Annual Report 2012 RENK AG at a Glance

Innovative Power Transmission

Annual Report 2012 RENK AG At a glance

• Operating profit €66 million (up from €53 million) • ROS: 13.8 percent (up from 13.6) • ROCE: 34.6 percent (up from 33.5) • Earnings per share: €6.69 (up from €5.58) • Proposed dividend: €2.00 per share (up from €1.80) • Net cash provided by operating activities: €66 million (up from €40 million)

RENK Group € million 2012) 2011) Change in % Order intake 525) 456) +15 Sales 476) 389) +22 Order backlog1) 634) 586) +8 Headcount1) 2,245) 2,013) +12 thereof temporary employees1) 78) 69) –

Change in € mill. Operating profit (EBIT) 66) 53) +13 Earnings before taxes (EBT) 65) 54) +11 Net income/earnings after taxes (EAT) 45) 38) +7 Earnings per share (EpS) in € 6.69) 5.58) – Dividend per share in € 2.00) 1.80) – Return on sales (ROS) in % 13.8) 13.6) – Return on capital employed (ROCE) in % 34.6) 33.5) –

Capital expenditures 28) 24) +4 Amortization/depreciation 14) 13) +1 Internally funded R&D expenditures 7) 6) +1 Cash earnings 59) 51) +8 Cash flow from operating activities 66) 40) +26 Cash flow from investing activities (31) (24) –7 Free cash flow 35) 16) +19 Net liquid assets1) 124) 103) +21 Total equity1) 265) 236) +29

1) As of December 31, 2012 vs. 2011

RENK—an MAN SE Company Contents

04 Supervisory Board 05 Executive Board 06 Report of the Supervisory Board 12 Corporate governance 20 RENK stock

22 RENK Group Management Report for fiscal 2012 23 The RENK Group’s business focus 24 Economic environment 26 Order situation and operating profit 30 Income statement 31 Reconciliation to net income (EAT) 32 Controlling system and shareholder value management 36 Financial position 37 Asset and capital structure 40 Capital-related disclosures 42 Research and development 44 Investing activities, environmental management 48 Employees 52 The situation at the divisions 66 Risk report 76 Board compensation report 2012 82 Outlook

85 RENK consolidated financial statements for the fiscal year ended December 31, 2012 86 Consolidated income statement 86 Statement of comprehensive income 87 Consolidated balance sheet 88 Statement of changes in equity 89 Consolidated statement of cash flows 91 Notes to RENK’s consolidated financial statements 91 Accounting principles 104 Notes to the consolidated income statement 109 Notes to the consolidated balance sheet 120 Other information 138 Subsequent events 139 Supervisory and Executive Board memberships in other statutory boards or equivalent 142 Management representation 143 Independent auditor’s report and opinion

145 Six-year overview

03 RENK Annual Report 2012 Supervisory Board

Dipl.-Kfm. Frank H. Lutz Klaus Ketterle*) Munich Neusäss Supervisory Board Chairman Technical clerk, RENK AG Former executive board member of MAN SE

Herbert Köhler *) Augsburg Dipl.-Oec. Hiltrud Werner Senior foreman, RENK AG Munich Supervisory Board Vice-Chairwoman

Head of Corporate Internal Auditing, MAN SE

*) elected by the employees As of Feb. 21, 2013 Prof. Dipl.-Ing (FH) Gerd Finkbeiner Neusäss

Management consultant (freelance)

Dr.-Ing. Hans-O. Jeske Wesel

Executive board member of MAN Diesel & Turbo SE

04 Executive Board

Ulrich Sauter Dipl.-Ing. (FH) Florian Hofbauer Wertingen Landsberg Spokesman responsible for Production and Administration responsible for Engineering and Marketing

05 RENK Annual Report 2012 Report of the Supervisory Board

Frank H. Lutz

Ladies and Gentlemen:

In fiscal 2012, the Supervisory Board periodically and thoroughly dealt with RENK’s situation and development and throughout performed the tasks and duties incumbent on it under law, the Company’s bylaws and its own Rules of Procedure. We provided the Executive Board members with advice on the conduct of business and oversaw their activities.

The Supervisory Board convened in 2012 at four meetings, attendance averaging 88 percent. Detailed Executive Board reports (oral and written) informed the Supervisory Board on business trends and transactions of relevance, RENK’s performance and financial trends, the corporate plan and any variances and their causes, the present strategic focus, as well as the purposes and configuration of the risk management system. As part of its management monitoring duties, the Supervisory Board furthermore satisfied itself of the installation by the Executive Board of an effective and efficient regulatory compliance system for the RENK Group, and obtained reports on compliance-related tests and audits.

The Supervisory Board’s Presidential Committee met twice in fiscal 2012; no other committees existed within the Supervisory Board.

The Supervisory Board was involved as advisory body in all issues and decisions of import to RENK. Moreover, at periodical conferences with the Executive Board members outside scheduled Supervisory Board meetings, I discussed, among other topics,

06 relevant issues involving RENK’s business trend, regulatory compliance, and strategic projects.

Agendas of Supervisory Board meetings The Supervisory Board’s March 5, 2012 meeting centered on the annual financial statements for fiscal 2011 (including the dependency report on affiliations). Further topics being discussed at this meeting were the approval of the agenda of, and proposed resolutions to be passed by, the annual general meeting 2012, the Executive Board’s compliance report, as well as amendments to the fixed salary and D&O insurance cover in the Executive Board members’ service contracts.

Preceding the AGM on April 26, 2012, the Supervisory Board met again to listen to the Executive Board’s report on RENK’s business trend and then discuss the pre-publication Q1 interim report.

At the Supervisory Board meeting of July 27, 2012, the Executive Board reported on ongoing cost efficiency improvement projects, as well as on M&A and R&D activities. This was followed by a joint discussion by the Supervisory and Executive Boards of the semiannual financial report prior to publication. Then a resolution to change the Executive Board remuneration system by redesigning the long-term performance- related incentive was passed. Details are included in the Board Compensation Report 2012 which is published as part of the annual management reports for RENK AG and the Group.

The Supervisory Board’s October 22, 2012 meeting upstream of the Q3 interim report’s publication also dealt with the German Corporate Governance Code, the declaration of conformity, and the examination conducted on the efficiency of Supervisory Board activities as recommended in § 5.6 of the Code. Moreover, the Supervisory Board discussed with the Executive Board the applicability of Codetermination Act provisions, besides formally resolving that PwC be engaged to audit RENK AG’s annual financial statements and dependency report. The newly appointed Compliance Officer then introduced himself to the Supervisory Board and submitted his report on RENK AG’s regulatory compliance system.

Corporate governance In December 2012, RENK AG’s Executive and Supervisory Boards issued the declaration of conformity on the current recommendations of the German Corporate Governance Code Government Commission (as amended up to May 15, 2012). This declaration is published on RENK AG’s website. The Supervisory Board approved the corporate governance report 2012 at the present meeting of February 21, 2013.

In fiscal 2012, no Supervisory Board member reported any clashing interests under the terms of § 5.5 of the Code.

Annual and dependency report audits 2012 The separate financial statements and management report of RENK AG, as well as the consolidated financial statements and group management report, for the fiscal year

07 RENK Annual Report 2012 ended December 31, 2012, were all examined by PricewaterhouseCoopers AG, Wirt schaftsprüfungsgesellschaft (“PwC”), Munich, the statutory auditor duly elected by the annual general meeting; PwC issued its unqualified opinion on both sets of financial statements. The focal audit areas defined by the Supervisory Board referred to deferred taxes and hedge accounting.

Pursuant to Art. 312 German Stock Corporation Act (“AktG”), the Executive Board prepared a dependency report on affiliations for fiscal 2012. The statutory auditor examined this report and issued the following opinion thereon:

“According to our due audit and analysis we hereby confirm (1) that the facts stated in the report are true and valid, and (2) that the consideration the Company received for the legal transactions mentioned therein was not unreasonably high.”

The Supervisory Board endorsed the statutory auditor’s conclusions from the latter’s examination of the dependency report.

The statutory auditor attended, and reported on its key audit conclusions at, our annual accounts meeting today. We took approving note of the audit results.

According to the final results of our own review of RENK AG’s separate and consolidated financial statements and the management reports, we do not raise any objections either. We approve the separate financial statements as prepared by the Execu- tive Board, which are thus adopted, as well as the consolidated financial statements. After thorough discussion of the RENK Group’s financial budget and capital expenditure plan, we agree with the Executive Board’s proposal (also reviewed by us) for the appropriation of net earnings.

After reviewing the final results of our own examination, we found no reasons for objections to the Executive Board’s concluding statement in the dependency report.

Changed Supervisory Board membership After Ms. Hiltrud Werner had been delegated in May 2011 by MAN SE to RENK AG’s Supervisory Board in accordance with Art. 7(3) Clause 1 of the Articles of Incorporation (bylaws), the AGM endorsed Ms. Werner’s Supervisory Board membership, electing her formally for the remaining term of office of the Supervisory Board.

The current year 2013 will see a change in Supervisory Board membership. Since RENK meantime regularly employs more than 2,000 people, the provisions of Art. 96(1) AktG in conjunction with Art. 1(1) MitbestG (German Codetermination Act) require the Supervisory Board in future to have six stockholder and employee representatives each, as set out in Art. 7(1) MitbestG. Employee representatives are elected in line with MitbestG provisions while the election of stockholder representatives will be held at this year’s AGM.

08 Our thanks go to the Executive Board and the RENK Group’s employees for their efforts and dedicated service. We also thank the employee representatives for their constructive cooperation in RENK’s interests.

For the Supervisory Board:

Augsburg, February 21, 2013

Frank H. Lutz Supervisory Board Chairman

099 RENK Annual Report 2012 At Hamburg’s SMM 2012, the world’s most important shipbuilding fair, RENK showcased its new T2RECS. The new gear unit was the subject of keen interest on the part of trade visitors.

10 11 RENK Annual Report 2012 Corporate governance

For RENK, corporate governance and control are designed to ensure, in line with social market economy principles, its continuance as a going concern by adding the necessary sustainable shareholder value.

A prime driver of these efforts is the corporate governance system, which is defined by current legislation, RENK’s articles of incorporation (bylaws) and in-house rules, as well as by nationally and internationally accepted standards of sound and responsible corporate management. The German Corporate Governance Code (the “Code”) describes the regulations applicable to RENK under stock corporation law and provides recommendations and suggestions on how to practice good corporate governance according to generally accepted standards.

RENK’s corporate governance statement pursuant to Art. 289a German Commercial Code (“HGB”) has been published on the Internet at www.renk.eu within Investor Relations.

Corporate governance at RENK RENK AG’s Executive and Supervisory Boards have thoroughly dealt with the subject of corporate governance and the implementation of the Code’s recommendations, and are aware that sound and transparent corporate governance in line with German and international standards is essential to responsible and far-sighted corporate management.

Declaration of conformity On December 14, 2012, RENK AG’s Executive and Supervisory Boards issued the following declaration of conformity:

“RENK AG’s Executive and Supervisory Boards declare that, in the period from Decem- ber 12, 2011 (the date of RENK AG’s latest declaration of conformity) up to June 15, 2012, RENK AG adopted the recommendations of the German Corporate Governance Code Government Commission, which have been published by the Federal Ministry of Jus- tice on July 2, 2010, in the official part of the digital Federal Gazette (as amended up to May 26, 2010), subject to its latest declaration of conformity, with the exception of §§ 5.3.1–3 (Formation of Committees) and 5.4.6 par. 1 clause 3 (Compensation of Com- mittee Members) of the German Corporate Governance Code (the ‘Code’).

As from June 15, 2012, to this date, RENK AG has adopted the recommendations of the German Corporate Governance Code Government Commission as published on June 15, 2012, by the Federal Ministry of Justice in the official part of the digital Federal Gazette (amended up to May 15, 2012), with the exceptions stated above as well as the following in addition: §§ 5.4.1 par. 2 (Disclosure of Concrete Supervisory Board Membership Objectives) and 5.4.6 par. 2 (Performance-Oriented Remuneration of Supervisory Board Members).

12 The CGC Government Commission additionally recommended in § 5.4.1 par. 2 of the Code (Disclosure of Concrete Supervisory Board Membership Objectives) that in future the Supervisory Board also specify the number of its independent members (as defined in § 5.4.2); concurrently, this very definition of “independent Supervi- sory Board members” in § 5.4.2 of the Code was amended. On October 22, 2012, the Supervisory Board deliberated and agreed on this definition, and this recommendation has since been implemented.

Article 12(1) of our Memorandum & Articles of Incorporation stipulates, inter alia, that the compensation of Supervisory Board members be tied to the dividend amount. While we deem this statutory stipulation to be in conformity with the Code’s recommendation that the variable fee be oriented toward a company’s sustainable corporate development under the terms of § 5.4.6 par. 2, it cannot be ruled out that this recommendation might be construed or interpreted differently; therefore, to be on the safe side, we included our Supervisory Board fee system among the exceptions as aforesaid.

Moreover, the Executive and Supervisory Boards declare that as from the date hereof, RENK AG has fully implemented the recommendations of the German Corporate Governance Code Government Commission as published on June 15, 2012, by the Fed- eral Ministry of Justice in the official part of the digital Federal Gazette and as amended up to May 15, 2012), with the following exceptions: §§ 5.3.1–3 (Formation of Commit- tees), 5.4.6 par. 1 clause 3 (Compensation of Committee Members), 5.4.6(2) (Perfor- mance-Oriented Remuneration of Supervisory Board Members), and 5.5.3 clause 1 (Report to the General Meeting on Existing Conflicts of Interest and their Treatment).

Besides the existing Presidential Committee (in charge of Executive Board staffing issues), no further Supervisory Board committees are or will be established (§ 5.3.1–3 of the Code). With a membership of only six, neither efficiency nor any other reasons would support the formation of such additional committees from among the Supervisory Board members.

Presidential Committee chairmanship and membership will not be remunerated (§ 5.4.6 par. 1 clause 3 of the Code) since committee work has not been and will not within the foreseeable future be of any significant extent.

The reasons for the noncompliance with the recommendation in § 5.4.6 par. 2 of the Code have been detailed above.

In its judgment of July 5, 2011 (file ref. 5U 104/10), the Higher Regional Court of Frankfurt/Main has held that the official discharge by the AGM of the acts and omissions of a listed stock corporation’s executive and supervisory boards is null and void because in this case (inter alia) the boards’ reports to the AGM on conflicts of interest and their treatment had not been sufficiently detailed. Particularly in light of the nondisclosure obligation imposed on boards by the provisions of Arts. 93 and 116 AktG, the judgment has given rise to uncertainty about the scope of disclosure in reports as required by the Code’s recommendation. We therefore and

13 RENK Annual Report 2012 again to be on the safe side, include § 5.5.3 clause 1 of the Code among the exceptions. This qualification notwithstanding, we will continue to report to the previously adopted degree of detail on any conflicts of interest and their treatment.”

Certain significant recommendations and suggestions of the Code are commented on in detail below:

Promotion of stockholder rights and transparency On our website at www.renk.eu under Investor Relations, and through published financial reports, we offer our German and international stockholders and other interested parties the opportunity to obtain anytime an updated and authentic portrayal of RENK and its corporate governance practices. Promptly on disclosure (cf. § 6.3 of the Code), RENK AG publishes on its website annual and interim reports, a financial diary with all upcoming events of financial relevance.

General meeting The (annual) general meeting of stockholders is the platform for all RENK stockholders to exercise their voting rights, obtain information, as well as to dialogue with the Exec- utive and Supervisory Boards.

RENK AG organizes and conducts its AGM in order to efficiently, comprehensively and effectively inform all its stockholders before and during the meeting. The invitation to the AGM is published in the digital version of the German Federal Gazette (“Bundes anzeiger”) and made available to all stockholders and other interested parties on RENK’s website, including all AGM-related reports and documents.

Where stockholders do not attend the AGM they may authorize as voting proxy not only a bank, shareholder association or other person but also a RENK employee.

Interaction of Executive and Supervisory Boards In accordance with German stock corporation legislation, RENK AG has two boards in addition to the general meeting as corporate body: the Executive and Supervisory Boards closely collaborate in RENK’s best interests and endeavor to add sustainable shareholder value.

The Executive Board is in charge of RENK’s management and conduct of business while the Supervisory Board has overseeing and advisory functions. Both boards pursue their activities in accordance with applicable statutory regulations and their respective rules of procedure. The Executive Board briefs the Supervisory Board timely and comprehensively on all relevant strategic, planning, business trend and risk position issues. Any business subject to Supervisory Board approval is submitted to the Supervisory Board in due course. Moreover, the Executive Board promptly reports any extraordinary events to the Supervisory Board Chairman.

Executive Board The Executive Board is RENK AG’s top management body and has two members (as of December 31, 2012) who conduct RENK’s business under their joint responsibility. Exec-

14 utive Board members are appointed by the Supervisory Board. The Executive Board’s work is governed by rules of procedure.

The Executive Board determines the business goals and aims for the entire RENK Group and is accountable not only for compliance with the law, official regulations and in-house policies but also for open, fair and transparent corporate communication. The risk management system is designed to assist the Executive Board in early identifying any business and financial risks.

In accordance with German stock corporation legislation and § 4.3.5 of the Code, the acceptance by an Executive Board member of any sideline activity (including the membership in a nongroup company’s supervisory board) is subject to prior Supervi- sory Board approval. Moreover, Executive Board members are obligated to report any conflicts of interests promptly to the Supervisory Board and to their peers on the Exec- utive Board. In the year under review, no clashing interests of Executive Board members were reported, nor did any company of the RENK Group transact any business with RENK AG’s Executive Board members or parties related to these.

Supervisory Board As another corporate body, the Supervisory Board performs monitoring and advisory functions at RENK AG and is generally composed of four stockholder and two employee representatives. Stockholder representatives are elected by the general meeting but according to our bylaws MAN SE has the right to appoint one of them. Employee representatives are elected by the workforce. Supervisory Board members are elected individually (i.e., not by collective slate). For details of Supervisory Board membership and its changes in 2012, see also the Supervisory Board report and the notes to the consolidated financial statements.

In the wake of the amended Code (“independence” redefined in § 5.4.2), RENK AG’s Supervisory Board updated at its October 22, 2012 meeting the resolution passed on December 10, 2010, on its composition, which now reads as follows:

“Given the Company’s purposes, size and proportion of international business, RENK AG’s Supervisory Board envisages a composition that meets the following criteria:

• At least one member should be a non-German citizen to reflect the Board’s inter national orientation;

• At least one member should be independent, i.e., the member should have no personal or business relations with RENK AG, its corporate bodies, a controlling stockholder or any related entity of such stockholder, unless the resulting conflict of interest is only of an insignificant or temporary nature;

• At least one member should be female.

15 RENK Annual Report 2012 A slate of candidates for Supervisory Board membership that is submitted to the election committees should take account of the aforementioned criteria and, as a rule moreover, not list any person aged 70 or above as of the election date.”

In the year under review, no clash of interests was reported by Supervisory Board members.

Memberships of Supervisory Board members in boards of other enterprises are listed in the notes to the consolidated financial statements.

A directors & officers (D&O) insurance policy has been taken out by Volkswagen AG to cover liability claims also against RENK AG, in accordance with the requirements of VorstAG (German Act on the Reasonableness of Executive Board Compensation, dated July 31, 2009) and the Code.

Regulatory compliance/risk management In line with the responsibility assigned by the Code, the Executive Board consistently developed and enacted in 2012 the 2009 Compliance Program by adding revised and detailed anticorruption/anti-bribery, antitrust and data privacy policies.

RENK’s Executive Board has appointed a Compliance Officer who is answerable for developing and implementing the integrity and compliance program; he reports to RENK AG’s Executive and Supervisory Boards, works closely together with MAN SE’s Chief Compliance Officer, and applies the latter’s resources and tools for ensuring regulatory and corporate compliance. Besides RENK’s Compliance Officer, RENK employees can also contact at any time MAN SE’s Compliance Helpdesk.

RENK’s Code of Conduct specifies the principles of generally accepted ethics, behavior and conduct and details compliance-related issues such as

• Handling Gifts, Hospitality and Invitations to Events;

• Marketing Assistance through Commercial Agents/Consultants;

• Donations in General;

• Data Protection Rules, Handling of Personal Data and Organizing Data Protection.

In fiscal 2012, several compliance guidelines were reviewed and updated.

In addition to the Code of Conduct for Employees, RENK issued a Code of Conduct for Suppliers & Business Partners that defines certain minimum ethical standards, and any RENK supplier, vendor or business associate must agree to comply with these.

As follow-up program to earlier-year training events, the Compliance Officer trained employees who are exposed in their day-to-day work to related risks, by enhancing their awareness in presence training courses with primary focus on the basic facts and

16 knowledge of anticorruption/anti-bribery issues and infringements against antitrust laws.

Moreover, the Compliance Office launched in late December 2012 an e-learning program for compliance issues to impart the basics of RENK’s Code of Conduct and the associated anticorruption, anti-bribery, antitrust-law and data-privacy principles.

Unchanged, “Speak up!” (MAN SE’s whistleblower portal) has been available to RENK employees to detect risks that may also jeopardize RENK. Via this portal, leads, clues and evidence are received and followed up on that refer to cases of grave noncompliance, particularly in the fields of business crime (corruption/bribery offenses), antitrust legislation and data privacy laws.

The rollout of a computerized Continuous Controls Monitoring System (CCMS) was successfully tested in 2012 as a pilot project in Augsburg that aims at the early identification and prevention of potential noncompliance risks and guideline violations in purchasing and payment processes.

RENK does not condone or tolerate any noncompliance. Tips hinting at any potential infringement are thoroughly investigated, any actual infringements are brought to a stop and punished to the extent permitted by labor legislation.

No case of noncompliance was reported in the year under review.

Risks emanating from noncompliance, as well as other business risks were all assessed by the risk management system (RMS) and effectively dealt with by the Executive and Supervisory Boards. Reference is made to the risk chapter of the management report.

Reportable securities transactions Sec. 15a German Securities Trading Act (“WpHG”) and the applicable provisions of the Code require any board members and other officers, as well as parties related to these (whether closely related family members, legal entities or other institutions) to report to the issuer as well as the German Federal Financial Supervisory Authority (“BaFin”) on the purchase and sale of RENK shares and financial instruments based thereon. Such reported related-party transactions (so-called directors’ dealings) are published on our website at www.renk.eu under Investor Relations. In the year under review, no such notifiable transactions were reported to RENK AG.

Accounting The Executive Board prepares RENK’s consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS), and RENK AG’s separate financial statements in conformity with German GAAP, i.e., the Commercial Code (HGB) provisions. The financial statements were reviewed and approved by the Super- visory Board. In fiscal 2012, all deadlines for publication of the consolidated financial statements and the interim reports were duly kept.

17 RENK Annual Report 2012 As recommended in § 7.1.2 of the Code, the Supervisory Board discusses RENK’s semiannual and quarterly reports with the Executive Board prior to publication.

Statutory audit In the year under review, the Supervisory Board proposed that PricewaterhouseCoo pers AG, Wirtschaftsprüfungsgesellschaft (PwC), Munich, be elected as statutory auditor. The annual general meeting endorsed this proposal. In a representation to RENK AG’s Supervisory Board, PwC confirmed its independence. The agreement with PwC also included that the Supervisory Board Chairman will be informed immediately about any grounds for disqualification or partiality found during the audit unless it proved possible to promptly eliminate such grounds.

18 Combined propulsion systems are also state-of-the-art on offshore patrol vessels (OPV). Diesel engines and electric motors are combined (CODELOD, COmbined Diesel-Electric Or Diesel) in order to reduce part-load operation by the diesel engines whenever the vessel is waiting or cruising. This is the RENK CODELOD gear unit ASL 100-E.

19 RENK Annual Report 2012 RENK stock

General market trend favoring RENK stock price in 2012

Despite uncertainties, a good year

Fiscal 2012 was a period marked by uncertainties and violent swings on the world’s stock exchanges. Following a roller-coasting first six months—triggered by the latest news on the sovereign-debt crises in Europe and the global economy—stock markets picked up pace in the latter half of the year. Even though a general worsening of the global business climate could be sensed, the monetary policy eased by the Central Banks along with the release of liquidity, generated a momentum that fueled stock prices. It was especially the announced purchase of government bonds from the debt- ridden nations and the associated commitment on the part of the European Central Bank to assist the “crisis countries“ that brought about a feeling of alleviation among the market players.

Germany’s lead index, the DAX, surged 29 percent for all of 2012 to close the year at 7,612; the MDAX did even better jumping 34 percent to 11,914.

RENK stock performance The market volatility was not reflected to the same degree in the performance of RENK stock. Exiting 2011 at €61.08 it climbed by €11.72 or 19.2 percent to €72.80 by year-end. Including the dividend payout, the aggregate yield for owners of RENK stock in 2012 totaled 22.6 percent.

An analysis of stock performance over the past five years and excluding dividend payments, shows that RENK stock has achieved an average annual growth of 4.7 percent (2008 through 2012).

For fiscal 2012, the Executive and Supervisory Boards will propose to this year’s annual general meeting a dividend increased year-on-year to €2.00 per share. Measured against the 2012 closing stock price, this is tantamount to a yield of 2.7 percent.

20 RENK stock indicators 2012 2011) Earnings per share (EpS) € 6.69 5.58) Cash dividend per share € 2.00 1.80) Market capitalization1) € mill. 510 428) Annual closing price2) € 72.80 61.08) Annual high2) € 75.19 76.10) Annual low2) € 60.42 58.00) Price-earnings ratio (PER) 10.88 10.95) Dividend yield3) % 2.7 2.9) Aggregate yield4) % 22.6 (10.5) Total shares outstanding 6,800,097 6,800,097)

1) based on 7 million shares 2) daily closing price at the Frankfurt/Main Stock Exchange 3) cash dividend related to the annual closing price 4) all-in return if reinvesting the cash dividend at the post-AGM month-end

21 RENK Annual Report 2012 RENK Group Management Report for fiscal 2012

Order intake, sales and operating profit up

• Order intake: €525 million (up from €456 million)

• Sales: €476 million (up from €389 million)

• Operating profit €66 million (up from €53 million)

• ROS: 13.8 percent (up from 13.6)

• ROCE: 34.6 percent (up from 33.5)

• EpS: €6.69 (up from €5.58)

• Free cash flow: €35 million (up from €16 million)

• Proposed dividend: €2.00 per share (up from €1.80)

Prospects for 2013

• Order intake expected again at around €500 million

• Sales continuing stable

22 The RENK Group’s business focus

RENK AG RENK AG dates back to 1873 when Johann Julius Renk established a small workshop for the mechanical production of gear wheels in Augsburg Lechviertel. In 1879, the young firm moved to Gögginger Strasse, still the Group’s headquarters. The ambitious enter- prise was transformed into a stock corporation as early as 1897; since 1923, RENK has belonged to today’s MAN Group.

Nowadays, RENK is a prime supplier of premium propulsion equipment for a wide variety of applications. Its business is global and its major production locations are at Augsburg, Rheine, and Hannover.

Division overview The Vehicle Transmissions division is foremost manufacturer of fully automatic transmissions built into medium- and heavy-weight tracked vehicles as well as of a broad spectrum of high-duty test rigs for many different industries.

RENK’s automatic power-shift transmissions are suitable for use with all modern diesel engines, with rear or front installation. Electronically controlled and monitored, the units are built at the Augsburg location of RENK AG.

Another member of the Vehicle Transmissions division, the French subsidiary RENK France S.A.S., Saint-Ouen-l’Aumône, is at present chiefly involved in providing maintenance services for French army tank transmissions.

Likewise assigned to this division are the test rig operations of RENK. Augsburg-based RENK Test System GmbH (RTS) and its US marketing arm RENK Labeco Test Systems Corporation (RLTS), Mooresville, Indiana, which devise and manufacture customized test rigs for development, production and quality assurance applications in the motor vehicle, helicopter, rail engineering, tracked vehicle, and wind energy markets.

RENK AG’s Slide Bearings division along with its location in Hannover, ADMOS-Gleit- lager Produktions- und Vertriebsgesellschaft mbH, Berlin, (ADMOS), and the US sales company RENK Corporation, Duncan, South Carolina, supply hydrodynamic, lubricated slide bearings for electric motors, generators, pumps, blowers, water turbines, convey- ors, and marine applications. RENK’s standard series have been market leaders for years now.

The Special Gear Units division comprises RENK AG’s large-gear production at Augs- burg and RENK-MAAG GmbH, Winterthur, Switzerland. The product lineup ranges from stationary gear units for wide-ranging industrial environments including the cement industry via turbo gear units of up to 140-MW transmission capacity to complex gear units for fast craft and naval applications with up to 80-MW rating.

The Standard Gear Units division encompasses large-gear production at RENK AG in Rheine and specializes in marine gear units for merchant ships, ferries, LNG/LPG tankers, and supply vessels. Also manufactured are gear units for turbine plants and cou-

23 RENK Annual Report 2012 plings for industrial use. In 2012, RENK’s operations for offshore wind energy gear units moved from Augsburg to Rheine.

Working together closely Merging and converging the strengths and product expertise of the various divisions are an opportunity to exploit synergies through close interdivisional cooperation. Selective product allocation allows ongoing optimization of large-gear unit production and assembly capacities.

Sharpening the competitive edge Ever since 2008, an extensive capital expenditure program designed to broaden and improve manufacturing structures has fostered the RENK Group’s international growth.

Foundations for competitiveness continue to be the maintenance of technological leadership in various applications, RENK’s global presence in its relevant markets and excellent service quality tailored to the needs of our international customers.

Economic environment

For Germany’s mechanical engineering sector, 2012 turned out better than anticipated at the start of the period. Driving this development was a strong first quarter with production up over Q1/2011. As the year progressed, orders from non-euro countries were moderately up and new business from the eurozone was more or less at the prior year’s level. In contrast, domestic demand was clearly down. A closer look at the market indi- cates very heterogeneous trends both as to the regional sources of order intake and its breakdown by industry.

Germany’s mechanical engineering association, VDMA, forecasts for 2013 a generally repeated slight advance in orders with a price-adjusted climb of 2 percent in production, assuming, however, no exogenous shocks impacting. The necessary momentum is expected, in particular, from the People’s Republic of China and the USA, unchanged the biggest foreign markets. As to eurozone demand (including domestic), VDMA reckons that the market will tend to stabilize at its present level or even slightly shrink.

24 Making its debut at SMM 2012, the T2RECS standard gear unit, a new range of gear units that fulfills the most important operating requirements for simple marine gear units while at the same time allowing customers, despite a high level of standardization, to opt for individual configura- tions. The T2RECS is of modular design and is especially suitable for installation in working vessels on offshore, commercial and fishery duties. The new lineup comprises seven ratings with shaft center distances of 400 to 710 mm. At medium engine speeds of 600 to 1200 RPM, the series covers power ratings of 500 to 5,000 kW.

25 RENK Annual Report 2012 Order situation and operating profit

Order intake up by 15 percent Order intake by the RENK Group in 2012 rose from €456 million to €525 million (year- on-year up 15 percent or €69 million). The steepest hike was shown by the Vehicle Transmissions division, especially thanks to a megacontract from South Korea. Special Gear Units likewise boosted new business, particularly on account of large orders for high-end marine gear units, especially for naval and coastguard applications.

In all still slightly above the prior-year volume, new Slide Bearings business toward the end of the period began to show some shrinkage. A clear shortfall compared with 2011 was reported by the Standard Gear Units division. This was, on the one hand, due to the absence of same-scale follow-up orders for wind energy gear units and, on the other, to a slowdown in the temporary boom in LNG (liquefied natural gas) tankers, a sector from which this division benefited both in 2011 and in the first quarters of 2012.

Order intake in € million

443 2008 281 162

294 2009 197 97

525 2010 263 262

456 2011 306 150

525 2012 349 176

Total Abroad Germany

26 Clear rise in sales RENK’s sales in the period under review outpaced order intake and surged to €476 million, a gain of €87 million or 22 percent compared with the €389 million in 2011. The biggest share in this growth was delivered by Standard Gear Units, especially thanks to revenue from the wind power plant market and the shipment of gear units and couplings for LNG tankers. All the other RENK divisions likewise reported additional sales—led by Special Gear Units where strong demand for the marine variety was already reflected in incremental sales during the year.

Sales in € million

527 2008 316 211

474 2009 301 173

403 2010 283 120

389 2011 243 146

476 2012 311 165

Total Abroad Germany

27 RENK Annual Report 2012 Another growth in orders on hand The upswing in order intake and sales was also mirrored in order backlog. At €586 million at the start of the period, this climbed to €634 million by the end of the year, a jump of 8 percent. The growth was most pronounced at Special Gear Units, followed by Vehicle Transmissions. Virtually at the 2011 level was Slide Bearings; in contrast, Stan dard Gear Units’ order backlog declined.

Order backlog in € million

612 2008 379 233

415 2009 262 153

522 2010 240 282

586 2011 302 284

634 2012 338 296

Total Abroad Germany

28 Operating profit significantly improved Rising revenue was also expressed in a much higher operating profit. At €66 million in 2012, the increase was €13 million or 25 percent over the €53 million in 2011. The sharp- est gain was recorded by Standard Gear Units, followed by Slide Bearings and Special Gear Units. In contrast, Vehicle Transmissions’ operating profit was down.

Operating profit (EBIT) in € million

2008 80

2009 66

2010 52

2011 53

2012 66

29 RENK Annual Report 2012 Income statement1)

2012 2011 € mill.) %) € mill.) %) Net sales 476) 100.0) 389) 100.0) Cost of sales (356) (74.8) (286) (73.5) Gross margin 120) 25.2) 103) 26.5) Other operating income 5) 1.0) 5) 1.3) Selling expenses (30) (6.3) (27) (7.0) General administrative expenses (16) (3.3) (15) (3.9) Other operating expenses (14) (3.0) (14) (3.6) Net investment income 1) 0.2) 1) 0.3) Operating profit (EBIT) 66) 13.8) 53) 13.6)

The relative gross margin inched in 2012 down from 26.5 to 25.2 percent of sales, largely due to rising input market prices for outsourced components and services. The uptrend of selling expenses was essentially the result of again expanded sales capacities, in terms of both an extension of our global presence and a boost in consulting and project management capabilities. The structure of general administrative expenses showed a merely insignificant change since we were able to meet incremental requirements mostly with existing resources. Likewise minor changes only were shown by other operating income/expenses and our net investment income.

1) Differences in totals or percentages in the statements and tables below may be attributable to commercial rounding.

30 Reconciliation to net income (EAT)

€ million 2012) 2011) Operating profit 66) 53) Net interest (expense)/income (1) 1) EBT 65) 54) Income taxes (20) (16) Net income (EAT) 45) 38) Earnings per share (EpS) in € 6.69) 5.58) Cash dividend per share in € 2.00) 1.80)

The turnaround to net interest expense was ascribable to shrinking interest income and climbing interest expenses, including higher discount on noncurrent liabilities and accruals.

Tax expenses went up from €16 million to €20 million, which is in line with the upgraded EBT for 2012. The tax load ratio picked up year-on-year from 29.0 to 30.3 percent. This ratio reflects the income tax rates of domestic and foreign group companies, as well as nonperiod and deferred taxes.

Net income (earnings after taxes) improved to €45 million, EpS accordingly mounting from €5.58 to €6.69.

31 RENK Annual Report 2012 Controlling system and shareholder value management

The RENK Group’s most important financial controlling benchmarks are return on sales (ROS) and return on capital employed (ROCE). ROS and ROCE mirror the percentage operating profit returns on sales and on annual average capital employed, respectively.

These benchmarks are applied both at RENK Group level and for the purpose of controlling the performance of each division. They are also the yardsticks for calculating major portions of the performance-related pay awarded to management, officers and staff.

Operating profit Operating profit is one of the two variables in the ROS formula and hence also used to assess and control a division’s performance; it virtually equals EBIT, except that for operating profit accounting, EBIT is adjusted for the effects on income of purchase price allocations and nonrecurring items. “Nonrecurring items” refers to major losses or gains that do not originate in operating activities. RENK had no such significant nonrecurring items to report in either 2012 or 2011.

ROS For the MAN Group’s Power Engineering business area and hence also RENK, ROS (tantamount to the EBIT margin) is targeted at 9.0 percent as an average for an economic cycle, with a bandwidth of ±2 percentage points.

With an ROS of 13.8 percent (up from 13.6), RENK not only achieved but once again out- performed its benchmark in 2012; while the Slide Bearings and Standard Gear Units divisions made above-average contributions and Special Gear Units stepped up its ROS, the Vehicle Transmissions division reported an ROS downturn.

ROCE ROCE relates operating profit to the weighted annual average capital employed (CE), defined as total assets excluding financial funds and tax assets, less all accruals and liabilities other than financial debts, pension accruals and taxes. Additionally eliminated from CE are any M&A-related effects produced by finite-lived tangible and intangible assets. Prepayments received are not deducted unless they have already been applied to contract work. RENK’s performance target is to outstrip the WACC benchmark of 10 percent. In fiscal 2012, we achieved 34.6 percent (up from 33.5). The heavier burden in the form of a heightened average CE (hiking from €157 million in 2011 to €191 million in 2012 primarily in the wake of capital expenditures) was well outcompensated by the higher EBIT, thus raising ROCE nonetheless.

32 Returns in %

48.3 2008 15.1

38.8 2009 13.9

36.9 2010 12.9

33.5 2011 13.6

34.6 2012 13.8

ROCE ROS

WACC The weighted average cost of capital (or WACC for short) is the minimum return investors expect to receive for the capital they have invested and the investment risk they have incurred. WACC is composed—for the equity portion of CE—of the yield of long- term risk-free securities in line with a capital asset pricing model (CAPM) plus a specific investment risk premium, and—for the debt portion of CE—of the rate of return on risk-free investments plus a risk premium applicable to long-term industrial securities.

For the determination of controlling indicators, WACC is used as basis for defining minimum ROCE requirements and has been set at an unchanged 10 percent for fiscal 2012 within the MAN Group and thus also RENK.

33 RENK Annual Report 2012 A nacelle test rig for a wind energy plant. The rig will be installed at Clemson University in the USA.

34 A nacelle test rig for a wind energy plant. The rig will be installed at Clemson University in the USA.

35 RENK Annual Report 2012 Financial position

Financial management principles and purposes In 2012 as in prior years, RENK’s funding has been ensured through MAN SE’s central finance system.

Aim and purpose of the centralized financial management are to ensure sufficient cash at all times, contain financial risks, and thus enhance shareholder value.

This central finance system guarantees the availability of the cash needed for business operations, capital expenditures and strategic growth as well as the hedging against currency risks. RENK AG is integrated with MAN’s central cash management system, as are its consolidated subsidiaries.

Cash flow analysis

€ million 2012) 2011) Opening net liquid assets 103) 99) Net cash provided by operating activities 66) 40) Net cash used in investing activities (31) (24) Free cash flow 35) 16) Net cash used in financing activities (12) (12) Net change in net liquid assets 23) 4) Consolidation group change (2) —) Closing net liquid assets* 124) 103)

* including long-term cash investments of €7.5 million as of December 31, 2011.

The net cash of €66 million provided in 2012 by operating activities surged from the prior-year €40 million. Booming business notwithstanding, RENK’s net working capital (inventories, trade receivables/payables, and prepayments on orders) moved up by a mere €5 million (up from €1 million). This higher total of funds tied up contrasted with an €11 million improvement in the net balance of tax assets/liabilities, other liabilities, accruals and assets (up from a prior-year burden of €10 million).

In line with the future-oriented volume of newly added tangible assets and the acquisition of ADMOS, the net cash used in investing activities hiked up year-on-year from €24 million to €31 million.

The free cash flow generated by the RENK Group in 2012 came to €35 million (up from €16 million).

36 Unchanged, the net cash used in financing activities reflects the dividend payout of €12 million. Closing net liquid assets—which break down into cash and cash equivalents, short- and long-term cash investments and financial debts—climbed €21 million to €124 million.

Asset and capital structure

€ million 2012 2011 Tangibles and intangibles 146 127 Investments 1 1 Tax assets 27 18 Inventories 164 145 Trade receivables 85 83 All other current and noncurrent assets 6 16 Cash and cash equivalents 125 96 Total assets 554 486

Equity 265 236 Pension accruals 30 23 Other accruals 54 53 Prepayments received 100 83 Tax liabilities 35 22 Trade payables 40 43 All other current and noncurrent liabilities 29 26 Total capital 554 486

RENK’s medium-term capex budgeting policy for the selective replacement/addition of plant and equipment was consistently continued in 2012. Therefore, the total of tangible and intangible assets advanced from €127 million (opening balance 2012) to €146 million (annual closing balance). Within the same period, inventories climbed €19 million to €164 million and mirrored the increase in longer-term projects. Despite a steep rise in sales, trade receivables moved up by just €2 million. The shrinking total of all other current and noncurrent assets was largely the effect of noncurrent financial receivables reclassified in 2012 into liquid assets.

At 47.9 percent (down from 48.6), the equity ratio stayed at a solid level, nudging the 50-percent mark and thus again underlining RENK’s healthy finance structure. The surging prepayments received on orders (up €17 million) presented a mirror image of the inventories growth.

Tax assets swelled substantially as deferred tax assets mounted and similarly, so did deferred tax liabilities, the higher EBT pushing up current tax debts accordingly.

37 RENK Annual Report 2012 Dividend increase proposed Our dividend policy aims not only at allowing our stockholders to commensurately share in RENK’s success but also at securing RENK’s future as a going concern through a strong equity base. According to German GAAP (i.e., Commercial Code principles), RENK AG earned net income of €42.9 million (up from €28.1 million) for fiscal 2012, including €21.4 million (up from €14.0 million) transferred to the reserves retained from earnings. Adding the profit carryover, the Company’s net earnings totaled €42.5 million (up from €33.3 million) from which the Executive Board, subject to the Supervi- sory Board’s approval, will propose to the annual general meeting to distribute for 2012 a cash dividend of €2.00 per share (up from €1.80). Measured against the year-end 2012 stock price of €72.80, this represents a yield of 2.7 percent (down from 2.9).

RENK’s TAX turbo gear unit for energy generation. The Company manufactures turbo gear units of up to 140 MW and is world leader in this range.

38 © Leif Hoegh LNG

The RENK plant at Rheine, Germany, which specializes in single- and twin-engine gear units, is a highly sought-after partner when it comes to developing innovative marine gear solutions for LNG tankers. The majority of all new LNG tankers feature single and double gear units from RENK with center distances of up to 4,400 mm. Two electric motors are combined by a double gear unit and together deliver up to 30,000 kW to the fixed-pitch propeller. Modern LNG tankers have a capacity for up to 155,000 m3 liquefied gas, equivalent to around 95 million m3 gaseous natural gas.

Ship’s name: GDF SUEZ NEPTUNE Owner: Leif Hoegh LNG Shipyard: Samsung Heavy Industries (SHI), Korea Model: NDSH-3800 Rating: 213,200 kW (electric motors) Speed: 700/88.1 RPM

39 RENK Annual Report 2012 Capital-related disclosures

The provisions of Art. 315(4) HGB require the disclosures itemized below.

(1) Capital stock breakdown: RENK AG’s capital stock of €17.9 million is divided into 7 million no-par bearer shares of common stock, excluding any other stock classes.

(2) Restraints on voting rights or share transfer: One share entitles to one vote. No restrictions or restraints on voting rights or share transfer/assignment exist at RENK AG.

(3) Direct or indirect shareholdings of 10+ percent: In fiscal 2012, Munich-based MAN SE owned a 76-percent stake in RENK AG’s capital stock. Given their interests in MAN SE, Wolfsburg-based Volkswagen AG and Stuttgart-based Porsche Automobil Holding SE, too, held indirect 76-percent stakes in RENK AG’s capital stock. Neither have we received any further WpHG-related notifications of any voting interest of 10+ percent or beyond other reportable thresholds, nor are we aware of any such stakes.

(4) Shares with controlling rights, etc.: No special-right shares exist that would entitle stockholders to exercise any controlling powers.

(5) Voting control of employee shareholdings: No controlling-vote interests attaching to employee-held shares exist either.

(6) Appointment/removal of Executive Board members and other bylaw- amending provisions: The appointment and removal of Executive Board members are subject to the provisions of Art. 84 German Stock Corporation Act (“AktG”), according to which an Executive Board member is appointed by the Supervisory Board for a maximum 5-year term. Art. 5 of the bylaws specifies a minimum of two members on the Executive Board, the actual number of members being determined by the Supervisory Board.

According to Art. 179(2) AktG, amendments to the bylaws (articles of incorporation) require a special vote (i.e., 75 percent or more of the capital repre- sented) by the general meeting.

40 (7) Stock repurchase or issuance authority of the Executive Board: The Executive Board’s authority to repurchase treasury stock expired Novem- ber 8, 2007; up to that date, 199,903 treasury shares (2.86 percent of the total) had been reacquired.

Subject to Supervisory Board approval, the Executive Board is authorized to dispose of such treasury stock (while excluding stockholders from subscrip- tion) also in a way other than by sale on stock markets or public offering to all stockholders, however, always provided

• that the repurchased treasury shares are sold at a price that is not significantly below market, and/or

• that they are used as consideration in a business combination or for the acquisition of other enterprises or any equity interest therein.

After first obtaining Supervisory Board approval but without further AGM vote, the Executive Board is, moreover, authorized to redeem and withdraw treasury shares.

In fiscal 2012, none of these authorities were exercised. No authorized capital for the issuance of new stock exists.

(8) Arrangements upon any change of control, etc.: No agreements have been made that are contingent on a change of control in the wake of a takeover bid.

(9) Compensation agreements upon change of control: No arrangements for post-takeover indemnification or other compensation of RENK AG’s Executive Board members or employees upon a change of control have been made either.

41 RENK Annual Report 2012 Research and development

The accelerating transformation of industry and society, with supplemental momentum through globalization, represents a permanent challenge that companies (RENK, too) must get to grips with. Added to this are ambitious environmental protection goals whose repercussions are having deep-rooted consequences for product innovations and production technologies.

In coping with these challenges, R&D plays a lead role. Since most RENK products have a long life-cycle, ongoing refinements and further enhancements in the interests of improved customer benefits are essential ingredients in our innovation management efforts.

Internally funded expenses dedicated to developing new and refining existing products added up to altogether €7.0 million in 2012 (up from €5.9 million). This represents a continuation of recent years’ policy of addressing the growing demands for customized, leading-technology gear systems with on-target development work.

Vehicle Transmissions started developing new electronic systems for making our products fit for the future. With the new multi-range TCS (Transmission Control System) platform, RENK intends, on the one hand, to resolve the growing problem of shrinking availability of hardware components used until now (obsolescence) and, on the other, with the aid of a uniform hardware and software solution to take into account the proliferating documentation and monitoring requirements regarding the functional reliability of the transmissions. The new TCS is interfaced with the recently developed PPCMS (Powerpack Control and Monitoring System) consisting of a transmission controller, a main display unit, an “above hatch” display unit, and an operating data storage unit. The controller monitors the operation of both the RENK transmission and the diesel engine. Together with a customer we started work on further developing our RK 325 transmission and in the course of the year already achieved our first design review milestone.

Besides further work on automation software for the RDDS test rigs, R&D efforts at RENK Test System GmbH were directed at car and wind-energy test rigs. A project was launched by which a mechanical-hydraulic test setup can be used for exploring the basic functioning, control responses and other technical parameters of the planned wind energy simulators.

R&D at Slide Bearings concentrated on specific performance enhancements and their test verification. Customer demands for higher performance on typical slide bearing applications entail a review and further development of certain engineering parameters until now still considered controllable. The insight gained will flow into perfecting RENK’s own proprietary design tools for slide bearing applications. Work is also continuing on developing coating and surface finishing technologies.

42 Stationary gear unit R&D at Special Gear Units continued on the test rig gear unit which, as the world’s biggest and most powerful planetary gear setup, will be installed in a wind turbine drivetrain testing unit at Clemson University, USA. Likewise continued were value analyses into the gear unit ranges for the cement industry and efficiency improvements on turbo gear units. Parallel to this, efforts were aimed at developing alternative drive systems for stationary gear units.

Development work on high-end marine gear units at Special Gear Units addressed customer demands for new propulsion options. Emphasis was on implementing and refining CODELAG technology in which a combination of gas turbines and electric motors serves as the vessel’s main propulsion system. In this context, AED (Advanced Electric Drive) is a new concept universally applicable to very low-noise propulsion systems. Other work concerned the standardization of gear units for high-speed diesel engines with a view to consolidating our competitiveness in this performance category.

RENK-MAAG concentrated on resuming production of, further developing and launch- ing, the MULTICOM multi-shaft gear units and the range of synchronous couplings.

A key development project at Standard Gear Units for marine applications was again the new series of smallish antifriction-bearing-mounted gear units. Following completion of the prototypes, trials were carried out at a back-to-back setup on our own test rig, followed by demonstration in the presence of invited customers. At the SMM 2012 trade fair in Hamburg, RENK then showcased to a wider audience the gear unit under its new designation of T²RECS.

The newly developed DTR multidisk steel clutches were successfully tried out on the new test rig engineered for this purpose. This now completes the basic development work on the DTR and DTL series. Other clutch/coupling focal points were refinements to the existing ranges and the development of a new tooth clutch for regenerative energy production uses.

The design of the 5- to 6-MW standard gear units for wind energy plants is complete and prototyping has started. Regarding developments ahead, an analysis of customer requirements and feedback from fair visitors indicate several technical strategic options ahead. One option for wind energy plant, which can be operated without a frequency converter, is the mechanical AeroDrive for constant generator speed—a project being developed together with VOITH.

43 RENK Annual Report 2012 Investing activities, environmental management

Capital spending in fiscal 2012 amounted to €31 million, hereof €28 million on tangible and intangible assets (up from €24 million), and another €3 million on the acquisition of newly consolidated subsidiaries (takeover of ADMOS). RENK is directing its expenditure policies long-term at the changing markets for its products and services. Flexibil- ity, speed and the ability to respond to individual customer needs while retaining and even enhancing cost efficiency, despite smaller production batches, are the emphasis of our endeavors.

Capital spending during the period was chiefly incurred at the Augsburg location. At Special Gear Units, expenditures again focused on revamping and restructuring the metal-cutting facilities with the aim of expanding all-in machining operation by com- bining several work cycles and technologies and hence addressing rising demands with respect to both precision and shorter lead times for complex components. Tougher requirements in terms of precision and documentation are also being met with the procurement of a new 3-D measuring machine with a vibration-cushioning foundation set in an air-conditioned measuring room.

Capex trends in € million

11 2008 29

11 2009 20

13 2010 23

13 2011 24

14 2012 28

Amortization/depreciation Capital expenditures

44 At Vehicle Transmissions, spending concentrated on two main items. Firstly, there was a continuation of the multiyear program for reconfiguring production to changing requirements (parallel production of several product ranges in small batches) by introducing new machines and processes. Secondly, the construction of a new office building has set up the conditions for merging under a single roof all the functions necessary for ensuring smooth workflows: from sales via development, design, scheduling, procurement to production control.

In 2012, RENK completed conversion and expansion work on the central warehouse in Augsburg by switching over from a manual warehouse (man-to-goods order picking) to a fully automatic one (goods-to-man) and by adding space for another 3,000 pallets it has been possible to dispense with the type of block storage system used until now in favor of much improved workflows.

At Rheine, work continued on the capex program for producing offshore wind components as required by the market, especially by improving the hard-turning, measuring and cylindrical grinding equipment. Crucial in the selection of the machinery is its ver- satility for use on components of other series of large gear units.

At the start of 2012, the Slide Bearings division acquired a 100-percent stake in ADMOS. Besides securing a reliable source for bearing shells, the acquisition aims at generating in the medium term synergies in metallurgical know-how and opening up new fields of activity. To achieve these goals, a further expansion and the modernization of the technical facilities in Berlin are necessary and, in fact, work started on this immediately after takeover. Moreover, the expansion of the division’s global presence and the resulting need to provide considerably more consultancy services call for an extension of office capacities at the Hannover location. For this purpose, the administration building has been undergoing expansion since mid-2012.

At RENK France, work started on a comprehensive rehabilitation and modernization of the location and this project is scheduled for completion in 2013. In the United States, the branching-out of operations at RLTS is requiring relocation to new premises. Besides the test rig business which it already has, the company will in future take over servicing activities for the increasing numbers of RENK marine gear units in the USA. For this purpose, real estate was acquired and in 2013 the construction of new offices along with an integrated assembly and warehouse building will start.

Environmental considerations are accorded high priority at RENK’s production plants. Besides the already existing certification of the environmental management system to ISO 14001 at the Hannover location and the certification of RENK-MAAG GmbH at Win- terthur, July 2012 saw the successful certification of the Augsburg plant, the home of RENK AG and RTS GmbH. This means that all employees and management staff have committed themselves to complying with current legal requirements and rules plus corporate policies as well as to protecting resources and the environment. Throughout the divisions, the environmental aspects of normal operations and plant failures were determined and assessed. On the basis of these aspects, the Augsburg location has set for itself the following environmental goals for the period up to 2015:

45 RENK Annual Report 2012 • Environmental indicators shall be determined to serve as a basis for possible reduc- tions in energy consumption, solid waste, and noise emissions.

• All plant/processes of high environmental relevance shall by suitable measures improve by 10 percent.

These goals have then given rise to divisional environmental programs which are enacted through a catalogue of actions such as measurements for establishing noise pollution in the neighborhood of RENK, the provision of tank filling areas or a further reduction in the use of solvents for cleaning purposes.

Irrespective of the certifications, the German official inspection authorities (TÜV) check annually for compliance with the requirements of federal legislation on pollution control (BlmSchG) and water resources (WHG). In addition, plants with environmental impact such as the pickling and painting and the collection points for recycla- bles are regularly inspected by officially approved third parties or test institutes.

46 RENK’s CODAD gear unit with PTI for the Korean coast guard. This unit is engineered for light- weight specifications. For propulsion it has two diesel engines and one electric motor.

47 RENK Annual Report 2012 Employees

At December 31, 2012, the RENK Group had a workforce of 2,245 (up from 2,013) including 78 temporary (up from 69). The number of employees in Germany totaled 2,069 (up from 1,844); outside of Germany 176 (up from 169).

The headcount rise is due, on the one hand, to the inclusion of the 94 ADMOS employees and, on the other, to the solid order backlog at all locations which required corresponding capacity enlargements. Especially at the Rheine location, capacity utilization was much higher than in preceding years.

Pension plan A cornerstone of RENK’s pension plan is the MAN Profit-Sharing & Pension Plan (MPP). In addition to benefiting from employer contributions, active employees are given the opportunity to make additional provision through deferred compensation which, unless exceeding the statutory income threshold, is exempt from social security and income taxes. RENK promotes this voluntary deferred compensation by making even further contributions.

Letting employees share in business success The hard work by employees was again rewarded in Germany in 2012 by letting them directly share in corporate success. The profit shares are based on the RENK Group’s defined profitability targets.

Converting the results of the employee survey into actions The results of the employee survey of 2011 provided valuable indications of suitable measures for moving the RENK Group further ahead. The points of emphasis in the resulting action catalogue: strengthen communication, leadership conduct, and customer focus.

The divisions have established for themselves fixed and regular information sessions. At these, employees are updated regarding the current business situation at RENK; at the same time, these events help lubricate internal communication channels within the departments. Also, a number of areas have organized team workshops in order to strengthen internal and external customer understanding. The Vehicle Transmissions and Special Gear Units divisions have launched special parts-selling projects.

Another HR emphasis at RENK was the further development of the subject of leadership across all corporate tiers. For instance, also top management from the divisions participated in a multilevel program centering on and sustainably encouraging a shared understanding of leadership notions and cross-locational styles of thinking and acting.

48 Employee training and development Efforts stepped up in previous years with regard to professional qualifications and pro- moting hard and soft skills again branched out in 2012.

The various distinctions and awards reaped by our apprentices underscore the high quality of training at RENK and emphasize our successful promotion of young talent. At the close of 2012, altogether 137 apprentices were being trained directly at the RENK divisions or indirectly at the Augsburg-based MAN training center (thus adding 13 apprenticeships over 2011). Of the 120 apprentices at RENK AG, Augsburg accounted for 67, Rheine 43, and Hannover 10. There were another seven at RTS, four at RENK-MAAG, and one each at ADMOS and RENK France. This year again there was even closer cooperation with universities as part of the dual course schemes. These combined practical- training and classroom tuition courses accounted for 22 apprenticeship positions.

Training courses again centered on foreign languages, teamwork and interpersonal skills. Interlocational programs and individual coaching helped enhance the leadership skills of managers and supervisors. Also organized were in-house courses on regulatory compliance, these being backed up by an e-learning tool.

Business success hinges, not least of all, on the close identification and ties of our employees and hence their very low turnover rates. Thanks to the solid reputation and close contacts with universities it is possible for us to succeed on the labor market despite limited resources and to recruit a large number of skilled and qualified technical and managerial staff.

Our thanks to the employees and their representatives Our thanks go to all the employees for their dedicated and hence successful efforts. We also thank the Supervisory Board employee representatives, the Works Councils and the Economic Committee for continuing the constructive cooperation of the past years.

We cherish the memory of those of our present and former employees who passed away during the period under review.

49 RENK Annual Report 2012 5-MW wind-energy gear unit being assembled at the Rheine plant for offshore systems.

50 5-MW wind-energy gear unit being assembled at the Rheine plant for offshore systems.

51 RENK Annual Report 2012 The situation at the divisions

The total figures for order intake and sales in the tables preceding the division reports include intersegment transactions.

Vehicle Transmissions (Augsburg plant/RENK France/RTS/RLTS) € million 2012 2011 Change* Total order intake 136 84 +53 Total sales 106 100 +7 Operating profit 9 15 –6 ROS (%)* 8.4 15.5 –7.1

* based on k€

Economic parameters The market for medium- and heavy-duty tracked vehicles accessible to RENK is still characterized by a low number of procurement programs extending over lengthy periods with moreover frequently small volumes and hence only few annual shipments. To this extent, the market situation and economic parameters in 2012 hardly changed compared with fiscal 2011. For future business to stay on a stable footing it is vital for RENK to share in the majority of these worldwide procurement programs.

Alongside the market for new programs there continues to exist a secondary market derived from government sale of used vehicles to secondhand and even thirdhand buy- ers. This is a situation that for RENK opens up opportunities in aftermarket business along with the corresponding transmission overhaul work, training and parts supplies. In the medium-term, however, we expect this market to contract or at least stagnate. We have therefore reconciled ourselves to a steady yet modest order intake trend for new transmissions and stable to slightly receding demand for repair work and parts.

At RENK France, business continues to focus on the maintenance and repair of various transmission series for the French land forces. The related supply relations are long term and hence, comparatively stable.

RENK Test System GmbH (RTS) found itself confronted with significantly tougher economic parameters in 2012. Potential orders for test rigs are subject to tight price and delivery timing constraints. Most of the demand was again from abroad.

52 Business trend The biggest new contract for the Vehicle Transmissions division was a major order from South Korea for HSWL 295 transmissions intended for the country’s K2 project. The first will already be shipped out in the course of 2013. On the basis of this order, we are negotiating logistics support in repair and maintenance work for this customer.

A customer in the Middle East placed an order for repairing transmissions at our Augsburg plant and for sizable parts shipments. We were also awarded a contract for further development of our RK 325 transmission. Within this context, we are aspiring to participate in the production of the customer’s future procurement programs. Given, however, the funding arrangements only a relatively small portion of production can be expected for our Augsburg location.

In our aftermarket business, we successfully concluded negotiations on a logistics package for the RK 304 transmission for our Turkish customer. The deal includes parts, special tools, documentation, training and modifications to the test equipment already supplied by RENK.

At RENK France, order intake for maintenance work was very satisfactory. Some years ago we shipped out ESM 350 transmissions to Malaysia and in 2012 were awarded for the first time major contracts for parts and tools.

Short of expectations, in contrast, was demand for test rigs. Especially regarding wind energy test rigs and due to the great uncertainty throughout this market, order placement was extremely sluggish.

Thanks to the major order from South Korea, order intake at Vehicle Transmissions surged, from €84 million to €136 million (up by nigh €53 million).

In fiscal 2012, RENK shipped out the first ten transmissions for the German PUMA infantry fighting vehicle. Likewise completed was a contract milestone for the Spanish PIZARRO. Prototypes were handed over for the British SV infantry fighting vehicle and the Turkish ALTAY programs. Also shipped out were contracts for parts kits for the RK 304 transmission and the BOXER program. Aftermarket business continued to represent a substantial share of revenue.

RENK France again benefited in 2012 from long-term maintenance contracts with the French army; these ensure a steady workload for our subsidiary.

Operations at RTS in 2012 were mainly concerned with the technical and organizational challenges associated with the handling of major orders for the wind power, helicopter and rail industries. There was, moreover, a whole chain of unexpected disruptions (increased material costs, process uncertainties, delays with suppliers and customers) that inhibited project performance.

53 RENK Annual Report 2012 Earnings The Vehicle Transmissions division suffered an appreciable setback in operating profit in 2012, which dropped €6 million, from €15 million to €9 million. The main reason was the EBIT shrinkage in the test rig sector.

Developments ahead Present vehicle procurement programs in the submarket accessible to RENK will continue to be typically low in volume and of high model heterogeneity. Furthermore, there is an ongoing insistence on local content. The conditions required to fulfill this latter stipulation are of growing complexity and frequently associated with a risk of know-how seepage. At the same time, established systems are being kept longer in service. This may generate aftermarket business but it does limit opportunities for the sale of new products. Given the severe sovereign-debt crises, the budget consolidation constraints are inevitably impacting on defense spending. This situation makes it very difficult to assess and plan for future market developments. Added to this, in certain countries with potential procurement projects there are often political considerations and influencing factors (lobbying), either domestic or external, which hold back the implementation of the appropriate solutions.

Over the next two years, RENK France is again looking to steady maintenance business prompted by the multiyear plans of the French army. However, this strong dependence on the public sector may mean that in the medium or long term the tight public bud gets will lead to a decline in sales and earnings. We are attempting to offset any potential shrinkage by expanding our business, such as by supporting RTS in the joint marketing of test rigs in France.

The market situation for the product lineup of RTS will continue to be strained. Major projects ready for award have been postponed and the marketing of wind energy test rigs is proving more arduous than anticipated. There are, however, favorable prospects in the automotive and rail vehicle markets.

54 RENK’s AXILUS-type thrust bearing for a frigate with CODELAG propulsion. It is capable of absorbing very high axial forces such as propeller thrust. The bearing has its own lubrication for emergency operation and its own tubular cooling system.

55 RENK Annual Report 2012 Slide Bearings (Hannover plant/RENK Corporation/ADMOS) € million 2012 2011 Change* Total order intake 110 107 +3 Total sales 112 99 +13 Operating profit 25 22 +3 ROS (%)* 22.1 21.8 +0.3

* based on k€

Economic parameters The business environment at the Slide Bearings division is meantime clouded by the sovereign-debt crisis that is weighing heavily on the eurozone economies. Contracting demand in these countries is sapping any capital spending propensity. And, the shortfall in European business can no longer be offset by demand elsewhere. The repercussions are meanwhile also being felt by Slide Bearings. Follow-up orders from, for instance, the steel and shipbuilding sectors are tapering off appreciably while, in contrast, project planning activities in the areas of exploration, production and transport of fossil fuels are impacting favorably. Other projects still under way are in electrical energy production through oil- and gas-fired engine and turbine generator sets. This situation is leading to much fiercer competition since new players are entering the market for slide bearings and the already established ones, due to faltering demand for special bearings, are squeezing their way into RENK’s standard bearings segments.

Business trend The Slide Bearings division took off to a good start in 2012 and in the early months and despite the generally gathering clouds on the economic horizon, order influx continued unabated. But then in the course of the year, the dynamism weakened and by year- end for all of 2012 settled at almost the prior-year level. Regionally, business was mixed, with US demand much less volatile than Chinese.

The order inflow mix moved in the direction of series products, one reason being several contracts for slide bearings for generators propelled by gas engines. In heavy- capex project business for specialty bearings we encountered, on the other hand, a marked reticence on the part of customers.

A newcomer to the consolidation group is ADMOS taken over at the start of the year. For many years, a strategic supplier of RENK’s Slide Bearings division, this company is part of the division’s strategic focus on a medium-term expansion of its technology base and an opening-up of new fields of business.

Slightly sluggish was order intake at the US marketing subsidiary RENK Corporation. This was, above all, due to the relocation of business from Chinese customers previously handled in the USA, to the assembly and distribution center for slide bearings opened last year on the plant premises of MAN Diesel & Turbo in Changzhou, China.

Drooping order intake during the closing months of 2012 was not yet reflected in annual sales which at €112 million rose 13 percent or €13 million from the prior year’s figure. The share of newly consolidated ADMOS totaled €5 million. Contributing to the

56 uptrend was the handling of bearings projects awarded the year before; sales of stan dard electric bearings also inched up.

Earnings The generally still healthy order situation in 2012 was the basis for the very good operating profit. Contributing to this, above all, were high capacity utilization and ongoing supply chain improvements.

Developments ahead In view of the general downtrend in global demand, Slide Bearings is focusing on a consolidation of its market position. A precondition is the ability to respond rapidly and flexibly to sudden customer needs. Tougher competition in our traditional segments from both newcomers to the slide bearings market and competitors previously tending to favor other sectors, will very likely lead to a tighter squeeze on prices and profit margins.

The Slide Bearings division will push ahead along the path of internationalization taken in past years. On the one hand, this will be by expanding and boosting the support and consultancy capabilities available from the Hannover division headquarters; on the other, by again strengthening our local presence in the growth markets. With the necessary expansion of human and material resources and the integration of ADMOS’s technology capabilities we intend in the medium term to access additional applications for RENK’s slide bearings lineup.

57 RENK Annual Report 2012 RENK CODELAG gear unit for the F125 frigate with distributor gear unit (center) and port and starboard side main gear units, as seen from the front. The couplings are mounted before the main gear units.

58 The hybrid CODELAG system (COmbined Diesel Electric And Gas Turbine) is an important milestone in the development of new propulsion systems for frigates and meanwhile ranks as state-of-the-art. On the new class 125 frigates of the German navy and the Italian FREMM frigates, RENK has successfully pointed the way ahead for this gear technology.

59 RENK Annual Report 2012 Special Gear Units (Augsburg plant/RENK-MAAG) € million 2012 2011 Change* Total order intake 185 142 +43 Total sales 153 132 +21 Operating profit 13 11 +3 ROS (%) * 8.8 8.0 +0.8

* based on k€

Economic parameters The stationary gear product group at the Special Gear Units division again had to wrestle with tough market conditions in 2012. The volume of new cement mill projects hovered at the depressed level of 2011. The few invitations to bid were overshadowed by fierce price competition; the once dominant Chinese market appears to be saturated. Demand by the plastics-processing industry for new plant also stayed subdued.

Even energy sector demand, previously less susceptible to economic downswings, eased off appreciably. The volume of projects for new industrial power plants as well as for oil production and refining plants was, if anything, unchanged. There was a general trend for sizable projects to be stretched out and even completely postponed.

Special Gear Units’ marine business was largely influenced by orders from the public sector for gear units installed in naval and coastguard fleets; this was in addition to the niche submarket of megayachts. RENK’s product range includes, in particular, highly sophisticated sets of gear units for frigates, corvettes, and patrol craft designed to run on a combination of propulsion options as required. Activities in 2012 focused, on the one hand, on the parallel implementation of several new projects that have for some time now been pursued in the global frigate and corvette markets and, as in the preceding years, on the continuation of procurement programs already awarded.

The economic scenario at our Swiss subsidiary RENK-MAAG was again hostile, with the strong Swiss franc still blunting the competitive edge of Switzerland’s export trade. In the most important market for this company’s turbo gear units, China, demand, moreover, subsided. Potential customers are postponing their capex decisions and waiting to see the industrial policies adopted by China’s new political leadership.

Business trend With marine business still buoyant, Special Gear Units reported for 2012 a surge in order intake which rose €43 million, from €142 million to €185 million (up 30 percent). Participating in this growth were, firstly, follow-up orders from projects launched in previous years such as the LCS (Littoral Combat Ship) program of the US navy, the NSC (National Security Cutter) program of the US coastguard, and the FFX frigate program of the South Korean navy. Secondly, gear units were ordered for a number of worldwide new frigate and corvette programs, projects first launched in 2012 from the UK, India, and MENA (Middle East and North Africa). Demand for stationary gear units was, in contrast, modest to dwindling, both at Augsburg and RENK-MAAG.

60 Also rising in 2012 by 16 percent or €21 million from €132 million to €153 million was revenue at Special Gear Units. As in the case of order inflow, the added sales were chiefly fueled by marine gear units. Besides the shipments for the US LCS and NSC programs and for the South Korean FFX project, the division shipped out a set of gear units for the second F125 frigate of the German navy.

Earnings The improved operating profit at Special Gear Units was a consequence of the mounting volume of invoiced orders and expanded high-margin aftermarket business.

Developments ahead Fiscal 2013 is expected to show ongoing demand for sophisticated propulsions systems installed into public-sector vessels. This will center on the continuation of multiyear procurement programs by various nations for naval, coastguard and other craft for public authorities. Running parallel are a number of new projects whose planning is next to completion and these are then expected to generate further orders.

The stationary gear sector continues to be troubled. In all the industrial gear unit submarkets there is fierce competition with the corresponding squeeze on margins and prices. Our efforts will be directed at regions such as India, Africa and the Americas often in relation to energy production and generation projects. With the opening of a service base in Shanghai, China, we intend to amplify our aftermarket presence in the region and in the medium term create additional potential.

61 RENK Annual Report 2012 Standard Gear Units (Rheine plant) € million 2012 2011 Change* Total order intake 101 137 –36 Total sales 119 66 +53 Operating profit 17 6 +11 ROS (%)* 14.2 8.5 +5.7

* based on k€

Economic parameters In its relevant markets, the Standard Gear Units division also found itself faced with widely diverging economic parameters in 2012. New projects were again in extremely short supply on the merchant shipbuilding market. Idle haulage capacities and greater financing difficulties inhibited both the continuation of already planned and the initia- tion of new shipbuilding projects. The only major exceptions were applications directly or indirectly linked to power production, either with the construction of LNG tankers or specialty offshore vessels.

Toward year-end, demand for steam turbine and turbo gear units used in the process industry dipped sharply. In contrast, the couplings market was mixed: throughout the year demand from the marine sector stayed steady while steel processing project business abated appreciably after mid-2012.

The German market for offshore wind energy plant was much more subdued than had been forecast a year ago. A shortage of submarine cable capacities for routing the power generated offshore or on sea, inadequate linkups with the terrestrial grid and insufficient capacities for transmitting the power onward to the consumer centers in Germany’s south obstructed further expansion. Also making it difficult to obtain the necessary funding facilities were legal uncertainties and risks.

Encouraging signals, in contrast, were emitted by East Asia, with Japan proving to be a congenial market for offshore wind energy plant. The Japanese government launched special net-metering and financing programs with a view to accelerating the exit from nuclear power generation. South Korea is said to be planning a 100-MW offshore wind farm.

Business trend Business at Standard Gear Units mirrored the market trend. Marine gear unit demand was again driven by inquiries for LNG tanker gear units, albeit the latter half of the year saw a sharp downturn in this exceptional boom, with the consequence that twelve- month order intake fell short of 2011. Much the same was the situation in the steam turbine plant sector: the prior year’s trend continued through the first three quarters but then in the final, order influx slumped. Uncertainty regarding future energy industry subsidies throttled the volume of orders placed by the European plant construction companies.

New orders for couplings rose marginally, thanks to customized one-off solutions (e.g. for hydro-engineering plants) and, in particular, for marine applications—both as

62 a package together with gear units for LNG tankers and for other uses. In contrast, business for new offshore wind energy gear units plummeted year-on-year and was mainly confined to prototype contracts for a customer in Japan.

Altogether, Standard Gear Units reported new orders worth €101 million in 2012 (down 26 percent or €36 million).

The sales situation was altogether different, with revenue surging 81 percent from €66 million to €119 million. Over one-half of incremental sales was generated from offshore wind energy gear units whose production was shifted to Rheine in 2012. Another sales hike was attributable to the shipment of LNG tanker gear units and couplings.

Earnings The much improved operating profit was a direct consequence of surging sales and the attendant improved capacity utilization.

Developments ahead Marine business at Standard Gear Units in the first half of 2013 is expected to benefit from another inrush of LNG tanker gear unit orders. Thereafter, demand is likely to calm down, especially due to the debate on alternative propulsion systems for these special uses. For the prime applications of our turbo gear units we expect a slow revival in demand starting mid-2013 at the earliest. Coupling business is predicted to stay steady.

The offshore wind energy sector is not likely to recover quickly. According to industry analysts, delays in project funding, infrastructure issues and, for investors and opera- tors, the problem of hedging against risks are factors that will impede any significant rise in European business in 2013. Hence, the volume of new business can be expected to virtually remain at the level of 2012. More congenial signals are being received, in contrast, from Asia—i.e., from South Korea, Japan, and China.

63 RENK Annual Report 2012 RENK Rheine’s marine RSHL gear unit being assembled. Units of this nature are installed, for example, on anchor handling tug supply vessels. These are a special type of vessel used for serving oil rigs, large pipe layers and for

64 tugging oil rigs and other big offshore units without a propulsion system of their own. In some cases, the tugboats have some transport capacity to carry materials to the drilling rigs.

65 RENK Annual Report 2012 Risk report

Groupwide risk management system Doing business entails repeated risk exposure. RENK defines risk as the threat that events, decisions or actions prevent us from achieving defined goals or successfully pursuing certain strategies. In order to seize the market opportunities we consciously accept risks if we can thereby expect a commensurate addition to shareholder value. Essential for this purpose is an efficient risk management system tailored to the requirements of our business activities, one that provides in good time the information needed to guide the Group.

Risk management at RENK is nested in the MAN Group’s own risk management system and forms an integral constituent of business management, processes and procedures. Its core elements are corporate planning including the quarterly review processes, risk & reward management (“RMS”), and the internal control and compliance systems.

Among the purposes of corporate planning are to identify and assess in good time risks and rewards so that suitable measures may be adopted. The risk management system is at all levels organized to obtain up-to-date and pertinent information on the situation regarding major risks and the effectiveness of the risk containment measures early on. At the focus of the internal control system (“ICS”) are the close monitoring and control of risks, in particular with reference to the effectiveness of business processes, the reliability of financial reporting, and compliance with legislation and regulations. The RENK Compliance System assists in ensuring abidance by all legislation, internal guidelines and codes of conduct and behavior applicable within the Group, with special emphasis on the subjects of antitrust legislation, data privacy and protection, as well as combating corruption and bribery. For more details refer to the Compliance System chapter.

Organization of the risk management and internal control systems The overall responsibility for setting up and maintaining a suitable and purposeful system for the early identification of risks lies with the Executive Board. RENK AG’s Execu- tive Board has assumed responsibility for organizing the risk management and internal control systems to an extent and in a form matching the requirements and circumstances peculiar to RENK. “Industrial governance” is a mode of management that calls for local decision-making processes for operations within the RENK Group. It is management’s responsibility to make sure that not only RENK AG (by far the most important company) but also the subsidiaries are included in the risk management and internal control systems to the degrees required. A groupwide guideline for risk & reward management and internal controls (“Group Guideline”) provides the framework for a RENK-wide understanding of the RMS and ICS by specifying rules for risk organization, processes, and reporting.

66 Organizational structure The organization of the RMS and ICS is based on RENK’s management hierarchy. Roles and bodies have been set up with defined responsibilities regarding risks and their monitoring. There are coordinators for risk management and the ICS who ensure that the processes defined in the Group Guideline are implemented. They are also involved in the ongoing development and improvement of the risk management system. RENK has set up an interdisciplinary Risk Board which acts as a central control, monitoring and supervisory body in RMS and ICS matters. In the course of discussions by this board, the risk situation is assessed and measures for coping with risks and remedying weak points are resolved.

Internal regulatory processes within the RMS Risk management system processes include rules for identifying, analyzing, assessing, controlling, monitoring and reporting risks; these are classified into near-term (one year or less) or far-term (up to five years) ones. Risks are analyzed according to their probability and the extent of possible loss. Loss, in turn, is graded as “net” and “gross,” in its impact on each organizational unit’s operating profit, “net” already taking into account any risk-abatement measures. Within their area of responsibility, risk officers define, carry out and monitor for effectiveness suitable counteracting measures. With the aid of risk areas, defined uniformly, any risk cluster or aggregation can be identified and counteracted in good time. Besides risks, also rewards are continuously monitored.

Reporting Quarterly Risk Board reports to the Executive Board deal with current risks and expo- sures, major control weaknesses and measures designed to eliminate such weak points. In addition, the Supervisory Board is briefed in periodical reports on the risk position and major ICS shortcomings.

67 RENK Annual Report 2012 Accounting-related risk management and internal control systems Generally, the risk management system (RMS) and the internal control system (ICS) embedded in the RMS also encompass all accounting-related processes and parts thereof which can materially affect the consolidated financial statements, as well as all risks and control mechanisms that are related to the accounting system. The RMS assesses identified risks in terms of their impact on the Group’s accounts and takes appropriate counteractions.

The ICS aims to contain any risks not only of material misstatement in financial reports but also from regulatory noncompliance or from fraud, besides minimizing operational and business risks (e.g., asset risks resulting from unauthorized decisions or obligations assumed). One of the purposes of the accounting-related ICS is, by implementing suitable controls, to provide reasonable assurance that Corporate Accounting processes conform with International Financial Reporting Standards (IFRS), German GAAP (i.e., HGB provisions) and other accounting-related rules and regulations, and are reliable.

Patterned on the MAN Group’s approach, RENK has structured and documented its ICS in accordance with the framework of COSO (Committee of Sponsoring Organizations of the Treadway Commission) in order to systematically assess the effectiveness of its internal controls. The documentation covers all standard business processes, as well as all known specific business risks and all processes and controls required for a proper annual close. The extent of the documentation—reviewed annually according to certain defined criteria—depends on the relevance of subsidiaries which are material to the consolidated financial statements or whose qualitative characteristics imply a higher exposure to risks.

Key elements of accounting-related RMS and ICS include the unambiguous allocation of responsibilities and controls for all closing processes, transparent process criteria in the form of guidelines, policies and responsibilities for keeping and closing the accounts, clearly defined rules for accessing accounting-related IT systems, as well as precisely described responsibilities for involving outside specialists. Peer reviews and strict segregation of functions/duties are also essential to effective internal controls along the entire accounting process chain and have been duly implemented at RENK.

The effectiveness of accounting-related internal controls is tested at least once annually, primarily when closing the accounts. Identified control weaknesses and agreed remedial steps are included in the quarterly reports to the Risk Board. Additionally, as and when necessary or appropriate, RENK AG’s Executive Board will involve MAN SE’s Corporate Internal Auditing as independent auditor.

The control environment and cross-process controls as a framework for a functional operating ICS are centrally documented at division level and tested once annually for their propriety and workability.

68 RENK frigate gear unit for CODAD propulsion.

69 RENK Annual Report 2012 The control system is regularly checked for completeness, suitability and effectiveness to ensure that the rules for reducing procedural and organizational risks are adhered to throughout the Group.

Risks and rewards RENK divides the major risks and rewards for the Group with substantial impact on the asset and capital structure, financial position and/or results of operations into five categories: market, products, processes, personnel, finances.

Market In its relevant markets, RENK identifies medium- to long-term opportunities for profit- able growth in many areas. There will be a continuation of the fundamental international economic trends such as ongoing business growth, increased international division of labor and the associated worldwide expanding haulage distances and volumes, capital expenditure needs on the part of the oil and gas industry and innovations driven by the developing global climate policies.

Despite the expected medium-term modest growth trend, there does exist in the pres ent economic environment which continues to be overshadowed by uncertainty, some risk of a downturn. This may have a sudden impact on our markets, such as a decline in demand or the cancellation of contracts already awarded. RENK counteracts economic risks by a variety of instruments, such as flexible production and costs through hiring temporary labor, flexitime and, where required, short-time. Protectionism in some countries and changed competitive conditions may throttle growth. Military markets, in particular, are reliant on political decision-making processes and risk-prone due to cash-strapped public sectors. RENK is keeping an eye on and assessing regularly its economic, political, legal, and social environments in order to take into account in good time when making decisions the related risks and rewards.

Products As a foremost supplier in the technology market the RENK Group’s mission is to develop technologically and economically leading products and launch them onto the market in outstanding quality. Abandoning such a mission would entail irresponsibly risking the Group’s market position. Still, the rollout of new products is accompanied by conceptual and market risks. These are counteracted by meticulous strategic planning that analyzes developments in the marketplace and RENK’s environment. In making sure that its products are of a continuously high quality, RENK establishes an essential precondition for tapping further worldwide market potentials.

Regarding products already introduced onto the market, quality risks exist. Poor quality can lead to costs for implied, express and/or goodwill warranties and, in the long term, to loss of market share and to lower profit margins. In extreme cases, product liability claims and related damages are conceivable. Vendors and the components they supply must undergo a strict approval procedure so that high quality standards are maintained. Once production has started up, defined in-process quality assurance measures ensure that manufacturing defects or malfunctions are identified and remedied in good time. Later, when the products are in use, any defects or malfunctions are registered, analyzed, and remedied.

70 An international presence and a wide variety of products and services allow diversifica- tion and thus the opportunity to abate risks from reliance on key accounts, individual products or markets as well as the risk of unauthorized disclosure or transfer to third parties of RENK know-how.

Long-term customer contracts harbor additional risk potential: changes in the political or business environment within a market can entail additional expenses in the execution of major projects. Wherever commitments or obligations under bonds or guaranties are a firm fixture of customer contracts, the risk exists that any such bond or guaranty is called upon and enforced against RENK without being justified. This risk is managed by formulating contracts and agreements with utmost care.

Processes A continuous task for RENK is the fine-tuning of business processes in R&D, Purchas- ing, Production, Sales, and Administration. Suppliers are monitored well in advance to identify in good time any delivery delays, failures or cases of nonperformance and sof- ten their impact. In order to optimize the funds tied up in current assets, RENK rigorously and strictly pushes ahead with the improvement of its working capital management processes.

Among the risks peculiar to the performance of major projects are faults in contract formulation, miscosting, postcontracting changes in the economic and technical conditions, and substandard performance by subcontractors or consortium partners. It is with the aid of comprehensive project management and contract controlling mechanisms that the RENK Group minimizes these risks. Major projects are submitted for approval to RENK AG’s Executive Board and, starting from a certain magnitude, MAN SE’s Controlling and Finance departments as well as MAN SE’s Executive Board for eval- uation. Contracts already approved and in execution yet clearly deviating from plans, are classified as critical and are the subject of special reports that are regularly submitted to the Executive Boards of RENK AG and MAN SE.

Business processes at the RENK Group are closely supported and in some cases even facilitated by IT. This leads to efficiency gains but also harbors risks. Parts of the IT infrastructure may fail due to accidents, natural disasters or technical malfunctions and hence a wide variety of business processes may be hampered or brought to a complete standstill. Other risks involve unauthorized access, theft, destruction or misuse of business information and data. The ensuing financial damage and image loss may impact on RENK companies or even the entire Group. To ensure the availability, integrity, confidentiality and authenticity of information and to reduce or avoid risks, RENK deploys state-of-the-art hardware and software and effective IT organizational mechanisms in combination with a continuously improved IT-related ICS. By centralizing and outsourcing certain IT operations and rigorously introducing IT service management processes according to ITIL (IT Infrastructure Library organizational standard for IT processes) and increasingly organizing the RENK Group’s IT security in line with the internationally recognized security standard ISO 27001, RENK has significantly upgraded the transparency, operational reliability and security of its IT processes and infrastructure.

71 RENK Annual Report 2012 A pivotal role in business including accounting process security is played by the ICS whose function is to make sure that the relevant rules and procedures are adhered to. In this way, it largely contributes toward the protection of assets and the reduction of risks.

Personnel Highly skilled specialist and managerial staff that set technological standards in the form of RENK products and effectively and efficiently run the Group, represent a vital success factor. HR opportunities are to be found in the skills, international focus and innovative resources of employees developing continuously improved forward-looking products, services, and processes. Risks exist in an inability to staff key positions in good time according to future requirements. With a wide array of personnel marketing efforts we have succeeded in tying to the Group personnel with excellent technical and managerial skills.

Finances As an international player the RENK Group finds itself exposed to considerable market price, liquidity and credit risks. These are counteracted through RENK’s groupwide financial-risk management system.

The term market price risks subsumes currency, interest rate and commodity price risks. RENK’s international business transactions involve cash flows in several different currencies. If RENK companies transact business in a currency other than their functional they are exposed to a forex risk which may affect not only the price of products or services but also profit margins. RENK therefore hedges underlyings (contracts, receivables and payables) against currency risks to a large, and forecast sales transactions to some, extent. The Group’s and its operating companies’ financing functions are exercised centrally by MAN SE. RENK needs sizable commodity quantities to manufacture its products. Commodity market price trends or escalator clauses in contracts with suppliers expose RENK to risks which cannot always be downloaded onto customers and which therefore erode profit margins. Such risks are counteracted through long-term supply contracts and escalator clauses in contracts with customers.

Liquidity risks describe a situation where the RENK Group may no longer be able to adequately meet its financial obligations. In order to ensure the availability of sufficient liquidity, all inflowing and outflowing cash is subject to ongoing control and management. RENK’s integration with the MAN Group’s central cash management system safeguards a sufficient cash supply. Moreover, cash flow trends are monitored within a fine-tuned financial planning system.

Given the nature of its business, RENK is exposed to counterparty or default risks, meaning the potential failure by a counterparty to meet its contractual obligations, either on account of its own financial constraints or due to the political environment, thus causing a financial loss to RENK. Such country and counterparty risks are contained by carefully weighing business transactions and counterparties, by stipulating appropriate contract and payment terms and conditions, as well as by requiring guar- antee bonds and using documentary credits (LCs).

72 If an investee carried at cost presents any indication of an impairment loss, RENK is exposed to the risk of recognizing this loss in its income statement.

For further details of the management of market price, liquidity and credit risks, see Note (30) to the consolidated financial statements. With a view to reducing the inherent financial risks and, outside of Germany, also complying with statutory regulations, the RENK Group’s defined benefit obligations (DBO) are covered by plan assets which are largely separated from operating assets. For detailed information on pensions, see Note (21) to the consolidated financial statements.

Assessment by the Executive Board of RENK’s risk situation On the basis of the risk management system set up by the MAN Group and introduced at RENK, the Executive Board notes that at the present time no risks are identifiable that might have a substantial and sustained adverse impact on the asset and capital structure, financial position and/or results of operations of the RENK Group. The risk management system installed and the related organizational mechanisms allow the Executive Board in good time to become aware of a risk situation and initiate adequate measures.

Risk management is a permanent and unremitting corporate activity and as such is, of course, continuously subject to improvements. For RENK, this means that in future we will again be fine-tuning our risk management and internal control systems to match changed scenarios. Given the still uncertain economic outlook, activities in 2013 will again focus on managing market and product risks.

Compliance system In the course of 2012, RENK continuously refined and applied the Compliance Program set up in 2009, on the subjects of combating corruption and bribery as well as prevent- ing antitrust and data privacy infringements.

RENK’s Code of Conduct specifies the principles of generally accepted ethics, behavior and conduct and details compliance-related issues such as

• Handling Gifts, Hospitality and Invitations to Events;

• Marketing Assistance through Commercial Agents/Consultants;

• Donations in General;

• Data Protection Rules, Handling of Personal Data and Organizing Data Protection.

73 RENK Annual Report 2012 In fiscal 2012, several compliance guidelines were reviewed and updated.

“Speak up!” (MAN SE’s whistleblower portal) is likewise available to RENK employees to detect risks that may also jeopardize RENK. The rollout of a computerized Continuous Controls Monitoring System (CCMS) was successfully tested in 2012 as a pilot project in Augsburg that aims at the early identification and prevention of potential noncompliance risks and guideline violations in purchasing and payment processes.

74 MULTICOM® integrated gear unit GMX-140/R4. This Swiss multi-shaft gear unit from RENK-MAAG is installed between the steam turbine and the compressor in an air separation plant. The compressors are directly connected to the gear unit housing and hence this latter absorbs additional weights and forces.

75 RENK Annual Report 2012 Board compensation report for fiscal 2012

Remuneration of the Executive Board In accordance with the law, the plenary Supervisory Board fixes the total remuneration of each Executive Board member. The topic is prepared by the Supervisory Board’s Presidential Committee. As and when proposed by this Committee, the plenary Super- visory Board periodically deliberates on the Executive Board remuneration structure and—in accordance with the Code recommendation in § 4.2.2—decides on, periodically reviews and, where appropriate, revises, this compensation system.

The aim is to stipulate a reasonable compensation, based on criteria such as each Executive Board member’s responsibilities and personal performance, as well as on the economic situation, the success and the future prospects of RENK and the MAN Group, besides considering aspects such as a reasonable remuneration level in comparison to industry peers.

Compensation structure and components The remuneration of Executive Board members is made up of performance-unrelated fixed salaries and payments in kind, plus pension entitlements, as well as of performance-linked components. The latter, variable, amounts comprise annually recurring components hinging on corporate performance and long-term incentives that involve a certain risk.

In fiscal 2012, the long-term incentive—previously granted in the form of the MAN Stock Program—was redesigned and approved by Supervisory Board vote.

(a) Fixed compensation The fixed compensation is paid as monthly salary. Additional are benefits in kind, such as the provision of a company car and the payment of insurance premiums. The fixed compensation is periodically reviewed and, where appropriate, revised to account for the general pay trend and the respective Executive Board member’s responsibilities.

(b) Variable compensation The business performance-related annual bonus is predicated on two equally weighted criteria, so-called performance elements:

Performance element 1 This element equals the MAN Group’s differential between the operating profit returned on capital employed (ROCE) and the weighted average cost of capital (WACC), its 2-year average (current and succeeding year) being compared to a benchmark range previously fixed by MAN SE’s supervisory board.

If performance is at or below the benchmark range minimum, the target achievement degree is 0 percent; if equal to or exceeding the range maximum, performance corresponds to a target achievement degree of 200 percent, which is also the cap. Any

76 degree between the minimum and maximum of the range is determined on a straight- line basis.

The annual bonus of performance element 1 amounts to 50 percent of the fixed annual salary if the target achievement degree is 100 percent; if 200 percent is achieved, the annual bonus equals one full fixed annual salary, the ceiling for this performance element. If target achievement in the succeeding year outperforms the current year, thus improving the 2-year average, the annual bonus is retroactively stepped up accordingly unless the 200-percent cap has been reached. By analogous calculation, any underper- formance in the succeeding year reduces this year’s annual bonus accordingly.

The current benchmark corridor for the differential of ROCE over WACC ranges from –5 to +5 percent, which corresponds to a straight-line range of target achievement degrees between 0 and 200 percent. Consequently, if ROCE equates with WACC, the annual bonus for performance element 1 is 50 percent of the fixed annual salary; if the differential is equal to or exceeding 5 percent, one full fixed annual salary is paid out.

Performance element 2 For this second element, RENK’s current-year operating profit returned on sales (ROS) is juxtaposed with a predefined benchmark. The target achievement degree is determined in analogy to performance element 1.

The current ROS benchmark corridor ranges from 7 to 11 percent. This range between minimum and maximum performance corresponds to a straight-line corridor of target achievement degrees between 0 and 200 percent. Consequently, if ROS equals or exceeds 11 percent, the annual bonus for this performance element is one full fixed annual salary while for an ROS of 9 percent, 50 percent of one fixed annual salary is paid out.

The 2-element annual bonus is hence capped at two full fixed annual salaries but is dis- bursed only in cases where the MAN Group’s ROS exceeds 2 percent.

Fiscal 2012 results

Performance benchmarks and target achievement in 2012:

Performance 100% 200% Actual Target Annual element benchmark benchmark 2012 achievement bonus 1* (ROCE–WACC) 0% 5% (cap) 1.6% 132% 66% of fixed salary 2 ROS 9% 11% 13.8% 340% 134% of fixed salary (cap)

* This element is based on a 2-year (current and succeeding years) average. It may therefore well be a repayable installment.

77 RENK Annual Report 2012 Supplementary information on the annual bonus for 2011 Performance element 1 is based on a 2-year (current and succeeding years) average. Now that the 2012 actual figures are available, the annual bonus calculated a year ago for this element can remain unchanged.

(c) Long-term incentive Previously, this incentive would be granted in the form of the MAN Stock Program (MSP); in the year under review, however, this long-range component was redefined with Supervisory Board approval and is now predicated on the MAN Group’s differential between the operating profit returned on capital employed (ROCE) and WACC (for details, see “performance element 1” above). Instead, the bonus derived from this incentive will in future be paid out cash, all stock-based payments having been discontinued as from January 1, 2012.

The 3-year average (current and two preceding years) of the delta between ROCE and WACC is compared to a benchmark range prefixed by the Supervisory Board.

The annual bonus amounts to 50 percent of one fixed annual salary if the target achievement degree is 100 percent; if 200 percent is achieved, the annual bonus equals one full fixed annual salary, the ceiling for this incentive.

The current benchmark corridor for the differential of ROCE over WACC ranges from 0 to +20 percent, which corresponds to a straight-line range of target achievement degrees between 0 and 200 percent. Consequently, if 20 percent or more is achieved, the annual incentive is one full fixed annual salary while for an actual benchmark of 10 percent, half the fixed annual salary is paid out.

(d) Postretirement benefits The postretirement benefits of Executive Board members encompass pensions as retirement and invalidity (disability) income and for surviving dependants. The postretirement benefit is a fund-based defined contribution plan. RENK AG pays annual contributions of 20 percent of pensionable pay (contractually agreed fixed salary plus variable remuneration). Additional contributions by deferring gross compensation are optional. The contributions and the return thereon are maintained in individual capital accounts. Capital account performance is directly tied to the capital market and is governed by a basket of indexes and other suitable parameters. Investment risks are gradually downscaled as the beneficiary grows older (so-called life-cycle concept). Upon retirement, the capital account balance or the aggregate total of contributions paid, whichever is higher, will be paid out either in one sum, in installments (annuities) or as retirement pension, at the beneficiary’s discretion. When pension benefits become pay-

78 able upon invalidity or death, the accumulated capital account balance or a capital corresponding to four times the fixed annual pay, whichever is higher, will be paid out.

Remuneration of Executive Board members in 2012 The compensation of active Executive Board members in 2012 totaled an unchanged k€1,525 plus k€274 for postretirement benefits (up from k€1,421 plus k€262). For an itemized breakdown by fixed, annual variable and long-term incentive components, see the list in Note (31) to the consolidated financial statements.

Special employment contract provisions If the appointment of an Executive Board member is revoked early by the Company for reasons other than good cause, the employment contract provisions in force since 2010 stipulate that such dismissed Executive Board member receive his fixed salary, annual bonus, insurance premium allowances and pension plan contributions up to the regular end of his term of office or for two years, whichever is shorter. Any income earned from other activities will be offset, the pensionable pay base underlying plan contributions being the reduced amount. The past fiscal year and the estimated bonus for the current year will underlie the calculation of the annual bonus payable as termination benefit after the Executive Board member’s separation.

If an Executive Board member gives notice of termination and steps down from office at 18 months’ notice (permitted without disclosing any reason), he will receive his pay up to the effective date of his notice. No particular stipulations apply upon a change of control.

Remuneration of the Supervisory Board Structure and level of Supervisory Board fees are fixed by the general meeting and governed by Art. 12 of the bylaws. These fees hinge on the functions and responsibilities of the Supervisory Board members and the Group’s economic performance.

Annual compensation breaks down into these components:

• A fixed basic fee of €2,100

• A variable profit-related fee: The variable fee corresponds to €200 for each €0.01 of the RENK AG dividend in excess of €0.10 per no-par share and is capped at €6,000 each.

• Additional compensation for Supervisory Board (vice-)chairmanship: The Supervisory Board Chairman receives double, the vice-chair(wo)man 1.5 times, the fixed and variable fees.

• Moreover, Supervisory Board members are reimbursed for their out-of-pocket expenses.

79 RENK Annual Report 2012 Remuneration of Supervisory Board members in 2012 The compensation payable to Supervisory Board members for 2012 totals €60,750 (up from €58,106). For an itemized breakdown of the active Supervisory Board members’ remuneration for 2012, see the list in Note (32) to the consolidated financial statements.

80 RENK gear unit for a megayacht. Marine gear units of this kind are engineered for weight savings and very low noise. RENK gear units are installed on most of the megayachts.

81 RENK Annual Report 2012 Outlook

Given the still simmering sovereign-debt crisis in many industrialized countries, the related imponderabilities and slow growth rates in the previously booming regions (such as BRIC), any forecast about economic developments ahead is fraught with great uncertainty. Such is also reflected in the diverging assessments by various institutes concerning trends of this nature.

Germany is forecast to show moderate economic growth in 2013. As to the mechanical engineering sector, the industry association VDMA is looking to an expansion of production in the region of two percent, the level assumed for 2012.

For the RENK Group, we expect order intake over the next two years to once more exceed €500 million. One precondition is the award of a megacontract for vehicle transmissions and sustained high order intake for marine gear units. Sales, too, should again be above €450 million.

Despite fierce competition, management reckons with once again double-digit ROS in the next two years, even if likely no longer as high as in 2012.

To preserve our competitiveness and to be able to cope both in terms of quality and quantity with the challenges ahead, the continuation of our long-term capex program is of great significance. Especially the requirements entailed by orders for Augsburg- based marine gear units will over the coming years call for a substantial expansion of the assembly and test rig capacities.

Another essential aspect in stretching toward the future is the R&D input indispensa- ble within an increasingly competitive environment in order to defend RENK’s position as a foremost supplier of transmission and gear unit technology. We mean to step up our innovative pace over the years ahead.

As to RENK’s individual divisions, this is the situation over the next two years.

Vehicle Transmissions has the opportunity of winning sizable new contracts during the next two years. Obstacles are mainly related to local-content stipulations, know- how transfer, and offset obligations. We continue to pursue the goal of securing for RENK a relevant content of each new contract. Because of the lengthy planning times— periods of 12 to 24 months regularly elapse between contract placement and shipment of the first transmissions—revenue in 2013 will tend to be short of last year’s but then recover starting from 2014.

82 Over the years ahead, RENK France’s maintenance work for the French army will continue to generate revenue at the 2012 volume.

Protracted project times are also typical of test rig business at RTS and RLTS, with orders starting to flow only after some time has elapsed. Hence and given the slowdown in orders received, 2013 is likely to show a reduction in revenue. The outlook for 2014 is, however, brighter.

The position in the standard bearings market already achieved by the Slide Bearings division hardly allows any incremental growth in the traditional segments. What’s more, receding demand must be expected in the foreseeable future. By expanding our local presence in the relevant markets, a policy pursued for years now, and by strengthening our central support and consultancy capabilities we are consolidating our market position.

Special bearings forecasts remain difficult, with developments depending on projects undertaken by the capital goods manufacturers and plant construction companies. Generally, we expect for 2013 slightly receding revenue for this division. Due to the short lead times typical of the standard-product business any recovery in the course of 2013 might already be reflected in same-year sales.

Order intake by Special Gear Units in 2013 will once again be driven by demand for high-end sets of naval gears. Little momentum, in contrast, is likely to come from the stationary industrial gear segment. The long lead times for work in process will generate steady sales over the next two years.

RENK-MAAG will continue in the direction of gradually extending the product lineup regarding both multi-shaft gear units and couplings. This will also help lessen reliance on individual regional markets. This might then trigger a revival in growth impetus in 2014.

At Standard Gear Units and following the upswing in 2012, this coming period is expected only to offer limited growth opportunities. Offshore wind energy business is proving much more modest than assumed and this will have repercussions on orders placed with RENK. Demand from other parts of the world cannot offset shortfalls in Germany and other Europe. The special boom in the building of LNG tankers will also bottom out over the next two years. So, for Standard Gear Units we predict sales for 2013 and 2014 that are only marginally in excess of 2012.

The above statements and information regarding future trends are founded on present expectations and specific assumptions and, as such, are accompanied by a string of

83 RENK Annual Report 2012 risks and uncertainties. There are a host of factors—many beyond our control—that impact on our business operations and bottom line. Such factors might mean that the actual results and performance of the RENK Group significantly deviate from those made in the foregoing forward-looking comments.

Augsburg, January 30, 2013

RENK AG The Executive Board

Florian Hofbauer Ulrich Sauter

84 RENK AG, Augsburg, Germany Consolidated financial statements for the fiscal year ended December 31, 2012

86 Consolidated income statement 86 Statement of comprehensive income 87 Consolidated balance sheet 88 Statement of changes in equity 89 Consolidated cash flow statement 91 Notes 91 Accounting principles 104 Notes to the consolidated income statement 109 Notes to the consolidated balance sheet 120 Other information 138 Subsequent events 139 Supervisory and Executive Board memberships in other boards 142 Management representation 143 Auditor’s opinion

85 RENK Annual Report 2012 Consolidated income statement for fiscal 2012

k€ Note 2012) 2011) Net sales (6) 475,955) 388,822) Cost of sales (355,855) (285,646) Gross margin 120,100) 103,176)

Other operating income (7) 4,979) 4,597) Selling expenses (29,957) (27,012) General administrative expenses (15,812) (15,128) Other operating expenses (8) (14,384) (13,800) Sundry investment income 958) 916) EBIT 65,884) 52,749)

Interest income (9) 283) 1,137) Interest expense (9) (870) (407) EBT 65,297) 53,479)

Income taxes (10) (19,800) (15,524) Net income (EAT) 45,497) 37,955) Earnings per share (EpS) in € (basic and fully diluted) (11) 6.69) 5.58)

Statement of comprehensive income

k€ 2012) 2011) Net income (EAT) 45,497) 37,955) Currency translation differences 374) (491) Change in fair value of financial derivatives 8) 477) Change in actuarial gains/losses on pensions (6,822) (8,057) Deferred taxes on OCI 2,843) 1,104) OCI (3,597) (6,967) Comprehensive income 41,900) 30,988)

Deferred taxes on OCI break down into (i) a red k€3 (down from a red k€150) on OCI from the change in fair value of financial derivatives and (ii) a black k€2,846 (up from k€1,487) on OCI from the change in actuarial gains/losses on pensions; fiscal 2011 had seen a red k€233 from a DBA (excess cover of plan assets according to IAS 19:58).

86 Consolidated balance sheet as of December 31, 2012

Assets k€ Note 12/31/2012) 12/31/2011) Intangible assets (14) 6,799) 6,228) Tangible assets (15) 139,516) 120,828) Sundry investments 1,493) 1,493) Deferred tax assets (10) 25,371) 17,861) Trade receivables (17) 3,356) 2,403) Other noncurrent assets (18) 131) 7,517) Total noncurrent assets 176,666) 156,330)

Inventories (16) 163,612) 145,378) Trade receivables (17) 81,409) 80,182) Income tax assets 1,392) 2,618) Other current assets (18) 6,179) 5,241) Cash and cash equivalents (19) 124,627) 96,451) Total current assets 377,219) 329,870) 553,885) 486,200)

Equity & liabilities k€ Note 12/31/2012) 12/31/2011) Capital stock 17,920) 17,920) Additional paid-in capital 10,669) 10,669) Reserves retained from earnings 158,937) 137,497) Net earnings 95,959) 84,142) Accumulated OCI (18,222) (14,625) Total equity (20) 265,263) 235,603)

Noncurrent financial liabilities (23) 263) 508) Pension accruals (21) 29,731) 22,924) Deferred tax liabilities (10) 23,188) 18,215) Other noncurrent accruals (22) 6,589) 7,102) Other noncurrent liabilities (26) 1,168) 587) Total noncurrent liabilities and accruals 60,939) 49,336)

Current financial liabilities (23) 247) 240) Trade payables (24) 40,076) 42,927) Prepayments received (25) 100,434) 83,100) Current income tax liabilities 11,554) 4,079) Other current accruals (22) 47,664) 45,906) Other current liabilities (26) 27,708) 25,009) Total current liabilities and accruals 227,683) 201,261) 553,885) 486,200)

87 RENK Annual Report 2012 Statement of changes in group equity

k€ Capital Additional Reserves Net) Accumu-) Total) stock paid-in retained earnings) lated OCI) capital fr. earnings

Balance at Dec. 31, 2010 17,920 10,669 123,497 72,427) (7,658) 216,855) Net income (EAT) – – 14,000 23,955) –) 37,955) Currency translation differences – – – –) (491) (491) Change in fair value of financial derivatives – – – –) 477) 477) Change in actuarial gains/losses on pensions – – – –) (8,057) (8,057) Deferred taxes on OCI – – – –) 1,104) 1,104) Comprehensive income – – 14,000 23,955) (6,967) 30,988) Dividend payout – – – (12,240) – (12,240) Balance at Dec. 31, 2011 17,920 10,669 137,497 84,142) (14,625) 235,603) Net income (EAT) – – 21,440 24,057) – 45,497) Currency translation differences – – – –) 374) 374) Change in fair value of financial derivatives – – – –) 8) 8) Change in actuarial gains/losses on pensions – – – –) (6,822) (6,822) Deferred taxes on OCI – – – –) 2,843) 2,843) Comprehensive income – – 21,440 24,057) (3,597) 41,900) Dividend payout – – – (12,240) –) (12,240) Balance at Dec. 31, 2012 17,920 10,669 158,937 95,959) (18,222) 265,263)

For further details see Note (20).

88 Consolidated statement of cash flows for fiscal 2012

k€ Note 2012) 2011) EBT 65,297) 53,479) Current taxes (20,348) (15,633) Depreciation/amortization/write-down of tangibles, intangibles and investments (14, 15) 14,386) 12,996) Change in pension accruals (145) 343) Cash earnings 59,190) 51,185)

Change in inventories (16,440) (34,667) Change in prepayments received 17,336) 36,064) Change in trade receivables (1,639) (9,740) Change in trade payables (3,993) 7,349) Change in other accruals 1,141) (9,590) Change in other assets (1,909) (1,574) Change in other liabilities 3,789) 5,573) Elimination of the net gain/loss on the disposal of tangibles, intangibles and investments (135) (84) Other changes in working capital 8,285) (4,349) Net cash provided by operating activities 65,625) 40,167)

Cash outflow for additions to tangibles and intangibles (14, 15) (28,093) (24,316) Cash outflow for the acquisition of subsidiaries (less cash & cash equivalents) (2,860) –) Cash inflow from the disposal of tangibles, intangibles and investments 162) 396) Net cash used in investing activities (30,791) (23,920)

Dividend payout (20) (12,240) (12,240) Change in financial liabilities (1,917) (229) Net cash used in financing activities (14,157) (12,469)

Net change in cash and cash equivalents 20,677) 3,778) Parity-related change in cash and cash equivalents (1) 3) Opening cash and cash equivalents 96,451) 85,170) Noncash change in cash and cash equivalents (18) 7,500) 7,500) Closing cash and cash equivalents (19) 124,627) 96,451)

The cash flow from operating activities includes interest received at k€283 (down from k€1,137), interest paid at k€408 (up from k€76), and income taxes paid at k€11,652 (down from k€18,958). The noncash change in cash and cash equivalents was due to the reclassification of previously long-range credit term extensions of MAN intragroup financial receivables.

89 RENK Annual Report 2012 90 Notes to RENK’s consolidated financial statements

Accounting principles

(1) General

RENK AG is a German listed company with business domicile at Gögginger Strasse 73 in Augsburg. RENK develops, manufactures and markets worldwide upscale drive technology products. The RENK Group breaks down into the Vehicle Transmissions, Slide Bearings, Special Gear Units and Standard Gear Units divisions. As 76-percent subsidiary of Munich-based MAN SE, RENK is included in its parent’s consolidated financial statements. MAN SE, in turn, is a 75.03-percent subsidiary of Wolfsburg-based Volks wagen AG. Therefore, both MAN SE and RENK AG will be included in the consolidated financial statements of Volkswagen AG, which will be published in the digital version of the German Federal Gazette (“Bundesanzeiger”).

Furthermore, in accordance with Sec. 21(1) Clause 1 WpHG, Porsche Automobil Holding SE and its controlling stockholders notified RENK AG on November 14 and 15, 2011, respectively, that the 78.86-percent voting interest attributed to Volkswagen AG is likewise attributed to Porsche Automobil Holding SE and its controlling stockholders.

The subject consolidated financial statements of RENK AG for the fiscal year ended December 31, 2012, conform with Art. 315a(1) German Commercial Code (“HGB”) and hence with the International Financial Reporting Standards (IFRS, which include the IAS) of the International Accounting Standards Board (IASB), as endorsed by Regulation (EC) No. 1606/2002 of the European Parliament and Council on the application of international accounting standards in the European Union (EU). As resolved by the Executive Board, the consolidated financial statements were released on January 30, 2013, for submittal to the Supervisory Board.

The consolidated financial statements are prepared in euros (€), the Group’s reporting currency, and presented in € ’000 (“k€”) unless expressly otherwise stated.

Minor differences (if any) in totals or percentages may be attributable to commercial rounding.

(2) Consolidation

(a) Consolidation group RENK’s consolidation group includes, besides RENK AG as parent, the wholly-owned subsidiaries, viz. RENK France SAS, Saint-Ouen-l’Aumône, France; RENK Corporation, Duncan, SC, USA; RENK Test System GmbH, Augsburg, Germany; RENK-MAAG GmbH, Winterthur, Switzerland; RENK LABECO Test Systems Corporation, Mooresville, IN, USA; as well as newly included ADMOS-Gleitlager Produktions- und Vertriebsgesellschaft mbH, Berlin, Germany.

91 RENK Annual Report 2012 In December 2011, RENK AG executed a share deal to acquire all of the shares (100 percent) in ADMOS. The shares were transferred as of January 2, 2012.

ADMOS manufactures slide bearings from a variety of paired materials according to customer drawings. The acquiree has to date been RENK AG’s longstanding strategic supplier. Since January 2, 2012, the new subsidiary has been fully consolidated and assigned to the Slide Bearings division. This consolidation transaction as of January 2, 2012, has not resulted in any materially different balances versus December 31, 2011.

The purchase price amounted to k€2,881. The badwill of k€294 as a result of the purchase price allocation has been fully released to other operating income.

The table below compares the book values as of December 31, 2011, to the fair values as of January 2, 2012:

k€ Book value Fair value 12/31/2011 1/02/2012 Fixed assets 2,040 5,528 Inventories 2,304 1,854 Trade receivables 576 576 Other assets 198 198 Cash and cash equivalents 21 21 Total assets 5,139 8,177

Badwill – 294 Accounting equity 999 2,881 Dormant equity 500 500 Deferred tax liabilities – 862 Financial liabilities 2,089 2,089 Other liabilities 1,551 1,551 Total equity & liabilities 5,139 8,177

Direct transaction costs totaled k€10.

The subsidiaries not included in the consolidated financial statements are, even in the aggregate, of minor significance for the RENK Group’s asset and capital structure, financial position, and results of operations.

A complete listing of the RENK Group’s shareholdings has been appended to these notes.

92 (b) Business combinations and consolidation principles The acquisition method is used for capital consolidation in business combinations. For initial consolidation, all identifiable assets and (effective and contingent) liabilities in the acquiree’s accounts are stated at their fair value. Any positive difference between the cost (purchase price) of the acquiree and the proratable revalued equity (if net under cost) is allocated to the appropriate RENK division as cash-generating unit (CGU) and separately capitalized as goodwill. The division (CGU) including the assigned goodwill is tested for impairment at least once annually and, if found impaired, written down to its recoverable amount. Upon the disposal of a subsidiary, any goodwill allocable to it will be taken into account when calculating the net gain or loss on such divestment. Acquisition incidentals (other than incurred for equity funding) are not added to the acquisition price but immediately expensed.

Intercompany accounts (profits, gains, losses, income, expenses, receivables and pay ables) among companies included in the consolidated financial statements, as well as intercompany profits/losses from intragroup transfers of inventories and noncurrent assets, are all eliminated. Taxes are deferred for consolidation transactions recognized in net income.

(c) Currency translation Foreign-currency transactions are first translated at the applicable historical rate. In subsequent periods, monetary assets and liabilities are translated at the current (closing) rate, the resulting translation differences being recognized in the income statement. Nonmonetary items valued at historical cost in a foreign currency are translated at the historical rate.

The functional-currency concept is used to translate the financial statements of non- Euroland companies. Since it is the primary business environment that governs functional currency, that of RENK’s consolidated subsidiaries corresponds to the local currency. The financial statements are translated according to the modified closing-rate method, using the current rate for balance sheet lines (except for non-OCI equity, which is translated at historical rates) and the annual average rate for the income statement. The annual average rates are derived from the monthly means.

In the movement analyses of assets, accruals and equity, the fiscal year’s opening and closing balances as well as consolidation group changes are translated at the applicable current rates, while for the remaining balance sheet lines, the annual average rates are used. Differences from the prior-year currency translation of balance sheet captions are recognized in equity only (OCI) but, upon divestment of a subsidiary, recycled to the income statement.

93 RENK Annual Report 2012 The euro (€) exchange rates of major currencies are as follows:

Current rate of €1 at Average rate of €1 in 12/31/2012 12/31/2011 2012 2011 US dollar 1.31940 1.29390 1.29210 1.40178 Swiss franc 1.20720 1.21560 1.20473 1.23328 Pound sterling 0.81610 0.83530 0.81273 0.87231 Chinese yuan 8.22070 8.15880 8.14251 9.05768 Japanese yen 113.610 100.200 102.930 111.673

(3) Accounting and valuation

Except for certain financial instruments carried at fair value, the consolidated financial statements are based on cost, as well as on the financial statements of RENK AG and consolidated RENK subsidiaries as prepared in accordance with MAN’s groupwide uniform accounting and valuation principles.

(a) Sales recognition Sales are recognized as and when the underlying products or goods have been delivered or the services rendered and after risk has passed to the customer, always net after all such sales deductions as cash and other discounts, allowances granted to customers, etc. Sales are not recognized unless the amount is reliably determinable and the receivable’s collection reasonably certain.

Revenue from dedicated contracts for customized manufacture (or construction) is recognized according to the percentage-of-completion (PoC) method. For details see Note 3(h) below.

(b) Operating expenses Operating expenses are recognized when the underlying products or services are utilized, whereas expenses for advertising and sales promotion and other sales-related expenses are recognized when incurred. Cost of sales breaks down into the production cost of goods sold and the purchase cost of merchandise sold. In addition to direct materials and direct labor, production cost also comprises production-related overheads, including the depreciation of manufacturing plant and equipment.

Warranty obligations are accrued when the products are sold. Research expenses, as well as interest and other costs of debt, are directly expensed in the period, unless such borrowing costs are capitalized as part of the cost of qualifying assets.

(c) Intangible assets Separately acquired intangible assets are capitalized at cost. Intangibles acquired in a business combination or M&A transaction are capitalized at fair value as of the acquisition date. Finite-lived intangibles are amortized on a straight-line basis over their useful lives. The amortization period for software is mostly three years, while licenses and similar rights or assets are amortized over the agreed or contractual term of use. Indefinite-lived intangible assets (i.e., whose useful life cannot be determined) are not amortized but tested at least once annually for impairment. If found impaired, they are

94 written down. As of December 31, 2012, no goodwill or other indefinite-lived intangibles were capitalized.

Expenses incurred for developing new products or series are capitalized (i) when the new products or series are found technically and economically feasible, (ii) when they have been scheduled for internal use or for marketing, (iii) if the expenses can be reliably determined, and (iv) if sufficient resources are available for development project completion, any other development and all research expenses being directly expensed. Capitalized development costs are amortized as from the date of market rollout on a straight-line basis, as a rule over five to seven years. As long as a development project is still in progress, its accumulated capitalized cost is tested at least once annually for impairment. No development costs were capitalized as of December 31, 2012.

(d) Tangible assets Tangible assets (a.k.a. property, plant and equipment) are carried at historical (purchase or production) cost, less accumulated depreciation and, where appropriate, write-down. The production cost of internally manufactured tangibles includes all direct costs (labor and materials), prorated indirect materials and indirect labor, as well as interest cost proratable to the manufacturing period. If tangible assets consist of significant identifiable components with different useful lives, these components are capitalized and depreciated separately.

Unless subject to capitalization, maintenance and repair (M&R) costs are expensed.

Tangible assets are depreciated according to the straight-line method over their estimated useful lives. The groupwide uniform asset depreciation ranges are based on the following useful lives: Buildings 10–50 years; land improvements 5–33 years, production plant and machinery 3–33 years, and other plant, factory and office equipment 3–25 years.

(e) Leases According to IAS 17, leases for tangible assets (investment leases) may either be capital or operating leases. Contracts where substantially all the risks and rewards incidental to beneficial ownership of the leased asset are transferred to any RENK company as lessee are capitalized and therefore treated as capital leases (a.k.a. finance leases).

In these cases, the lessee capitalizes the leased asset at the present value of the minimum lease payments or the leased asset’s fair value, whichever is lower, and then depreciates it over the shorter of the estimated useful life or the lease term. Concur- rently, the lessee recognizes a corresponding financial liability, the latter being amortized in subsequent periods on the basis of the effective interest method. All other leases where companies of the RENK Group are lessees, are accounted for as operating leases, the lease payments being expensed.

(f) Write-down for impairment losses If any evidence exists that the book value of an intangible or tangible asset or an investment carried at cost may be impaired, it is tested accordingly by determining the asset’s recoverable amount, which is the higher of the asset’s value in use or net fair value (NFV: fair value less costs to sell). The value in use, in turn, corresponds to the

95 RENK Annual Report 2012 value of expected cash flows, which is then discounted at a fair pretax market rate. Where an individual asset’s recoverable amount cannot be determined, that for the smallest identifiable asset group (a so-called cash-generating unit, or CGU for short) to which the asset can be assigned is determined instead. Where the book value exceeds an asset’s (or CGU’s) recoverable amount, such excess is directly recognized as write- down (i.e., impairment loss) within other operating expenses. No indications existed in fiscal 2012 that would have required an impairment test. If the fair value of an asset (or CGU) previously written down rebounds in full or in part, the asset other than goodwill (or the CGU excluding goodwill) is written up accordingly, the contra being other operating income. This write-up is capped at the amortized or depreciated cost (excluding a CGU’s goodwill) which would have resulted had the asset not been written down.

(g) Inventories Inventories are stated at the lower of (purchase or production) cost or net realizable value. Production cost includes all manufacturing-related direct costs (materials and labor), as well as proratable fixed and variable indirect materials and indirect labor. The allocable overheads are mostly determined on a normal workload basis. General administrative and selling (GAS) expenses are not capitalized. Raw materials and merchandise are generally priced at average purchase cost.

(h) Customized manufacturing contracts Dedicated contracts for customized manufacture (or construction) are recognized according to the percentage-of-completion (PoC) method: Based on agreed revenues and expected contract costs, sales and cost of sales are recognized by prorating them at the PoC achieved by the balance sheet date. The contract progress, or PoC, is as a rule determined on a cost-to-cost basis (i.e., from the ratio the costs incurred by the balance sheet date bear to the expected total contract costs). If the profit or loss from a PoC contract is not yet reliably determinable, revenue is recognized according to the zero- profit method, i.e., only at the amount of contract costs incurred to date. In the balance sheet, the contract portions proratable according to such PoC are carried as trade receivables net after deducting customer prepayments.

Expected losses on customized manufacturing contracts (so-called onerous contracts) are immediately and fully recognized by writing down the affected capitalized assets and providing for any additional loss.

(i) Straight financial instruments Straight financial instruments primarily include trade receivables from customers, loans, (financial) investments, securities, cash and cash equivalents, as well as financial liabilities and trade payables. Straight financial instruments are initially capitalized or recognized as of the transaction date at fair value, which generally equals the transaction price (value of the consideration given or received). Thereafter straight financial instruments are carried at fair value or amortized cost, depending on the category to which they are assigned. Loans and receivables held for purposes other than trading are generally carried at amortized cost (less any write-down). Within the RENK Group, this category primarily includes trade receivables from customers, the remaining receivables, and loans. Non- or low-interest receivables with a remaining term above twelve months are discounted at fair market rates using the DCF method. The counter-

96 party or default risks inherent in financial assets among such loans and receivables are accounted for by charging specific or portfolio bad-debt allowances.

Specifically, each significant receivable is tested for indications that it may be impaired. The potential need for writing down the receivable may ensue from facts such as defaulted payments observed over a certain period, the institution of enforcement processes, impending insolvency, excess of debts over assets, filing for or opening of insolvency or bankruptcy proceedings, the dismissal or failure of financial reorganization processes, etc. In cases where a specific impairment loss has been found to exist, a specific bad-debt allowance is charged in line with groupwide uniform guidelines at the amount of actual default.

Homogeneous portfolios of non-significant and specific significant receivables not deemed impaired are defined to determine portfolio allowances for bad debts. So long as no hard evidence of a specific receivable being (wholly or partly) uncollectible exists, the allowance is determined on the basis of a probability record derived from the average default history for each portfolio.

Bad-debt allowances for receivables are throughout posted to separate allowance accounts.

Financial instruments neither held to maturity, nor for trading, nor assigned to any other specific category, are treated as financial assets available for sale and hence carried at fair value; within the RENK Group, they include mainly securities and (financial) investments. The difference between cost and fair value is recognized in, and only in, other comprehensive income (OCI) within equity after duly deferring taxes thereon. Wherever the book value exceeds fair value long-term or substantially, such excess is recognized as write-down in the income statement. Financial assets available for sale are written down wherever evidence of long-term impairment exists. For instance, if the book value of any such asset exceeds its fair value over a long period of time or substantially, the impairment loss is recognized as write-down in the income statement.

The fair value of securities is as a rule their quoted market price. Investments not quoted in an active market and whose fair value is not reliably determinable are carried at cost. Where considered potentially impaired, such assets are tested accordingly, any write-down for an impairment loss being recognized in expense.

Financial investments held to maturity are carried at amortized cost. However, the RENK Group generally does not use this category, nor does it exercise the fair-value option.

Financial liabilities are initially recognized at cost and thereafter carried at amortized cost, except for financial derivatives.

(j) Derivative financial instruments The MAN Group uses financial derivatives to hedge underlyings against currency, interest rate and other price risks, mainly from ordinary business. Major financial derivatives of relevance to the RENK Group are currency forwards and forex options.

97 RENK Annual Report 2012 Financial derivatives are (re)measured at fair value upon first-time recognition (as of the trading date) and at each succeeding balance sheet date. The fair value of exchange- traded derivatives is their quoted positive or negative market value, where applicable, with due regard to counterparty risks. Where no market prices are quoted, fair value is determined on the basis of the terms and conditions current at the balance sheet date (such as interest or exchange rates) and by using generally accepted option pricing models or DCF techniques. The recognition of the resulting unrealized gains/losses depends on the category to which the derivative is assigned.

Any financial derivatives failing to meet the IAS 39 requirements for a hedging relationship are considered instruments held for trading, and for these, any gains/losses from fair value remeasurement are immediately recognized in the income statement. If no market value is quoted, their fair value is determined by means of suitable methods (such as DCF).

If and when the IAS 39 hedge accounting criteria are met, RENK designates and documents this hedge as from such date as either fair value or cash flow hedge.

A fair value hedge (FVH) secures recognized assets or liabilities or unrecognized firm commitments against potential fair value variations, and these changes in the derivative’s (= hedge’s) and its underlying’s fair values are recognized in net income. There- fore, any upward change in a perfect hedge’s fair value is virtually offset by the down- ward movement of the underlying’s fair value, and vice-versa.

Cash flow hedges (CFHs) secure recognized assets or liabilities, or unrecognized firm commitments or forecast transactions (high-probability customer projects), against the risk of cash flow variations. In a CFH, the effective portion of the change in the derivative’s fair value is initially recognized in a separate equity line (OCI) after deducting deferred taxes. When the hedged underlying (if a sales transaction) is recognized in the income statement, the proratable OCI is recycled to net sales. If a purchasing transaction resulting in the future recognition of a nonfinancial asset, the gains/losses from the statement at fair value of the financial derivative that have been accumulated as OCI change the hedged nonfinancial asset’s value. The ineffective portion of such gains/losses on fair value remeasurement is directly recognized in the income statement. When the hedging instrument expires, or is sold, terminated or exercised, or when the hedge ceases to exist although the forecast transaction is expected to materialize nonetheless, the unrealized gains/losses by then accumulated in, continue to be carried as, OCI and are recycled (as described above) to, once the hedged underlying is recognized in, the income statement. If and when the originally hedged underlying is no longer expected to materialize, the proratable accumulated OCI is released to the income statement, too.

See Note (30) for the RENK Group’s hedging strategy and the current notional volumes.

(k) Deferred taxes Deferred tax assets and liabilities are recognized for (i) temporary differences between tax bases and book values, (ii) consolidation transactions recognized in net income, (iii) income tax assets, and (iv) tax loss carryforwards. Deferred taxes are measured by

98 applying the tax rates either effectively or substantively enacted and hence current at the balance sheet date for 2012 and subsequent fiscal periods.

Deferred tax assets are recognized only to the extent that taxable income for the utilization of deductible temporary differences is believed to be available.

Deferred tax assets whose realization is unlikely in the foreseeable future are adjusted accordingly.

Deferred tax assets and liabilities are mutually offset if (i) the same tax creditor is involved and (ii) their maturities match.

Any changes in deferred taxes recognized in the balance sheet generally result in deferred tax expense or income. However, if the deferred taxes have directly been reflected or recognized in OCI, their changes are, too.

(l) Pension obligations Pension obligations arising from defined benefit plans are determined according to the projected unit credit (PUC) method by measuring the defined benefit obligations (DBO) on the basis of the prorated employee entitlements acquired by the balance sheet date, discounting them to their present value and duly taking into account assumed trends of certain parameters that impact on future pension levels. Differences between assumptions and actual trends or changed actuarial parameters may produce actuarial gains or losses, these being recognized (after duly accounting for deferred taxes) in, and only in, OCI and shown in the statement of comprehensive income (SOCI).

The fair value of plan assets (which are used to cover pension obligations) is deducted from pension accruals. For measurement details, see Note (21). A defined benefit asset (DBA: excess of plan assets over pension obligations) is capitalized among other assets only to the extent that it results in a refund from the plan or reduces future contributions. The current service cost, which represents the increase in a DBO’s present value as active employees have acquired additional entitlements in the period, is shown in the appropriate functional expense category. The interest cost included in net pension expense, as well as the expected return on plan assets, are recognized within the net interest result.

(m) Other accruals The other accruals provide for all identifiable risks and uncertain commitments which (i) arise from past events, (ii) are likely to result in an outflow of economic resources, and (iii) whose amount can be reliably estimated. An accrual is measured at the best estimate of the amount required to settle the obligation. Where the effect of interest is material, the accrual is discounted by applying a current market rate. Any accrual- related reimbursement or refund expected from a third party, if virtually certain to be received, is capitalized as a separate asset.

The recognition of accruals is periodically reviewed for appropriateness and adjusted accordingly when newly established facts or changed circumstances require so. If a reassessment reduces the obligation, the accrual portion proratable to such reduction

99 RENK Annual Report 2012 is released by crediting it to the same functional expense category to which the provision had originally been debited.

Warranty obligations are provided for when the warranted products are sold or services rendered, primarily on the basis of previously incurred warranty expenses. Further- more, specific warranties are accrued for known claims. Costs yet to be charged or billed and other business obligations are provided for at the value of the payment or work/service to be performed, as a rule the future production cost thereof. Impending losses on onerous contracts in progress are accrued wherever the expected economic benefit from the contract is below the unavoidable costs required to perform the contract.

(n) Financial statement presentation In the balance sheet, assets and liabilities are grouped into noncurrent and current ones. Items are deemed current if due within one year or any longer business cycle. Deferred tax assets and liabilities, as well as assets and accruals relating to defined benefit pension plans, are all classified as noncurrent. The cost-of-sales format is used for consolidated income statement presentation.

(o) Prior-year comparatives For better interperiod comparability, certain prior-year comparatives have been restated to match the current presentation format.

(p) Estimates and latitude Preparing the consolidated financial statements requires certain judgment, estimates and discretionary decisions. RENK’s estimates are based on empirical data and other relevant factors, as well as on a going concern. Accounting estimates and assumptions are all made to the best of RENK’s knowledge and belief, with a true and fair view of the Group’s asset and capital structure, financial position and results of operations in mind. Although valuation reasonably allows for identifiable uncertainties, future events may differ from such estimates. Accounting estimates and assumptions are continually reviewed.

The following accounting estimates as of the closing date are of particular significance:

The test for goodwill impairment, required at least once annually, calls inter alia for the forecast of future cash flows and their discounting. Forecasts predicated on financial budgets or plans approved by management underlie such cash flow projections. Fur- ther material assumptions are needed for WACC (weighted average cost of capital) and tax rates. If the book value of tangible or intangible assets or financial investments carried at cost is tested for impairment, management’s judgment and estimates are again inevitable to determine recoverable amounts. Extensive forecasts, projections and estimates are likewise required for any write-up (reversal of earlier-period impairment losses) in subsequent years.

Certain manufacturing contracts are accounted for according to the percentage-of- completion (PoC) method, which requires the degree of contract progress to be estimated with great care. Revenue is recognized according to contract progress, measured as PoC. Depending on the PoC measurement method used, contract revenue, total con-

100 tract costs, costs to completion, contract risks and other judgmental factors are among the key parameters of estimates. Each operating division’s management regularly reviews such PoC estimates and, where required, restates or adjusts the values or parameters accordingly.

RENK makes use of the MAN Group’s central finance management system. In a cash- pooling process, RENK accounts are netted (as a rule daily) and then balanced, thus giv- ing rise to receivables from or payables to MAN SE. Through its central cash management system, MAN SE manages and ensures the MAN Group’s supply with cash and credit facilities by conducting appropriate transactions on the international financial markets. RENK has consistently shown receivables from intragroup finance transactions with MAN SE as cash equivalents (if current) or other noncurrent assets (if long- term) while any (current or noncurrent) financial liabilities originating from this MAN finance management system are disclosed as such.

Pension and similar obligations are measured using actuarial methods which, in turn, mainly hinge on assumptions of discount rates, expected returns on plan assets, pay and pension trends, and mortality. A changed market or business environment may considerably impact on these actuarial assumptions, actual pension and similar obligations thus differing substantially.

Since the Group operates in quite a number of countries it is also subject to a multitude of tax laws and regulations. Actually expected income taxes as well as deferred tax assets/liabilities must be predicted for each corporate taxpayer, and this also calls for assumptions (such as the interpretation of complex tax regulations and the ability to earn sufficient taxable income, depending on tax type and jurisdiction). Any depar- ture of assumed factors from the actual taxation outcome may affect tax expense or deferred taxes.

Depending on the underlying transaction, the measurement of certain other accrued liabilities and similar obligations may be complex and largely rely on substantial judgment and a number of estimates. Management estimates of the probability and amounts required for the settlement are, inter alia, predicated on empirical and cur- rently available technical data, cost trend predictions, potential warranty claims, and the cash inflow from realization. Litigation and other legal disputes may also pose complex legal problems and entail a plethora of difficulties and imponderabilities. Such risks are provided for if an obligation is likely to arise from any such action that will probably result in a future outflow of economic resources at an amount determinable by reliable estimates. The decision whether (i) as of the closing date a present obligation exists that has arisen from a past event, (ii) the future outflow of economic resources is likely, and (iii) the obligation can be reliably estimated, requires considerable judgment and extensive estimates on the part of management. Future events or trends and changed estimates or assumptions may subsequently result in a different or updated assessment. Therefore, additional expenses with a material effect on RENK’s asset and capital structure, financial position or results of operations cannot be fully ruled out.

101 RENK Annual Report 2012 (4) Cash flow statement

The cash flow statement breaks down cash flows into those from operating, investing and financing activities. Effects of changes in the consolidation group and exchange rates are eliminated in the lines concerned. The net (forex) parity-related change in cash and cash equivalents is shown in a separate line. The indirect method is used to determine the cash flow from operating activities.

In the cash flow from operating activities, the noncash operating expenses and income, as well as the net gain/loss from the disposal of intangibles, tangibles and investments are all eliminated.

The cash flow from investing activities reflects the cash outflow for, which is offset against the cash inflow from the disposal of, tangible/intangible assets and investments. Cash and cash equivalents taken over are netted against the cash outflow for the acquisition of subsidiaries.

The cash flow from financing activities mirrors the dividend payout, cash inflow from and outflow for (i) securities transactions and (ii) financial liabilities redeemed or newly raised, as well as endowments of pension funds or plans.

Cash and cash equivalents comprise cash on hand and in bank (including highly liquid, temporarily invested funds readily convertible into cash and subject to only insignificant volatility risks), as well as the current receivables from MAN intragroup finance transactions.

(5) Changed accounting policies and rules

(a) Newly applied rules RENK has applied all legally obligatory accounting standards in 2012.

Due to the revision in October 2010 of IFRS 7, the disclosure obligations regarding financial-asset transfers were supplemented. Newly required disclosures refer to financial assets transferred and fully or partly derecognized. RENK has applied the revised Standard since January 1, 2012.

(b) Standards newly issued or revised but not applied early In its consolidated financial statements for fiscal 2012, RENK has not applied the below- listed accounting standards which, though approved by the IASB, were not yet obligatory in the year under review.

102 Standard1) Published by Mandatory Endorsed Anticipated the IASB effective date2) by the EU1) impact IFRS 7 Financial Instruments: 12/16/2011 1/1/2013 Yes Supplemented disclo- Disclosures—Offsetting sures in the notes of financial assets and any financial-instru- financial liabilities ment offset IFRS 9 Financial Instruments: 11/12/2009 & 1/1/20153) No Redefined recognition Classification and 10/28/2010 of changes in the fair measurement value of financial instruments previously classified as available for sale IFRS 10 Consolidated Financial 5/12/2011 1/1/2014 Yes No significant Statements changes IFRS 11 Joint Arrangements 5/12/2011 1/1/2014 Yes No significant effects IFRS 12 Disclosure of Interests 5/12/2011 1/1/2014 Yes Supplemented disclo- in Other Entities sures of interests in other entities in the notes Transitional provisions 6/28/2012 1/1/2013 No No significant for IFRS 10, IFRS 11, changes IFRS 12 IFRS 13 Fair Value Measurement 5/12/2011 1/1/2013 Yes Redefined and supplemented disclosures in the notes of fair value measurement IAS 1 Presentation of Finan- 6/16/2011 1/1/2013 Yes Amended presenta- cial Statements—Pres- tion of OCI lines entation of OCI lines IAS 12 Income Taxes— 12/20/2010 1/1/2013 Yes No significant Deferred Tax: Recovery changes of Underlying Assets IAS 19 Employee Benefits 6/16/2011 1/1/2013 Yes Revised presentation and further disclosures in the notes of employee benefits IAS 27 Separate Financial 5/12/2011 1/1/2014 Yes None Statements IAS 28 Investments in Associ- 5/12/2011 1/1/2014 Yes None ates and Joint Ventures IAS 32 Financial Instruments: 12/16/2011 1/1/2014 Yes No significant Presentation—Offset- changes ting a financial asset and a financial liability IFRS Improvements 5/17/2012 1/1/2013 No No significant 20114) changes

1) On or before December 31, 2012. 2) First-time application obligatory from the RENK Group’s viewpoint. 3) First-time application postponed by the Mandatory Effective Date Project from 2013 to 2015. 4) Minor changes in a number of Standards (IFRS 1, IAS 1, IAS 16, IAS 32, IAS 34).

103 RENK Annual Report 2012 Notes to the consolidated income statement

(6) Net sales

Sales by geographical market/region k€ 2012) 2011) Germany 164,769) 146,338) Other EU 126,314) 103,201) Other Europe 19,335) 13,034) Asia 117,084) 89,996) Americas 42,791) 32,495) Africa 1,982) 2,277) Australia and Oceania 3,680) 1,481) 475,955) 388,822)

Revenue from PoC contracts totaled k€16,763 (down from k€20,529).

(7) Other operating income k€ 2012) 2011) Income from the release of accruals 602) 259) Gains from the disposal of tangible/intangible assets 140) 97) Income from other trade business 643) 544) Gains from foreign exchange and derivatives 2,363) 2,504) Miscellaneous 1,231) 1,193) 4,979) 4,597)

(8) Other operating expenses k€ 2012) 2011) R&D 6,983) 5,850) Change in accruals 2,072) (104) Write-down of current assets (1,022) 2,912) Losses on foreign exchange and derivatives 2,329) 1,948) Inventories scrapped 797) 305) Guaranty commissions 639) 613) Miscellaneous 2,586) 2,276) 14,384) 13,800)

The other operating expenses comprise the expenses not assigned to any of the functional expense categories (primarily to cost of sales); R&D expenses reflect only such portion as is contract-unrelated production cost. The miscellaneous other operating

104 expenses include legal, consultancy and audit fees, functionally unallocable personnel expenses, as well as a multitude of single items.

(9) Net interest expense k€ 2012) 2011) Interest and similar income 283) 1,137) Interest and similar expenses (408) (76) Interest portion of addition to pension accruals (4,259) (4,221) Expected return on plan assets 3,797) 3,890) (587) 730)

k€283 (down from k€1,136) of interest income was earned from intragroup finance transactions with MAN SE.

Furthermore, fiscal 2012 saw a review of the assumptions underlying the determination of discount rates applied to (i) measure other accruals whose interest effect is material and (ii) value non- and low-interest noncurrent receivables and payables. The review resulted in additional net expense of k€229 shown within net interest expense while the effect on income in succeeding years depends on how market rates develop.

(10) Income taxes

The recognized income tax expense breaks down as follows:

k€ 2012) 2011) Current taxes Germany 17,322) 12,627) abroad 3,026) 3,006) Deferred taxes Germany (132) (218) abroad (416) 109) 19,800) 15,524)

The income tax expense expected for 2012 was calculated by applying an unchanged total 31.18 percent to EBT for the assessment period 2012, this percentage being the combined result of municipal trade income tax at 15.25 percent, corporate income tax at 15.0 percent, plus solidarity surtax of 5.5 percent of corporate income tax.

105 RENK Annual Report 2012 Reconciliation of expected to actual income tax expense:

k€ 2012) %) 2011) %) EBT 65,297) 100.0) 53,479) 100.0) Expected income tax 20,360) 31.2) 16,675) 31.2) Tax rate differential (131) (0.2) (56) (0.0) Tax-exempt income/gains (416) (0.7) (759) (1.4) Nondeductible business expenses 190) 0.3) 60) 0.1) Taxes for previous years and sundry (203) (0.3) (396) (0.8) Actual tax expense 19,800) 30.3) 15,524) 29.0)

The actual tax expense includes nonperiod income taxes of k€230.

Allocation of deferred taxes to balance sheet lines:

k€ 12/31/2012) 12/31/2011) Deferred tax assets Pension accruals 23,003) 18,880) Other accruals 310) –) Noncurrent 23,313) 18,880) Inventories and receivables 10,387) 7,969) Sundry 1,930) 320) Other accruals 2,580) 2,792) Current 14,897) 10,878) Netting (13,850) (14,307) Consolidation 1,011) 2,207) 25,371) 17,861)

Deferred tax liabilities Noncurrent assets 9,502) 8,005) Inventories and receivables 634) –) Pension accruals 13,850) 13,705) Noncurrent 23,986) 21,710) Inventories and receivables 4,385) 3,436) Other accruals 8,667) 7,375) Current 13,052) 10,822) Netting (13,850) (14,307) 23,188) 18,215)

In connection with shares in subsidiaries, temporary differences exist for which taxes of k€293 have not been deferred (up from k€227).

106 (11) Earnings per share

2012 2011 Net income (k€) 45,497 37,955 Weighted average number of shares outstanding (1,000) 6,800 6,800 Earnings per share in € 6.69 5.58

In accordance with IAS 33, the number of shares outstanding is divided into the Group’s net income (EAT) to obtain earnings per share (EpS). No unexercised stock options existed to dilute earnings per share, at either December 31, 2012 or 2011.

(12) Additional notes to the income statement

Cost of sales includes the following cost of materials:

k€ 2012 2011 Cost of raw materials, supplies, and merchandise purchased 146,867 117,569 Cost of services purchased 30,722 22,096 177,589 139,665

Personnel expenses break down as follows:

k€ 2012 2011 Wages and salaries 129,300 113,852 Social security taxes and pension expense 26,968 24,328 156,268 138,180

Including statutory Social Security taxes of k€9,822 (up from k€8,916), pension expense for 2012 totaled k€13,827 (up from k€12,395) and was allocated to the appropriate functional categories but excludes the interest portion contained in the period’s pension provision—see Note (9).

In fiscal 2012, the RENK Group’s headcount averaged 2,098 employees (up from 1,883), including 1,287 (up from 1,140) directly and 811 (up from 743) indirectly working in Pro- duction.

Breakdown of amortization/depreciation:

k€ 2012 2011 Amortization of intangible assets 1,725 1,531 Depreciation of tangible assets 12,661 11,465 14,386 12,996

107 RENK Annual Report 2012 Lease payments expensed:

k€ 2012 2011 Minimum operating lease payments 199 123 199 123

(13) Total fees of statutory auditor

In the year under review, the Supervisory Board proposed Munich-based Pricewater- houseCoopers AG Wirtschaftsprüfungsgesellschaft (PwC) to be engaged as statutory auditor, and the AGM of April 26, 2012, endorsed this proposal.

The table below specifies the fees charged by PwC and auditing firms of the international PwC network in fiscal 2012 and 2011.

k€ 2012 2011 (a) Fee for statutory audits 171 159 Incidentals 1 2 (b) Other certification/assurance and valuation services 71 19 (c) Tax accounting 108 10 (d) Other services 196 33 Total fees of statutory auditor 547 223

The fees charged by the Munich-based statutory auditor PwC in 2012 totaled k€170 (up from k€142), including k€111 (down from k€123) for the statutory audit and k€71 for other certification, assurance and valuation services (up from k€19).

108 Notes to the consolidated balance sheet

(14) Intangible assets k€ Licenses,) Technologies) Customer) Total) software,) purchased) relations) similar rights) and assets) Gross book value at 1/1/2011 10,975) 1,801) 3,281) 16,057) Accumulated amortization/write-down (7,050) (440) (1,203) (8,693) Balance at 1/1/2011 3,925) 1,361 2,078) 7,364) Additions 452) –) –) 452) Book transfers 35) –) –) 35) Disposals (249) –) –) (249) Amortization (1,076) (122) (333) (1,531) Currency translation differences 64) 38) 55) 157) Balance at 12/31/2011 3,151) 1,277) 1,800) 6,228)

Gross book value at 1/1/2012 10,741) 1,853) 3,375) 15,969) Accumulated amortization/write-down (7,590) (576) (1,575) (9,741) Balance at 1/1/2012 3,151) 1,277) 1,800) 6,228) Additions 648) –) –) 648) Consolidation group change –) 762) 850) 1,612) Book transfers –) –) –) –) Disposals –) –) –) –) Amortization (878) (202) (645) (1,725) Currency translation differences 15) 9) 12) 36) Balance at 12/31/2012 2,936) 1,846) 2,017) 6,799)

Gross book value at 12/31/2012 11,500) 2,628) 4,248) 18,376) Accumulated amortization/write-down (8,564) (782) (2,231) (11,577)

The amortization charged to capitalized intangibles is included in the appropriate functional expense categories, mainly cost of sales.

109 RENK Annual Report 2012 (15) Tangible assets k€ Land) Production) Other plant,) Prepayments) Total) and) plant) factory and) on tangibles,) ) buildings) and) office) construction) machinery) equipment) in progress)

Gross book value at 1/1/2011 72,365) 133,726) 26,604) 11,443) 244,138) Accumulated depreciation/ write-down (32,142) (83,033) (20,574) –) (135,749) Balance at 1/1/2011 40,223) 50,693) 6,030) 11,443) 108,389) Additions 866) 9,117) 1,612) 12,269) 23,864) Book transfers 148) 4,358) 157) (4,698) (35) Disposals –) (33) (30) –) (63) Depreciation (2,029) (7,751) (1,685) –) (11,465) Currency translation differences 2) 114) 11) 11) 138) Balance at 12/31/2011 39,210) 56,498) 6,095) 19,025) 120,828)

Gross book value at 1/1/2012 73,402) 146,664) 28,025) 19,025) 267,116) Accumulated depreciation/ write-down (34,192) (90,166) (21,930) –) (146,288) Balance at 1/1/2012 39,210) 56,498) 6,095) 19,025) 120,828) Additions 4,396) 7,614) 3,307) 12,128) 27,445) Consolidation group change 59) 3,662) 195) –) 3,916) Book transfers 124) 9,379) 470) (9,973) –) Disposals –) (21) (6) –) (27) Depreciation (1,810) (8,755) (2,096) –) (12,661) Currency translation differences (7) 24) 2) (4) 15) Balance at 12/31/2012 41,972) 68,401) 7,967) 21,176) 139,516)

Gross book value at 12/31/2012 77,221) 166,323) 31,373) 21,176) 296,093) Accumulated depreciation/ write-down (35,249) (97,922) (23,406) –) (156,577)

The depreciation charged to tangible assets is included in the appropriate functional expense categories, mainly cost of sales. No write-down was charged in either 2012 or 2011.

110 (16) Inventories k€ 12/31/2012 12/31/2011) Raw materials and supplies 31,429) 28,078) Work in process and finished products 131,649) 115,638) Prepayments made 534) 1,662) 163,612) 145,378)

Inventories valued at k€308,910 (up from k€251,104) were in 2012 recognized as cost of sales. Inventories of a gross k€24,492 (down from k€29,996) were stated at their net realizable values (NRV) of k€4,263 (down from k€8,116). The write-down expensed in 2012 alone totaled k€4,740 (up from k€2,755).

(17) Trade receivables k€ 12/31/2012) 12/31/2011) Due from customers 66,781) 68,337) Due from nonconsolidated group companies 6,915) 6,071) Due from investees 121) 590) PoC receivables 10,948) 7,587) 84,765) 82,585)

k€3,356 (up from k€2,403) of trade receivables has a remaining term above one but below five years. The remaining k€81,409 (up from k€80,182) now falls due in less than one year. The accounts due from nonconsolidated group companies include not only receivables from RENK subsidiaries but also those from Volkswagen and MAN companies.

Analysis and breakdown of PoC receivables:

k€ 12/31/2012) 12/31/2011) PoC contract costs and prorated profits 46,807) 36,952) Currency translation differences (467) 1,172) Gross PoC receivables 46,340) 38,124) Prepayments received (35,392) (30,537) 10,948) 7,587)

The contracts and parts/milestones thereof invoiced to customers are shown within trade receivables.

111 RENK Annual Report 2012 Movement analysis of specific allowances for bad debts among trade receivables:

k€ 2012) 2011) Balance at January 1 553) 707) Added 734) 129) Utilized (327) –) Reversed (137) (289) Currency translation differences –) 6) Balance at December 31 823) 553)

A specific allowance for bad debts was charged to receivables of k€823 gross book value (up from k€553).

Movement analysis of the specific portfolio allowances for trade receivables:

k€ 2012) 2011) Balance at January 1 615) 565) Added 52) 76) Reversed (36) (27) Currency translation differences 1) 1) Balance at December 31 632) 615)

(18) Other assets k€ 12/31/2012) 12/31/2011) Financial derivatives 1,061) 32) Loans and other receivables from third parties 10) 14) Noncurrent receivables from MAN intragroup financing –) 7,500) VAT assets 3,442) 3,475) Other non-income tax assets 32) 33) Advances, clearing account balances 769) 779) Prepaid expenses and deferred charges 706) 798) Sundry assets 290) 127) 6,310) 12,758)

The other assets are disclosed in these balance sheet lines:

k€ 12/31/2012 12/31/2011 Other noncurrent assets 131 7,517 Other current assets 6,179 5,241

Financial derivatives are stated at fair value; most of them are hedges against either currency risks in customer contracts or other forex risks.

112 (19) Cash and cash equivalents k€ 12/31/2012 12/31/2011 Cash on hand and in bank 439 138 Due from MAN intragroup financing 124,188 96,313 124,627 96,451

The accounts due from MAN intragroup financing reflect current receivables under the central cash-pooling system of, and short-term investments with, MAN companies.

(20) Equity

RENK AG’s capital stock of €17,920,000 is divided into 7 million fully paid-up no-par shares of common stock that all rank pari passu. During the year under review, 76 percent of RENK AG’s capital stock has been owned by Munich-based MAN SE.

As of December 31, 2012, RENK AG held a total 199,903 treasury shares in its portfolio, equivalent to 2.86 percent of the capital stock or a stake of k€512. The additional paid-in capital solely comprises stock premiums from increases in RENK AG’s capital stock. The accumulated other comprehensive income (OCI) is mostly attributable to the remeasurement of pension accruals at fair value.

The actuarial gains/losses within OCI break down as follows:

k€ 12/31/2012) 12/31/2011) (Gain)/loss on the PV of the DBO 10,015) 4,236) (Gain)/loss on plan assets (3,193) 3,821) Change in actuarial gains/losses 6,822) 8,057) Deferred taxes (2,846) (1,254) Actuarial gains/losses 3,976) 6,803)

Dividend distribution is subject to the provisions of the German Stock Corporation Act (“AktG”), according to which cash dividends may be distributed from the Group parent’s (RENK AG’s) net earnings; these net earnings according to German GAAP totaled k€42,466 at December 31, 2012. The Company’s Executive and Supervisory Boards will propose to the annual general meeting on April 24, 2013, to pay a cash dividend of €2.00 per eligible share from said net earnings, corresponding to €13,600,194.00 for 7,000,000 no-par shares after deduction of the dividends proratable to the 199,903 treasury shares (which do not rank for dividend pursuant to Art. 71b AktG).

RENK’s capital management primarily targets the sustainable increase in shareholder value while safeguarding the Group’s liquidity and thus its credit standing. Contribut- ing to these targets are ongoing efforts toward trimming capital costs, improving the cash flow from financing activities, perfecting the capital structure, as well as ensuring an effective risk management system.

113 RENK Annual Report 2012 For the measurement and direction of business operations and the best-possible allocation of capital within the Group, RENK uses the excess of ROCE over WACC as controlling parameter, i.e., the difference between return on capital employed (ROCE) and the weighted average cost of capital (WACC).

For capital management purposes, the Group’s capital employed (CE) comprises total assets excluding financial funds and tax assets, less all accruals and liabilities other than financial debts, pension accruals and taxes. Additionally eliminated from CE are any material M&A-related effects produced by finite-lived tangible and intangible assets. Prepayments received are not deducted unless they have already been applied to contract work.

The RENK Group’s capital employed as of December 31, 2012, totaled k€193,468 (up from k€176,897).

RENK AG’s articles of incorporation (bylaws) do not require the creation of any statutory reserves.

(21) Pension accruals

(a) Pension plans and coverage capital Employees of German RENK companies benefit from a pension plan to provide additional retirement income including disability (invalidity) and death benefits during their active service life.

Under the current pension plans, active employees receive employer contributions pegged to their pensionable pay and are offered the opportunity to top up their retirement income through deferred compensation to which, where covered by collective agreements, their employers make certain contributions. All these defined contributions (funded by both employers and employees) plus the income earned from the investment on the capital market help accumulate during active service a pension capital to be paid out on retirement in one sum or in installments; capital redemption in the form of annuities is optional in certain cases. When investing the employees’ pension capital, the related investment risks are scaled back with growing age (according to the life-cycle concept). Pension capital performance is directly linked to the capital market and controlled by a basket of indexes and other suitable parameters.

RENK’s pension plan assets in Germany are managed by MAN Pension Trust e.V., a membership corporation under German law, as well as by MAN Pensionsfonds AG; under irrevocable agreements, these trust assets are exempt from recourse or attach- ment by RENK (trustor) and earmarked solely to fund current pension payments or settle employee claims in the case of employer insolvency. For the purpose of overseeing due and proper management and appropriation of the special pension trust assets, security trustees independent of MAN have been appointed. MAN Pensions- fonds AG is, moreover, subject to the supervision by BaFin, the German Federal Finan- cial Supervisory Authority. The assets held under the CTA (contractual trust agreement) are invested by several professional asset managers in various funds on the capital market in accordance with investment policies specified by an investment board. The

114 acquisition of securities issued or floated by MAN SE or an MAN company is prohib- ited, as is any investment in real estate for internal use.

RENK-MAAG GmbH has incurred defined benefit obligations which are all plan-funded and managed by an independent pension fund. In addition, RENK France S.A.S. is subject to certain statutory payment obligations when employees separate early or go into regular retirement.

The employer contributions to defined benefit plans are expected to amount in 2013 to k€3,416.

(b) Funding status

The following actuarial parameters are assumed in order to calculate the DBO’s present value and the plan assets:

% Germany Abroad 2012 2011 2012 2011 Discount rate 3.20 4.60 1.90 2.35 Pension rise +1.80 +2.00 0.00 0.00 Pay rise +2.70 +2.75 +1.20 +1.52 Expected return on plan assets 5.00 5.00 2.50 4.00

The discount rates mirror the year-end returns on prime industrial bonds at matching maturities and currencies. Current local actuarial tables underlie the biometric accounting bases. For Germany, the 2005G mortality tables of Prof. Klaus Heubeck were adjusted to reflect specific empirical corporate data. The return expected long term to be earned on plan assets is derived from assumed yields of national and international investments in line with the portfolio structure.

Breakdown of funding status and pension accruals:

k€ 12/31/2012) 12/31/2011) 12/31/2010) 12/31/2009) 12/31/2008) Plan-unfunded DBO 3,090) 2,509) 2,279) 1,928) 1,658) Plan-funded DBO 112,483) 99,429) 92,221) 84,883) 73,535) Total DBO 115,573) 101,938) 94,500) 86,811) 75,193) Plan assets at fair value (85,842) (79,014) (80,024) (75,732) (69,773) Pension accruals 29,731) 22,924) 14,466) 11,079) 5,420) thereof Germany 26,949) 20,243) 12,448) 8,814) 2,987) thereof abroad 2,782) 2,681) 2,018) 2,265) 2,433)

115 RENK Annual Report 2012 Movement analysis of the present value of the DBO:

k€ Germany Abroad 2012) 2011) 2012) 2011) Present value of the DBO at Jan. 1 86,941) 80,163) 14,998) 14,327) Current service cost 2,669) 2,269) 486) 899) Past service cost – ) –) –) (139) Interest cost 3,897) 3,865) 362) 356) Actuarial losses/(gains) 9,245) 4,264) 770) (28) Pension payments (4,224) (3,977) (820) (1,283) Contributions by beneficiaries 455) 384) 488) 459) Exchange rate changes, other 208) (27) 100) 407) Present value of the DBO at Dec. 31 99,191) 86,941) 16,384) 14,998)

Movement analysis of plan assets:

k€ Germany Abroad 2012) 2011) 2012) 2011) Plan assets at Jan. 1 66,698) 67,715) 12,315) 12,309) Expected return on plan assets 3,355) 3,393) 442) 497) Actuarial gains/(losses) 2,826) (3,098) 367) (723) Contributions by employers 2,107) 1,451) 691) 672) Contributions by beneficiaries –) 368) 488) 459) Pension payments (2,948) (3,102) (786) (1,245) Exchange rate changes, other 204) (29) 83) 346) Plan assets at Dec. 31 72,242) 66,698) 13,600) 12,315)

Breakdown of plan asset portfolio

k€ Germany Abroad 12/31/2012 12/31/2011 12/31/2012 12/31/2011 Fixed-income bonds 30,273 30,872 6,135 5,457 Money market instruments 3,182 1,752 1,031 1,093 Equities 14,321 11,221 2,756 2,551 Real estate 1,060 893 3,081 2,757 Other investments 23,406 21,960 597 457 Total plan assets 72,242 66,698 13,600 12,315

116 (c) Pension expense

Breakdown of pension expense:

k€ 2012) 2011) Current service cost 3,155) 3,168) Past service cost –) (139) Interest cost 4,259) 4,221) Expected return on plan assets (3,797) (3,890) 3,617) 3,360)

(d) Gains and losses recognized as OCI

k€ 2012) 2011) Actuarial losses at Jan. 1 18,701) 10,634) Changes in fiscal year 6,822) 8,057) Consolidation group changes/other 1) –) Exchange rate effects 5) 10) Actuarial losses at Dec. 31 25,529) 18,701)

(e) Empirical adjustments

The empirical adjustments, i.e., the variances between the values calculated on the basis of actuarial assumptions and the actual trend of DBO and plan assets, present the following picture over time:

2012) 2011) 2010 2009 % of the present value of the DBO (1.43) (1.07) 0.74 0.72 % of plan assets 3.72) (4.84) 0.53 3.99

117 RENK Annual Report 2012 (22) Other accruals k€ 12/31/ Currency) Utilized) Added Released) 12/31/ 2011 translation) 2012 diff., other) Warranties 33,817 421) (6,651) 6,472 (2,075) 31,984 Unbilled costs 5,668 (2) (1,760) 2,324 (446) 5,784 Other business obligations 5,151 167) (200) 4,446 (2,149) 7,415 Obligations to personnel 5,444 1) (2,243) 2,927 (12) 6,117 Remaining accruals 2,928 26) (162) 163 (2) 2,953 53,008 613) (11,016) 16,332 (5,998) 54,253

The other accruals are disclosed in these balance sheet lines:

k€ 12/31/2012 12/31/2011 noncurrent current noncurrent current Warranties 3,642 28,342 4,850 28,967 Unbilled costs – 5,784 – 5,668 Other business obligations – 7,415 – 5,151 Obligations to personnel 2,308 3,809 1,637 3,807 Remaining accruals 639 2,314 615 2,313 6,589 47,664 7,102 45,906

The warranty accruals provide for implied and express warranties, as well as accommo- dation/goodwill warranties voluntarily extended to customers. Warranty accruals are utilized when the warranty claim takes effect, which may be anytime during the warranty period. The unbilled costs accrued refer to products or services yet to be provided under contracts already invoiced (or parts thereof) and to obligations under maintenance and service contracts. The other business obligations refer to accrued losses on onerous contracts, to default/performance-related penalties, etc.

The accruals for obligations to personnel provide for employment anniversary allowances, termination indemnities, and preretirement part-time work.

(23) Financial liabilities k€ 12/31/2012 12/31/2011 Payables under capital leases 510 748 510 748

Payables under capital leases are included in noncurrent or current financial liabilities.

118 (24) Trade payables k€ 12/31/2012 12/31/2011 Trade payables 40,076 42,927

Trade payables are disclosed within current liabilities and accruals and include k€531 (down from k€910) due to nonconsolidated group companies.

(25) Prepayments received k€ 12/312012 12/312011 Prepayments received 100,434 83,100

Prepayments received are disclosed within current liabilities and accruals and include k€3,899 (up from k€1,810) received from nonconsolidated group companies. PoC contracts account for k€12,357 (down from k€15,622).

(26) Other liabilities k€ 12/31/2012 12/31/2011 Personnel-related 23,840 20,692 Statutory Social Security 1,116 1,376 Currency hedges 289 1,198 VAT payable 292 – Other non-income taxes 8 1 Sundry financial debts 1,923 545 Remaining liabilities 1,408 1,794 28,876 25,596

The personnel-related liabilities refer to wages, salaries and social security taxes due but not yet paid at the balance sheet date, as well as to prorated vacation pay and special year-end payments.

The other liabilities include the negative market values of financial derivatives. Since they mostly served as hedges against currency risks in customer contracts, their negative market values contrasted with increased values in the balance sheet lines of the underlyings.

The other liabilities are disclosed in the following balance sheet lines:

k€ 12/31/2012 12/31/2011 Other noncurrent liabilities 1,168 587 Other current liabilities 27,708 25,009 28,876 25,596

119 RENK Annual Report 2012 Other information

(27) Contingent liabilities

k€ 12/31/2012 12/31/2011 Guaranties and suretyships 929 947 929 947

In fiscal 2007, RENK AG furnished MAN SE with a non-expiring payment guaranty for the liabilities of RENK subsidiaries from the latter’s business relationship with MAN SE.

The contingent liabilities disclosed are, as a rule, measured at the maximum amount enforceable against RENK, any rights of recourse not being offset.

The tangible-asset purchasing obligation totaled k€2,244 (down from k€4,285) at December 31, 2012.

(28) Other financial obligations

Other financial obligations exist from and under leases. Future rents for the minimum terms of operating leases fall due as follows:

k€ 12/31/2012 12/31/2011 Operating leases Due within 1 year 165 102 Due >1–5 years 180 124 345 226

Financial purchase obligations to third parties from pending capital expenditure projects were within the ordinary scope of business.

(29) Additional disclosures for financial instruments

This Note (29) additionally highlights details of financial instruments (FI) and discloses further information on FI-related balance sheet and income statement (IS) lines. The table below details according to IFRS 7 the book values, the breakdown into valuation categories, the fair values (FV) and FV hierarchy level of financial instruments, all as of December 31, 2012.

120 k€ Book thereof IAS 39 Fair value Fair value value covered valuation hierarchy by IFRS 7 category*) level Assets Investments 1,493 1,493 AfS 1,493 n/a Other noncurrent/current assets 6,310 6,310 – – – Other financial assets 2,836 2,836 – 2,836 – financial derivatives at FV through IS (no hedge) 823 823 aFV 823 2 financial derivatives in hedges 238 238 n/a – 2 sundry assets 1,775 1,775 LaR 1,775 – Assets not covered by IFRS 7 3,474 – n/a – – Trade receivables 84,765 84,765 LaR 84,765 – Cash and cash equivalents 124,627 124,627 LaR 124,627 – Liabilities Other noncurrent/current liabilities 29,386 2,722 – – – Noncurrent/current financial liabilities 510 510 aAC 510 – Other financial debts 2,212 2,212 – 2,212 – financial derivatives at FV through IS (no hedge) 112 112 aFV 112 2 financial derivatives in hedges 177 177 n/a 112 2 sundry liabilities 1,923 1,923 aAC 1,923 – Liabilities not covered by IFRS 7 26,664 – n/a – – Trade payables 40,076 40,076 aAC 40,076 –

*) AfS: financial assets available for sale LaR: loans and receivables aFV: at fair value through income statement aAC: financial payables at amortized cost n/a: not applicable

The table below details according to IFRS 7 the book values, the breakdown into valuation categories, the fair values and FV hierarchy level of financial instruments, all as of December 31, 2011.

121 RENK Annual Report 2012 k€ Book thereof IAS 39 Fair value Fair value value covered valuation hierarchy by IFRS 7 category*) level Assets Investments 1,493 1,493 AfS 1,493 n/a Other noncurrent/current assets 12,758 8,408 – – – Other financial assets 8,408 8,408 – 8,408 – financial derivatives at FV through IS (no hedge) 32 32 aFV 32 2 financial derivatives in hedges – – n/a – – sundry assets 8,376 8,376 LaR 8,376 – Assets not covered by IFRS 7 4,350 – n/a – – Trade receivables 82,575 82,575 LaR 82,575 – Cash and cash equivalents 96,451 96,451 n/a 96,451 – Liabilities Other noncurrent/current liabilities 26,344 2,958 – – – Noncurrent/current financial liabilities 748 748 aAC 748 – Other financial debts 2,210 2,210 – 2,210 – financial derivatives at FV through IS (no hedge) 467 467 aFV 467 2 financial derivatives in hedges 1,198 1,198 n/a 1,198 2 sundry liabilities 545 545 aAC 545 – Liabilities not covered by IFRS 7 23,386 – n/a – – Trade payables 42,927 42,927 aAC 42,927 –

*) AfS: financial assets available for sale LaR: loans and receivables aFV: at fair value through income statement aAC: financial payables at amortized cost n/a: not applicable

122 Breakdown of the accumulated book values of financial instruments by IAS 39 valuation category:

k€ 12/31/2012 12/31/2011 IAS 39 valuation category Assets Liabilities Assets Liabilities AfS 1,493 – 1,493 – aFV 823 112 32 467 LaR 211,167 – 187,402 – aAC – 42,509 – 44,220

Fair values have been determined on the basis of market conditions available at the closing date and the valuation techniques described below, and reflect the prices at which market participants would exchange the rights and/or obligations arising from the measured financial instruments in a transaction at arm’s length. The valuation techniques used have remained substantially unchanged in comparison with those applied the year before.

Cash, cash equivalents, trade receivables, other financial assets, trade payables and other financial debts all have largely a short remaining term and, therefore, their current book values essentially equal their fair values. Moreover, trade receivables are reasonably written down wherever evidence of their impairment exists. The financial assets available for sale include equity interests of k€1,493 (virtually unchanged) which are stated at cost. They represent securities and shares in nonlisted companies for whose valuation DCF methods could not be and were not used for lack of reliably determinable cash flows. These nonlisted companies are enterprises for which no quoted market prices are available since no active market exists for their shares. At present, we do not intend to dispose of these shares.

The future cash flows of financial derivatives without option components (mainly currency forwards) are determined by using forward rate trajectories. The fair value of these derivatives corresponds to their discounted cash flows. Options for currency pairs are valued on the basis of generally accepted option-pricing models, such as the Black-Scholes formula or similar generalized closed-form models.

Fair value hierarchy:

A hierarchy that prioritizes the inputs to valuation techniques used to measure fair value of financial instruments aFV into three broad levels helps assess the significance of fair value measurements and related disclosures:

123 RENK Annual Report 2012 Level 1: Inputs in the form of (unadjusted) quoted prices in active markets for identical assets or liabilities;

Level 2: Direct inputs other than Level 1 quoted prices for identical or similar assets or liabilities or indirect inputs derived from observable market data;

Level 3: Unobservable inputs for an asset or liability that are used to measure fair value in cases where little or no market data is available.

Neither in fiscal 2011 nor 2012 were any fair value measurement inputs recategorized between Levels 1 and 2, nor was any fair value measurement transferred to or from Level 3.

The interest income and expense earned or incurred in connection with financial assets and debts break down as follows:

k€ 2012) 2011) Interest income 786) 1,392) Interest expense (455) (1,012)

Interest income from impaired financial assets is insignificant given the mostly short periods to expected receipt of payment.

The table below lists the net gains/losses from financial instruments:

k€ 2012) 2011) Loans and receivables (1,740) 664) Financial assets available for sale 958) 916) Financial instruments held for trading 1,871) (578) Financial debts at cost 38) (10) Net gain/(net loss) 1,127) 992)

The net gains/losses from loans and receivables mainly reflect changes in allowances, write-down and currency translation differences, as well as income from cash inflows and write-up.

The net gains/losses from financial assets available for sale basically mirror net income/loss from investments.

124 The net gains/losses from financial assets/debts aFV (viz. at fair value through the income statement) represent changes in the fair value of financial derivatives to which no hedge accounting rules are applied.

The net gains/losses from financial debts carried at cost chiefly comprise currency translation differences and income from liabilities charged off.

The net forex loss on the aforesaid items totaled k€1,146 in 2012 (down from a net gain of k€744).

(30) Derivative financial instruments and hedging strategies

Given the international business activities and operations, the assets, liabilities and forecast transactions of the MAN Group are exposed to market price, credit and liquidity risks for whose identification, measurement and containment a groupwide risk management system has been set up. RENK has been integrated with this RMS and makes use of the risk-managing tools thereby placed at its disposal.

(a) The MAN Group’s risk management system Companies of the MAN Group generally hedge their transactions against currency and interest rate risks through MAN SE’s central Group Treasury, on terms as if at arm’s length and using straight and mainly derivative financial instruments. In countries where foreign-exchange, supervisory or other regulatory legislation prevents MAN SE from hedging (primarily Brazil), MAN SE makes or negotiates any forex, interest rate and money-trading contracts in the name and for the account of the group company concerned. Financial instruments are recognized at the trading date.

The Group Treasury’s risk positions are hedged externally with banks within predeter- mined risk limits. The contracting of hedges substantially meets the risk management requirements also applicable to banks and is subject to stringent monitoring, which is particularly ensured through the strict segregation of contracting, settlement and controlling functions.

The groupwide cash management system centralizes the MAN Group’s liquidity management and investment. When it comes to investing any cash surplus, the credit institutions, banks and investment vehicles are carefully selected and spread in accordance with a system of defined limits; these limits and their utilization are regularly monitored. Most liquid assets are cash investments kept with investment-graded banks.

The MAN Group’s market price risk positions are regularly reported to MAN SE’s Executive and Supervisory Boards. Compliance with guidelines and directives is checked by MAN’s Internal Auditing.

125 RENK Annual Report 2012 (b) RENK’s currency risks Any future cash flows not transacted in the functional currency of a RENK company are exposed to currency risks. In order to counteract the effects of exchange rate volatility, RENK companies ensure the ongoing quantification of forex risks and contract currency forwards and options to hedge against all such risks wherever material.

Within the RENK Group, generally all firm customer contracts, all purchase orders issued in foreign currency, as well as forex receivables and payables are hedged. Currencies that closely correlate with the euro (such as the Danish krone), equity interests or equity-type loans in foreign currency are hedged in isolated cases only. Moreover, hedging transactions provide for planned foreign-currency revenues from series-manufacturing business within defined limits and for high-probability customer projects (so-called forecast transactions). The RENK Group’s currency positions are regularly reported to RENK AG’s Executive and Supervisory Boards.

At December 31, 2012, RENK was primarily exposed to forex risks originating from business in US dollar, Swiss franc, Japanese yen, and Chinese yuan renminbi. However, since such risks were counteracted by hedges, RENK’s exposure to currency risks was altogether insignificant.

Virtually throughout, hedges are recognized according to cash flow hedge (CFH) accounting rules, in exceptional cases also as fair value hedges (FVH).

In fiscal 2012, unrealized pretax gains of k€43 (down from k€442) from the measurement at fair value of derivatives in CFHs were recognized in, and only in, OCI. During the year under review, losses of k€35 (down from k€89) were recycled from OCI to the income statement.

As of December 31, 2012, the longest time to maturity among cash flow hedges for forecast transactions was 32 months. One percent of hedged forecast transactions is expected to materialize in, and hence be recognized in the income statement for, Q1/2013, another 81 percent by the end of 2013.

In connection with fair value hedges (FVHs), the total gain from derivatives, and the mirror-image total loss on underlyings, amounted to k€82 (down from k€112).

126 Theoretical what-if scenarios were used to analyze the straight and derivative financial instruments existing at the balance sheet date for the effects of a 10 percent higher or lower exchange rate for each currency pair:

k€ 12/31/2012 Equity EBT) Currency relation +10% –10%) +10%) –10%) Euro/US dollar 3,171 (3,171) 4,477) (4,477) Euro/Swiss franc – –) 704) (704) Euro/Chinese yuan – –) (246) 246) Euro/pound sterling – –) (149) 149) Swiss franc/US dollar – –) 7) (7) Euro/Japanese yen – –) (99) 99)

(c) RENK’s commodity price risks RENK is exposed to the risk of fluctuations in prices and availability of commodities (i.e., commodity sourcing risks), both regarding production materials and energy (power, gas, oil, etc.).

Wherever possible, these risks are counteracted by agreeing on fixed prices with suppliers. Given the wide variety of raw materials in use and the consequently small quantities involved, commodity price hedging through suitable financial market instruments is presently no viable option for RENK. No commodity derivatives were contracted in 2012 by RENK.

In the year under review, no significant cluster risks existed at RENK.

(d) RENK’s default risks Given its business operations, the RENK Group is exposed to default risks (a.k.a. credit or counterparty risks), i.e., the risk that a counterparty fails to perform its contractual obligations, thus causing a financial loss. The term default risk covers not only the direct nonpayment risk but also the credit risk from a deteriorated credit standing.

The total value at risk from all default risks combined (VaR) is capped by the aggregate total book value of capitalized financial assets, see Note (29). Mainly the following steps are taken to mitigate, contain, and provide for, such risks:

In business operations, country and counterparty risks are constantly assessed locally; on this basis, risks are mapped and profiled. A/R balances are throughout monitored and tracked locally. Nonpayment risks are adequately allowed for or reflected in write- down. Default risks are contained by means of various forms of collateralization (as

127 RENK Annual Report 2012 appropriate in the country concerned), such as documentary credits, credit insurance, guaranties, bonds, suretyships, liens, retention of title, or customer deposits or upfront payments. In project business, nonpayment risks are reduced to a minimum by insist- ing on downpayments and the provision of collateral security.

The collection risks inherent in business operations are adequately allowed for within the RENK Group. All receivables are subject to ongoing monitoring, and wherever there is any evidence of potential noncollectibility or other noncontractual performance, a due allowance or write-down is charged. Major individual receivables and potentially bad debts are assessed itemwise. With due regard to specific country risks and, where applicable, collateral security received, the remaining receivables are grouped into portfolios of similar contracts and their potential need for write-down assessed accordingly.

In the year under review, the RENK Group had no significant clusters of default risks.

Aged analysis of financial assets not impaired:

k€ Due in 2012 2011 30 days or less 12,771 13,554 31–90 days 2,701 3,798 91–180 days 1,568 2,069 181–360 days 500 2,390 >1 year 894 2,886 Total financial assets not impaired but past due 18,434 24,697 Financial assets neither impaired nor past due 55,879 52,101 Book values of financial assets not impaired 74,313 76,798

With a view to covering the default risks from both these receivables and accounts not past due, bad-debt portfolio allowances are charged on the basis of RENK’s empirical data.

Regarding receivables and other financial assets neither impaired nor past due, there were no signs of uncollectibility at December 31, 2012.

128 In line with the nature of RENK’s integration with the MAN Group’s central finance management (by agreement with MAN SE), a sizable portion of RENK’s financial assets is concentrated in one counterparty, MAN SE. Consequently, this portion is generally exposed to the same risks MAN SE is exposed to in its entirety. The risk management tools installed at MAN SE contain such risks.

(e) RENK’s liquidity risks These refer to the risk that the RENK Group can no longer meet its payment obligations to an adequate degree or is required to pay a price to do so.

RENK is integrated with the MAN Group’s liquidity management system. The MAN Group’s effective finance management system with ongoing monitoring and control of cash inflows and outflows and their due dates is an effective tool for liquidity risk management. The primary sources of funds are cash inflows from operating activities and external finance. Therefore, no significant cluster risks existed at RENK in 2012.

Finance management for business operations is substantially centralized and ensured through a cash-pooling system. By daily netting and pooling the cash balances of RENK companies and MAN SE, cash available or required is managed as needed and appropriate. For external finance the sources of funds available on financial markets are rou- tinely monitored in order to ensure financial flexibility and contain inappropriate refi- nancing risks.

Cash and cash equivalents are mainly used to fund working capital and capital expenditures. Management is regularly briefed on the inflow and outflow of funds.

Cash flows within RENK are governed by the (mainly short-term) maturities in the Group’s business operations. Cash inflows and outflows are netted through RENK’s integration with the MAN Group’s central finance management system.

The table below shows the impact on RENK’s liquidity position of cash outflows for (effective and contingent) liabilities and financial derivatives.

129 RENK Annual Report 2012 Maturity analysis1) k€ 12/31/2012 12/31/2011 2014– 2013– 2013 2017 > 2017 2012 2016 > 2016 Cash outflows for

straight financial debts2) 66,605 1,966 141 66,137 891 128 thereof financial liabilities 247 263 – 240 508 – thereof trade payables 39,516 99 – 42,879 48 – thereof remaining financial debts 27,089 1,260 141 23,018 335 128 Cash outflows for financial derivatives with negative market value2) 283 16 – 1,360 621 – thereof with gross cash flow exchange4) 279 16 – 1,228 621 – thereof with net cash flow exchange 4 – – 132 – – Potential cash outflows for contingent liabilities3) 929 – – 947 – – thereof for obligations under guaranties/bonds 929 – – 947 – –

1) Amounts were generally determined as follows: – for no fixed maturity date, the liability refers to the earliest possible due date; – interest payments at variable rates are reflected according to the terms and conditions prevailing at the balance sheet date; – cash outflows are assumed not to occur earlier. 2) As required by IFRS 7, only undiscounted cash outflows for the agreed payments of principal and interest are shown. 3) Contingent liabilities under guaranties exist for formally guaranteed trade obligations, the highest possible cash outflows being shown. Amounts are assumed to fall due in the first year. 4) For financial derivatives with gross cash flow exchange, not only the cash outflow has been shown but also the cash inflow upon the financial derivative’s settlement.

(f) Breakdown of hedges by hedging instrument type The table below states the fair values (FV) of hedging instruments, primarily currency forwards.

k€ 12/31/2012 12/31/2011 with pos. FV with neg. FV with pos. FV with neg. FV Fair value hedges (FVH) 1 – – 81 Cash flow hedges (CFH) 237 177 – 957 238 177 – 1,038

130 (31) Remuneration of the Executive Board

The remuneration of RENK AG’s Executive Board members consists of a fixed compensation and a variable remuneration (see also the Board Compensation Report). In addition, Executive Board members are vested with pension entitlements.

The itemized remuneration of Executive Board members active in 2012 [2011 in brack- ets] is shown in this table:

Remuneration components k€ Fixed) Variable Total Annual) Total] salary) remu- pension) accrued] neration provision) Florian Hofbauer 246] 533 779 133] 1,215] [226] [500, incl. [726, incl. [121] [1,039] 100 in shares] 100 in shares] Ulrich Sauter 237] 509 746 142] 1,601] [220] [475, incl. [695, incl. [141] [1,384] 95 in shares] 95 in shares] Total 483] 1,042 1,525 275] 2,816] [446] [975, incl. [1,421, incl. [262] [2,423] 195 in shares] 195 in shares]

In fiscal 2012, the long-term incentive—previously granted under the MAN Stock Program (MSP)—was redesigned and formally approved by the Supervisory Board, all stock-based payments having been discontinued as from January 1, 2012.

Pension payments to former Executive Board members and their surviving dependants amounted to k€314 (down from k€316), while the accrued pension obligations to such former members and their surviving dependants totaled k€3,686 (up from k€3,424). The Executive Board members including their memberships in other statutory supervisory and comparable boards are disclosed in Note (40).

(32) Supervisory Board

Supervisory Board compensation is subject to the provisions of RENK AG’s bylaws. Accordingly, Supervisory Board members are reimbursed for their official expenses and receive an annual fee which consists of a basic €2,100 and a variable fee of €200 for each €0.01 of the RENK AG dividend in excess of €0.10. The variable portion is capped at €6,000 each. The Supervisory Board Chairman receives double, the vice- chair(wo)man 1.5 times, this amount.

131 RENK Annual Report 2012 Supervisory Board remuneration 2012 in € Name Membership Fixed Variable Total period fee fee Dipl.-Kfm. Frank H. Lutz all year 4,200 12,000 16,200 Dipl.-Oec. Hiltrud Werner all year 3,150 9,000 12,150 Dr.-Ing. Hans O. Jeske all year 2,100 6,000 8,100 Prof. Dipl.-Ing. (FH) Gerd Finkbeiner all year 2,100 6,000 8,100 Klaus Ketterle all year 2,100 6,000 8,100 Herbert Köhler all year 2,100 6,000 8,100 Total 2012 15,750 45,000 60,750 Total 2011 15,064 43,042 58,106

If employed by RENK AG, the employee representatives on the Supervisory Board additionally receive their regular collectively agreed pay. For the Supervisory Board members including their memberships in other statutory supervisory and comparable boards, turn to Note (39).

(33) German Corporate Governance Code

On December 14, 2012, RENK AG’s Executive and Supervisory Boards issued, and disclosed to the stockholders on the Internet, the declaration of conformity pursuant to Art. 161 AktG, which reads as follows:

“RENK AG’s Executive and Supervisory Boards declare that, in the period from Decem- ber 12, 2011 (the date of RENK AG’s latest declaration of conformity) up to June 15, 2012, RENK AG adopted the recommendations of the German Corporate Governance Code Government Commission, which have been published on July 2, 2010, by the Federal Ministry of Justice in the official part of the digital Federal Gazette (as amended up to May 26, 2010), subject to its latest declaration of conformity, with the exception of §§ 5.3.1–3 (Formation of Committees) and 5.4.6 par. 1 clause 3 (Compensation of Com- mittee Members) of the German Corporate Governance Code (the “Code”).

As from June 15, 2012, to this date, RENK AG has adopted the recommendations of the German Corporate Governance Code Government Commission as published on June 15, 2012, by the Federal Ministry of Justice in the official part of the digital Federal Gazette (amended up to May 15, 2012), with the exceptions stated above as well as the following in addition: §§ 5.4.1 par. 2 (Disclosure of Concrete Supervisory Board Member- ship Objectives) and 5.4.6 par. 2 (Performance-Oriented Remuneration of Supervisory Board Members).

The CGC Government Commission additionally recommended in § 5.4.1 par. 2 of the Code (Disclosure of Concrete Supervisory Board Membership Objectives) that in future, the Supervisory Board also specify the number of its independent members (as defined in § 5.4.2); concurrently, this very definition of “independent Supervi- sory Board members” in § 5.4.2 of the Code was amended. On October 22, 2012, the

132 Supervisory Board deliberated and agreed on this definition, and this recommendation has since been implemented.

Article 12(1) of our Memorandum & Articles of Incorporation stipulates, inter alia, that the compensation of Supervisory Board members be tied to the dividend amount. While we deem this statutory stipulation to be in conformity with the Code’s recommendation that the variable fee be oriented toward a company’s sustainable corporate development under the terms of § 5.4.6 par. 2, it cannot be ruled out that this recommendation might be construed or interpreted differently; therefore, to be on the safe side, we included our Supervisory Board fee system among the exceptions as aforesaid.

Moreover, the Executive and Supervisory Boards declare that as from the date hereof, RENK AG has fully implemented the recommendations of the German Corporate Governance Code Government Commission as published on June 15, 2012, by the Federal Ministry of Justice in the official part of the digital Federal Gazette and as amended up to May 15, 2012), with the following exceptions: §§ 5.3.1–3 (Formation of Committees), 5.4.6 par. 1 clause 3 (Compensation of Committee Members), 5.4.6(2) (Performance-Oriented Remuneration of Supervisory Board Members), and 5.5.3 clause 1 (Report to the General Meeting on Existing Conflicts of Interest and their Treatment).

Besides the existing Presidential Committee (in charge of Executive Board staffing issues), no further Supervisory Board committees are or will be established (§ 5.3.1–3 of the Code). With a membership of only six, neither efficiency nor any other reasons would support the formation of such additional committees from among the Supervisory Board members.

The reasons for the noncompliance with the recommendation in § 5.4.6 par. 2 of the Code have been detailed above.

133 RENK Annual Report 2012 (34) Segment reporting

The RENK Group’s operations are segmented into the Vehicle Transmissions, Slide Bearings, Special Gear Units and Standard Gear Units divisions. The management of, as a corporate body accountable for, each segment reports directly to RENK AG’s Executive Board.

The parameter used to assess and control segment performance is operating profit, which as a rule equals EBIT; in exceptional cases EBIT is adjusted for nonrecurring items, these being defined as major gains or losses that do not originate in operating activities. Segment assets comprise all operating assets, i.e., the noncurrent and current assets excluding income tax assets and deferred tax assets.

The segment financial information has been determined in conformity with the disclosure and accounting methods applied to the consolidated financial statements, too. Intersegment transfer prices are based on fair market transfer prices. Amortiza- tion/depreciation refer to the intangible/tangible assets assigned to each division (segment). For details of the ROS formula, see the management report.

Segment information by operating division k€ Vehicle Transmissions) Slide Bearings Special Gear Units Standard Gear Units Consolidation Group 2012) 2011)) 2012 2011 2012 2011) 2012 2011) 2012) 2011) 2012 2011 Order intake from third parties 136,211) 83,865) 107,101) 103,819 182,562) 134,561 99,269) 134,044 –) –) 525,143) 456,289 Intersegment order intake 209) (101) 2,756) 2,809 2,890) 7,669 1,842) 2,723 (7,697) (13,100) –) – Total order intake 136,420) 83,764) 109,857) 106,628 185,452) 142,230 101,111) 136,767 (7,697) (13,100) 525,143) 456,289 Sales to third parties 106,112) 97,707) 108,227) 97,060 144,038) 131,515 117,578) 62,540 –) –) 475,955) 388,822 Intersegment transfers 334) 1,900) 3,402) 1,824 8,931) 931 1,884) 3,434 (14,551) (8,089) –) – Total segment sales 106,446) 99,607) 111,629) 98,884 152,969) 132,446 119,462) 65,974 (14,551) (8,089) 475,955) 388,822 Order backlog at Dec. 31 283,861) 255,560) 37,443) 37,519 195,848) 163,377 128,314) 148,193 (11,886) (18,191) 633,580) 586,458 EBIT 8,926) 15,420) 24,713) 21,553 13,433) 10,600 16,916) 5,576 1,896 (400) 65,884) 52,749 Net interest result (106) 245) (170) 215 (5) 229 (306) 41 –) –) (587) 730 Segment assets at Dec. 31 141,063) 125,271) 103,441) 92,190 165,236) 154,010 118,206) 91,142 (824) 4,466) 527,122) 467,079 Segment debt at Dec. 31 73,368) 76,342) 23,789) 18,901 98,646) 88,170 64,034) 47,772 (5,957) (1,523) 253,880) 229,662 Capex 9,985) 2,765) 4,236) 3,219 7,713) 8,846 6,159) 9,486 –) –) 28,093) 24,316 Amortization/depreciation 2,819) 2,879) 2,900) 1,849 5,638) 5,500 3,029) 2,768 –) –) 14,386) 12,996 ROS 8.4%) 15.5%) 22.1%) 21.8% 8.8%) 8.0% 14.2%) 8.5% –) –) 13.8%) 13.6%

134 Segment information by region k€ Germany Other Europe Other world Consolidation) Total 2012 Segment sales 164,769 145,649 165,537 –) 475,955 Segment assets 497,060 42,654 19,703 (32,295) 527,122 Capex for tangibles/intangibles 26,725 870 498 –) 28,093

2011 Segment sales 146,338 116,235 126,249 –) 388,822 Segment assets 433,726 39,657 26,118 (32,422) 467,079 Capex for tangibles/intangibles 23,721 500 95 –) 24,316

135 RENK Annual Report 2012 (35) List of RENK AG’s shareholdings as of December 31, 2012

Company’s name Share- Local currency Equity Net income/ and registered office holding unit (loss) in % (LCU) (1,000 LCU) (1,000 LCU) RENK France S.A.S., 100 EUR (€) 9,578 2,840 Saint-Ouen-l’Aumône, France RENK Corporation, 100 USD (US$) 7,656 1,504 Duncan, SC, USA (EUR 1 = USD 1.3194) RENK Test System GmbH, 100 EUR (€) 1,522 (3,797) Augsburg, Germany ADMOS-Gleitlager Produktions- 100 EUR (€) 1,342 (657) und Vertriebsgesellschaft mbH, Berlin, Germany RENK Labeco Test Systems 100 USD (US$) 739 (34) Corporation, Mooresville, (EUR 1 = USD 1.3194) IN, USA RENK Transmisyon Sanayı A.S¸., 55 TRY (TL) 1,623 313 Istanbul, Turkey1) (EUR 1 = TRY 2.4432) RENK UAE LLC, Abu Dhabi, 49 AED (UAE D) 17,527 4,027 United Arab Emirates1) (EUR 1 = AED 4.7524) COFICAL RENK MANCAIS 98 BRL (Rs) 8,592 2,455 DO BRASIL LTDA, (EUR 1 = BRL 2.4159) Guaramirim, Brazil1) RENK-MAAG GmbH, 100 CHF (Sfr) 12,472 3,268 Winterthur, Switzerland (EUR 1 = CHF 1.2072) RENK (UK) Ltd., London, 100 n/a n/a n/a UK (inactive)

1) As of Dec. 31, 2011

(36) Notified stakes in RENK AG

For many years (between 2002 and March 16, 2010, indirectly through a wholly-owned subsidiary), MAN SE has held a 76-percent voting interest in RENK AG.

On November 14, 2011, Volkswagen AG notified RENK AG pursuant to Sec. 21(1) Clause 1 WpHG that on November 9, 2011, its voting interest crossed above the thresholds of 3, 5, 10, 15, 20, 25, 30, 50 and 75 percent to reach 78.86 percent (corresponding to 5,519,903 out of a total 7,000,000 voting shares) in RENK AG and that it has since held this stake.

According to Sec. 22(1) Clause 1 No. 1 WpHG, all of the aforesaid 5,519,903 votes are attributed to Volkswagen AG via Munich, Germany, based MAN SE. The reason for the difference between (i) MAN SE’s 76-percent stake in RENK AG and (ii) Volkswagen AG’s voting interest is that the latter additionally includes the 199,903 treasury shares directly held by RENK AG, equivalent to a 2.86-percent voting interest.

Furthermore, pursuant to Sec. 21(1) Clause 1 WpHG, Porsche Automobil Holding SE and its controlling stockholders notified RENK AG on November 14 and 15, 2011, respectively, that the 78.86-percent voting interest attributed to Volkswagen AG is equally attributed to Porsche Automobil Holding SE and its controlling stockholders.

136 Neither has RENK AG received any notification to such effect nor is it aware of any further direct or indirect shareholdings in its capital stock that have crossed above the voting-interest threshold of 10 percent (or any other threshold reportable according to WpHG).

(37) Related-party transactions

For the purposes of IAS 24, related parties include all individuals and entities which can influence, or be influenced by, RENK AG or which is controlled by another party related to RENK AG.

Due to its 76-percent stake in RENK AG, MAN SE is the parent of, and thus a company related to, RENK AG; therefore, MAN SE’s subsidiaries and its related companies are also companies related to RENK AG. In particular, this includes Volkswagen AG and Porsche Automobil Holding SE and their group companies, too.

Trade transactions between RENK and related entities are based on terms as if at arm’s length.

The types of such legal trade transactions with MAN Group companies basically comprise:

• Products delivered to MAN companies, primarily marine and turbine gear units and bearings, plus test rigs, as well as the related services;

• Products and materials sourced from MAN companies, mainly upstream material for gear/transmission manufacture (such as castings);

• Other reciprocal transfers, such as debit and credit interest for or from MAN SE’s intercompany payment transaction system and cost refunds for sundry services.

The exchange of products/services with companies of the Volkswagen and Porsche groups covers specific projects for the supply of test rigs and related services. RENK sources services from such companies under vehicle leases.

The table below lists the extent of relations of RENK with the above related entities:

k€ 2012 2011 Outbound transfers (income) 35,632 28,708 Inbound transfers (expense) 3,139 4,802 Receivables (Dec. 31) 131,724 115,228 Payables (Dec. 31) 488 5,678

137 RENK Annual Report 2012 Further legal transactions with MAN SE involve guaranties for borrowings in favor of RENK companies (totaling k€2,521 as of December 31, 2012), as well as derivative currency hedges (their notional volume totaling k€53,153 as of December 31, 2012). Receivables under the cash management system with MAN SE/MCC amounted to k€124,188 at year-end 2012.

RENK subsidiaries and investees not included in the consolidated financial statements are also companies related to RENK AG. Intragroup trade transactions among these related parties substantially cover the supply of parts and provision of services on terms as if at arm’s length, the extent of the transactions resulting from the table below:

k€ 2012 2011 Outbound transfers (income) 14,854 5,126 Inbound transfers (expense) 862 260 Receivables (Dec. 31) 2,971 1,079 Payables (Dec. 31) 64 129

Trade receivables from, and trade payables to, nonconsolidated group companies are disclosed in Notes (17) and (24).

Financial obligations to group companies exist under operating leases at k€264.

Unpaid items have neither been collateralized nor were they written down as of December 31, 2012.

Parties related to RENK also encompass individuals who may be influenced by, or are able to influence, RENK AG, such as the members of RENK AG’s, MAN SE’s and Volks- wagen AG’s Supervisory and Executive Boards.

For the compensation paid to senior management, etc. (reportable according to IAS 24), see Notes (31) and (32) above.

(38) Subsequent events

No significant events with a material effect on RENK’s financial position, asset and capital structure or results of operations occurred after December 31, 2012.

138 Supervisory and Executive Board memberships in other statutory boards or equivalent

(39) Supervisory Board

Dipl.-Kfm. Frank H. Lutz Munich Supervisory Board Chairman

Executive Board member of MAN SE

MAN Diesel & Turbo SE2) MAN Pensionsfonds AG (chairm.)2) MAN Truck & Bus AG2) Munich Stock Exchange3) MAN Capital Corporation, USA (chairm.)4) MAN Latin America Indústria e Comércio de Veículos Ltda., Brazil4)

Dipl.-Oec. Hiltrud Werner Munich Supervisory Board Vice-Chairwoman

Head of Corporate Internal Auditing of MAN SE

MAN Diesel & Turbo SE2)

Prof. Dipl.-Ing (FH) Gerd Finkbeiner Neusäss

Management consultant (freelance)

Dr.-Ing. Hans-O. Jeske Wesel

Executive Board member of MAN Diesel & Turbo SE

RWTÜV e.V., Essen1) MAN Diesel & Turbo Schweiz AG, Zurich, Switzerland4) MAN Diesel & Turbo Shanghai Co., Ltd., China (chairm.)4) MAN Diesel & Turbo China Production Co., Ltd., China (chairm.)4) MAN Diesel Shanghai Co., Ltd., China (chairm.)4) MAN Turbo India Pvt. Ltd., India (chairm.)4) PT MAN Diesel & Turbo Indonesia, Indonesia4)

139 RENK Annual Report 2012 Klaus Ketterle*) Neusäss

Technical clerk, RENK AG

Herbert Köhler*) Augsburg

Senior foreman, RENK AG

As of Dec. 31, 2012

*) elected by the employees

1) member of a German company’s supervisory board 2) member of a German group company’s supervisory board 3) member of a comparable German or foreign board 4) member of a German or foreign group company’s comparable board

140 (40) Executive Board

Dipl.-Ing. (FH) Florian Hofbauer Landsberg Spokesman

Ulrich Sauter Wertingen

Augsburg, January 30, 2013

RENK AG The Executive Board

Florian Hofbauer Ulrich Sauter

141 RENK Annual Report 2012 Consolidated financial statements/ group management report as of Dec. 31, 2012 Management representation

We represent that, to the best of our knowledge and in accordance with applicable accounting principles, the consolidated financial statements present a true and fair view of the RENK Group’s asset and capital structure, financial position and results of operations, as well as that the group management report describes fairly, in all material respects, the Group’s business trend and performance, the Group’s position, and the significant risks and rewards of the Group’s future development.

Augsburg, January 30, 2013

RENK AG

Florian Hofbauer Ulrich Sauter

142 Independent auditor’s report and opinion

We have audited the consolidated financial statements (consisting of balance sheet, income statement, statement of comprehensive income, statement of changes in equity, cash flow statement, and notes) and the group management report, all as pre pared by RENK AG for the fiscal year ended December 31, 2012. The prepara tion of the consolidated financial statements and group management report in accordance with the IFRS whose application is mandatory in the European Union, and the additional financial-accounting provisions of Art. 315a(1) HGB, as well as with the supplementary provisions of the articles of incorporation and bylaws is the responsibility of the Com- pany’s Executive Board. Our responsibility is, based on our audit, to express an opinion on the consolidated financial statements and group management report.

We have conducted our annual group audit in accordance with Art. 317 HGB and with due regard to generally accepted standards on the audit of financial statements as established by IDW, the Institute of Sworn Public Accountants & Auditors in Germany. Said standards require that we plan and perform the audit to obtain reasonable assurance that any misstatement or fraud which has a material impact on the view of the asset and capital structure, financial position and results of operations as presented by the consolidated financial statements in accordance with applicable accounting principles and by the group management report is identified. When planning the audit procedures, knowledge and understanding of the Group’s business, its economic and legal environment as well as sources of potential errors are given due consideration. An audit includes examining, largely on a test basis, the accounting-related internal control system’s effectiveness and the evidence supporting the amounts and disclosures in the consolidated financial statements and group management report. An audit also includes assessing the financial statements of companies included in the consolidated financial statements, the definition of the consolidation group, the accounting and consolidation principles used, and significant estimates made, by the Company’s Executive Board, as well as evaluating the overall presentation of the consolidated financial statements and group management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not resulted in any objections or exceptions.

It is our opinion that, based on our audit conclusions, the consolidated financial statements are in conformity with the IFRS whose application is mandatory in the EU, and with the additional financial-accounting provisions of Art. 315a(1) HGB, as well as with the supplementary provisions of the articles of incorporation and bylaws, and with due regard to these standards, regulations and provisions, present a true and fair view of

143 RENK Annual Report 2012 the Group’s asset and capital structure, financial position and results of operations. The group management report is in conformity with the consolidated financial statements and presents fairly, in all material respects, both the Group’s position and the risks and rewards inherent in its future development.

Munich, January 30, 2013

PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft

Petra Justenhoven Holger Grassnick Wirtschaftsprüferin Wirtschaftsprüfer

144 Six-year overview

€ million 2007 2008 2009 2010 2011 2012 Order intake 439 443 294 525 456 525 Germany 199 162 97 262 150 176 Abroad 240 281 197 263 306 349 Sales 430 527 474 403 389 476 Germany 165 211 173 120 146 165 Abroad 265 316 301 283 243 311 Order backlog at Dec. 31 684 612 415 522 586 634 Germany 287 233 153 282 284 296 Abroad 397 379 262 240 302 338 Employees at Dec. 31 Headcount incl. temporary employees 1,854 2,041 1,903 1,882 2,013 2,245 Temporary employees 126 135 35 68 69 78 Regular workforce 1,728 1,906 1,868 1,814 1,944 2,167 Annual average headcount 1,695 1,875 1,911 1,823 1,883 2,098

Capital expenditures and funding Tangible and intangible assets 15 29 20 23 24 28 Amortization and depreciation 8 11 11 13 13 14 Cash earnings 52 69 59 53 51 59 Cash flow from operating activities 61 68 62 81 40 66

Key indicators/ratios in %* ROS 15.7 15.1 13.9 12.9 13.6 13.8 ROCE 47.2 48.3 38.8 36.9 33.5 34.6 Equity ratio 34.7 39.8 48.9 51.7 48.6 47.9

RENK share data Earnings per share (EpS in €, acc. to IAS 33) 5.83 8.10 6.80 5.54 5.58 6.69 Dividend per share (€) 2.00 1.80 1.80 1.80 1.80 2.00 Price-earnings ratio (PER) 9.95 6.60 7.35 12.63 10.95 10.88

Balance sheet data Noncurrent assets 75 109 120 150 156 184 Inventories 150 154 121 110 145 164 Other current assets 105 114 99 74 89 81 Cash and cash equivalents 10 23 53 85 96 125 Equity 118 159 192 217 236 265 Pension accruals 5 5 11 14 23 30 Other noncurrent liabilities and accruals 12 15 28 35 26 31 Prepayments received 89 78 55 46 83 100 Other current liabilities and accruals 116 143 107 107 118 128 Total assets/total capital 340 400 393 419 486 554

Income statement data Net sales 430 527 474 403 389 476 Cost of sales (325) (396) (355) (303) (286) (356) Gross margin 105 131 119 100 103 120 Other operating expenses/income, net (37) (51) (53) (48) (50) (54) Operating profit (EBIT) 68 80 66 52 53 66 Net interest result (1) 0) (1) 0) 1) (1) Earnings before taxes (EBT) 67 80 65 52 54 65 Income taxes (27) (25) (19) (14) (16) (20) Net income (EAT) 40 55 46 38 38 45

*) based on k€

145 RENK Annual Report 2012

Products and services

Vehicle transmissions Fully automatic power-shift, reverse and steering transmissions with brake systems and final drives for medium and heavy tracked vehicles.

Industrial gear units Gear units for the cement industry. Spur-wheel and planetary gear units for turbo machines especially for the petrochemical industry and power generating plants. High- speed gear units for the plastics industry. Gear units for wind turbines.

Marine gear units Gear units for merchant vessels, ferries, cruise liners and naval craft with diesel engine and/or turbine as well as electric propulsion, marine reversing gear units, reduction gear units and variable-speed gears for ship generators.

Slide bearings Standard and special versions of horizontal and vertical slide bearings for electrical machines, air blowers/fans, compressors, pumps, turbines, and general mechanical engineering. Slide bearings for transmissions. Marine shaft bearings and thrust bearings.

Clutches and couplings Curved-tooth couplings for industry, marine and ocean technology, as well as for rail- bound vehicles; multidisk steel clutches for slow- and high-speed industrial duties, dia- phragm couplings for high-speed machinery, safety couplings. Torsionally elastic couplings.

Testing systems Testing rigs for development and quality assurance in the motor vehicle and aviation industries as well as for railroad engineering. RENK AG

Gögginger Str. 73 86159 Augsburg, Germany Phone (+49-821) 5700-0 Fax (+49-821) 5700-573 www.renk.eu

An MAN SE Company