Linamar Hungary Nyrt

Linamar Hungary Nyrt.

INTERIM REPORT FOR THE FIRST THREE MONTH ENDED MARCH 31, 2009

Linamar Hungary Nyrt. Orosháza, 5900 Csorvási út 27.

To the Shareholders Linamar Hungary Nyrt.

Sales for the three month ended March 31, 2009 were HUF 6,571 million. This compares unfavourably to sales of HUF 7,037 million for the same period of the previous year. The sales decrease of 6,6% comprised of the increase of HUF 522 million in agricultural equipment and general machinery segment and decrease of HUF 1,018 million in the automotive component and precision machining segment.

The profit from operations for the three month ended March 31, 2009 were HUF 462 million, the increase by 9.2% compared to the profit from operations of HUF 423 million a year earlier. The Company’s operations were profitable in both segments, the gross profit decreased by 25.4%.

The net earnings for the first three month of 2009 were HUF 382 million, which is, compared to HUF 307 million for same period of the previous year, an improvement of 24.4%. The increase is mainly related to the decreased sales and the movement of exchange rates.

The management of Linamar Hungary Nyrt declares that this interim report presents fairly the Company’s position, and all of the data and information that is necessary to properly evaluate the Company’s position has been included

János Ivanics János Gábriel General Manager Chief Financial Officer

Linamar Hungary Nyrt.

Notes to the Financial Statements For the first three month ended March 31, 2009 and 2008 (NON AUDITED)

1. Management prepared these financial statements in accordance with generally accepted accounting principles using the approximations and estimates based on professional judgement. These interim financial statements contain all adjustments that management believes are necessary for a fair presentation of the Company's financial position, results of operations and changes in cash flows.

2. The accounting policies used in preparing these interim financial statements are consistent with those used in preparing the annual financial statements. These statements should be used in conjunction with the Company's most recent annual financial statements. The number of shares of the Company as at March 31, 2009 was 8,580,000 units (March 31, 2008 8,580,000).

3. Segmented Sales Information

Three Months Ended March 31 2009 2008

Export Sales Automotive Components and Precision Machining Europe – EU Member Countries 2 569 183 3 086 555 North America 355 251 220 439 Other Export 47 194 109 866 Europe – non EU Member Countries 0 0

Total Automotive Components and Precision Machining Export Sales 2 971 628 3 416 860

Agricultural Equipment and General Machinery Segment Europe – EU Member Countries 2 553 754 1 587 473 North America 243 218 308 840 Europe – non EU Member Countries 0 275 247 Other Export 0 0 Total Agricultural Equipment and General Machinery Export Sales 2 796 972 2 171 560 Total Export Sales 5 768 600 5 588 420

Domestic Sales Automotive Components and Precision Machining 729 886 1 302 452 Agricultural Equipment and General Machinery Segment 72 688 145 899 Total Domestic Sales 802 574 1 448 351 Total Sales 6 571 174 7 036 771

MANAGEMENT'S ANALYSIS AND OTHER REQUIRED DISCLOSURE

Explanation of the main changes in the balance sheet

The tangible fixed assets without deferred taxes have increased by HUF 1,398 million from March 31, 2008, resulted from the investments in both segments. The value of the deferred tax assets was determined at December 31 2006 at the first time in the amount of HUF 1,640 million, the updated value is HUF 706 million as at March 31, 2009

Trade accounts receivable decreased by 0.4% to HUF 4,558 million compared to March 31, 2008. The decrease HUF 18 million is due to the sales decrease.

Cash, bank balances and short-term deposits increased by 183.9%, from HUF 561 million to HUF 1,594 million. The increase is related to lower level of purchases and capital expenditures.

The level of inventories was 0.9% lower at March 31, 2009 compared to the same period of previous year. Inventories decreased by HUF 54 million: from HUF 6,165 million to HUF 6,111 million. The inventories at the agricultural equipment and general machinery segment decreased by HUF 357 million, the automotive inventories increased by HUF 303 million.

The current portion of long-term debt is zero due to the repayment of the investment loan, the amount of this item as at March 31, 2008 was HUF 48 million.

The Company does not have any long term loans as at March 31, 2009.

The deferred tax liability on March 31, 2008 was HUF 24 million, and HUF 71 million in 2009, which relates to timing differences, primarily relating to differences between accounting and tax depreciation.

The amount of liabilities without loans increased, from which the payables increase from HUF 3,673 million to HUF 4,371 million.

Explanation of the main changes in the profit and loss statement

Sales

Linamar Hungary Nyrt.’s sales decreased by 6.6% to HUF 6,571 million in first three months of 2009 compared to sales of HUF 7,037 million in the same period of 2008. Changes by business segment, as discussed below, can be seen under item 3 of the Notes to the Financial Statements.

Segmented sales are as follows: 56.33% automotive component and precision machining and 43.67% agricultural equipment and general machinery.

Automotive component and precision machining sales decreased by HUF 1,018 million, or 21.6%, compared to the same period of 2008, while agricultural and general machinery sales increased by HUF 552 million, or 23.8%.

The automotive component and precision machining export sales decreased by HUF 445 million. The sales value to the EU countries is lower by HUF 517 million due to the volume decrease of differential gear, body and steering column while the North-American sales increased by HUF 135 million due to increase of vacuum pump and elevator part sales. The domestic automotive component and precision machining sales were HUF 730 million, which is a HUF 573 million decrease compared to the same period last year especially due to the lower sales of common rail and air condition parts.

Agricultural and general machinery export sales increased by HUF 625 million to HUF 2,797 million from the same period of last year. The North American sales decreased by HUF 66 million especially due to lower platform and cornhead sales. The sales to EU-member countries increased by HUF 966 million which was mainly related to the higher volumes of Krone parts and snapping units sold to Poland. The sales to other European countries decreased by HUF 275 million due to fallback of snapping unit and cornhead sales to post-Soviet countries.

Domestic agricultural and general machinery sales decreased from HUF 146 million to HUF 73 million compared to the last year due to the lower cornhead and spareparts sales.

Cost of sales

The cost of sales increased from 88.3% of sales to 90.6%.

The unfavourable change relates to automotive component segment; the increasing raw material and public utility costs caused the increase of costs on a pro-rate basis on sales.

Selling, general and administrative costs

In the first three month of 2009 the selling, general and administrative costs amounted to HUF 375 million or 5.7% of sales, compared to HUF 388 million or 5.5% of sales in the same period of 2008. The change is not significant.

Other income/expense

The other income/expense balanced on March 31, 2009 to HUF 221 million income, compared to the HUF 16 million expense of the previous year. Other income/expense includes the net realized and non- realized exchange gain/loss of accounts payable and accounts receivable which resulted gain HUF 217 million in actual period and HUF 41 million gain one year before.

Profit from operations

Profit from operations of HUF 423 million of last year increased to HUF 462 million this year. Profit from operations as a percent of sales increased from 6.0% to 7.0%. The most significant impact upon profit from operations was the favourable change in gross profit and the change of other income.

Exchange gain (loss)

The Company experienced an exchange loss on financial operations HUF 18 million in the first three month of 2009, compared to an exchange loss of HUF 0.6 million in the same period of 2008.

Taxation The Taxation amount in the Profit and Loss Statement is detailed as follows in HUF thousands:

2009 2008 Current tax (corporate tax) - - Local business tax 47 121 47 816 Solidarity tax 15 865 16 580 Deferred tax - 1 000 51 000 Taxation 61 986 115 396

Based on the investments completed between 1997 and 2001, the Company is entitled, through a tax credit system, to an effective 100% income tax reduction through to December 31, 2011. At March 31, 2009, the company determined it was appropriate to recognize a deferred tax asset in the amount of HUF 706 million in respect of the utilization of this credit against future taxable earnings.

In addition the company has established a deferred tax liability in respect of timing differences, primarily relating to differences between accounting and tax deprecation, in the amount of HUF 71 million at period ended on 31st March 2009.

Net earnings

The Company’s net earnings in the first three month of 2009 were HUF 382 million or 5.8% of sales an increase of 24.4% compared to the HUF 307 million, or 4.4% of sales in the first three month 2008. This change is resulted mainly by the favourable development of exchange rates.

Explanation of the main changes in the cash flow statement

In the three month ended March 31 2009, the purchases of fixed assets amounted to HUF 311 million. The cash payments during the period related to purchases of fixed assets totalled HUF 491 million. The main part of these investments relates to the agricultural and general machinery segment.

Information on shares

The Company does not currently hold any of its own shares and has not held any in the past.

Commitments

As at March 31, 2009, the Company has outstanding commitments for fixed assets under purchase orders and contracts of HUF 644 million.

Major events

The Company held its Annual General Meeting on April 23, 2009.

Other information

Organizational structure

During the first three month of 2009 there were no changes in the Company’s organizational structure.

Senior officers

During the first three month of 2009 there were no changes in the Company’s senior officers.

Senior management

There were no changes in management.

Share Option Program

There are no outstanding share options under the share option program of the Company.

Company name: Linamar Hungary Autóipari és Gépgyártó Nyilvánosan M űköd ő Részvénytársaság Telephone: 68-514-600 Company address : 5900 Orosháza, Csorvási út 27. Fax: 68-514-690 Sector: 2932 E-mail address: [email protected] Reporting period: 01.01.2009 – 03.31.2009 Investor relations manager: János Ivanics

PK1. General information about financial data

Yes No Audited X Consolidated X

Accounting principles Hungarian IFRS X Other Other: …………………... Company name: Linamar Hungary Autóipari és Gépgyártó Nyilvánosan M űköd ő Részvénytársaság Telephone: 68-514-600 Company address : 5900 Orosháza, Csorvási út 27. Fax: 68-514-690 Sector: 2932 E-mail address: [email protected] Reporting period: 01.01.2009 – 03.31.2009 Investor relations manager: János Ivanics

PK2. Consolidated companies

Name Equity/Registered Interest held (%) Voting right 1 Classification 2 Capital ------

1 Voting rights for decision making at the consolidated company’s General Meeting 2 Full (L); Jointly Managed (K); Associated (T)

PK3. Balance Sheet (expressed in thousands of Hungarian Forints)

Three Months Ended March 31 2009 2008 Change ASSETS HUF '000 HUF '000 % Non - Current assets Property, plant and equipment 10 259 691 8 909 417 15,2 Deferred tax asset 706 000 1 454 000 (51,4) Intangible assets 109 495 61 750 77,3 11 075 186 10 425 167 6,2

Current Assets Inventories 6 111 197 6 165 229 (0,9) Trade receivables 4 557 791 4 576 144 (0,4) Due from related parties 731 549 400 977 82,4 Deductible value added tax 382 066 401 438 (4,8) Other current assets 102 798 231 555 (55,6) Cash and cash equivalents 1 593 847 561 434 183,9 13 479 248 12 336 777 9,3

Total Assets 24 554 434 22 761 944 7,9

SHAREHOLDERS' EQUITY Share capital 858 000 858 000 0,0 Capital reserve 5 026 774 5 026 774 0,0 Accumulated profit 12 985 875 12 198 961 6,5 18 870 649 18 083 735 4,4 LIABILITIES Non - Current Liabilities Deferred government grants 149 299 30 877 383,5 Deferred tax liabiliy 71 000 24 000 195,8 220 299 54 877 301,4

Current Liabilities Short term loan 0 0 Current portion of long term bank borrowings 0 48 231 (100,0) Trade payables 3 623 937 3 369 915 7,5 Due to related parties 747 074 303 379 146,3 Other current libilities 1 037 948 895 833 15,9 Provisions 54 527 5 974 812,7 5 463 486 4 623 332 18,2

Total Liabilities 5 683 785 4 678 209 21,5

Total Equity and Liabilities 24 554 434 22 761 944 7,9

Statement of Changes in Shareholders’ Equity for the period ended March 31, 2009 and 2008 (Expressed in Thousand of Hungarian Forints)

Share Capital Capital Reserve Accumulated Total Profit Shareholder's Equity Balance as at 12/31/2007 858 000 5 026 774 11 891 879 17 776 653 Result for the period 307 082 307 082 Balance as at 03/31/2008 858 000 5 026 774 12 198 961 18 083 735

Share Capital Capital Reserve Accumulated Total Shareholder's Equity Balance as at 12/31/2008 858 000 5 026 774 12 603 901 18 488 675 Result for the period 381 974 381 974 Balance as at 03/31/2009 858 000 5 026 774 12 985 875 18 870 649

PK4. Profit and Loss Statement (expressed in thousands of Hungarian Forints expect per share figures)

Three Months Ended March 31 Change 2009 2008 % HUF '000 HUF '000

Sales 6 571 174 7 036 771 (6,6) Cost of Sales 5 954 641 6 210 024 (4,1) Gross Profit 616 533 826 747 (25,4)

Selling expenses 148 282 138 462 7,1 General expenses 113 032 143 805 (21,4) Administrative expenses 114 178 105 312 8,4 Other operating income/expenses (221 156) 16 094 (1474,2) Profit from Operations 462 197 423 074 9,2

Finance cost (18 237) (596) 2959,9

Profit before tax 443 960 422 478 5,1

Taxation* (61 986) (115 396) (46,3)

Net Income 381 974 307 082 24,4

Earnings per Share ** Basic and Diluted HUF 45 HUF 36

* 4% solidarity, industrial tax and deferred taxes ** Including effect of the deferred taxes. Without the deferred taxes EPS for first quarter of 2009 is HUF 44 while the EPS for first three month 2008 is HUF 42.

PK5 Cash-Flow Report (expressed in thousands of Hungarian Forints)

Three Months Ended March 31 2009 2008

Net income 381 974 307 082

Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 440 418 465 426 Impairment – net (79 056) (1 650) Provision for warranty and other obligations 19 527 (10 123) Net loss/(gain) on sale of property plant and equipment (95) 176 Net Interest expense 1 231 1 928

Changes in operating assets and liabilities:- (Increase)/decrease in inventories 190 670 (915 324) (Increase) in accounts receivable (505 511) (226 850) (Increase)/ decrease in due from related parties (219 427) (152 680) (Increase)/decrease in tax receivable 93 832 (74 935) (Increase) in other current assets (55 810) (110 954) Increase/(decrease) in accounts payable (603 546) (327 533) Increase/(decrease) in capex payables 172 544 201 712 Increase/(decrease) in accounts payable due to related parties 173 704 111 345 Increase/(decrease) in capex payables due to related parties 5 777 (56 540) Defered taxes (1 000) 51 000 Increase/(decrease) in other current liabilities 317 274 236 655 Interest paid (1 231) (1 928) Net cash provided by operating activities 331 275 (503 193)

Cash flows from investing activities Purchase of property plant and equipment and intangibles (310 511) (694 443) Reclassification of fixed assets (2 088) 0 Unpaid capex payables (178 321) (145 172) Proceeds on sales of property plant and equipment 0 0 Net cash used in investing activities (490 920) (839 615)

Cash flows from financing activities Proceeds from short-term loans 0 0 Repayments of long-term loans 0 (193 962) Net cash used in financing activities 0 (193 962)

Net decrease in cash & cash equivalents (159 645) (1 536 770) Cash & cash equivalents at the beginning of the year 1 753 492 2 098 204 Cash & cash equivalents at the end of the year 1 593 847 561 434

PK6. Significant off-balance sheet items 1

Description Value (HUF million) Indoctoheat 22,5 EMAG installation and service 4,6 Liebher LFS500 & LC 500 embassing punch 253,2 Aquarese- Autofrettage 153 Doosan Puma lathe 145,5 ECM 64,8

Total: 643,6

1 Any financial liabilities of material importance in respect of financial evaluation not reflected in the balance sheet (e.g. surety, guarantees given, liabilities under lien, etc.)

RS1. Ownership structure, Ratio of Holdings and Votes

Description of owner Total share capital Listed series 1 Year Opening Year Opening Closing Closing at 1st January at 1st January %2 %3 Qty %2 %3 Qty %2 %3 Qty %2 %3 Qty Domestic 28.40 28.40 2,437,018 28.65 28.65 2,458,178 institution/company Foreign 70.64 70.64 6,060,682 70.42 70.42 6,041,992 institution/company Domestic individual 0.95 0.95 81,575 0.92 0.92 79,105 Foreign individual 0.01 0.01 725 0.01 0.01 725 Employees, senior ------officers Treasury shares ------Government held ------owner 4 International Development ------Institutions 5 Other ------TOTAL 100.0 100.0 8,580,000 100.0 100.0 8,580,000

1In case listed series equal total share capital. 2 Ownership ratio. 3 Voting rights at the issuer’s General Meeting. 4 E.g.: State Privatization Holding Co. Ltd., Social Security, Municipality, 100% state-owned companies etc. 5 E.g.: EBRD, EIB, etc.

RS2. Volume (qty) of treasury shares held in the year under review

1 January 31 March 30 June 30 September 31 December Company - - - - - Subsidiaries 1 - - - - - TOTAL - - - - -

1 Consolidated subsidiaries as defined by the pertaining sections of the Capital Markets Act.

RS3/1. List and description of shareholders with more than 5% ownership (at the end of the period) with regard to the listed series.

Name Nationality 1 Activity 2 Quantity Interest (%) 3 Voting Remarks 5 right(%) 3, 4 Linamar K C 6,027,527 70.25 70.25 strategic Corporation and investor subsidiaries Budapest B I 548,680 6.39 6.39 financial Alapkezel ő Zrt. investor

Linamar Corporation’s headquarters are located in Guelph, Ontario, Canada, along with a significant percentage of the Company’s manufacturing capacity. Linamar Corporation is a global manufacturer of precision machined components, assemblies and castings primarily for automotive industry.

Any person holds more than 5% of the volume of securities deposited with a custodian. In case listed series equal total share capital. The ownership ratios and voting rights are identical. 1 Domestic (B), Foreign (K) 2 Custodian (L), Government (Á), International Development Institute (F), Institutional (I), Corporate (C), Individual (M), Employee, senior officer (D) 3 Figures should be rounded to two decimal points. 4 Voting rights at the issuer’s General Meetings. 5 E.g. strategic investor, financial investor, etc.

RS3/2. List and description of shareholders with more than 5% ownership (at the end of the period) with regard to the total share capital

TSZ1. Changes in the headcount (number of persons) employed by the

End of reference period Current period opening Current period closing Company 1,717 1,883 1,642 Group n.a. n.a. n.a.

TSZ2. Senior officers, strategic employees

Type 1 Name Position Beginning of End/ No, of assignment termination of shares held assignment IT Frank J. Hasenfratz Chairman of the Board 04.15.1999 05.31.2011 - IT Linda Hasenfratz Director 04.15.1999 05.31.2011 - IT Tibor Antalpéter Independent Director 04.15.1999 05.31.2011 - IT Márton Havasi Director 04.15.1999 05.31.2011 - IT Csaba Havasi Director 04.15.1999 05.31.2011 - IT János Ivanics General Manager, 01.16.1992 05.31.2011 - Member of the Board FB Rezs ő Bándy Dr. Chairman of the 04.15.1999 05.31.2011 - Supervisory Board FB Sándor Csontos Member 04.15.1999 05.31.2011 - FB Pál Simák Dr. Member/Audit 04.19.2007 05.31.2011 - Committee FB Csaba Fehérdi Member/Audit 04.19.2007 05.31.2011 - Committee FB István Molnár Dr. Member/Audit 04.19.2007 05.31.2011 - Committee SP János Gábriel Chief Financial Officer 09.01.2006 Undefined - SP Tibor Parászka Director of Human 07.23.2007 Undefined - Resources Own share property (pcs) TOTAL: -

1 Employee in strategic position (SP), Board Member (IT), Supervisory Board Member (FB)