concerning the obligations of listed issuers to disclose information.

(1) The current Corporate Governance Charter of RHJI was adopted before the publication of the new version of the Belgian Code on Corporate Governance. While the Charter issubstantially in compliance with the new version of the Belgian Code on Corporate Governance (subject to what is said in footnote 2 below), it is however being reviewed andwill be subject to some adjustments to take into account this new version. References, in this “Corporate Governance” section, to the “Belgian Code on CorporateGovernance” are to such Code in its December 2004 version.

(2) This “Corporate Governance” section does not yet reflect new recommendations contained in the new version of the Belgian Code on Corporate Governance. Suchrecommendations are being reviewed and will be reflected, as appropriate, in the next Annual Report (relating to the fiscal year ending March 31, 2010).

108

POWERS AND RESPONSIBILITIESIn accordance with the Belgian Companies Code, RHJI isadministered by a Board of Directors with full powers andauthority to undertake any action, except where specific powersare reserved for action at a Shareholders’ Meeting, either by lawor pursuant to RHJI’s Articles of Association. Among others, theBoard of Directors approves RHJI’s strategy as recommended bythe Investment and Strategy Committee, reviews and approvesthe annual and six-month financial statements and presents tothe Annual Shareholders’ Meeting an evaluation of RHJI’sfinancial situation. The Board of Directors appoints the ChiefExecutive Officer and members of the Board’s Committees. TheBoard of Directors may assign a special mandate to one or moreDirectors, but all other Board decisions must be taken by theBoard of Directors as a whole. The Board has delegated the dailymanagement of RHJI to its Chief Executive Officer, Mr. Fischer(see section “Chief Executive Officer” hereunder), and certainresponsibilities for mergers & acquisitions to the Investment andStrategy Committee (see “Board Committees” hereunder).

FUNCTIONINGThe Board of Directors is a collegial body. It deliberates if amajority of its members are present or represented (except inthe case of force majeure, for which the quorum is threedirectors present or represented).

The Board of Directors meets as regularly and as frequently asrequired by RHJI’s interests.

In accordance with the Belgian Companies Code (Article 523), anydirector with a conflicting interest must bring this to the notice ofboth the statutory auditor (see “Statutory Auditor” below) and hisfellow directors and may not take part in related deliberations.

During the fiscal year ended March 31, 2009, the Board ofDirectors held 13 meetings, in addition to periodic updates fromexecutive management. Major topics considered by the Board ofDirectors during the fiscal year included, among others: financialstatements and reports relating thereto for the fiscal year endedMarch 31, 2009, operations and performance of the Company;new investments; incentive compensation plan and renewal ofthe waiver granted to Mr. Collins as then co-Chief ExecutiveOfficer, with respect to his outside activities (see below). Theconflict of interest procedure provided by Article 523 of theBelgian Companies Code was applied four times (please refer tothe statutory report of the Board of Directors on the non-consolidated financial statements dated July 22, 2009 of RHJInternational SA, which is published separately from this AnnualReport and may be viewed on RHJI’s website at www.rhji.com).Directors attended all meetings, except that Mr. Daniel did notattend one meeting, Mr. Sillem did not attend two meetings, LordJacob Rothschild did not attend one meeting, Mr. König did notattend one meeting, Mr. Döpfner did not attend one meeting andMr. Golub did not attend six meetings.

COMPOSITIONBoard members are appointed by the shareholders at aShareholders’ Meeting upon proposal by the Board of Directors.RHJI’s Articles of Association provide that the Board of Directorsmust have at least seven and at most twelve directors. RHJI’sArticles of Association also provide that as long as Mr. Collins,together with his affiliates, owns, directly or indirectly, at least5% of RHJI’s outstanding shares, he will have the right topresent a pool of two candidates, from which the Shareholders’Meeting must select one, but may select both, for election to theBoard of Directors. The Nomination and RemunerationCommittee (see “Nomination and Remuneration Committee”)nominates the other candidates for election to the Board ofDirectors.

To qualify as an independent director, such person must complywith the conditions set forth in Article 526ter of the BelgianCompanies Code.

BOARD OF DIRECTORS

109


The following table sets forth the current members of the Boardof Directors. Each director serves for a three-year term endingon the date of the Annual Shareholders’ Meeting in September2011 which will approve the non-consolidated financialstatements relating to the fiscal year ending in March 2011.Directors may be reappointed. Biographies of each director areavailable here below and may be viewed on RHJI’s website atwww.rhji.com .

Name Age Title

D. Ronald Daniel (3) (4) 79 Chairman of the Board of Directors and Chairman

of the Nomination and Remuneration Committee

Timothy C. Collins (4) 52 Chairman of the Investment and Strategy Committee

Leonhard Fischer (4) 46 Chief Executive Officer

Mathias Döpfner (3) 46 Director

Harvey Golub 70 Director

Gerd Häusler 58 Director

Björn König (1) (2) 47 Director

Jun Makihara (1) (2) (3) 51 Director

Jeremy W. Sillem (1) (2) 59 Chairman of the Auditand Compliance Committee

(1) Independent director pursuant to Article 526ter of the Belgian Companies Code.(2) Member of the Audit and Compliance Committee.(3) Member of the Nomination and Remuneration Committee.(4) Member of the Investment and Strategy Committee

D. Ronald Daniel – Chairman of the Board of Directors and of theNomination and Remuneration Committee :

Mr. Daniel, a director since April 1, 2005, has been amanagement consultant for 47 years, including 12 years asMcKinsey & Company’s managing partner. Prior to joiningMcKinsey, Mr. Daniel served in the United States Navy.

From 1989 through 2004, Mr. Daniel was the Treasurer ofHarvard University, a member of the Harvard Corporation and amember of the Harvard Board of Overseers. He also wasChairman of the Harvard Management Company (whichoversees Harvard’s endowment) and Chairman of the Board ofFellows of the Harvard Medical School.

Mr. Daniel is also a member of the Board of Trustees ofThirteen/WNET, of Rockefeller University and of BrandeisUniversity. He is a member of the Council on Foreign Relations,an Honorary Trustee of the Brookings Institution and ChairmanEmeritus of the Wesleyan University Board of Trustees.

Mr. Daniel has a B.A. in Mathematics from Wesleyan Universityand an M.B.A. from Harvard Business School. He also holds anHonorary Doctor of Humane Letters from Wesleyan University.

Timothy C. Collins – Director and Chairman of the Investmentand Strategy Committee:

A director with RHJI since the company's formation in June 2004,Mr. Collins was appointed on January 2009 as Chairman of theInvestment and Strategy Committee. Mr. Collins was co-ChiefExecutive Officer of RHJI from May 2007 (when Mr. Fischer joinedthe company) until December of 2008. He was RHJI's ChiefExecutive Officer from its formation in June 2004 until May 2007.

Mr. Collins founded Ripplewood Holdings LLC in 1995 andcurrently serves as its Senior Managing Director and ChiefExecutive Officer. From 1990 to 1995, Mr. Collins managed theNew York office of Onex Corporation, a Toronto-based holdingcompany engaged in acquiring companies in a variety ofindustries. Previously, Mr. Collins held positions at Lazard Frères& Company, Booz, Allen & Hamilton and Cummins EngineCompany. Mr. Collins is a director of Commercial InternationalBank and RSC Equipment Rental which are publicly tradedportfolio companies of Ripplewood, as well as a director ofvarious privately held Ripplewood portfolio companies.

He is involved in several not-for-profit and public sectoractivities, including the Trilateral Commission, Yale DivinitySchool Advisory Board, Yale School of Organization andManagement Board of Advisors, the Board of Overseers of theWeill Cornell Medical College and is a member of the Council onForeign Relations. Mr. Collins is also a Trustee of the CarnegieHall Society.

Mr. Collins has a B.A. in Philosophy from DePauw University andan M.B.A. from Yale University’s School of Organization andManagement.

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Leonard Fischer – Director and Chief Executive Officer:

Leonhard Fischer was appointed Chief Executive Officer inJanuary 2009. He was co-Chief Executive Officer of RHJI sinceMay 2007 and is a member of the Board of Directors sinceSeptember 18, 2007.

Prior to joining RHJI, Mr. Fischer was Chief Executive Officer ofWinterthur Group from 2003 to 2006, an insurance subsidiary ofCredit Suisse, and a member of the Executive Board of CreditSuisse Group from 2003 to March 2007. Mr. Fischer joined CreditSuisse Group from Allianz AG, where he had been a Member ofthe Management Board and Head of the Corporates and MarketsDivision since 2001. Previously, he had been with Dresdner BankAG as a member of the Executive Board since 1998 and with JPMorgan in Frankfurt since 1987.

Mr. Fischer holds an M.A. in Finance from the University ofGeorgia and a Business Management Degree from the Universityof Bielefeld.

Harvey Golub – Director:

Mr. Golub has been a director of RHJI since September 2006.Mr. Golub is the Non-Executive Chairman of RipplewoodHoldings, LLC. He serves as Non-Executive Chairman of theBoards of Campbell Soup Company and the Reader’s DigestAssociation. Mr. Golub also serves on the Boards of the LincolnCenter for the Performing Arts, the American EnterpriseInstitute, and the New York Presbyterian Hospital, and as amember of the Advisory Board of Miller Buckfire & Co., LLC.Previously, Mr. Golub has served on the Board of Dow Jones &Company.

Mr. Golub served as the Chief Executive Officer and Chairman ofthe Board of American Express from 1993 until he retired in2001.

Prior to joining American Express in 1991, he was a seniorpartner with McKinsey & Co.

Mr. Golub attended Cornell University from 1956 to 1958, andreceived a B.S. degree from the New York University in 1961.

Mathias Döpfner – Director:

Dr. Döpfner was appointed as a director of RHJI on September16, 2008. He is currently Chairman and Chief Executive Officer ofAxel Springer AG in Berlin, which he joined in 1998 as Editor-in-Chief of Die Welt. He has been a Member of the ManagementBoard there since the year 2000.

Mathias Döpfner has held several different positions in mediacompanies during his career. Amongst others, as Editor-in-Chiefof the Wochen Post and the Hamburger Morgenpostnewspapers. Since 2006 he has been a member of the Board ofDirectors at Time Warner, Inc.

He is also on the Supervisory Boards of the Deutsche PresseAgentur and the Leipziger Verlags- und Druckereigesellschaft,as well as being a member of the European Publishers Council.He holds Honorary Offices at the American Academy, the AspenInstitute, and on the American Jewish Committee.

Dr. Döpfner studied Musicology, German, and Theatrical Arts inFrankfurt and Boston.

Björn König – Director:

Mr. König, a director since April 1, 2005, is currently an adviserto private equity and alternative asset management groups.

Mr. König has several years of experience as an investor inlimited partnerships and has served as an advisor in theestablishment of a number of limited partnerships.

Mr. König has a B.S. in Business Administration from theUniversity of Stockholm, Sweden.

Jun Makihara – Director:

Mr. Makihara, a director since April 1, 2005, is currently theChairman of Neoteny Co., Ltd., an early stage ventureinvestment firm in Japan. From 1981 to 2000, Mr. Makihara waswith Goldman, Sachs & Co. where he served in variouscapacities, including as a Managing Director in New York inInvestment Banking from 1998 to 2000, as a Managing Directorin Tokyo as co-head of Equities and co-branch manager from1995 to 1998 and as co-head of Investment Banking in Tokyofrom 1992 to 1995. Mr. Makihara is a director of Monex Group,Inc. and the Japan Society.

Mr. Makihara has an B.A. from Harvard College in Economicsand an M.B.A. from Harvard Business School.

Gerd Häusler – Director:

Mr. Gerd Häusler joined RHJI in October 2008 as a director and asenior advisor after having served the previous two years atLazard as a Vice-Chairman and Managing Director in theirFinancial Institutions Group and their Sovereign Debt Advisorypractice.

Between 2001 and 2006 he was counselor and director of theInternational Capital Markets Department of the IMFresponsible for all financial markets-related work and iscredited with the creation of the Global Financial StabilityReport; he also represented the Fund at the Financial StabilityForum. Before, Mr. Häusler was a Member of the Board ofManaging Directors at Dresdner Bank AG in Frankfurt (1996 to2000) and Chairman of Dresdner Kleinwort Benson in London

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(1997 to 2000). He spent the first 18 years of his career atDeutsche Bundesbank, the last two of them (1994-1996) on theExecutive Board and the Central Bank Council. He has served asan outside director on the board of various companies and hasbeen a member of the Group of Thirty, a think tank, since 1996.

Mr. Häusler studied Law and Economics at the Universities ofFrankfurt and Geneva.

Jeremy W. Sillem – Director and Chairman of the Audit andCompliance Committee :

Mr. Sillem, a director since April 1, 2005, is the ManagingPartner and Co-Founder of Spencer House Partners LLP. Priorto establishing Spencer House Partners, he was the Chairman ofBear, Stearns International Limited, the European arm of theNew York based investment bank, from May 2000 until January2004. Prior to joining Bear Stearns, Mr. Sillem spent a 28 yearcareer with Lazard LLC and its predecessor entities, during fiveyear of which he was Chief Executive of Lazard Capital Marketsin London.

Currently, Mr. Sillem is Chairman of the World Trust Fund, aLondon Stock Exchange-listed investment company; a directorof Martin Currie (Holdings) Limited, a privately held equitiesfund manager; a director of Harbourmaster Capital (Holdings)Limited, a privately held European-based credit manager; and adirector of Checkmate Mortgages Limited, due to start trading in2009 in the UK mortgage distribution sector.

He is also a member of the Hoegh Capital Partners Hedge FundAdvisory Committee, the Advisory Board of Partners CapitalInvestment Group, the Investment Committee of BrasenoseCollege Oxford and serves as an Advisory Director of Reform,the London based public policy think tank. From 1994 to 2004 hewas a member of the International Capital Markets Committeeof the New York Stock Exchange.

Mr. Sillem has a M.A. in Philosophy, Politics and Economicsfrom Oxford University.

COMPENSATIONThe following compensation was paid to directors for theirservices as directors during the fiscal year ended March 31,2009.

Each of RHJI’s non-executive directors (except as mentionedbelow and other than the Chairman of the Board of Directors)was paid an amount of EUR 100,000. The Chairman has beenpaid an amount of EUR 250,000. In addition, the Chairman of theAudit and Compliance Committee (see “Audit and ComplianceCommittee”) has been paid an amount of EUR 60,000 andmembers of that Committee have been paid an amount of EUR40,000. The Chairman of the Nomination and Remunerationcommittee (see “Nomination and Remuneration Committee”)has been paid an amount of EUR 40,000 and members of thatCommittee have been paid an amount of EUR 25,000. Pursuantto the Corporate Governance Charter of RHJI, the Chairman ofthe Investment and Strategy Committee (see “Investment andStrategy Committee”) is paid an annual retainer of EUR 60,000and members of such Committee are paid an annual retainer ofEUR 40,000.

No benefits were granted to directors for their services asdirectors.

Directors who are (Leonhard Fischer) or were (Timothy C.Collins) members of RHJI’s executive management do notreceive any compensation for their services as directors ormembers of any Board Committees.

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AUDIT AND COMPLIANCECOMMITTEEThe Audit and Compliance Committee must consist of at leastthree non-executive directors, all of whom must be independentand none of whom may be the Chairman of the Board ofDirectors. Directors may be appointed to the Audit andCompliance Committee for terms of up to three years and maybe re-appointed.

The Audit and Compliance Committee’s role is to assist andadvise the Board of Directors regarding, among others, (i) thequality and integrity of RHJI’s financial statements, (ii) therelationship with RHJI’s statutory auditor, (iii) risk management,(iv) compliance with legal and regulatory requirements, (v)compliance with internal codes of conduct and other policies and(vi) potential conflicts of interests of Mr. Collins (see section“Mr. Collins as Director and Chairman of the Investment andStrategy Committee”).

The Audit and Compliance Committee currently consists ofMessrs. Sillem, König and Makihara.

During the fiscal year ended March 31, 2009, the Audit andCompliance Committee held six meetings. Major topicsconsidered by the Committee during the fiscal year were:financial statements and reports relating to the fiscal yearsended March 31, 2008 and 2009, risk management systems andcontrols, relationship with the statutory auditor, reportingframework in accordance with new Belgian requirements andrenewal of the waiver granted to Mr. Collins as then co-ChiefExecutive Officer with respect to his outside activities and underthe Code of Business Conduct and Ethics for the periodbeginning on February 20, 2008 until February 28, 2009 (seebelow). Committee members attended all meetings of the Auditand Compliance Committee during the fiscal year except thatMr. Makihara did not attend one meeting.

The Belgian Code on Corporate Governance recommends theestablishment of an internal audit function. An experiencedinternal audit professional based in the Tokyo office providesguidance and support to the Company’s portfolio companyoperations in Japan. Currently, the internal audit activities donot cover Honsel, but the Audit and Compliance Committee willcontinue to monitor the Company’s internal audit function basedon the Company’s evolving size and needs.

NOMINATION AND REMUNERATIONCOMMITTEEThe Nomination and Remuneration Committee must consist ofat least three non-executive directors, a majority of whom mustbe independent. Directors may be appointed to the Nominationand Remuneration Committee for terms of up to three years andmay be re-appointed (but no member of the Committee shallserve for consecutive terms collectively exceeding nine years).

The Nomination and Remuneration Committee’s role is to assistand advise the Board of Directors regarding, among others, (i)the size and composition of, and appointment to, the Board ofDirectors, (ii) the size and composition of, and appointment to,the committees of the Board of Directors, (iii) appointment ofmembers of senior management and (iv) the remunerationpolicy, evaluation and strategy for directors and personnel.

The Nomination and Remuneration Committee currentlyconsists of Messrs. Daniel, Döpfner and Makihara.

During the fiscal year ended March 31, 2009, the Nomination andRemuneration Committee held 4 meetings. Major topicsconsidered by the Committee during the fiscal year were: seniormanagement compensation and long-term incentives andappointment of Board members. Committee members attendedall meetings of the Nomination and Remuneration Committeeduring the fiscal year.

BOARD COMMITTEES

The RHJI Board of Directors has created the following Board Committees : the Audit and Compliance Committee, the Nomination andRemuneration Committee and the Investment and Strategy Committee. The Board of Directors has adopted formal charters for suchcommittees. Amendments to key principles with respect to the composition and core tasks of such committees, as set out in theirrespective charters, may be made by the Board of Directors.

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INVESTMENT AND STRATEGYCOMMITTEEThe Investment and Strategy Committee is a new committee ofthe Board of Directors, which has been established as ofJanuary 2009.

The Investment and Strategy Committee must consist of at leastthree executive or non-executive directors. Directors may beappointed to the Investment and Strategy Committee for termsof up to three years and may be re-appointed.

The key responsibilities of the Investment and StrategyCommittee include:

(i) approval of any acquisition in which the purchase pricepayable by RHJI, together with any other commitment madeby RHJI, does not exceed 100 million and any disposal inwhich the sale price or book value of the sold assets(whichever is the highest), together with any other form ofpayment does not exceed 100 million;

(ii) approval of any financing activity related to an acquisitionmentioned in (i);

(iii) providing recommendations to the Board of Directorsregarding any acquisition (including any related financingactivity) or disposal in excess of 100 million;

(iv) in consultation with the Nomination and RemunerationCommittee, jointly recommending, to the Board of Directors,individuals for appointment as Chief Executive Officer, ChiefFinancial Officer and General Counsel;

(v) defining and preparing the strategic options and proposals(including alliances, spin-offs or mergers, investments,acquisitions, divestitures, capital structure and secondarylistings) that may contribute to the development of RHJI, forrecommendations to the Board of Directors.

The Investment and Strategy Committee currently consists ofMessrs. Collins, Daniel and Fischer. Mr. Collins is Chairman ofthe Investment and Strategy Committee.

During the fiscal year ended March 31, 2009, the Investment andStrategy Committee held no meetings as it was established inJanuary 2009.

MR. COLLINS AS DIRECTOR ANDCHAIRMAN OF THE INVESTMENTAND STRATEGY COMMITTEE

TIME COMMITMENT Under the terms of RHJI’s agreement with Mr. Collins, he is onlyrequired to spend as much of his aggregate business time andattention as is required to fulfill his functions as RHJI’s directorand Chairman of the Investment and Strategy Committee. Mr.Collins continues to be obligated under the terms of certainexisting private equity partnership agreements to devotebusiness time and attention to such partnerships. In addition, inthe future he also may create funds or other investment entitiesthat could require a substantial portion of his business time andattention. Such partnerships, funds or other investment entitiesmay potentially compete, from time to time, with the interests ofRHJI.

COMPENSATIONDuring the fiscal year ended March 31, 2009, Mr. Collinsreceived a compensation of EUR 100,000 as then co-Chief-Executive Officer of RHJI. He did not receive any other elementof compensation, such as any bonus or any participation inexecutive benefit plans and programs established by RHJI. Mr.Collins did not receive any shares, share warrants, shareoptions or any other right to acquire shares of RHJI during thefiscal year ended March 31, 2009. Mr. Collins will not be paid forhis function as member and Chairman of the Investment andStrategy Committee.

TERM AND TERMINATION The initial term of Mr Collins’ agreement with RHJI expires inMarch 2010. At the end of the initial term, the agreement willautomatically renew for successive one year terms, unlessnotice is given by RHJI to Mr. Collins that it does not intend torenew the current term, no later than 30 days prior to theexpiration thereof. Mr. Collins’ agreement may be terminatedby the Board of Directors at any time, with or without cause. Noseverance will be paid to Mr. Collins upon termination except asmay be required by law. Upon termination of the agreement, Mr.Collins will receive payment for any accrued compensation andunreimbursed expenses. In addition, Mr. Collins will resign fromRHJI’s Board of Directors, the Investment and StrategyCommittee and any committee thereof, and any Board ofDirectors (and committee thereof) of any companies owneddirectly or indirectly by RHJI.

If Mr. Collins is terminated prior to March 23, 2010, unless thetermination was for cause, Mr. Collins will no longer be subjectpursuant to his agreement with RHJI to restrictions on transfersof RHJI’s ordinary shares held by him, as described below.Cause is narrowly defined as (1) willful and continued failure to

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substantially perform duties (other than due to physical ormental illness) after written notice from the Board of Directorsor (2) conviction of, or plea of nolo contendere to, a felony.

In the event Mr. Collins is subject to the so-called “goldenparachute” excise tax under Section 4999 of the U.S. InternalRevenue Code upon any termination, RHJI will pay him anadditional amount to place him in the same after-tax positionthat he would have been in had no excise tax been imposed.

RESTRICTIONS ON SHARE TRANSFERS At the time of RHJI’s initial public offering in March 2005, Mr.Collins agreed with RHJI that he could not transfer, pledge,assign, hypothecate or otherwise dispose of RHJI’s ordinaryshares (including by way of any hedging or similar transactionthat would result in the reduction or elimination of the downsiderisk in respect of their investment in such shares), subject tosome limited exceptions. The lock-up agreement with RHJI endson March 23, 2010. Mr. Collins will be released from the termsof any lock-up agreement with RHJI in the event of anytermination of his agreement with RHJI, other than for a cause,prior to March 23, 2010.

NEW OPPORTUNITIES Mr. Collins has agreed that he will use reasonable efforts toprovide additional acquisition opportunities to RHJI that areconsistent with RHJI’s strategy, although Mr. Collins will nothave any obligation to allocate any particular opportunity toRHJI.

On March 23, 2005, RHJI’s Board of Directors adopted aresolution waiving the specific provisions of the RHJI’s Code ofBusiness Conduct and Ethics (see “Code of Business Conductand Ethics Code”) that would apply to the outside activities of Mr.Collins, as a member of the Board of Directors and as then ChiefExecutive Officer. The resolution was valid for a period ending onthe first anniversary date of such resolution. RHJI’s Board ofDirectors had subsequently renewed the above waiver on ayearly basis and, lastly, on March 5, 2009 approved a waiver forthe fiscal year ending March 31, 2010.

On an annual basis, the Board of Directors will continue todetermine whether to renew the above waiver, after a thoroughreview of Mr. Collins’ activities outside RHJI. Any resolutionrenewing the waiver shall only be validly adopted if it has beenapproved by at least three-quarters of RHJI’s independentdirectors present or represented at the relevant meeting of theBoard of Directors.

In addition, the procedure required by Article 523 of the BelgianCompanies Code applies to the renewal of such waiver.

MR. FISCHER AS CHIEF EXECUTIVEOFFICERMr. Fischer has been co-Chief Executive Officer of RHJI sinceMay 2007. Since January 1, 2009, Mr. Leonhard Fischer is soleChief Executive Officer and, as such, carries out the dailymanagement of RHJI. Mr. Fischer is engaged full-time with theCompany for an indefinite term.

DELEGATION OF AUTHORITYThe Board of Directors has delegated to Mr. Fischer the powerstypically exercised by a Chief Executive Officer, which consists ofgeneral executive authority over RHJI’s affairs arising in theordinary course of business. The authority delegated to the ChiefExecutive Officer is intended to be within the limits of the dailymanagement of RHJI’s business within the meaning of theBelgian Companies Code. At any time the Board of Directors willhave the power to withdraw or modify the authority it hasdelegated or terminate the agreement (see below) with the ChiefExecutive Officer with or without cause.

Mr. Fischer is authorized to sub-delegate, under his ownresponsibility, one or more specific powers falling within thescope of day-to-day management to employees of the Companyor any other person of his choice. However, he may not sub-delegate the daily management as a whole to anybody.

As part of his daily management powers, Mr. Fischer hasauthority to cause the Company to, among others, incur or grantany form of financing; grant any form of collateral; effect anytreasury management transaction, investment or disinvestmenttransaction, hedging transaction, renting or leasing transaction;enter into any (including consultancy) services agreement (as aprovider or beneficiary of the services); initiate or defend legalproceedings, provided (i) the amount of such financing,collateral, treasury management transaction, investment ordisinvestment transaction, hedging transaction, renting orleasing transaction, services agreement or legal proceedingsdoes not exceed EUR 25 million and (ii) such financing,collateral, hedging transaction or services agreement are forpurposes other than M&A activity or such investment ordisinvestment transaction does not qualify as M&A activity. Thefollowing will not qualify as “M&A activity”: any (i) investmentinto or (ii) disinvestment of, a shareholding in a company whensuch shareholding represents (together with any such sharesalready, directly or indirectly, (i) held or (ii) disinvested,respectively, by the Company) less than 10% of all sharesoutstanding of such company.

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Mr. Fischer has no authority over any matters that are reservedfor the Board of Directors or the Shareholders’ Meetingpursuant to law or the Company’s Articles of Association or thatare within the duties of any committee of the Board of Directors.

Without prejudice to the day-to-day management powers ofMr. Fischer, Mr. Fischer has specific representation powers tohire, dismiss and determine the terms of employment of anyemployee, including any member of the Company’s seniormanagement (other than the Chief Executive Officer, ChiefFinancial Officer and General Counsel).

COMPENSATIONMr. Fischer receives an annual salary of EUR 100,000 and iseligible to an annual bonus, that for each of the fiscal yearsended March 31, 2009 and 2008 amounted to EUR 1.5 million. Inconnection with his appointment as co-Chief Executive Officer in2007, entities controlled by Mr. Collins granted Mr. Fischer282,000 shares of RHJI. These shares are subject to a lock-upagreement that ends on May 1, 2010 on substantially similarterms as described for Mr. Collins above. The Company has alsogranted 513,333 shares to Leonhard Fischer, for which vestingwas accelerated, further to a board decision, to October 22,2008, subject to a lock-up that restricts the transfer of sharesfor a four years period without consent of the RHJI Board ofDirectors. On September 16, 2008, RHJI has also granted to Mr.Fischer 90,000 shares of RHJI (free and clear of anyrestrictions). The compensation expense for the Companyassociated with the grant of 90,000 shares to Mr. Fischer and thevesting of the 513,333 shares amounted to JPY 145 million (EUR1 million). for the fiscal year ended March 31, 2009. Mr. Fischerparticipates in executive benefit plans and programs of RHJI andis also eligible for private aircraft usage pursuant to hisemployment agreement.

TERMINATION AND CERTAIN OTHER TERMSMr. Fischer’s employment agreement with the Companyprovides for customary non-compete, non-solicitation and nohire restrictions. The agreement may be terminated by eitherparty, with or without cause. No severance will be paid to Mr.Fischer upon termination except as required by law andpursuant to the non-competition clause if enforced by theCompany. Upon termination of the agreement, Mr. Fischer willreceive payment for any accrued compensation andunreimbursed expenses. In addition, Mr. Fischer will resignfrom any position at the Board of Directors (and committeethereof) of RHJI and any companies owned directly or indirectlyby RHJI, as applicable.

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COMPOSITION OF EXECUTIVEMANAGEMENTThe following table sets forth information as to the individualswho, in addition to RHJI’s Chief Executive Officer, comprisedRHJI’s executive management during the fiscal year endedMarch 31, 2009.

Name Age Function at RHJI

Anthony Barone 60 Executive Vice President

Arnaud Denis 37 Investor Relations Director

Jean-Marc Roelandt 44 Chief Financial Officer

Rüdiger Schmid-Kühnhöfer 35 General Counsel

Richard Shirrefs 53 Executive Vice President

COMPENSATIONPursuant to the terms of the agreements entered into by RHJIand/or its affiliates with the members of RHJI’s executivemanagement, other than Mr. Fischer, the aggregate followingcompensation paid to such members for services during thefiscal year ended March 31, 2009 was:

• an aggregate compensation of JPY 231 million (EUR 1.6million) for services;

• an aggregate bonus (based on performance and paid at thediscretion of the Board of Directors) of JPY 206 million (EUR1.4 million);

• aggregate other remuneration in the form of pensions,insurance coverage and other fringe benefits, includingallowances, of JPY 23 million (EUR 0.2 million).

The members of RHJI’s executive management, other than Mr.Fischer, were awarded a total of 741,260 restricted stock units(“RSU”) under the equity-based compensation plan adopted bythe Board of Directors, on September 18, 2007 (see “Equity-based Compensation Plan” below). Total share-basedcompensation expense associated with the RSU’s awarded onOctober 1, 2007 and recorded in the consolidated incomestatement in accordance with IFRS, amounted to JPY 103 million(EUR 3.2 million) for the fiscal year ended March 31, 2009.177,880 RSU’s were awarded on October 1, 2007 and 563,380RSU’s were awarded on April 1, 2009. The awarded RSU perindividual member of RHJI’s executive management are asfollows:

Name Number of restricted stock units

Anthony Barone 213,183

Arnaud Denis 13,684

Jean-Marc Roelandt 177,971

Rüdiger Schmid-Kühnhöfer 123,239

Richard Shirrefs 213,183

Total 741,260

OTHER MEMBERS OF EXECUTIVE MANAGEMENT

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OTHER TERMSRHJI’s executive management is generally subject to customarynon-compete, non-solicitation and no hire restrictions. Theagreements may be terminated at any time by RHJI. Generallyno severance will be paid to members of RHJI’s executivemanagement upon termination, except as required by law.

EQUITY-BASED COMPENSATION PLANThe adoption of any equity-based compensation plan is subjectto approval by RHJI’s Board of Directors. While the Belgian Codeon Corporate Governance recommends that such equity-basedcompensation plan be submitted to the approval of theshareholders, any equity-based compensation granted to themembers of executive management is (along with othercompensation granted to them) disclosed in the Annual Reportof RHJI and RHJI believes that this provides information forshareholders to assess whether the level and structure of theremuneration of the members of executive management is suchthat qualified professionals can be attracted to, motivated andretained by RHJI, taking into account the global nature of RHJI’sbusiness and competitive environment in which it operates. RHJIfurther believes that the process whereby executiveremuneration requires the approval of the Board of Directors,upon recommendation of the Nomination and RemunerationCommittee, is designed to ensure that such remuneration is fairand equitable.

On September 18, 2007, the Board of Directors has approved along-term share-based incentive plan. The purpose of the planis to serve the interests of RHJI and its affiliates by attractingand retaining exceptional employees, consultants andindependent contractors, aligning their interests with theinterests of RHJI’s shareholders and reinforcing the creation oflong-term value.

Awards under the plan are made in the form of restricted stockunits, which shall be vested at such times, in such manner andsubject to such terms and conditions contained in the relevantaward agreement. For each restricted stock unit which vests,the participant shall receive one share of RHJI or, in the sole andplenary discretion of the Board, a cash amount equal to the fairmarket value of such share as of the vesting date.

RESTRICTION ON SHARE TRANSFERSAt the time of RHJI’s initial public offering in March 2005, inaddition to Mr. Collins, other members of RHJI’s executivemanagement, who were granted shares by a significantshareholder at that time, agreed with RHJI that until March 23,2010, each of them would not transfer, pledge, assign,hypothecate or otherwise dispose of RHJI’s ordinary shares(including by way of any hedging or similar transaction thatwould result in the reduction or elimination of the downside riskin respect of their investment in such shares), subject to somelimited exceptions.

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As of June 30, 2009:

• All directors and executive management as a groupbeneficially own approximately 9.54% of RHJI’s totaloutstanding ordinary shares (which excludes 7.14 % nonbeneficially held by Mr. Collins (see “ShareholdingStructure”));

• All directors and executive management as a group (otherthan Mr. Collins) beneficially own approximately 1.46 %;

• Executive management as a group beneficially ownapproximately 1.20 %.

Article 34 of the Belgian Royal Decree of 14 November 2007requires disclosing certain types of elements when these may besusceptible to have an adverse effect on the ability of a thirdparty to launch a public take-over bid on RHJI.

According to this provision, RHJI discloses the following:

• see Article 8 of RHJI’s Articles of Association (as publishedon www.rhji.com) on the ability of the Board of Directors toincrease the share capital of RHJI under certain conditions;

• see Article 12 of RHJI’s Articles of Association (as publishedon www.rhji.com) on the ability of the Board of Directors tocause RHJI to acquire and dispose of its own shares undercertain conditions.

RHJI SHARES HELD BYDIRECTORS AND EXECUTIVE MANAGEMENT

DISCLOSURE REQUIRED BYARTICLE 34 OF THE BELGIANROYAL DECREE OF 14NOVEMBER 2007

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Under Belgian law, the statutory auditor is appointed by aresolution adopted by a simple majority vote at a Shareholders’Meeting. The statutory auditor is appointed for renewable termsof three years. During their term of office, the statutory auditorcan be removed only by a Shareholders’ Meeting for just cause.

KPMG Reviseurs d’Entreprises/Bedrijfsrevisoren (representedby Mr. Benoit Van Roost, partner) is RHJI’s statutory auditor.

KPMG was appointed, in connection with the audit of the non-consolidated financial statements specifically, until the AnnualShareholders’ Meeting of September, 2010. KPMG wasappointed, in connection with the audit of the consolidatedfinancial statements, until the Annual Shareholders’ Meeting ofSeptember 2011.

The Shareholders’ Meeting determines the remuneration ofRHJI’s statutory auditor for his services in connection with theaudit of RHJI’s financial statements. During the fiscal yearended March 31, 2009, the aggregate annual fee for theseservices has been JPY 42 million (EUR 0.3 million), excludingvalue-added tax and outlays. Information about totalremuneration received by KPMG and certain of KPMG’s memberfirms in lieu of audit and other services is presented in note 37to the Consolidated Financial Statements.

RHJI holds its Annual Shareholders’ Meeting on the thirdTuesday of September of each year. If such day is a legal publicholiday, the meeting will be held on the following working day. Atthis meeting, the Board of Directors and the statutory auditor’sreport on the management and RHJI’s financial situation at theend of the previous fiscal year. RHJI’s shareholders then vote onthe approval of the statutory annual accounts, the allocation ofthe profit or loss, the appointment, if necessary, of new directorsor statutory auditor, and the release from liability of thedirectors and the statutory auditor (see “Statutory Auditor”) forthe previous fiscal year. The Board of Directors or the statutoryauditor may convene an Extraordinary Shareholders’ Meeting atany time RHJI’s interests so require. Shareholders representingone-fifth of RHJI’s total issued share capital may also convenean Extraordinary Shareholders’ Meeting.

Shareholders representing one-fifth of RHJI’s total issued sharecapital may also move to include an item of business in theagenda for a Shareholders’ Meeting. While the Belgian Code onCorporate Governance provides that the level of shareholding tothat effect should not exceed 5% of the total issued sharecapital, the one-fifth threshold adopted by RHJI is in compliancewith the Belgian Companies Code. In addition, RHJI encouragesparticipation at shareholders’ meeting and promotes proxyvoting. Time is always allocated for questions during theShareholders’ Meetings.

Notices of all Shareholders’ Meetings contain the agenda of themeeting and the Board of Directors’ recommendations on thematters to be voted upon and are published in accordance withthe Belgian Companies Code and posted on RHJI’s website atwww.rhji.com.

Except as described below, no quorum is required for aShareholders’ Meeting and decisions are taken upon a simplemajority vote of the shares present in person or represented byproxy. Each ordinary share is entitled to one vote.

Resolutions relating to amendments of RHJI’s Articles ofAssociation are subject to special quorum and majorityrequirements. Specifically, any resolution on these mattersrequires the presence in person or by proxy of shareholdersholding an aggregate of at least 50% of RHJI’s total issued sharecapital and, generally, the approval by at least 75% of the sharespresent in person or represented by proxy at the meeting (and,in some cases, such as, among others, a modification to RHJI’scorporate purposes or legal form, a majority of at least 80%). If aquorum is not present, a second meeting must be convened.

At the second meeting, the quorum requirement does not apply.The special majority requirement, however, will continue toapply.

STATUTORY AUDITOR SHAREHOLDERS’ MEETING

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RHJI’s Code of Business Conduct and Ethics summarizes thevalues, principles and business practices that guide its businessconduct. The Business Conduct and Ethics Code sets out a set ofbasic principles regarding the minimum requirements whicheach of RHJI’s employees, officers, members of executivemanagement, directors, advisors and consultants are expectedto become familiar with and to apply as guiding principles in thedaily performance of their job responsibilities.

In addition to general principles, there are specific provisionswhich address various legal and ethical compliance issues,including, among others, conflicts of interest (including conflictsof interest not covered by Article 523 of the Belgian CompaniesCode), outside directorships and other outside activities,business gifts and entertainment, whether offered or received,competition and fair dealing, discrimination and harassment,health and safety, confidentiality and personal data protectionand protection of proprietary information. The Business Conductand Ethics Code also provide procedures for addressingcomplaints concerning auditing issues.

The Business Conduct and Ethics Code encourage the reportingof any possible unethical or illegal conduct and sets forthspecific compliance procedures. This includes the opportunityfor all complaints to be brought anonymously.

The Business Conduct and Ethics Code is intended tosupplement RHJI’s other policies including the Dealing andDisclosure Code (see “Dealing and Disclosure Code”) and RHJI’sgeneral commitment to comply with applicable laws, and is notintended to replace those laws.

RHJI’s Dealing and Disclosure Code applies to all of RHJI’semployees (including officers and members of executivemanagement) and directors, as well as to the other persons andentities (including, to the extent indicated in the Code, to thecompanies controlled by RHJI) indicated therein.

The purpose of the Dealing and Disclosure Code is to ensurethat such persons and entities do not abuse, nor placethemselves under suspicion of abusing, and maintain theconfidentiality of price sensitive information that they may haveor may be thought to have, especially in periods leading up to anannouncement of financial results or of price sensitive events ordecisions. To this end, the Dealing and Disclosure Code sets outminimum standards to be followed. In particular, subject tospecial clearance that can only be granted in very limitedcircumstances, covered persons may not deal in RHJI’s ordinaryshares during a closed period or a prohibited period. A closedperiod is defined substantially as the period preceding thepublication of periodical financial results, beginning on the lastday of the period covered by such results and ending on the dateof such publication. A prohibited period is a period that RHJI’sGeneral Counsel or RHJI’s Board of Directors has determined asa sensitive period. The Dealing and Disclosure Code alsoprovides that directors and certain members of executivemanagement (and certain persons associated to them) mustcomply with the Belgian law requirement to notify theirtransactions in RHJI shares (or other financial instrumentslinked to such shares) to the CBFA in accordance with applicableBelgian rules and the guidance published by the CBFA. TheDealing and Disclosure Code is not intended to replace theapplicable laws prohibiting insider dealing and disclosure ofprice sensitive information.

BUSINESS CONDUCT AND ETHICS CODE

DEALING AND DISCLOSURE CODE

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PART IV SHAREHOLDERS’ INFORMATION

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Share Code RHJIISIN Code: BE0003815322Reuters Code RHJI.BRBloomberg Code: RHJI.BBNumber of shares 85,545,547Market Capitalization (30/06/2009) EUR 389 million

All outstanding ordinary shares of RHJI have been listed on NYSE-Euronext Brussels and have been part of the BEL Mid Index sinceJuly 1, 2005 and the PRIVATE EQUITY NXT Index since February 2008.

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SHAREHOLDERS’ INFORMATION

Fiscal Year Ending March 31,

In EUR 2009 2008

Highest Closing Price 8.48 15.50

Lowest Closing Price 2.50 7.16

Fiscal Year-End Share Price 2.69 7.16

Number of Shares

Average daily volumes traded 137,620 94,126

Stock Market Capitalization EUR 230 million EUR 612 million

The share capital of RHJI amounts to 664,424,086 EUR and isrepresented by 85,545,547 shares without nominal value. Allshares are listed on NYSE-Euronext Brussels, have the samerights and par accounting value and are fully paid up. Each shareentitles the holder to one voting right.

Based on transparency declarations received by RHJI inaccordance with Belgian rules and RHJI’s Articles ofAssociation, five shareholders have notified RHJI of theirholdings as of June 30, 2009.

Percentages indicated hereunder relate to the voting rightsattached to the total number of outstanding shares issued byRHJI.

• Timothy C. Collins and related entities: 15.22% (13,021,992shares) (includes 7.12% of non-beneficially held shares).

In accordance with Belgian rules, 15.22% represents acombination of shares beneficially owned by Mr. Collins directlyor through entities related with Mr. Collins (8.11%) and shares(held in entities related with Mr. Collins on behalf of certainother investors) over which Mr. Collins is deemed to have votingrights (7.12%) but not beneficial ownership.

• BlackRock Group: 8.41% (7,193,000 shares)• Davis Selected Advisors LP: 5.66% (4,840,741 shares)• Third Avenue Management LLC: 4.60% (3,934,399 shares) • Bank of America Corporation: 2.99% (2,599,672 shares)

SHARE PRICE SHAREHOLDING STRUCTURE

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FINANCIAL CALENDAR AND INVESTOR RELATIONS

Shareholders and investors wishing to obtain copies of this Annual Report or other information on RHJI can contact:

Arnaud DenisInvestor Relations Director Tel. +32 (0)2 643 60 13Fax +32 (0)2 648 99 38 E-Mail : [email protected]

When accessing RHJI’s website on www.rhji.com, you will find a PDF version of this Annual Report, the non-consolidated financialstatements and the related directors’ report and auditors’ report, press releases, stock price and other information on RHJInternational, in English and French.

Date Event

• Tuesday, September 15, 2009 Annual Shareholders’ Meeting

• Between August 1 and August 19, 2009 Trading Update

• Monday, November 30, 2009 Half-Year Results 2009 (Period Ending September 30, 2009)

• Between February 1 and February 17, 2009 Trading Update

• Wednesday, June 30, 2010 Preliminary Full-Year Results 2009 (Fiscal Year Ending March 31, 2010)

• Tuesday, September 21, 2010 Annual Shareholders’ Meeting

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NOTES

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NOTES

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