ANNUAL REPORT

Gross profit for the fiscal year ended March 31, 2009 amounted
to JPY 34,820 million, representing 8.8% of revenue, compared
to 11.1% for the fiscal year ended March 31, 2008. The decrease
in gross profit margin is driven by the significant decline in
production volumes of the car manufacturers and the inability to
reduce variable costs accordingly.
Selling, general and administrative expenses amounted to JPY
47,961 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 partly
reflected the impact from ongoing restructuring efforts that
were deployed towards the end of the fiscal year ended March
31, 2009, including at the level of the Company’s operating cost
structure, which is being gradually reduced to approximately
JPY 3,500 million, compared to JPY 4,935 million for the fiscal
year ended March 31, 2009.
Other income and expenses amounted to JPY 11,041 million for
the fiscal year ended March 31, 2009, compared to JPY 4,594
million during the previous fiscal year. The increase mainly
resulted from non-recurring restructuring expenses of JPY
5,118 million at HIT and Metaldyne and JPY 1,403 million losses
on disposal of certain of Metaldyne’s assets.
Loss from operations for the fiscal year ending March 31, 2009
of JPY 154,159 million, included amortization and impairment
charges of JPY 123,259 million of which JPY 38,096 million were
recognized in the consolidated financial statements only and
which are not reflected in the individual consolidated
subsidiaries’ income statements presented in Part I of this
Annual Report. Excluding those non-cash charges for both
periods, the operating loss of JPY 30,900 million for the fiscal
year ended March 31, 2009, compared to an operating loss of
JPY 4,662 million for the fiscal year ended March 31, 2008, again
clearly reflecting the magnitude of the impact the economic
recession had on the operating performance across all
consolidated subsidiaries.
As a result of the capital restructuring of Honsel, completed in
July, 2009, and Metaldyne's filing for Chapter 11 bankruptcy
protection, the Company will record significant gains associated
with the waiver of Honsel’s debt and the deconsolidation of
Metaldyne. These gains will be recorded in the fiscal year
ending March 31, 2010, and are currently estimated at
approximately JPY 57 billion or EUR 434.5 million.
Net financial income of JPY 15,269 million for the fiscal year
ended March 31, 2009, included (a) a gain of JPY 30,552 million
following Metaldyne’s bond tender, (b) a gain of JPY 3,134
million resulting from the agreement between Chrysler and
Metaldyne to cancel USD 31.0 million of Metaldyne’s secured
subordinated notes, (c) the gain of JPY 6,082 million from the
cancelation 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-controlling
minority investment. These gains were offset by financial costs
including (a) net interest expense of JPY 19,154 million from
consolidated subsidiaries, (b) net foreign exchange losses of JPY
7,345 million, and (c) JPY 1,045 million of fair value adjustments
on certain financial assets. Last year, financial costs amounted
to JPY 32,881 million, and included (a) interest expense of JPY
22,301 million, (b) foreign currency exchange losses of JPY 7,438
million and (c) the write-off of previously deferred financing fees
of JPY 2,526 million.
Income tax benefit for the fiscal year ended March 31, 2009
amounted to JPY 6,232 million, compared to JPY 186 million for
the previous fiscal year, and mainly resulted from the reversal of
deferred tax liabilities of JPY 7,761 million following the
impairment of certain tangible and intangible assets.
Discontinued operations reflect D&M and HIT’s Canadian
operations. The result from D&M includes the net loss of JPY
999 million from operations for the six months ended September
30, 2008 and the gain on disposal of JPY 11,073 million. The gain
on disposal as reflected in the Company’s consolidated income
statement consists of the gain of JPY 12,600 million over the
acquisition cost less JPY 1,527 million of income contributed by
D&M to consolidated reserves from April 1, 2005 through the
date of effective disposal. The gain from the liquidation of HIT’s
Canadian subsidiary, Amcan, amounted to JPY 1,918 million. The
breakdown of discontinued operations for the fiscal years ended
March 31, 2009 and 2008 is as follows:
(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)
Loss for the period ended March 31, 2009 amounted to JPY
131,271 million, of which JPY 116,043 million is attributable to
the equity holders of the parent company, compared to JPY
33,221 million for the fiscal year ended March 31, 2008. JPY
10,598 million of losses attributable to the minority
shareholders of HIT and Asahi Tec were attributed to the equity
holders of the parent pursuant to the provisions of IAS 27 that
prevent losses to be allocated to the minority shareholders,
except if they would have a binding obligation to cover such
losses.
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