ANNUAL REPORT

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 is
difficult to predict when it will end.
The financial crisis gradually spread to the real economy across all industries, and confronted us and our portfolio companies
with tremendous challenges. Yet our involvement with our portfolio companies as an industrial partner has proved to be
efficient: 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 venture
we 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. The
impact 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 an
impairment charge of EUR 671 million. This impairment charge is in part driven by what we believe to be a conservative stance
on the timing and the extent of the recovery of the global economy, and could therefore be partly or wholly reversed in the future
if 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 customer
confidence and tightening consumer credit resulted in the near collapse of two of the largest US auto-manufacturers, which
filed for bankruptcy protection. Our automotive assets, which account for more than 60% of the total invested capital, suffered
the 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 was
no 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 investing
alongside us.
Honsel also reached an agreement with RHJ International, its customers and its lenders, on a capital restructuring which
involved a significant deleveraging of its balance sheet and the injection of new capital to allow for a significant operational
restructuring.
In all instances, the support from customers in the financial and operational restructuring of some of our automotive
investments was essential to our decision to renew our commitment to these companies which are in many cases key parts of
the car manufacturing supply chain. We now believe they are in a better position to weather the current economic downturn, and
to emerge stronger when the global economy recovers.
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