ANNUAL REPORT

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30. FINANCIAL RISK MANAGEMENT AND RELATED INSTRUMENTS Exposures to a variety of financial risks and market risks arise in the normal course of the Company’s business. As a diversified holding company, the Company faces a combination of risks resulting from the commercial activities of its portfolio holdings and specific risks as a diversified holding company. The portfolio holdings are exposed to risks related to the level of indebtedness such as liquidity and interest rate risk and risks inherent to the nature of their commercial activities such as credit risk and foreign currency exchange risk. As a holding Company, RHJI is further exposed to risks associated with general, economic and market conditions, such as the risk of fluctuating interest rates and currency exchange rates, liquidity risk and risks related to the stock market, all of which may 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 individual businesses’ risk assessment and monitoring programs to manage the exposure to these and other risks. These programs have been designed based on the specific nature and size of the individual businesses’ activity. While the Company monitors these programs and attempts to mitigate the negative effects from any of these risks through its representation on the businesses’ Boards of Directors and through the implementation of certain reporting mechanisms, the Company may face negative consequences from inadequate risk 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 risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s trade receivables. 30.1.1. Trade receivables The Company’s credit risk is primarily attributable to its trade receivables. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Company’s customer base, including the default risk of the 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 management of 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 and 2008, 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 ended March 31, (in JPY millions) 2009 2008 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 (1) No rating available 86
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED MARCH 31, 2009 As of March 31, 2009, the total trade and other receivables and revenue for the top 5 customers are broken down by subsidiary as follows: (in JPY millions) 2009 (1) Not applicable Trade and other receivables Top 5 customers balance In % Revenue Top 5 customers revenue 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% In % 30.1.2. Global exposure to credit risk RHJI’s functional currency is the Japanese Yen cash and cash equivalents are maintained in EUR, USD and JPY, and invested primarily in time deposits, certificates of deposits, direct obligations of the US Treasury and European Zone Government securities for which the RHJI 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 international financial 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 presented net of impairment losses recognized. The table below shows the maximum exposure to credit risk at balance sheet date: (in JPY millions) 2009 2008 Non-current Gross Impairment Net carrying amount Gross Impairment Net carrying amount 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 87
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ANNUAL REPORT Year Ended March 31,
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PART I LETTER TO SHAREHOLDERS AND B
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Support to our portfolio companies
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The evolution of the book value of
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Consolidated Financial Statements F
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Asahi Tec Corporation • Headquart
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RHJI's purchase agreement to buy ce
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Honsel International Technologies S
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Niles Co., Ltd. • Headquarters: J
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Columbia Music Entertainment, Inc.
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Phoenix Resort K.K. • Headquarter
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Shaklee Global Group, Inc. • Indu
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PART II FINANCIAL STATEMENTS FOR TH
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FINANCIAL STATEMENTS FOR THE FISCAL
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ANNUAL REPORT

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