Interim Report as at 30 June 2008

Tognum Group − Overview of Key Figures

EUR million Q2 2007 Q2 2008 change H1 2007 H1 2008 change Order intake 785 773 – 2% 1,600 1,648 3%

Revenues 669 790 18% 1,336 1,517 14%

Adjusted EBITDA 123 118 – 4% 241 236 – 2% Adjusted EBIT 107 100 – 7% 207 200 – 3% Return on sales (adjusted EBIT/revenues) 15.9% 12.7% 15.5% 13.2%

Adjusted consolidated net income 57 75 32% 104 133 28% Adjusted earnings per share (in EUR) 0.47 0.57 21% 0.87 1.01 16%

Total Assets 2,315 2,487 7% 2,315 2,487 7% Equity ratio 7.3% 22.6% 7.3% 22.6% Net financial debt 643 326 – 49% 643 326 – 49%

Capital expenditure (intangible assets and property, plant, and equipment) * 30 36 20% 53 61 15% Research and development ** 47 37 – 21% 83 77 – 7%

Free Cashflow *** – 2 – 2 - – 24 53 321%

Market capitalisation at the end of reporting period - 2,249 - 2,249

Number of employees (end of period) 7,854 8,592 9% 7,854 8,592 9%

* Excluding additions to the group of consolidated companies resulting from acquisitions of companies ** Development expenses, capitalised development costs and development activities paid for by third parties *** Free cash flow is comprised of cash flow from operating activities and cash flow from investment activities

Segments

MTU ENGINES

EUR million Q2 2007 Q2 2008 change H1 2007 H1 2008 change Revenues 558 669 20% 1,146 1,286 12% thereof third parties 549 653 19% 1,132 1,254 11% Adjusted EBIT 95 103 8% 188 199 6% Return on sales 17.0% 15.4% 16.4% 15.5%

TOGNUM ONSITE ENERGY SYSTEMS & COMPONENTS

EUR million Q2 2007 Q2 2008 change H1 2007 H1 2008 change Revenues 135 157 16% 235 300 28% thereof third parties 120 137 14% 205 263 28% Adjusted EBIT 10 6 – 40% 17 16 – 6% Return on sales 7.3% 3.8% 7.1% 5.3%

Interim Report as at 30 June 2008 Index

04 The Tognum Share 23 Events after the Balance Sheet Date

07 Chronicle 24 Risk Report

09 Consolidated Interim Report 1st Quarter 2008 24 Outlook

10 Tognum – Company Portrait 27 Interim Consolidated Financial Statements 10 History and business of the Tognum Group 10 Group Structure and Business Activity 28 Consolidated Income Statement 12 Reporting Period and Comparable Periods 12 Corporate Management and Goals 29 Condensed Consolidated Cash Flow Statement

12 Business and General Background 30 Consolidated Balance Sheet 12 Global Economic Trend 12 Development of the Industries 32 Statement of Changes in Group Equity

13 Income, Assets and Financial Position 34 Notes to the Consolidated Financial Statements 13 Income Situation 34 Explanatory Notes 17 Assets 37 Explanations to the Consolidated Income Statement 19 Finance Management and Financial Position 38 Explanations to the Consolidated Balance Sheet 19 Overall View of the Economic Position 40 Other Disclosures 44 Responsibility Statement 20 Segments 45 Review Report 20 mtu Engines 21 Tognum Onsite Energy Systems & Components 47 Service

22 Research and Development 48 2007 — 2008 Figures at a Glance 48 Tognum Group 23 Employees 50 Segment information

3

The Tognum Share

STOCK MARKET TRENDS, DEVELOPMENTS AND FACTS IN THE FIRST HALF OF 2008

Stock market trends in the first half of 2008 Global stock markets recorded significant weaknesses in the first half of 2008 with extraor- dinarily high volatility. Primary reasons for this are still the considerable uncertainties as regards the further development of the global economy, originally triggered by the mortgage and financial crisis in the US in early 2007, which had an increasingly negative effect on the US economy and beyond. The massive devaluation of the US Dollar and the increased infla- tion pressure primarily caused by rising commodity prices are now adding to this. The activity indicators of the Euro zone economy are by now also showing a marked decline, mainly in Spain, France and Italy.

Development of stock markets in Germany and in other countries With -19.3%, the German blue-chip DAX index recorded the highest losses in the first six months as compared to other international indices: FTSE 100: -12.3%; S&P 500: -11.6%; Nasdaq 100: -10.4%; Topix: -6.5%.

Development of the Tognum share The performance of the Tognum share reflected to a great extent the share markets’ general weakness and volatility in the first half of 2008. After starting the year at EUR 19.77 on 2 January 2008, the share price declined until the end of March and reached the half-year low of EUR 13.46 on 17 March 2008. At the beginning of April, the confirmation of Tog- num’s business outlook for the year 2008 caused a trend reversal. The Tognum share gained 27% in April while the MDAX and the Bloomberg European Machinery and Diversified Index only rose by 3.3% in the same period. It reached its interim high of EUR 19.37 on 7 May. After the publication of the quarterly figures on 8 May, the price fell again and market participants then traded the share at EUR 17.50 to EUR 18.50 for a long time. Since 25 June, the share has again declined parallel to the market development and quoted at EUR 17.12 on 30 June, or 13.8% lower than at the beginning of the year. All in all, this share price devel- opment in the first half of the year was comparable to the performance of other shares of

4

As of 30 June 2008 The Tognum Share

machine and engine manufacturers. Nevertheless, the Tognum share was 6 percentage points above the German DAX at the end of the 6-month period, but 7 percentage points lower than the German mid-cap index, the MDAX.

DEVELOPMENT OF THE TOGNUM SHARE (INDEXED, FROM 2 JANUARY TO 30 JUNE 2008 BASED ON THE RESPECTIVE CLOSING PRICE ON XETRA)

TGM MDAX Index in %

105

100

95

90

85

80

75

70

65 January 2008 February 2008 March 2008 April 2008 May 2008 June 2008

The average trading volume increased to 686,000 shares per day during the first half of 2008. In comparison: in the second half of 2007, i.e. the first six months after the IPO, an average of approx. 524,000 shares changed hands every day. Over the course of the reporting period, a growing trading volume trend emerged: in the first quarter of 2008, an average of 588,000 shares was traded per day, increasing to 780,000 shares in the second quarter. April was the strongest month with an average of 964,000 shares traded per day.

Analyst recommendations Tognum shares are being actively followed by these eighteen investment banks: Bankhaus Lampe, Berenberg Bank, BHF Bank (new since 17 July), CA Cheuvreux, Credit Suisse, Commerzbank (new since 18 July), Deutsche Bank, Dresdner Kleinwort, DZ Bank, Gold- man Sachs, Landsbanki Kepler, Lehman Brothers, Main First Bank, MF Global Securities (new since 12 May), Sal. Oppenheim, Société Générale, UBS and WestLB. As at 31 July 2008, twelve analyst teams graded the shares as “Buy/Positive”, four teams as “Hold/Neutral” and two teams as “Sell/Negative”. Other current information for investors about the company and the shares is available at the website: http://www.tognum.com.

Approx. 900 participants at the first shareholders’ meeting since the IPO Dividend distribution of EUR 0.60 per share for the 2007 financial year paid out on 11 June 2008 The first shareholders’ meeting since the IPO was held on 10 June 2008 at the Messe Fried- richshafen. In total, 900 shareholders and shareholder representatives as well as journalists participated, the shareholders at the event representing 70.3% of the authorised capital of Tognum AG. A dividend distribution of EUR 0.60 per share for the 2007 financial year was approved and paid out on 11 June. With currently 131,375,000 no par value shares entitled to dividend, the payout amounted to EUR 78.8 million. This dividend amount corresponds to c. 47% of Tognum AG’s net profit and to 37% of the group’s annual profit. The distribution ratio ranks among the top third of the shares with dividend payout. Return on dividends, thus, amounts to approx. 3.4% [based on our share price as at the due date of this sharehold- ers’ meeting (record date)].

5

As of 30 June 2008 The Tognum Share

The intensive support of current and potential investors, as well as meetings with analysts form an important part of the daily business of the investor relations team. In addition, the board of directors and IR management conducted various road shows in Frankfurt, London, Milan and Zurich, in Scandinavia (Helsinki, Copenhagen, Oslo, Stockholm), Brussels and Edinburgh as well as in North America (Boston, New York, Montreal, Toronto). Participa- tion in international investor conferences, such as those in Paris and Frankfurt in April and again in Frankfurt in June, has meanwhile become a fixed item on the IR calendar.

The analyst conference that took place on 3 April 2008 as part of the publication of the an- nual report in Stuttgart was attended by many analysts and was a major success with an additional roughly 200 live visitors to the website. The annual report is available online un- der http://investoren.tognum.de not only as a PDF but also as an interactive online version.

6

Chronicle

Significant Events in the Reporting Period

APRIL

Tognum confirms 2008 prognosis despite global financial and economic situation. Tognum AG presents the first annual report in its company history and since last year’s IPO. Compared to 2006, the company recorded a 12% higher order intake amounting to EUR 3,107 million in the 2007 financial year (pro forma 2006: EUR 2,781 million). This high order intake led to a book-to-bill ratio of 1.1 (order intake to revenue) in the reporting year, from which further growth in revenues can be deduced for the year 2008.

MTU Germany subsidiary at new Hamburg location. The Tognum subsidiary MTU Friedrichshafen officially opens the new premises of the head office of its German companies at the Harburg inland port. MTU has been present in Ham- burg for 50 years. Sales and after sales for the German market are managed from Hamburg, where the staff totals approx. 100 employees.

Component business grows with fuel injection systems. The Tognum subsidiary L’Orange GmbH, Stuttgart, specialist for high-pressure injection systems for diesel engines and heavy fuel oil engines, has doubled its revenues in the last four years to more than EUR 140 million in 2007. To ensure continued growth, L'Orange invests EUR 16 million in its production capacity.

7

As of 30 June 2008 Chronicle

New major shareholder for Tognum. Associate company EQT informs Tognum AG that its remaining shares in Tognum AG of about 22% – held by Seeker Rekees S.à r.l. – were sold to Daimler AG. The Daimler supervi- sory board agreed to the acquisition of these shares. Daimler AG also informs us that they intend to acquire a blocking minority in Tognum AG (25% plus one share). In June, Daimler would receive the antitrust approval for the entire transaction.

MAY

Compass points the direction for Tognum. Reorganisation of Tognum AG in order to be able to sustain the profitable growth in the long run. Thus is the decision of the Tognum AG supervisory board on the basis of the results of the “Compass” project at the beginning of May. The advanced strategy is based on the new company vision: “We at Tognum set the standard as the preferred partner for the best solutions in the areas of drives and power.” Besides a markedly clear internal organisa- tion and a revised market presence, this also includes a new brand strategy. The Tognum subsidiaries which are already engaged in decentralised power supply today − CFC Solu- tions, Katolight, MDE and MTU’s power generation division – will be brought together under the brand “MTU Onsite Energy” as of 1 September 2008. In addition, the business units will be realigned and carry full business responsibility.

JUNE

Reliable power supply for South Africa by Tognum. In June, Tognum subsidiary MTU Friedrichshafen GmbH sells diesel engines worth over €5 million to South Africa for power generation applications. The engines are mainly intended for stand-by power generation to back up the public supply in the event of grid outages. The current order includes amongst others 53 engines of Series 2000 with power ratings of up to 1,000 kW as well as 10 engines of Series 4000 delivering up to 2,000 kW.

Specialised diesel engines for North Sea emergency tugboat. Four special diesel engines produced by the Tognum subsidiary MTU Friedrichshafen will be used in the new emergency tugboat for the North Sea, supplying a total of 17,200 kilo- watts for propulsion and 2,280 kilowatts of electrical power. Negotiations are taking place on the supply of additional MTU products for this special ship. The order volume is in the magnitude of €10 million.

First Tognum shareholders’ meeting. As already reported in the section on the Tognum share, the first shareholders’ meeting of Tognum AG as a listed company is held at the Messe Friedrichshafen on 10 June, with nu- merous shareholders, journalists, analysts and bank representatives attending. In 2007, Tog- num was able to keep to the statements and prognoses made prior to the IPO and to even exceed some of them. For the current financial year, the revenue and profit prognosis by chairman Volker Heuer is confirmed. The company structure will be advanced during the course of the year. The objective is to better position Tognum as a specialist for all-in-one solutions in the areas of propulsion systems and power generation.

China joint venture established. In June, the Shanxi North MTU Ltd., Datong City/China is formed as a joint venture to- gether with a subsidiary of the China North Industries Group Corp. (Norinco). A total of EUR 3.3 million is brought in by the joint venture partners Norinco and Tognum as starting equity until 30 June 2008. This represents another significant milestone in the Asia expan- sion policy.

8

Consolidated Interim Report as at 30 June 2008

10 Tognum − Company Portrait 22 Research and Development 10 History and Business of the Tognum Group 10 Group Structure and Business Activity 23 Employees 12 Reporting Period and Comparable Periods 12 Corporate Management and Goals 23 Events after the Balance Sheet Date

12 Business and General Background 24 Risk Report 12 Global Economic Trend 12 Development of the Industries 24 Outlook

13 Income, Assets and Financial Position 13 Income Situation 17 Assets 18 Finance Management and Financial Position 19 Overall View of the Economic Position

20 Segments 20 mtu Engines 21 Tognum Onsite Energy Systems & Components

9

Management Report Tognum − Company Portrait

Tognum − Company Portrait

HISTORY AND BUSINESS OF THE TOGNUM GROUP

The Tognum Group emerged out of the 2006 sale of the off-highway activities of the former Roots of the Tognum Group go back almost 100 years DaimlerChrysler Group to investment funds advised by the financial investor EQT. The MTU Friedrichshafen Group was an essential part of the off-highway activities in Daimler- Chrysler AG. Engines for blimps (zeppelins) were built in Friedrichshafen as early as 1909, and in 1923 they entered into the design and manufacturing of high-performance diesel engines. Consequently, the roots of today’s Tognum Group go back just under 100 years.

GROUP STRUCTURE AND BUSINESS ACTIVITY

Today, Tognum is one of the world’s leading providers of high-speed diesel engines and Tognum – one of the world’s leading providers of complete power systems for ships, heavy land and rail vehicles, industrial drives and decen- off-highway applications tralised energy systems (off-highway applications).

Diverse and Balanced Product Portfolio Tognum has one of the most modern and comprehensive product programmes in the indus- try. It includes not only diesel engines primarily of the brands MTU, Detroit Diesel and Mer- cedes-Benz (industrial engines via distribution license) but also diesel and gas engine systems (Katolight, MDE), stationary energy systems with fuel cells (CFC Solutions) and high-quality engine and drive components such as high-pressure injection systems (L’Orange) and propeller shafts for cars and light utility vehicles (Rotorion). The Tognum Group develops and pro- duces custom-made electronic systems for controlling and monitoring engines and drive systems. Furthermore, other key technologies for diesel engine production – for charging and injection – are also developed and produced by us.

Group Structure Tognum has grouped its commercial activities under the strategic holding company Tognum AG and in the business units mtu Engines and Tognum Onsite Energy Systems & Components (OES&C).

The activities related to engines belong to the segment mtu Engines. These include the devel- opment, manufacturing and sale of diesel engines with a performance range between 150 and roughly 9,100 kilowatts as well as the affiliated services and the after-sales business. In the lower performance range of 20 to around 500 kilowatts, the segment is rounded off with diesel engines from Mercedes-Benz, Detroit Diesel and VM Motori, while the upper per- formance range of up to 30,100 kilowatts is handled through the purchase of gas turbines.

The engines in the segment are used in diverse application areas with different requirements. The modular construction of the engines facilitates These are primarily the areas of Marine (ship drives and on-board aggregates in different their use in different application areas ship categories such as military and coast guard ships, large ferries, yachts or work boats), Power Generation (drives for the production of continuous, emergency and surge currents as well as mechanical power for oil and gas exploration), Industrial (engines for rail, agricul- tural and construction vehicles, industrial engines and engines for mining vehicles) and Defense (military land vehicles). Individual motors from various series can also be adapted for use in various application areas due to their modular construction. Thus, with the neces- sary modifications, engines from the top-selling 2000 and 4000 series are used for decentral- ised energy systems, construction vehicles and machines, ship drives and locomotives.

The segment Tognum Onsite Energy Systems & Components (OES&C) includes decentralised energy systems on the basis of diesel engines, gas engines and fuel cells (Onsite Energy Sys- tems, OES) as well as engine and drive components in the form of high-pressure injection systems and propeller shafts (Components, C). In the course of the consistent further devel- opment of the company and the brand strategy, the segment will take over the overall re- sponsibility for business activities in the field of decentralised energy systems, which are currently still partly being undertaken by the segment mtu Engines, from 2009.

10

Management Report Tognum − Company Portrait

Tognum has a global selling and service structure with 26 fully consolidated subsidiaries, more than 130 selling partners and roughly 1,100 authorised dealers. The parent company is Tognum AG with its registered offices in Friedrichshafen/Germany.

MTU Friedrichshafen GmbH, Friedrichshafen/Germany, is the most important single com- MTU Friedrichshafen GmbH is the most important pany in the Tognum Group. Other companies that contribute significantly to the volume of single company in the Tognum Group. business are MTU Detroit Diesel Inc., Detroit/USA, and MTU Asia Pte. Ltd., Singa- pore/Singapore, as the parent company of the sub-group MTU Asia Group which bundles together all Asian subsidiaries. The production sites are in Germany, the US and China.

An overview of the corporate structure of the Group around Tognum AG as at 30 June 2008 is provided by the diagram below. It shows the 26 companies that are consolidated in full as well as three that are consolidated at equity. New additions in the second quarter of 2008 were Rotorion GmbH, Friedrichshafen/Germany, MTU China Co. Ltd, Shanghai/China, MTU Vietnam Co. Ltd, Hanoi City/Vietnam, and, as a joint venture with a Chinese partner, Shanxi North MTU Diesel Co. Ltd., Datong City/China.

Overview of the Group structure as at 30 June 2008 (consolidated companies)

Tognum AG

Rotorion GmbH 100% 100% MTU Friedrichshafen GmbH

100% 50%** MTU Australia Pty. Ltd. MTU DD Australia Pty. Ltd.

100% 100% L’Orange GmbH MTU Hong Kong Ltd.

100% 100% MTU Engineering (Suzhou) MTU Asia Pte. Ltd. Co. Ltd. 100% 100% CFC Solutions GmbH MTU Asia (Singapore) Pte. Ltd. *

100% 100% MTU Anlagenvermietung GmbH MTU India Pvt. Ltd.

100% MDE Dezentrale 100% PT MTU Indonesia Energiesysteme GmbH 100% 100% Karl Maybach Hilfe GmbH MTU Japan Co. Ltd.

100% 49% MTU DD Benelux B.V. MTU Asia (Thailand) Ltd.

100% 100% MTU Italia S.r.l. MTU China Co. Ltd.

100% 49% SKL Motor GmbH Shanxi North MTU Diesel Co. Ltd.

100% 100% 100% MTU DDC International GmbH MTU VietnamDetroit Diesel Co. Ltd. Inc. Katolight Corp.

100% 100% Detroit Diesel Distribution Rotorion North America LLC Consolidation in full Center B.V. At Equity 100% 100% MTU Detroit Diesel Inc. Detroit Diesel (Suisse) AG

* In liquidation (2008), as operating business was transferred to MTU Asia Pte. Ltd. ** The remaining shares (50%) are held by Daimler

The Tognum Group generated revenues of EUR 1,517 million in the first six months of 2008 Half-year revenues of EUR 1,517 million and over and employed a staff of over 8,500 persons worldwide at the end of the reporting period. 8,500 employees worldwide

11

Management Report Business and General Background

REPORTING PERIOD AND COMPARABLE PERIODS

In this Group management report, we report on the second quarter of 2008 as well as on the first six months of 2008 in comparison with the corresponding prior year periods. Net assets are compared to the amounts at the end of 2007.

The financial statements of the reporting periods and of the comparative periods were pre- pared in accordance with the International Financial Reporting Standards (IFRS) as they are to be applied in the European Union (EU) and with the additional provisions pursuant to Article 315a HGB (German Commercial Code).

CORPORATE MANAGEMENT AND GOALS

Our strategic approach is focused on profitable growth on an organic basis – by increasing our market share and by the expansion of our market position as a provider of systems solu- tions in the area of energy and off-highway drives – and through external growth via tar- geted additional acquisitions. In the process, our overriding goal is the sustained and long- term increase in the value of the company.

Business and General Background

GLOBAL ECONOMIC TREND

The global economy continued on its expansion course during the first half of 2008, although Global economy develops cautiously positive despite economic growth was slightly lower compared to the prior year. A significant contribution to growth-dampening factors this expansion was made by the large developing and emerging markets. Commodity- exporting countries with comparably high growth rates also contributed to the positive development. In contrast, the uncertainties with respect to the extent of the economic weak- ening in the US as well as those arising from the US mortgage crisis continued on the inter- national financial markets. The US Dollar again lost value against the Euro in the second quarter, and the increase in international commodity prices continued. In the course of these developments, numerous countries recorded rising inflation. Growth in Europe and Japan also weakened as a result of these developments when compared to the prior year, although the economic upswing in Germany proved to be very robust in the first quarter. However, this dynamic could not be sustained in the second quarter, which could also be attributed to the increase in energy and food prices.

DEVELOPMENT OF THE INDUSTRIES

The dynamic development of the off-highway markets continued in the first six months of Dynamic development of off-highway markets largely 2008 compared to other capital goods. The effects of the crisis in the financial markets re- continues mained largely limited to individual regions and submarkets and continued to affect primar- ily the US markets for serially produced small yachts up to 30 meters, as well as construction machines in the lower performance range of up to 150 kilowatts and emergency gensets up to 500 kilowatts. The generally positive developments in the Asian and European regions continued to compensate for the negative developments in these submarkets. The persis- tently strong demand and the resulting good dockyard capacity utilisation led to continued above-average growth in the market segment for customised yachts over 30 meters in length. In addition, the market for marine applications grew in the area of transport and work boats, driven by the development of worldwide shipbuilding and expanding global trade. The highly diversified OEM markets (original equipment manufacturer) in the subsegment of industrial applications gained positive impulses primarily from the strong export activities of our customers. The tremendous demand for commodities positively influenced both the mining and the agricultural sectors and, thus, also the demand for engines. The area of rail applications benefited from a worldwide increasing transport volume. In the global market for diesel-powered and gas-powered decentralised power generation systems, the sustained growth from the first quarter of 2008 continued into the second quarter, particularly in the upper performance ranges. In contrast, due to the revised “Renewable Energy Sources Act” (Erneuerbare-Energien-Gesetz, EEG) only being enacted in the second quarter, the market demand for biogas systems in Germany was clearly restrained in the first half.

12

Management Report Income, Assets and Financial Position

The continuing positive situation in the diesel engine market led to a correspondingly posi- tive demand for injection systems, which are offered by our subsidiary L’Orange. In the sub- market of propeller shafts, in which we primarily supply premium manufacturers of cars up to 7.5 tons (passenger vehicles and light utility vehicles) independently of our off-highway engines and systems business, sales in the European market were above the trend of the overall car market in the first six months of 2008. In contrast, the North American market recorded a clear slow-down.

Production capacities in the off-highway product lines continued to be expanded and were Tognum increases sales by double-digit percentages almost fully utilised during the first half of 2008. As one of the leading providers in its mar- ket segments, the Tognum Group was able to take advantage of this market environment with a double-digit percentage increase in sales.

Income, Assets and Financial Position

INCOME SITUATION

The Tognum Group

EUR million Q2 Q2 change H1 H1 change 2007 2008 2007 2008 Order intake 785 773 – 2% 1,600 1,648 3% Book-to-bill ratio 1.2 1.0 1.2 1.1 Revenues 669 790 18% 1,336 1,517 14% EBIT 96 84 – 13% 178 190 7% Adjusted EBIT 107 100 – 7% 207 200 – 3% Return on sales (adjusted EBIT/revenues) 15.9% 12.7% 15.5% 13.2%

Order Intake (Fig. 1) ORDER INTAKE Order intake in the second quarter of 2008 reached EUR 773 million and, thus, continued (in EUR million) on the already high level of the prior year quarter. In the first half of 2008, an increase of 3% or EUR 48 million to EUR 1,648 was achieved (H1 2007: EUR 1,600 million). The segments H1 2008 1,648 mtu Engines and OES&C contributed to this positive development. Even after adjustments for merger and acquisitions activities relating to the acquisition of SKL Motor GmbH in H1 2007 1,600 Magdeburg/Germany (included in the segment mtu Engines from January 2008) and to the purchase of Katolight Corp. in Mankato, Minnesota/USA (included in the segment OES&C from Q2 2007), the relative deviation remained unchanged in the quarterly comparison. After elimination of the merger and acquisition activities, growth for the half-year amounted to 1%. These values, assuming a stable US Dollar exchange rate as compared to the prior year periods, would have shown an increase of 1% for the quarter and of 4% for the half year.

13

Management Report Income, Assets and Financial Position

Revenues Revenues in the second quarter of 2008 increased by 18% to EUR 790 million (Q2 2007: (Fig. 2) REVENUES ACCORDING TO REGIONS EUR 669 million). The first half of 2008 continued to record further increases and, increas- H1 2008 ing by 14% compared to the prior half-year, achieved a total volume of EUR 1,517 million (in %) (H1 2007: EUR 1,336 million). When adjusted for merger and acquisitions activities, the North America (NAFTA) 24% increases in the reporting quarter amounted to 17% and to 11% in the first six months of 2008. If the US Dollar exchange rate had remained at the level of the prior year, these values would actually have increased to 21% in the quarter and to 15% in the first six months. Both Europe w/o Germany 29% the segments mtu Engines and OES&C contributed to this positive development. Therefore, our strategy of offering a diversified product programme as well as a wide regional orienta- tion proved its value. Thus, the decline in the North America region (NAFTA) caused pri- marily by market and exchange rate developments could be compensated for by additional orders in the Europe and Asia/Pacific regions. Germany 22%

Domestic revenues amounted to EUR 337 million for the six months ending 30 June 2008 and, thus, accounted for roughly 22% of revenues during the reporting period (H1 2007: Asia/Pacific 17% 21%). Accordingly, the export ratio amounted to 78%. Europe continued to be the regional Other Countries 8% focus, followed by the North American (NAFTA) and Asia/Pacific regions.

Earnings before Interest and Taxes (EBIT) EBIT (earnings before interest and taxes) amounted to EUR 84 million in the second quarter (Q2 2007: EUR 96 million). In the period January to June 2008, we achieved an EBIT of EUR 190 million (H1 2007: EUR 178 million). These results, however, include one-time and non- operative effects. To increase the informative value and to improve comparability across periods and industries, we derived adjusted results which do not include such non-operative and one-time effects.

The adjustment effects currently consist of the increase in depreciation from purchase price allocations (PPA) − primarily from the acquisition of the off-highway activities from Daim- lerChrysler in 2006 −, the exchange rate effects from the valuation of US Dollar bank loans and hedging activities as at balance sheet date.

The one-time and non-operative effects are summarised in the following overview.

Tognum Group – Adjustment of EBIT

EUR million Q2 Q2 H1 H1 2007 2008 2007 2008 EBIT 96 84 178 190 Increased depreciation, amortisation due to PPA and in connection with acquisitions + 12 + 11 + 23 + 22 Non-recurring transaction/consultant costs + 2 0 + 6 0 Income from the sale of non-current assets – 1 0 – 2 0 Exchange rate factors resulting from valuation of loans/currencies and hedging activities – 2 + 5 – 8 – 12 Impairment of Fuel Cell Energy Inc. 0 0 + 10 0 Adjusted EBIT 107 100 207 200

Taking these adjustments into account, we achieved an adjusted EBIT of EUR 100 million in the second quarter of 2008 (Q2 2007: EUR 107 million). The adjusted six-month result amounted to EUR 200 million (H1 2007: EUR 207 million). This corresponds to a return on sales of 12.7% in the second quarter and to 13.2% in the first six months of 2008. The con- tinued weak US Dollar, which on average traded at around 1.53 US Dollars to the Euro (H1 2007: 1.33 US Dollars to the Euro), primarily contributed to the current situation.

14

Management Report Income, Assets and Financial Position

This value is higher than the average US Dollar-Euro exchange rate which was originally expected by the company for the entire year. The resulting effect could as yet not be fully compensated by additional price increases in the US Dollar markets and extensive ex- change rate hedges. In addition, new tasks and functions arising from the IPO as well as external consultancy services led to expenses in the mid-single-digit million range which, in the corresponding prior periods, either did not exist or not to a comparable extent. This includes the development and expansion of investor relations and communications activities, such as the first shareholders’ meeting in Friedrichshafen and the preparation of the an- nual report. In addition, we are working on several projects which are expected to se- cure future profitable growth for our company. These include, for instance, the reor- ganisation of the propeller shafts business in Friedrichshafen/Germany as a separate legal entity as well as the continued development of our business model in the drive and energy systems business (project “Compass”1). The relocation of our spare parts logistics led to a reduced share of the after-sales business in total revenues and profit in the second quarter. In contrast, our results were positively influenced by the ongoing business expansion and consistently high capacity utilisation.

Other significant earnings figures that can be found in the overview following this manage- ment report break down as follows:

Gross profit (Fig. 3) ADJUSTED GROSS PROFIT Our gross profit increased to EUR 173 million (Q2 2007: EUR 169 million) in the second (in EUR million) quarter. Gross profit in the first six months of 2008 rose to EUR 352 million (H1 2007: EUR 331 million). 1,517 1,336 376 (24.8%) Adjusted cost of sales (mainly adjusted for higher depreciation from PPA and for the valua- tion of hedging activities) rose to EUR 600 million in the second quarter of 2008 (Q2 2007: 354 (26.5%) EUR 488 million). In the first six months, adjusted cost of sales amounted to EUR 1,141 million (H1 2007: EUR 982 million). This resulted in an increased adjusted gross profit of EUR 190 million in the second quarter (Q2 2007: EUR 181 million) and of EUR 376 million in the first six months of 2008 (H1 2007: EUR 354 million). A slight shift in the revenue structure with a smaller share of the after-sales business as well as a continuously weak US 982 1,141 Dollar exchange rate led to a slightly lower gross profit margin of 24.1% in the quarter and of 24.8% in the half year compared to the prior comparable periods.

Interest Result H1 H1 In the second quarter as well as in the first half of 2008, the interest result improved mark- 2007 2008 Margin gross earnings edly in comparison to the corresponding prior year periods. In the second quarter of 2008, we achieved an almost balanced interest result (Q2 2007: EUR -15 million). In the first half Costof sales of 2008, the interest result amounted to EUR -17 million (H1 2007: EUR -33 million). This resulted primarily from lower interest expenses, which was due to lower net financial debt compared to the comparable prior periods. In addition, the non-adjusted market valuation of US Dollar interest swaps had a positive effect in the second quarter of 2008, which, based on a future expectation of increasing interest rate levels particularly in the US, led to a roughly EUR 8 million lower profit burden and almost equalised the negative valuation effects as at 31 March 2008.

1 For the Compass project please also refer to the section "Significant Events During the Reporting Period“.

15

Management Report Income, Assets and Financial Position

Net profit Net profit increased to EUR 63 million (Q2 2007: EUR 50 million) in the second quarter and to EUR 126 million in the first half of 2008 (H1 2007: EUR 87 million).

The improved interest result and a lower tax expense as compared to the prior periods, led to Adjusted net profit of EUR 133 million an adjusted net profit of EUR 75 million (Q2 2007: EUR 57 million) in the second quarter in the first half-year and of EUR 133 million in the first half of 2008 (H1 2007: EUR 104 million) taking the aforementioned one-time and non-operative effects into account.

The lower tax rate as compared to the prior periods resulted from the corporate tax reform in Germany that took effect in 2008 as well as from the different specific country tax rates in the Group.

Adjusted earnings per share2 clearly exceeded the corresponding results of the prior periods with EUR 0.57 in the quarter (Q2 2007: EUR 0.47) and with EUR 1.01 in the first half of the year (H1 2007: EUR 0.87).

2 Earnings per share are determined by dividing the consolidated earnings which the shareholders of Tognum AG are entitled to by the weighted average number of outstanding shares in the period (1 January to 30 June 2008: 131,375,000 shares; 1 January to 30 June 2007: 120,338,536 shares). The weighted number of outstanding shares was affected by the transformation of the former Tognum Group Holding GmbH to Tognum AG. Pursuant to IAS 33.64, the no par value shares that resulted from the change to Tognum AG were considered for the purpose of determining the earnings per share retroactively for all prior periods, i.e. under consideration of no par value shares from 2007.

16

Management Report Income, Assets and Financial Position

ASSETS

A condensed balance sheet with the most important items is provided in deviation to the balance sheet classification under IFRS for reasons of convenience. It also forms the basis for further commentary.

Tognum Group balance sheet

Assets

EUR million 31 Dec. 2007 30 June 2008

Non-current assets 976 1,001 Inventories 743 827 Trade receivables 465 462 Cash and cash equivalents 61 56 Other assets 116 141 Total assets 2,361 2,487

Equity and Liabilities

EUR million 31 Dec. 2007 30 June 2008

Equity 535 563 Provisions 767 804 Financial liabilities 425 466 Trade payables 241 268 Advance payments received 198 209 Other types of liabilities 195 177 Total equity and liabilities 2,361 2,487

As of 30 June 2008, the balance sheet total increased by EUR 126 million to EUR 2,487 mil- (Fig. 4) STRUCTURE OF BALANCE SHEET lion compared to the 2007 annual financial statements. Non-current assets increased by ASSETS EUR 25 million to EUR 1,001 million. The increase is primarily a result of an increase in deferred tax assets as well as of investments in property, plant and equipment and in in- tangible assets. Investments in property, plant and equipment amounted to EUR 44 mil- 41% 40% lion. Additions to intangible assets amounted to EUR 17 million, of which EUR 14 million related to capitalised development expenses. Other additions in intangible assets and prop- erty, plant and equipment amounting to EUR 14 million resulted from the acquisition of SKL Motor GmbH and the changes in the group of consolidated companies that were related to this. Furthermore, additional intangible assets (including goodwill) and appreciations in property, plant and equipment of EUR 11 million were considered as part of the purchase 56% 58% price allocation (PPA).

3 The net working capital increased by EUR 44 million to EUR 813 million compared to 3% 2% 31 December 2007. This increase is primarily due to an increase in inventories which is required due to the limited manufacturing capacity for the expected higher revenues in the 2007 H1 second half of the year. 2008 Non-current assets Current assets Cash and cash equivalents

3 Net Working Capital = Inventories plus Trade receivables less Trade payables less Advance payments received

17

Management Report Income, Assets and Financial Position

On the equity and liabilities side, provisions increased by EUR 37 million to EUR 804 million, (Fig. 5) STRUCTURE OF BALANCE SHEET primarily as a result of increased guarantee provisions associated with business expansion EQUITY AND LIABILITIES and the growing engine population, of an increase from obligations for orders accounted for during the year and of scheduled additions to pension provisions.

The increase in financial liabilities of EUR 41 million is primarily due to the drawdown of 59% 58% short-term liabilities for the dividend distribution of EUR 79 million approved in the share- holders’ meeting. Loan redemptions and exchange rate effects had an opposite effect in the first half of the year.

As compared to 31 December 2007, equity increased by EUR 28 million to EUR 563 million 18% 19% primarily due to the positive net profit, partly offset by the aforementioned dividend distri- bution. The equity ratio remained constant compared to the end of the previous year, 23% 23% amounting to roughly 23% at 30 June 2008 (end of 2007: 23%).

2007 H1 2008 Other debt capital

Financial liabilities FINANCE MANAGEMENT AND FINANCIAL POSITION Equity

Finance Management The main objectives of our finance management are to support the planned growth of the Finance management supports Group growth Group by ensuring an adequate financing structure and to safeguard our liquidity at all times. To this end, we have sufficient financial funds from the cash flow from operating activities and existing loan facilities.

The Tognum Group does not do any kind of financial business as such and has not traded with derivatives for purely speculative reasons in the past or present. All financial items are disclosed on our consolidated balance sheet.

Tognum Group cash flow

EUR million Q2 Q2 change H1 H1 change 2007 2008 2007 2008 Cash flow from operating activities 54 36 – 18 52 124 + 72 Cash flow from investing activities – 56 – 38 + 18 – 76 – 71 + 5 Cash flow from financing activities – 1 5 + 6 – 8 – 54 – 46

While cash flow from operating activities remained clearly positive in the second quarter at EUR 36 million, this cash flow could be more than doubled and amounted to EUR 124 mil- lion in the first half of the year compared to the prior year. As in the first quarter, a positive effect was achieved due to a significantly smaller increase in net working capital and also due to further inflows from the operating business. Active receivables management also contrib- uted to this positive development in the half-year.

In the second quarter of 2008, the cash flow from investing activities amounting to EUR -38 million was EUR 18 million less than in the prior year quarter (Q2 2007: EUR -56 million). The figures of the corresponding prior year quarter, however, included around EUR 28 mil- lion for the acquisition of the US company Katolight Corp..

18

Management Report Income, Assets and Financial Position

In the first half of 2008, cash flow from investing activities amounted to EUR -71 million (H1 2007: EUR -76 million). Besides investments in intangible assets and property, plant and equipment of EUR 61 million, the cash flow included a negative cash flow of EUR 9 million arising from the acquisition of SKL Motor GmbH on 1 January 2008. The company, with registered offices in Magdeburg/Germany, will strengthen the Group’s after-sales business with a focus on repairs/remanufacturing, as reported at the end of the first quarter. Addi- tions to intangible assets related primarily to capitalised development services. The increased expenditures in property plant and equipment mainly resulted from investments in technical equipment and production machines as well as investments in construction activities related to the expansion of production areas.

Cash flow from financing activities, both in the second quarter and the first six months of 2008 was marked by the aforementioned dividend distribution of EUR 79 million. Funds from the cash flow from operating activities and net credit borrowings were utilised to fi- nance this payment. Overall, this resulted in cash flow from financing activities for the second quarter of 2008 of EUR 5 million (Q2 2007: EUR -1 million) and a result of EUR -54 million for the first six months (H1 2007: EUR -8 million).

Net financial debt (interest-bearing financial liabilities less liquid funds) amounted to Net financial debt at EUR 326 million EUR 326 million as at 30 June 2008 (31 December 2007: EUR 294 million).

OVERALL VIEW OF THE ECONOMIC POSITION

The Tognum Group continued to be in a good economic position at the end of the first half of 2008. With our products, we were able to participate in the off-highway diesel engine markets in almost all application areas and sales markets. Contributing to this was not only our international presence and our diverse and balanced product portfolio, but also and primarily the high technological expertise and the outstanding dedication of our employees.

19

Management Report Segments

Segments4

MTU ENGINES

EUR million Q2 Q2 change H1 H1 change 2007 2008 2007 2008 Segment order intake 664 650 – 2% 1,393 1,401 1% Segment revenues 558 669 20% 1,146 1,286 12% thereof: Marine 122 174 43% 259 297 15% Power Generation 120 141 18% 231 271 17% Industrial 102 119 17% 215 223 4% Defense 53 70 32% 107 135 26% After Sales/Other 162 165 2% 334 360 8% EBIT 86 90 5% 171 180 5% Adjusted EBIT 95 103 8% 188 199 6% Return on sales (adjusted EBIT/revenues) 17.0% 15.4% 16.4% 15.5%

Order Intake The order intake of the segment mtu Engines reached EUR 650 million in the second quarter of 2008 (Q2 2007: EUR 664 million). As in the first half of 2007, the second quarter of 2008 was characterised by an accumulation of exceptionally large orders for global acquisition programmes of ships for the Navy and public authorities, but also in the yacht sector. Com- pared to the second quarter of 2007, however, this represents a slight decline. In contrast, order intake in the first half of 2008 recorded a slight increase of EUR 8 million to EUR 1,401 million (H1 2007: EUR 1,393 million). Order intake at SKL Motor GmbH, acquired at the beginning of 2008, amounted to EUR 5 million in the reporting quarter and to EUR 9 million in the first six months of 2008.

Revenues During the reporting quarter, the segment achieved a marked increase in revenues of 20% (Fig. 6) REVENUES AT MTU ENGINES to EUR 669 million (Q2 2007: EUR 558 million). Revenues for the first half of the year, H1 2008 increased by EUR 140 million or 12% reaching EUR 1,286 million, and represented another (in %) double-digit increase. Not taking the acquisition of SKL Motor GmbH into account, growth Marine 23% in the second quarter would have been at 19% and 12% in the first half of 2008. Power Gen 21% While revenues still declined strongly in the USA/North America (NAFTA) in the first quar- ter due to the financial and mortgage crisis, the decline slowed significantly in the second quarter. The regions of Europe/Africa/South America as well as Asia/Pacific contributed to Industrial 17% the overall strong revenue increase in the first six months achieving above-average increases in specific applications in some cases. The Defense, Power Generation and Marine engines applications recorded a significant rise in business volume. The Industrial applications and After Sales also recorded further growth rates. Defense 11%

Results After Sales/ mtu Engines achieved an increase of 8% with an adjusted EBIT of EUR 103 million in the Other 28% second quarter of 2008 (Q2 2007: EUR 95 million). In the first half of 2008, adjusted EBIT rose by 6% to EUR 199 million. The revenue increases had a particularly positive effect. The change in the US Dollar of approx. 20 cents compared to the first half of 2007 could, however, be only partly offset by hedging activities, price increases on the US markets and ongoing cost reduction measures. In addition, the revenue structure showed a slight shift from the high-margin after-sales business to other application areas.

4 All data includes intersegment relationships, i.e. transactions between segments.

20

Management Report Segments

This shift is primarily contingent on the aforementioned relocation of our spare parts logis- tics from Friedrichshafen/Germany to the new logistics centre in Überlingen/Germany. Nevertheless, return on sales at the end of the first half of the year remained at the overall level of 2007 (15.5%).

TOGNUM ONSITE ENERGY SYSTEMS & COMPONENTS (OES&C)

EUR million Q2 Q2 change H1 H1 change 2007 2008 2007 2008 Segment order intake 143 161 13% 249 317 27% Segment revenues 135 157 16% 235 300 28% thereof: Onsite Energy Systems 44 52 18% 60 99 65% Injection Systems 35 39 11% 69 79 14% Propeller Shafts 55 66 20% 106 122 15% EBIT 8 3 – 63% 4 11 175% Adjusted EBIT 10 6 – 40% 17 16 – 6% Return on sales (adjusted EBIT/revenues) 7.3% 3.8% 7.1% 5.3%

Order Intake In the second quarter of 2008, the order intake of the segment Tognum Onsite Energy Sys- tems & Components (OES&C) increased by 13% to EUR 161 million (Q2 2007: EUR 143 million), and the first half of 2008 closed at EUR 317 million, recording an increase of 27% (H1 2007: EUR 249 million). While the increases in the second quarter were exclusively generated by organic growth in which all application areas participated, the acquisition of the US company Katolight Corp. in the second quarter of 2007 contributed significantly to the growth in the half-year comparison. Excluding order intake achieved during the first quarter of 2008 this company, which does business in the field of decentralised energy tech- nology and with which we were able to clearly improve our position on the American mar- ket, growth in the first half of 2008 would have been 11%.

Revenues (Fig. 7) REVENUES AT OES&C Segment revenues amounted to EUR 157 million in the second quarter of 2008 and repre- H1 2008 sented an increase of 16% compared to the prior year quarter (Q2 2007: EUR 135 million). (in %) In line with the order intake, the marked increase of 28% to EUR 300 million at the end of Propeller shafts 41% the first half of 2008 resulted primarily from the revenues achieved by Katolight Corp. (adjusted for Katolight Corp.: 12%), included in the group of companies since the second quarter of 2007. The areas of Injection Systems and Propeller Shafts made a significant contribution to the organic growth. In contrast, revenues from energy systems on a gas Onsite Energy motor basis remained below the figures of the prior periods, which was in particular due to Systems 33% the uncertainties only resolved recently arising from the revision of the “Renewable Energy Sources Act” in Germany (Erneuerbare-Energien-Gesetz, EEG).

Results

At EUR 6 million, adjusted EBIT in the second quarter of 2008 remained below the prior Injection year figure by EUR 4 million. The contribution to profit in the area of Onsite Energy Sys- systems 26% tems was affected by, amongst others, advance payments for further business expansion. In Propeller Shafts, the result was influenced in particular by provisions for a warranty case and by the reorganisation of the propeller shafts business in Friedrichshafen/Germany into a separate legal entity.

21

Management Report Research and Development

In the first half of 2008, however, the segment achieved an adjusted EBIT of EUR 16 million which was only slightly below the corresponding prior year period (H1 2007: EUR 17 million). The largest contribution to revenues came from Injection Systems, but the Propeller Shafts business with the largest revenues in the segment also made a positive contribution − despite the difficulties in the second quarter and challenging business environment in the North American business. In contrast, Onsite Energy Systems’ contribution was slightly negative as in the reporting quarter, affected by preparatory efforts for further revenue development.

Research and Development

Innovative solutions based on highly advanced technology are in the focus in Tognum’s (Fig. 8) DEVELOPMENT SERVICES research and development. However, we never lose sight of the actual goal of our activities – (in EUR million) to be the preferred partner for our customers and to offer them the best possible benefits through our products. In the first half of 2008, we continued to commit considerable finan- 83 77 cial resources to this end. A total of EUR 77 million was used for development services paid 18 for by third parties and by ourselves. This amount included EUR 18 million paid for by third 30 parties, and EUR 14 million of capitalised development costs. 14 12 In addition to the continuing improvement of our engines and engine designs, development activities concentrated on further reducing emissions for compliance with future emission requirements in engine manufacturing. To this end, for example, low-emission combustion 41 45 processes as well as components for exhaust gas after treatment systems are being developed and tested. Together with professional partners, we are working intensively in the area of exhaust gas after treatment, in particular on the development of catalytic converters and diesel particulate filters. These activities will be primarily applied to the top-selling 2000 and 4000 series as well as in the 1600 series which is still in development. The modular concept H1 H1 can be used in a variety of applications and in the most diverse installation locations. Addi- 2007 2008 tionally, in the design of the systems, particular importance is placed on maintaining engine Paid development activities efficiency. Capitalised development costs Development costs In the context of the continuous development of our current engines programme, diverse issues were also dealt with which proved to be very successful. Thus, for instance, in the 2000 series in the area of marine engines, new prototypes optimised for increased performance with an improved acceleration performance are being realised. The start of the serial production is expected in the first half of 2009.

In the 4000 series, the first newly developed 16 cylinder oil and gas engine has been success- fully approved in-house and is now available for delivery. The new 20 cylinder engine for emergency gensets has also successfully passed the qualifying endurance test. This engine design fulfils the extended safety requirements which are an important criterion in nuclear plants. The new rail engines of the 4000 R43 model received the EU type approval “EU IIIA” for complying with future emissions regulations. Thus, these engines comply with the Euro- pean regulations which will be valid from January 2009 and can be utilised Europe-wide without any restrictions. The focus on development in the area of gas engines is the approval of all cylinder versions for isolated operation in which the gas engine provides the consumer with electrical energy and, if necessary, with heat.

For the propulsion of the new gas-protected emergency tug boat “Nordsee”, which is the most powerful of its kind in the world, the 8000 series is being developed in a gas-protected model. This technology, for which MTU is the only manufacturer in the world with long- standing experience, also ensures the operation of the ship in an environment that is con- taminated with explosive gases. After a Europe-wide tender, the German Ministry for Trans- port, Construction and Urban Development recently awarded the order for the ship design to the “Arbeitsgemeinschaft Küstenschutz” (coastal protection working group) − with MTU propulsion.

22

Management Report Employees

In addition, the 1600 series is well on its way to gaining approval for serial production. Successful endurance runs with different cylinder capacities were completed. The engines already displayed a high degree of product maturity in the subsequent assessment. We are independently developing specified electronics for this engine series in-house. This includes the engine management system “ADEC-Light” as an integral part of the series 1600 project.

The electronic components, as well as injection systems independently developed by our subsidiary L’Orange, ensure that we can continue to optimise our engines with respect to performance, efficiency and the reduction of emissions.

The focus of the development work in fuel cell technology was the final stage of the so-called “Eurocell” (Eurozelle) and its series maturity. A further focus of the activities was the appli- cation of fuel cells in the marine area so that it will also be possible to use these energy sys- tems on ships.

Employees

As at 30 June 2008, the number of employees rose by 413 to 8,592 persons compared to the end of 2007. A large part of this increase was a result from new hires, particularly at the Friedrichshafen site, as well as from the takeover of SKL Motor GmbH (number of employ- ees as at 30 June 2008: 119 persons).

Tognum employees according to regions (consolidated companies)

31 Dec. 2007 H1 2008 change (Fig. 9) EMPLOYEES WORLDWIDE Germany 6,748 7,083 5% Europe without Germany 134 140 4% USA 879 910 4% Asia 418 459 10% Germany 82% Total staff 8,179 8,592 5%

Besides additional employees for production and production-related areas, the company also Europe w/o added a significant number of staff in the areas of technology, sales, after sales and admini- Germany 2% stration during the reporting period. The major focus remained on the recruitment of engi- Asia 5% neers for research and development. USA 11% A partial transfer of operations from MTU Friedrichshafen GmbH to Tognum AG occurred on 1 May 2008. Thus, at 30 June 2008, Tognum AG recorded 405 employees which were mostly active in the Group functions of personnel, IT, finance and controlling as well as communications, investor relations, marketing and strategy.

Events after the Balance Sheet Date

Daimler AG informed us on 25 July 2008 that the Daimler Group’s holding of the voting rights in Tognum AG exceeded the reportable threshold of 25% by one share on 25 July (this corresponds to 32,843,751 voting rights).

With effect from 25 June 2008, Mr Marcus Brennecke and Mr Udo Philipp resigned as members of the supervisory board of Tognum AG. The resignations were a result of the sale of the shares held by Seeker Rekees S.à r.l. to Daimler Vermögens- und Beteiligungsgesell- schaft mbH.

23

Management Report Risk Report

In agreement with Daimler AG, the appointment of Mr Andreas Renschler and Dr Edgar Kroekel as new members of the supervisory board was proposed by the board of Tognum AG. In July 2008, the responsible court undertook the proposed appointments. These mem- bers of the supervisory board must be confirmed by Tognum shareholders’ meeting in 2009. The changes in the supervisory board also result in a change in the composition of the audit committee, which will in future be composed of Mr Heinz Michael Brechtel, Dr Volker Joos, Mr Sune Karlsson and Dr Edgar Kroekel.

There were no further significant, reportable events which occurred between the balance sheet date and the date of publication.

Risk Report

RISKS AND OPPORTUNITIES

Both the risks and the opportunities are comprehensively presented in the Group manage- ment report of Tognum AG for the 2007 financial year, which was published in the 2007 annual report and on the website of the company. No major changes have taken place from that time until the end of June 2008 and until the publication date of this quarterly report.

Outlook

During June and July 2008, the economic and exchange rate risks related to our business for The outlook for the engineering and off-highway the entire year of 2008 developed less positively than originally forecast by leading economic markets remains positive despite slower economic research institutes and bank representatives. A further slowdown in the expansion of the development global economy is now expected for the second half-year. Furthermore, there is an increas- ing risk of recession not only in the US, but also in other regions. Additional costs are gener- ated by the higher commodity and energy prices which are now also leading to an acceler- ated increase in the inflation rates of individual regions or national economies.

Japan and the established industrial countries of Europe expect lower growth rates in 2008 compared to the prior year. The growth drivers of the global economy remain to be the large developing countries and emerging markets, however, where economies are expanding at high growth rates in 2008 overall even under the more difficult current conditions. Experts assume that German economic growth will be lower compared to the very successful previ- ous year. In consequence of this and due to the strong external value of the Euro, prospects for the development of exports in the German economy are slightly bleak. Nevertheless, the outlook remains positive for the German engineering sector, in particular.

If the changed market forecasts of the economic research institutes prove true, we also ex- pect stable growth in the second half of 2008 in almost all application areas and sales mar- kets that are related to Tognum’s off-highway markets. We currently expect an annual growth of 7.0% (previously: 6.5-7.0%) for our markets in the area of high-speed diesel engines and of 8.0% (previously: 8.0-9.0%) for complete energy systems.

At the beginning of August 2008, we reassessed our previous sales and income prognosis for Increases in revenues and earnings for 2008 in the 2008 financial year on the basis of the above-mentioned economic conditions and of the double-digit percentage range actual data of the first half of the year. Thus, we now assume – in accordance with current market expectations − that the weakness of the US Dollar will continue for longer than expected and that the exchange rate will average around 1.55 US Dollar/Euro in 2008 (previ- ously: 1.45 US Dollar/Euro). Despite this negative effect, we expect a slight revenue increase in both segments for the second half of 2008 compared to the first six months. Consequently, we are confident that we will achieve revenue growth over the prior year in the lower region of the target corridor (11-13%).

24

Management Report Outlook

Based on the expected slight revenue increase in the second half-year as compared to the first six months, on positive effects from profits due to a further improved product mix in the second half-year and on the price increases implemented in early 2008, we also expect a slightly improved profit situation for the second half-year. Various new developments, how- ever, have a restricting effect for 2008 overall: the high average US Dollar exchange rate, higher prices for energy and primary products, preparatory work for further growth such as the new orientation of business areas resolved in May and planning activities for the devel- opment of a new US production plant as decided at the beginning of August as well as for the legal spin-off of Rotorion. Despite these developments and the forthcoming round of collective bargaining, we continue to expect the adjusted EBIT for 2008 to be above the prior year level. Furthermore, we also expect the margin to remain within the target corridor (13- 15%). We expect an adjusted EBIT margin at the bottom end of the corridor, however, due to the developments described.

On the basis of this expectation and assuming a further improved effective tax rate of Adjusted earnings per share of around 30%, we continue to expect an increase in adjusted earnings per share of over 25% more than EUR 2.00 expected compared to the prior year to more than EUR 2.00. We are again planning a dividend distri- bution of more than 30% of the annual profit for the 2008 financial year.

With a view to the next financial year, Tognum informed its customers and distributors in the engines markets that the company will increase its list prices from 1 January 2009 by 4% in the Euro region and by 7% in the US Dollar region.

Friedrichshafen, 8 August 2008

Tognum AG

Board of Directors

25

26

Interim Consolidated Financial Statements

28 Consolidated Income Statement 34 Notes to the Consolidated Financial Statements 34 Explanatory Notes 29 Condensed Consolidated Cash Flow Statement 37 Explanations to the Consolidated Income Statement 38 Explanations to the Consolidated Balance Sheet 30 Consolidated Balance Sheet 40 Other Disclosures

32 Statement of Changes in Group Equity 44 Responsibility Statement

45 Review Report

27

Interim Consolidated Financial Statements Consolidated Income Statement

Consolidated Income Statement of Tognum AG, Friedrichshafen, as at 30 June 2008

EUR million Note 1 Apr.— 1 Apr.— 1 Jan.— 1 Jan.— 30 June 2007 30 June 2008 30 June 2007 30 June 2008 Revenues 3 668.9 790.2 1,336.1 1,517.0 Cost of sales – 499.7 – 617.1 – 1,005.0 – 1,165.3 Gross profit 169.2 173.1 331.1 351.7 Other operating income 2.0 0.8 4.4 1.5 Selling costs – 37.4 – 45.1 – 71.9 – 82.6 General administrative costs – 20.4 – 23.4 – 42.3 – 45.6 Research and development costs – 21.5 – 21.4 – 41.4 – 45.5 Other operating expenses – 0.1 – 0.3 – 0.6 – 1.8 Results from operating activities 91.8 83.7 179.3 177.7 Share of profit from investments accounted for using the equity method 0.5 – 1.2 0.6 – 0.8 Other financial income 4 9.5 3.6 15.6 23.4 Other financial expenses 4 – 5.8 – 2.4 – 17.9 – 10.3 Earnings before interest and taxes 96.0 83.7 177.6 190.0 Interest income 5 1.3 0.8 2.6 2.3 Interest expenses 5 – 16.3 – 1.3 – 35.4 – 19.4 Earnings before taxes 81.0 83.2 144.8 172.9 Income taxes – 31.0 – 20.3 – 57.9 – 47.2 Net profit/loss 50.0 62.9 86.9 125.7

Earnings per share (in EUR) 0.41 0.48 0.72 0.96 Diluted earnings per share (in EUR) 0.41 0.48 0.72 0.96

The following explanatory notes are an integral part of the interim consolidated financial statements.

28

Interim Consolidated Financial Statements Condensed Consolidated Cash Flow Statement

Condensed Consolidated Cash Flow Statement of Tognum AG, Friedrichshafen, as at 30 June 2008

EUR million 1 Jan.— 1 Jan.— 30 June 2007 30 June 2008 Net profit/loss 86.9 125.7 Depreciation and amortisation/reversals of non-current assets 56.3 57.7 Elimination of changes of deferred taxes 42.5 – 5.0 Change of derivative financial instruments – 4.0 4.5 Change in inventories – 113.4 – 87.9 Change in receivables – 47.3 – 5.1 Change in liabilities 48.1 53.4 Increase/decrease in provisions including pensions 16.2 8.8 Change in other assets – 31.8 – 15.5 Non-cash exchange rate changes of loans – 9.8 – 13.6 Other non-cash expenses/income 8.5 1.4 Cash flow from operating activities 52.2 124.4 Purchase of property, plant and equipment – 39.2 – 43.6 Proceeds from the sale of property, plant and equipment 3.2 1.0 Purchase of intangible assets – 13.9 – 17.0 Payments for the acquisition of consolidated companies (net of cash and cash equivalents acquired) – 27.7 – 8.8 Payments for investments accounted for using the equity method 0.0 – 1.6 Proceeds from investments accounted for using the equity method (dividends) 0.9 3.6 Proceeds from investments available for sale 0.9 0.0 Payments for other cash investments 0.0 – 5.0 Proceeds from other cash investments 0.1 0.0 Cash flow from investing activities – 75.7 – 71.4 Borrowings 30.0 131.6 Repayments of financial liabilities – 49.8 – 90.2 Repayments of other financial liabilities 0.0 – 16.9 Proceeds from capital increase 11.4 0.0 Dividends paid 0.0 – 78.8 Cash flow from financing activities – 8.4 – 54.3

Change in cash and cash equivalents – 31.9 – 1.3 Cash and cash equivalents at the beginning of the period 101.5 60.8 Effect of foreign exchange rates on cash and cash equivalents – 0.9 – 3.3 Cash and cash equivalents at the end of the period 68.7 56.2

The following explanatory notes are an integral part of the interim consolidated financial statements.

29

Interim Consolidated Financial Statements Consolidated Balance Sheet

Consolidated Balance Sheet of Tognum AG, Friedrichshafen, as at 30 June 2008

Assets

EUR million Note 31 Dec. 2007 30 June 2008 Intangible assets 6 478.1 475.1 Property, plant and equipment 6 406.5 430.4 Investments accounted for using the equity method 20.3 17.9 Deferred tax assets 25.7 38.0 Other non-current financial assets 7 45.3 39.2 Other non-current assets 0.0 0.1 Non-current assets 975.9 1,000.7 Inventories 8 743.0 826.7 Trade receivables 464.7 462.2 Tax claims 5.1 8.2 Cash and cash equivalents 60.8 56.2 Other current financial assets 9 77.7 85.9 Other current assets 33.4 46.9 Assets held for sale 0.0 0.2 Current assets 1,384.7 1,486.3 Total assets 2,360.6 2,487.0 .

The following explanatory notes are an integral part of the interim consolidated financial statements.

30

Interim Consolidated Financial Statements Consolidated Balance Sheet

Equity and Liabilities

EUR million Note 31 Dec. 2007 30 June 2008 Share capital 131.4 131.4 Capital reserves 257.7 257.7 Retained earnings and other reserves 145.4 174.0 Equity 10 534.5 563.1 Provision for pensions 389.5 394.1 Tax provisions 10.9 10.2 Other long-term provisions 11 185.3 199.3 Deferred tax liabilities 112.5 122.9 Long-term financial liabilities 12 344.5 296.4 Advance payments received 0.2 0.6 Other long-term liabilities 1.5 1.6 Non-current liabilities 1,044.4 1,025.1 Trade payables 240.8 268.0 Tax payables 58.2 25.5 Other short-term provisions 11 192.6 211.0 Short-term financial and other liabilities 13 80.7 169.9 Advance payments received 197.8 208.3 Other current liabilities 11.6 16.1 Current liabilities 781.7 898.8 Total equity and liabilities 2,360.6 2,487.0

The following explanatory notes are an integral part of the interim consolidated financial statements.

31

Interim Consolidated Financial Statements Statement of Changes in Group Equity

Statement of Changes in Group Equity of Tognum AG, Friedrichshafen, as at 30 June 2008

EUR million Share capital Capital reserves

Balance as at 1 January 2007 0.0 121.6 Fair value changes of available for sale financial instruments Exchange rate changes Impairment losses on financial instruments Changes recognised directly in equity 0.0 0.0 Net profit or loss Total of net profit or loss and changes recognised directly in equity 0.0 0.0 Capital increase 11.4 Capital increase from corporate funds 120.0 – 120.0 Balance as at 30 June 2007 131.4 1.6

Balance as at 1 January 2008 131.4 257.7 Fair value changes of available for sale financial instruments Exchange rate changes Changes recognised directly in equity 0.0 0.0 Net profit or loss Total of net profit or loss and changes recognised directly in equity 0.0 0.0 Dividends Balance as at 30 June 2008 131.4 257.7

The following explanatory notes are an integral part of the interim consolidated financial statements.

32

Interim Consolidated Financial Statements Statement of Changes in Group Equity

Retained earnings and other reserves Total equity Total Accumulated Market Cumulative Total retained attributable to net income valuation currency earnings and the shareholders differences other reserves of Tognum AG – 33.4 – 12.3 – 12.1 – 57.8 63.8 63.8 2.6 2.6 2.6 2.6 – 4.5 – 4.5 – 4.5 – 4.5 9.6 9.6 9.6 9.6 0.0 12.2 – 4.5 7.7 7.7 7.7 86.9 86.9 86.9 86.9 86.9 12.2 – 4.5 94.6 94.6 94.6 11.4 11.4

53.5 – 0.1 – 16.6 36.8 169.8 169.8

178.8 2.3 – 35.6 145.4 534.5 534.5 – 6.0 – 6.0 – 6.0 – 6.0 – 12.3 – 12.3 – 12.3 – 12.3 0.0 – 6.0 – 12.3 – 18.3 – 18.3 – 18.3 125.7 125.7 125.7 125.7 125.7 – 6.0 – 12.3 107.4 107.4 107.4 – 78.8 – 78.8 – 78.8 – 78.8 225.8 – 3.7 – 47.9 174.0 563.1 563.1

33

Notes to the Consolidated Financial Statements

Explanatory Notes

1. Principles and Methods in the Interim Financial Statements

The present condensed interim consolidated financial statements of Tognum AG and its subsidiaries (hereinafter: Tognum Group) as at 30 June 2008 were prepared in accordance with the requirements of the International Accounting Standards for the preparation of interim reports (IAS 34) in conjunction with the International Financial Reporting Standards (IFRS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) as they are to be applied in the European Union (EU). Pursuant to IAS 34, the interim financial statements do not contain all the information that is to be disclosed in the consolidated financial statements at the end of the financial year. Consequently, these financial statements are to be read in conjunction with the consolidated financial statements for the 2007 financial year. The present interim financial statements include both figures from the financial statements and explanations on selected items. The segment reporting can be found on page 41 of the explanatory notes. Tognum AG is a public company by law in the Federal Republic of Germany. The company is registered in the Trade Register of the Ulm Local Court and has its registered offices at Maybachplatz 1, 88045 Friedrichshafen/Germany. The present financial statements cover the period from 1 January to 30 June 2008 and were approved for publica- tion by the board of directors on 8 August 2008. The interim consolidated financial statements are prepared in Euro. Unless indicated otherwise, all amounts are stated in million Euros (EUR million). All significant internal balances and transactions between Group companies were eliminated. According to the management, the interim financial statements include all adjustments that are necessary for an appropriate presenta- tion of the net assets, financial position and results of operations of the Tognum Group (i.e. conventional, ongoing adjustments). The results from the quarters are not necessarily indicative of the results that can be anticipated for future periods or for the entire financial year. Fundamentally, the same accounting and valuation methods as in the 2007 consolidated financial statements were applied for the preparation of the interim consolidated financial state- ments and the determination of the comparable figures for the prior year. A detailed description of these methods is

34

Interim Consolidated Financial Statements Notes: Explanatory Notes

published in the notes to the consolidated financial statements for the 2007 financial year. These notes are also avail- able online under http://investoren.tognum.de. The preparation of the interim financial statements under IFRS require a certain degree of estimates and assess- ments regarding the disclosed assets and liabilities as well as the disclosures of contingent receivables and liabilities at the reporting date and the recognised income and expenses for the reporting period. The actual values can deviate from the estimates.

2. Group of Consolidated Companies

The interim consolidated financial statements include Tognum AG and all the significant companies in which Tog- num AG possesses a direct or indirect majority or the majority of the voting rights and can determine the financial and business policies according to the so-called control concept. As at 30 June 2008, Tognum AG and 26 subsidiaries (31 December 2007: 22) were consolidated in full. The change in the group of consolidated companies in the first six months of 2008 resulted primarily from new formations and from the complete acquisition of SKL Motor GmbH, Magdeburg/Germany. The company does busi- ness in the area of development, manufacturing and the sale of medium-speed diesel and biofuel engines including the supply of replacement parts for driving ships and supplying electricity. Furthermore, the company shall be ex- panded to a centre for repair and remanufacturing activities in the after sales area. SKL Motor GmbH was allocated to the segment mtu Engines. SKL Motor GmbH was first consolidated pursuant to IFRS 3 “Business Combinations” under application of the acquisition method. The results of the acquired company have been included in the consolidated financial state- ments as of the acquisition date (1 January 2008). The contribution of SKL Motor GmbH to the net profits after taxes for the 6-month period since its acquisition amounted to EUR -1.1 million as at 30 June 2008. The consolidated revenues of SKL Motor GmbH included in this period amounted to EUR 7.6 million. The acquired net assets and the goodwill from the acquisition of SKL Motor GmbH, Magdeburg/Germany, are determined as follows:

EUR million 1 Jan. 2008 Acquisition price 7.1 Costs directly attributable to the acquisition 0.7 Total purchase price 7.8 Current market value of the acquired net assets 3.8 Goodwill 4.0

The total purchase price was allocated to the acquired assets and liabilities at the acquisition date as follows:

EUR million Carrying amount Carrying amount before acquisition after acquisition Intangible assets 0.2 3.0 Property, plant and equipment 13.7 17.8 Inventories 8.3 8.2 Other assets and receivables 3.8 3.8 Cash and cash equivalents 0.2 0.2 Liabilities – 26.8 – 27.3 Deferred tax liabilities 0.0 – 1.9 Net assets – 0.6 3.8

The book values of the acquisition represent IFRS book values. The book values after the acquisition correspond to the preliminary fair values at the time of acquisition. At the reporting date for the interim financial statements, the determination of the fair value at the time of acquisition was to be viewed as preliminary pursuant to IFRS 3.62 since the recognition processes, particularly in the area of non-current property, plant and equipment, could still not be concluded in full. The acquisition costs for the company shares amounted to EUR 7.1 million (calculated from the total purchase price paid less the purchase price for an acquired shareholder loan receivable) and include the preliminary purchase price reduction claim on account of the working capital adjustment clause contained in the purchase agreement (reduction of EUR 1.0 million). At the reporting date for the interim consolidated financial statements, the purchase price for the company shares was still subject to the final determination of the contractual working capital evaluation,

35

Interim Consolidated Financial Statements Notes: Explanatory Notes

with the consequence that the acquisition costs for the purchase of the company shares are to be viewed as prelimi- nary pursuant to IFRS 3.62 at the reporting date. Please refer to section 14 for information about contingent receiv- ables and liabilities resulting from the preliminary purchase price determination. Goodwill of EUR 4.0 million reflects the anticipated commercial advantages and the synergy effects on account of including SKL Motor GmbH in the Tognum Group as well as SKL Motor GmbH’s positive income prospects. Goodwill was allocated to the cash-generating unit Engines. The anticipated useful life of the acquired intangible assets is represented as follows:

Fair value Useful life EUR million in years Brand 0.7 unlimited Customer relationships 1.4 15– 17 Technology 0.6 4 Others 0.1 5

The hidden reserves disclosed in the context of the acquisition of non-current tangible assets have the following useful lives:

Hidden reserves Useful life EUR million in years Property 0.2 unlimited Buildings 2.0 19– 24 Machines and other plants 1.9 5– 15

The new company formations of MTU China Co. Ltd., Shanghai/China, and MTU Vietnam Co. Ltd., Hanoi City/Vietnam, were also allocated to the segment mtu Engines as fully consolidated subsidiaries of the sub-group MTU Asia Pte. Ltd. Further, Shanxi North MTU Ltd., Datong City/China, was formed as a joint venture together with a subsidiary of the China North Industries Group Corp. (Norinco) and is subsumed under the same sub-group and the same segment and is accounted for according to the equity method. The acquisition costs for Katolight Corp., Mankato, Minnesota/USA, which was acquired in April 2007 and allo- cated to the Tognum Onsite Energy Systems & Components segment, were no longer preliminary as at the reporting date for these interim financial statements on account of the final determination of the acquired working capital. Value adjustments with regard to the values reported in 2007 were only required to a limited extent. Final goodwill amounted to an unchanged EUR 9.0 million. Rotorion GmbH, Friedrichshafen/Germany, formed with effect from 30 May 2008 as a subsidiary of Tognum AG, was allocated to the same segment.

36

Interim Consolidated Financial Statements Notes: Explanations to the Consolidated Income Statement

Explanations to the Consolidated Income Statement

3. Revenues

The revenues primarily result from the sale of goods, with the product programme including diesel engines, diesel and gas engine systems, stationary energy systems with fuel cells and high-quality engine and drive systems such as high-pressure injection systems and drive shafts for vehicles. This includes gas turbines and custom-made electronic systems for the controlling and monitoring of engines and drive systems.

The external sales of the Tognum Group can be represented as follows:

EUR million 1 Apr.— 1 Apr.— 1 Jan.— 1 Jan.— 30 June 2007 30 June 2008 30 June 2007 30 June 2008 mtu Engines 549.0 653.3 1,131.5 1,254.0 Tognum Onsite Energy Systems & Components 119.9 136.9 204.6 263.0 668.9 790.2 1,336.1 1,517.0

Please refer to the separately prepared segment reporting for a breakdown of the revenues and results according to the individual areas of operation.

4. Financial Results

EUR million 1 Apr.— 1 Apr.— 1 Jan.— 1 Jan.— 30 June 2007 30 June 2008 30 June 2007 30 June 2008 Income from currency translation 4.3 0.4 10.4 16.7 Remaining financial income 5.2 3.2 5.2 6.7 Other financial income 9.5 3.6 15.6 23.4 Expenses from financial assets classified as held to maturity 0.0 0.0 – 0.7 – 0.1 Expenses from currency translation – 2.1 0.0 – 2.2 – 3.1 Expenses from financial assets available for sale 0.0 0.0 – 9.8 0.0 Expenses from compounding interests on provisions – 1.3 – 1.9 – 2.6 – 3.8 Remaining financial expenses – 2.4 – 0.5 – 2.6 – 3.3 Other financial expenses – 5.8 – 2.4 – 17.9 – 10.3 Other financial income and expenses 3.7 1.2 – 2.3 13.1

From the income from foreign currency translations in the first six months of 2008, EUR 13.6 million resulted from valuation measures of US Dollar loans, most of which were generated in Quarter 1 of 2008.

5. Interest Result

The valuation of the US Dollar interest rate swaps concluded by Tognum AG had a positive effect in the second quarter of 2008 with EUR 7.5 million, after valuation losses of EUR 9.5 million were recorded in Quarter 1 on ac- count of the declining US Dollar interest rate. In total, a valuation effect of EUR -1.9 million in the interest result is included in the first six months. In comparison to the same period in the prior year, the interest rate expense for banks reduced by EUR 16.1 million on account of funds received from the IPO which were used for reductions in the third quarter of 2007 and in this way effected a clearly reduced net financial indebtedness.

37

Interim Consolidated Financial Statements Notes: Explanations to the Consolidated Balance Sheet

Explanations to the Consolidated Balance Sheet

6. Additions and Disposals of Intangible Assets and Property, Plant and Equipment

The Tognum Group invested EUR 17.0 million in intangible assets and EUR 43.6 million in property, plant and equipment (not including assets that were acquired as part of company acquisitions) in the period from 1 January to 30 June 2008. In the comparable period from 1 January to 30 June 2007, the Group acquired intangible assets of EUR 13.9 million and property, plant and equipment with acquisition costs of EUR 39.2 million (not including assets that were acquired as part of company acquisitions). The Group sold intangible assets and property, plant and equipment with a residual book value of EUR 1.4 mil- lion in the reporting period (1 January to 30 June 2008) as compared to EUR 0.5 million in the prior period.

7. Non-Current Financial Assets

EUR million 31 Dec. 2007 30 June 2008 Other investments 45.1 39.0 Remaining 0.2 0.2 45.3 39.2

The item “Other investments” includes shares in the publicly listed company Fuel Cell Energy Inc., Dabury/USA, which are allocated to the valuation category “Assets held for sale”. An adjustment of EUR 6.1 million (before taxes) without an impact on net income was recorded with a reducing effect on equity on account of the current share price and the listing in US Dollars as at 30 June 2008.

8. Inventories

EUR million 31 Dec. 2007 30 June 2008 Raw materials, consumables and supplies 239.7 291.5 Unfinished goods 231.9 273.6 Finished goods, parts for resale 201.0 189.6 Advance payments made 70.4 72.0 743.0 826.7

Inventories increased by EUR 83.7 million as compared to 31 December 2007. The increase primarily resulted from the build-up in inventories during the year and also from the addition to inventories as part of the first con- solidation of SKL Motor GmbH in the first half of 2008.

38

Interim Consolidated Financial Statements Notes: Explanations to the Consolidated Balance Sheet

9. Other Current Financial Assets

EUR million 31 Dec. 2007 30 June 2008 Receivables from related parties Trade receivables from related parties 32.1 55.2 Receivables from joint ventures, associated companies and investments 31.1 19.9 63.2 75.1 Positive market values of derivative instruments 14.2 10.1 Other 0.3 0.7 77.7 85.9

The increase of EUR 8.2 million in other current financial assets as compared to 31 December 2007 primarily re- sulted from the increase in receivables from joint ventures, associated companies and unconsolidated subsidiaries by EUR 11.9 million (please also refer to the explanations under section 17 “Transactions with Related Parties”), while the valuation of the derivative financial instruments had an effect to the contrary with approx. EUR 4.1 million.

10. Equity

The increase in equity as compared to 31 December 2007 is largely due to the net profit generated by the company. The negative impact of exchange rates for the translation of foreign consolidated companies had the opposite effect. Furthermore, the dividends announced by the shareholders’ meeting were paid out in the 2008 second quarter, which had a negative effect in equity of EUR 78.8 million (0.6 EUR for each of the 131,375,000 ordinary shares). Further details on the development of equity can be found in the overview “Statement of Changes in Group Equity” on page 32.

11. Other Provisions

Provisions for other risks can be broken down as follows:

EUR million 31 Dec. 2007 30 June 2008 short-term long-term short-term long-term Warranty and voluntary concessions obligation 94.1 128.8 98.8 139.6 Personnel/social benefit obligations and partial retirement 28.0 35.6 25.4 37.5 Other provisions 70.5 20.9 86.8 22.2 192.6 185.3 211.0 199.3

In the second quarter of 2008, Tognum AG introduced a virtual stock options plan for management (“Long Term Incentive Concept 2008-2012”). The stock options plan has a maturity term of four years. Of this, the first three years form the “performance period” in which the relevant performance indicators will be determined, each of which are calculated in equal parts from the average profit development − based on the earnings per share (EPS) in the period from 2008 to 2010 relative to the EPS in 2007 – and from the development of the market price of the Tognum share compared to the MDAX. A one-year “holding period” is added to this, which has no further profit- dependent influence on the valuation of the stock options plan. As at 30 June 2008, an expense of EUR 0.1 million was booked on account of an appraisal report in this regard and was recognised as a provision.

39

Interim Consolidated Financial Statements Notes: Other Disclosures

12. Non-Current Financial Liabilities

EUR million 31 Dec. 2007 30 June 2008 Financial liabilities 336.5 289.6 Other liabilities 8.0 6.8 344.5 296.4

The decrease in non-current financial liabilities resulted from US Dollar loan valuation measures amounting to EUR 10.5 million and from loan redemptions of EUR 36.9 million (including EUR 3.1 million of realised currency profits) from funds received as part of the operative cash flow. An addition from accrued interest of EUR 0.5 million resulted from the loan valuation according to the effective interest method.

13. Current Financial and Other Liabilities

EUR million 31 Dec. 2007 30 June 2008 Liabilities to financial institutions 16.8 91.9 Liabilities arising from loans 1.0 1.0 Liabilities to related companies 7.5 11.1 Liabilities from derivatives (negative market values) 0.0 0.9 Other liabilities 55.4 65.0 80.7 169.9

The increase in current liabilities to financial institutions is primarily a result of the financing of the dividends resolved by the shareholders’ meeting which were payable in the second quarter of 2008. Other liabilities include, among others, obligations from payroll accounting, outstanding holiday allowances and overtime pay, liabilities from pension providers, social security associations, support funds and contributions to the employees’ chamber.

Other Disclosures

14. Contingent Receivables and Contingent Liabilities as well as Other Financial Obligations

As at balance sheet date, there were contingent receivables and liabilities from the acquisition of the shares in SKL Motor GmbH from a possible adjustment in the purchase price on account of the working capital adjustment clause provided in the agreement. The company anticipates an adjustment in the purchase price on the basis of the cur- rently ongoing negotiations with regard to the final determination of the acquired working capital at the time of acquisition (please see explanations under section 2 “Group of Consolidated Companies” for more information on this subject). Any claims against or obligations to the seller were not considered reliably determinable as at balance sheet date. Shanxi North MTU Ltd., Datong City/China, was formed as a joint venture together with a subsidiary of the China North Industries Group Corp. (Norinco) in the second quarter of 2008. As at balance sheet date, EUR 1.6 million were already brought in as equity by MTU Asia Pte. Ltd. MTU Asia Pte. Ltd. is to bring in as equity the remaining amount of EUR 9.2 million by 2010. Contingent liabilities from contingencies amounted to EUR 7.6 million as at 30 June 2008 (31 December 2007: EUR 7.8 million). This also includes warranties for refinancing for the benefit of affiliated companies, which amounted to EUR 1.8 million (31 December 2007: EUR 2.3 million). The other financial obligations from purchase contracts and order commitments secure planned investments as well as the material needs for processing the order backlog as part of ordinary operating activities. They amounted to EUR 1,053.5 million as at 30 June 2008 (31 December 2007: EUR 1,051.3 million).

40

Interim Consolidated Financial Statements Notes: Other Disclosures

In consequence of its business activities, the Tognum Group in Germany and in a number of other countries, in- cluding the US, is involved in legal, arbitration and regulatory proceedings that are a normal part of business. Such circumstances are subject to countless risks so that the results of individual proceedings cannot be foreseen with any certainty. No significant impact on the results of operations or the financial position of the Tognum Group is ex- pected from the final completion of these matters.

15. Segment Reporting

The Tognum Group has two operative segments: mtu Engines and Tognum Onsite Energy Systems & Components. The business units are subdivided according to the offered products and services, since this is appropriate for the risks and chances of the Tognum Group. The segment mtu Engines combines diesel engines for drive systems and power generation systems as well as electronics, system solutions and related services. The engines of the Tognum Group are used in ships and in heavy agricultural and rail vehicles. This segment includes not only the parts of MTU Friedrichshafen GmbH, Friedrichs- hafen/Germany, but also MTU Australia Pty. Ltd., Kings Park/Australia, MTU Asia Pte. Ltd., Singapore/Singapore, including its consolidated subsidiaries, MTU Italia S.r.l., Arcola/Italy, MTU Detroit Diesel Benelux B.V., Dord- recht/Netherlands, MTU Detroit Diesel Inc., Detroit/USA, including its consolidated subsidiaries and SKL Motor GmbH, Magdeburg/Germany. The segment Tognum Onsite Energy Systems & Components consists of the areas diesel engine driven, gas engine driven or fuel-cell driven decentralised power systems, injection systems and drive shafts. Besides parts of MTU Friedrichshafen GmbH, Friedrichshafen/Germany (which represent the drive shaft activities in Germany), this in- cludes the companies Katolight Corp. (diesel systems), Mankato, Minnesota/USA, MDE Dezentrale Energiesysteme GmbH (gas systems), Augsburg/Germany, MTU CFC Solutions GmbH (stationary power systems with fuel cells), Ottobrunn, L’Orange GmbH (injection systems), Stuttgart/Germany, and Rotorion North America LLC (drive shafts), Charleston/USA. The column “Consolidation and others” includes the elimination of intersegment relationships and not offset re- ceivables and income of the holding company.

EUR million mtu Engines Tognum Onsite Energy Consolidation Group Systems & Components and others Q2 2007 Q2 2008 Q2 2007 Q2 2008 Q2 2007 Q2 2008 Q2 2007 Q2 2008 External revenue 549.0 653.3 119.9 136.9 0.0 0.0 668.9 790.2 Intersegment revenue 9.5 15.8 14.8 19.7 – 24.3 – 35.5 0.0 0.0 Total revenue 558.5 669.1 134.7 156.6 – 24.3 – 35.5 668.9 790.2 Segment result (EBIT) 85.7 89.5 7.5 3.3 2.8 – 9.1 96.0 83.7

EUR million mtu Engines Tognum Onsite Energy Consolidation Group Systems & Components and others Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 Q1-Q2 2007 2008 2007 2008 2007 2008 2007 2008 External revenue 1,131.5 1,254.0 204.6 263.0 0.0 0.0 1,336.1 1,517.0 Intersegment revenue 14.6 32.2 30.6 37.3 – 45.2 – 69.5 0.0 0.0 Total revenue 1,146.1 1,286.2 235.2 300.3 – 45.2 – 69.5 1,336.1 1,517.0 Segment result (EBIT) 171.0 180.1 3.5 11.2 3.1 – 1.4 177.6 189.9

41

Interim Consolidated Financial Statements Notes: Other Disclosures

16. Boards

BOARD OF DIRECTORS There was no change in the composition of the board of directors at Tognum AG as compared to 31 December 2007.

SUPERVISORY BOARD With effect from 25 June 2008, Mr Marcus Brennecke and Mr Udo Philipp resigned from their office as members of the supervisory board of Tognum AG. The resignations were a result of the sale of the shares held by Seeker Rekees S.à r.l. to Daimler Vermögens- und Beteiligungsgesellschaft mbH.

17. Transactions with Related Parties

The changes in the subsidiaries included in the consolidated financial statements of the Tognum Group in 2008 as part of the full consolidation are listed under section 2 “Group of Consolidated Companies”. The unconsolidated subsidiaries are insignificant for the financial position, results of operations and net assets of the Tognum Group. All transactions between the Tognum Group and the related parties were made under conditions that would be conventional for independent business partners.

EUR million Transaction volume Transaction volume (1 Jan.—30 June 2007) (1 Jan.—30 June 2008) Volume of Volume of Volume of Volume of work performed work received work performed work received Associates and joint ventures 35.1 0.0 34.4 0.1 Other related parties 43.0 10.3 67.2 10.2 78.1 10.3 101.6 10.3

EUR million Outstanding balances Outstanding balances (Dec. 31, 2007) (June 30, 2008) Receivables Payables Receivables Payables Associates and joint ventures 31.1 0.0 19.9 0.1 Other related parties 32.1 8.1 87.9 63.4 63.2 8.1 107.8 63.5

The business relations of the companies in the Tognum Group with other related parties and with joint ventures and associated companies result to a large extent from ongoing delivery and service transactions. Related companies which are controlled by the Tognum Group or on which the Tognum Group is able to exert a significant influence are listed in the equity holdings list in the consolidated financial statements as at 31 December 2007. The compila- tion of the complete equity holdings list of the Group as at 31 December 2007 was submitted to the electronic Ger- man Federal Gazette. As at 31 December 2007, Dr Jürgen Großmann, sole shareholder of Georgsmarienhütte Holding GmbH, resigned his supervisory board seat at Tognum AG. Business relations with his company in the current period are conse- quently not subject to the reporting requirement, the transaction volume in the period from the prior year, however, amounted to EUR 6.5 million and primarily included the delivery of welded parts and spare parts by the Georgs- marienhütte Group to companies of the Tognum Group. The liabilities resulting from the exchange of services with the Georgsmarienhütte Group amounted to EUR 0.6 million as at 31 December 2007.

42

Interim Consolidated Financial Statements Notes: Other Disclosures

At the end of June, Daimler AG acquired a 24.5% share in Tognum AG. At the beginning of the third quarter of 2008, the business relations with Daimler AG (with effect from the date of acquisition) will be reported in the line item “Other related parties”, while the existing liabilities and receivables in the above table are already included as at the reporting date of this interim report.

18. Employees

The Tognum Group employed a total of 8,592 employees as at 30 June 2008 (31 December 2007: 8,179). The increase largely resulted from the general expansion of business and from the acquisition of SKL Motor GmbH, Magdeburg/Germany.

19. Events after the Balance Sheet Date

Daimler AG informed us on 25 July 2008 that the portion of the voting rights in Tognum AG of Daimler Vermögens- und Beteiligungsgesellschaft mbH, Stuttgart/Germany, exceeded the threshold of 25% by one stock on 23 July 2008 (this corresponds to 32,843,751 voting rights), now amounting to 25.00000076%. Daimler AG appointed Mr Andreas Renschler and Dr Edgar Kroekel as new members of the Tognum AG super- visory board. In July 2008, the competent court undertook the proposed appointments; the new supervisory board members must be confirmed by the shareholders’ meeting of Tognum AG in 2009. Due to the changes in the super- visory board, there is also a change in the composition of the audit committee, which will in future be composed of Mr Heinz Michael Brechtel, Dr Volker Joos, Mr Sune Karlsson und Dr Edgar Kroekel.

Friedrichshafen, 8 August 2008

Tognum AG

Volker Heuer Chairman of the Executive Board Chief Executive Officer (CEO)

Christof von Branconi Rainer Breidenbach Member of the Executive Board Member of the Executive Board Department “Onsite Energy & Components” Department “Engines”

Joachim Coers Degreed engineer Dr Gerd-Michael Wolters Member of the Executive Board Member of the Executive Board Department “Corporate Services” (CFO) Department “Technology & Operations”

43

Interim Consolidated Financial Statements Responsibility Statement

Responsibility Statement

“To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial re- porting, the condensed interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the interim management report of the group includes a fair review of the development and performance of the business and the position of the group, together with a descrip- tion of the principal opportunities and risks associated with the expected development of the group for the remain- ing months of the financial year.”

Friedrichshafen, 8 August 2008

Tognum AG

Volker Heuer Chairman of the Executive Board Chief Executive Officer (CEO)

Christof von Branconi Rainer Breidenbach Member of the Executive Board Member of the Executive Board Department “Onsite Energy & Components” Department “Engines”

Joachim Coers Degreed engineer Dr Gerd-Michael Wolters Member of the Executive Board Member of the Executive Board Department “Corporate Services” (CFO) Department “Technology & Operations”

44

Interim Consolidated Financial Statements Review Report

Review Report

We have reviewed the condensed interim consolidated financial statements – consisting of balance sheet, income statement, condensed cash flow statement, statement of changes in equity as well as selected explanatory notes − and the interim group management report of Tognum AG, Friedrichshafen, for the period from 1 January 2008 to 30 June 2008, the two of which form part of the 6-month financial report pursuant to § 37w WpHG (Securities Trad- ing Act). The preparation of the condensed interim consolidated financial statements in accordance with those IFRS applicable to interim financial reporting as adopted by the European Union, and of the interim group management report in accordance with the requirements of the WpHG applicable to interim group management reports, is the responsibility of the company’s management. Our responsibility is to issue a report on these condensed interim consolidated financial statements and on the interim group management report based on our review. We conducted our review of the condensed interim consolidated financial statements and of the interim group management report in accordance with the generally accepted German standards for the review of financial state- ments promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and conduct the review so that we can preclude through critical evaluation, with a certain level of reliability, that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the European Union, and that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports. A review is limited primarily to enquiries of company employees and analytical assessments and, therefore, does not provide the certainty attainable in a financial statement audit. Since, in accor- dance with our engagement, we have not performed an audit of financial statements, we cannot issue an auditors’ report. Based on our review, no matters have come to our attention that cause us to believe that the condensed interim consolidated financial statements have not been prepared, in all material respects, in accordance with the IFRS ap- plicable to interim financial accounting as adopted by the European Union, or that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports.

Stuttgart, 8 August 2008

PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Franz Wagner Dieter Wissfeld Auditor Auditor

45

46

Service

48 2007 — 2008 Figures at a Glance 48 Tognum Group 50 Segment information

47

Service 2007-2008 Figures at a Glance

2007 — 2008 Figures at a Glance

EUR million* 2007 2007 2007 2007 2007 Q1 Q2 Q3 Q4 Q1-Q4

Tognum Group Order intake 815 785 828 679 3,107 book-to-bill ratio 1.2 1.2 1.2 0.9 1.1

Revenues 667 669 709 790 2,835 Cost of Sales – 505 – 500 – 543 – 622 – 2,170 =Gross Profit 162 169 166 168 666 Selling and general administrative costs – 56 – 58 – 64 – 54 – 233 Research and development costs – 20 – 22 – 25 – 26 – 92 Other operating expenses 2 2 - – 1 3 = Results from operating activities 88 92 77 87 344 Financial result – 6 4 15 9 22 = EBIT 82 96 92 96 366 Interest result – 18 – 15 – 13 – 13 – 58 Income taxes – 27 – 31 – 7 – 30 – 95 = Net profit / loss 37 50 72 53 212

Gross profit (adjusted) 173 181 177 172 703 in % of revenues 25.9% 27.1% 25.0% 21.8% 24.8% EBIT (adjusted) 100 107 96 88 390 in % of revenues 15.0% 15.9% 13.5% 11.1% 13.8% Depreciation (without purchase price allocation) 17 17 17 16 67 EBITDA (adjusted) 117 123 112 104 457 in % of revenues 17.6% 18.4% 15.8% 13.2% 16.1% Net profit / loss (adjusted) 48 57 51 44 199 adjusted EPS (EUR) 0.40 0.47 0.39 0.34 1.58

Net Working Capital** 702 745 791 769 769 Cash flow from operating activities – 2 54 65 96 213 Cash flow from investing activities – 19 – 56 – 29 – 56 – 161

Net financial debt*** 645 643 341 294 294 Provision for pensions 384 387 388 389 389 Equity 111 170 489 535 535

* Differences between the individual values and the sums derived from these may result from rounding off in some columns and lines of this table. ** Net Working Capital = Inventories + Trade receivables ./. Trade payables ./. Advance payments received *** Net financial debt = Interest-bearing financial liabilities ./. liquid funds

48

Service 2007-2008 Figures at a Glance

2008 2008 2008 2008 vs. 2007 Q1 Q2 H1 Q2/Q2 Q2/Q2 absolute change in %

875 773 1,648 – 12 – 2% 1.2 1.0 1.1 – 0.2 N/A

727 790 1,517 121 18% – 548 – 617 – 1,165 – 117 23% 179 173 352 4 2% – 60 – 68 – 128 – 10 17% – 24 – 22 – 46 0 0% – 1 1 0 – 1 – 50% 94 84 178 – 8 – 9% 12 0 12 – 4 – 100% 106 84 190 – 12 – 13% – 17 - – 17 15 100% – 27 – 20 – 47 11 – 35% 63 63 126 13 26%

186 190 376 9 5% 25.6% 24.1% 24.8% 100 100 200 – 7 – 7% 13.8% 12.7% 13.2%

17 18 36 1 6% 117 118 236 – 5 – 4% 16.1% 14.9% 15.6% 58 75 133 18 32% 0.44 0.57 1.01 0.10 21%

781 813 813 68 9% 89 36 124 – 18 – 33% – 34 – 38 – 71 18 32%

245 326 326 – 317 – 49% 391 394 394 7 2% 576 563 563 393 231%

49

Service 2007-2008 Figures at a Glance

EUR million* 2007 2007 2007 2007 2007 Segment information Q1 Q2 Q3 Q4 Q1-Q4

mtu Engines Order intake 729 664 742 549 2,684 book-to-bill ratio 1.2 1.2 1.2 0.8 1.1

Segment revenues 588 558 612 658 2,416 Marine 138 122 153 192 604 Power Generation 111 120 135 146 512 Industrial 113 102 106 109 430 Defense 54 53 62 56 225 After Sales / Other 172 162 156 155 645 thereof external revenues 582 549 601 647 2,380

EBIT (adjusted) 94 95 92 93 373 in % of revenues 16.0% 17.0% 15.0% 14.1% 15.5%

Tognum OES&C Order intake 106 143 127 163 539 book-to-bill ratio 1.1 1.1 1.0 1.0 1.0

Segment revenues 101 135 130 162 527 Onsite Energy Systems 16 44 41 59 160 Components 84 90 89 104 367 thereof external revenues 85 120 108 144 456

EBIT (adjusted) 7 10 5 9 31 in % of revenues 7.0% 7.3% 3.8% 5.4% 5.9%

Consolidation / Corporate Service Tognum AG Segment order intake – 20 – 22 – 41 – 34 – 117

Segment revenues – 21 – 23 – 33 – 30 – 108

EBIT (adjusted) – 1 2 – 1 – 14 – 14

* Differences between the individual values and the sums derived from these may result from rounding off in some columns and lines of this table.

50

Service 2007-2008 Figures at a Glance

2008 2008 2008 2008 vs. 2007 Q1 Q2 H1 Q2/Q2 Q2/Q2 absolute change in %

751 650 1,401 – 14 – 2% 1.2 1.0 1.1 – 0.2 N/A

617 669 1,286 111 20% 123 174 297 52 43% 130 141 271 21 18% 104 119 223 17 17% 65 70 135 17 32% 195 165 360 3 2% 601 653 1,254 104 19%

96 103 199 8 8% 15.6% 15.4% 15.5%

156 161 317 18 13% 1.1 1.0 1.1 0 N/A

144 157 300 22 16% 47 52 99 8 18% 96 105 201 15 17% 126 137 263 17 14%

10 6 16 – 4 – 40% 6.9% 3.8% 5.3%

– 32 – 38 – 70 – 16 – 73%

– 34 – 36 – 69 – 13 – 57%

– 6 – 9 – 15 – 11 N/A

51

2008-2009 Financial Calendar*

November 11, 2008 Publication of the report on the third quarter 2008 March 26, 2009 Release of financial report 2008 May 13, 2009 Publication of the report on the first quarter 2009 June 09, 2009 General shareholders’ meeting 2009

* All data is preliminary and subject to changes

Contact Forward Looking Statements Corporate Communications In some tables of this report there may be differences between the Phone +49 (0) 75 41 90 39 89 individual values and the totals resulting from them due to rounding off. Fax +49 (0) 75 41 90 39 18 This report also contains forward-looking statements that are based on E-Mail [email protected] assumptions, prognoses and estimates of the man-agement at Tognum. Although we assume that the assumptions, prognoses and estimates Investor Relations that form the basis for our state-ments about the future are realistic, Phone +49 (0) 75 41 90 33 18 we cannot guarantee that these assumptions, prognoses and estimates Fax +49 (0) 75 41 90 33 28 will also prove correct in the future. Assumptions, prognoses and esti- E-Mail [email protected] mates naturally involve risks and uncertainties that can lead to the actual results significantly differing from the statements made about Impressum the future. Factors that can cause such deviations include, for example, Copyright © 2008 changes in the economic and business environment, fluctuations in Tognum Aktiengesellschaft exchange rates and interest rates, the launch of competitors’ products, Maybachplatz 1 the failure of customers to accept new products or services and changes 88045 Friedrichshafen/Germany in the com-pany’s strategy. Tognum does not assume any special www.tognum.com obligations to update and/or correct and/or confirm the forward-looking statements made here or to publish updates/corrections on any of the All rights reserved. forward-looking statements that concern circumstances or announce- Printed in Germany. ments that emerge after the date of today’s publication. The interim report is also published in English; in the event of devia- tions, the German version takes precedence over the English translation. The annual report is available in both languages online under http://www.tognum.com for downloading.

Tognum Aktiengesellschaft Maybachplatz 1 88045 Friedrichshafen Deutschland Telefon (0 75 41) 90 91 Telefax (0 75 41) 90 97

Investors and Analysts: [email protected] Applicants: [email protected] Customers: [email protected] Journalists: [email protected]