Joint Expert Opinion

on the Equity Value

of MAN SE,

Munich,

as well as on an appropriate recurring compensation payment and an appro-

priate cash compensation in accordance with § 304 AktG, § 305 AktG as at

6 June 2013 in connection with the intended domination and profit and loss

transfer agreement according to § 291.1 AktG between Truck & Bus GmbH,

Wolfsburg and MAN SE, Munich

This English version serves only as an explanatory note and shall not be signed by us.

In case of any inconsistencies between the German and English version of our joint expert opinion,

the German version shall prevail.

PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

is one of the autonomous and

legally independent member companies of the international PricewaterhouseCoopers network cooperating under PricewaterhouseCoopers International Limited.

-

KPMG AG Wirtschaftsprüfungsgesellschaft,

a subsidiary of KPMG Europe LLP and

a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity.

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Table of Contents Page

A. Engagement and scope of work ......................................................................................................... 12

B. Principles and methods of valuation .................................................................................................. 15

I. Basics of the valuation ............................................................................................................. 15

II. Appropriate cash compensation according to § 305 AktG ...................................................... 18

III. Appropriate recurring compensation payment according to § 304 AktG ............................... 18

C. Description of the valuation object .................................................................................................... 19

I. Legal and tax situation ............................................................................................................. 19

II. Economic fundamentals .......................................................................................................... 24

1. Business activity .............................................................................................................. 24

a) General information .................................................................................................. 24

b) MAN Truck & Bus division ......................................................................................... 24

c) MAN Latin America division ...................................................................................... 25

d) MAN Diesel & Turbo division ..................................................................................... 26

e) Renk division .............................................................................................................. 28

2. Market and competition ................................................................................................. 30

a) Preliminary remark and economic indicators in comparison.................................... 30

b) Market positioning and competitive environment in the MAN Truck & Bus

division ....................................................................................................................... 31

c) Market positioning and competitive environment in the MAN Latin America

division ....................................................................................................................... 46

d) Market positioning and competitive environment in the MAN Diesel and

Turbo division ............................................................................................................ 49

e) Market positioning and competitive environment in the Renk division ................... 58

3. Net assets, financial position and results of operations ................................................. 63

a) Net assets and financial position ............................................................................... 63

b) Results of operations ................................................................................................. 67

c) Adjustment of the results of operations ................................................................... 73

4. Major success factors of the MAN Group’s business model .......................................... 74

D. Determination of equity value ........................................................................................................... 77

I. Basis for valuation .................................................................................................................... 77

1. Valuation approach and assumptions ............................................................................ 77

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2. Forecasting procedure and accuracy .............................................................................. 79

II. Financial projections ................................................................................................................ 82

1. Financial planning of earnings before interest and taxes (EBIT) .................................... 82

a) Financial planning of the MAN group ........................................................................ 82

b) Financial planning of MAN Truck & Bus .................................................................... 83

c) Financial planning of MAN Latin America ................................................................. 90

d) Financial planning of MAN Diesel & Turbo ................................................................ 94

e) Financial planning of Renk ....................................................................................... 100

f) Financial planning of the Corporate Center and consolidation .............................. 103

2. Earnings before interest and tax (EBIT) in the terminal value ...................................... 104

3. Net dividends after personal income tax ..................................................................... 108

III. Determination of the discount rate ....................................................................................... 112

1. Risk-free rate ................................................................................................................ 112

2. Risk premium ................................................................................................................ 113

3. Growth rate .................................................................................................................. 118

4. Derivation of the discount rate .................................................................................... 119

IV. Value of operating assets ....................................................................................................... 120

V. Value of the separately valued assets ................................................................................... 120

1. Properties and buildings ............................................................................................... 120

2. Corporate tax credit ...................................................................................................... 121

VI. Equity value ............................................................................................................................ 121

VII. Liquidation value .................................................................................................................... 121

E. Plausibility assessment of the equity value on the basis of multiples ............................................. 123

I. General approach .................................................................................................................. 123

II. Derivation of the multiples .................................................................................................... 124

III. Multiple valuation .................................................................................................................. 125

F. Determination of appropriate cash compensation pursuant to § 305 AktG and the recurring

compensation payment pursuant to § 304 AktG ............................................................................. 127

I. Share price ............................................................................................................................. 127

II. Determination of the appropriate compensation ................................................................. 130

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III. Determination of the appropriate recurring compensation payment .................................. 131

G. Summary of results .......................................................................................................................... 136

Appendix

General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften (German Pub-

lic Auditors and Public Audit Firms) as at January 1, 2002

For computational reasons, there can be rounding differences in the tables

amounting to ± one unit (€, % etc.).

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List of abbreviations

% Percent

§ Article

€ Euro

AB Aktiebolag (limited company in Sweden)

AG Aktiengesellschaft (German public limited company)

Agrale Agrale S.A., Caxias do Sul/Brazil

AktE Aktenzeichen OLG (File number of OLG)

AktG Aktiengesetz (German stock corporation act)

AMI International, 2010 "20-Year global naval market forecast: number of ships", Bob Nugent, AMI

International, July 2010

AMI International, 2011 "Changing threats, changing markets – A consideration of the naval future",

AMI International, 2011

Analyse & Prognose Analyse & Prognose GmbH, Wilhelmsfeld

Analyse & Prognose, 2012 "European bus survey report", Analyse & Prognose, August 2012

AO Abgabenordnung (General Tax Code)

Ashok Leyland Ashok Leyland Limited, Chennai/India

BaFin Bundesanstalt für Finanzdienstleistungsaufsicht (Federal Financial Supervi-

sory Authority)

BCG, 2012 "Winning the BRIC truck battle", The Boston Consulting Group, February

2012

BGAV Beherrschungs- und Gewinnabführungsvertrag (domination and profit and

loss transfer agreement)

BGH Bundesgerichtshof (Federal High Court)

bn. billion

BP, 2012 "BP statistical review of world energy 2012", BP p.l.c, London/United King-

dom, June 2012

BRIC Brazil, Russia, India, China

BS Balance sheet

Btu British thermal unit (unit of measurement for energy)

BVerfG Bundesverfassungsgericht (Federal Constitutional Court of Germany)

BvR Aktenzeichen für Verfassungsbeschwerden (File number of an appeal to the

Federal Constitutional Court on a constitutional issue)

CAGR Compound annual growth rate

CAPM Capital asset pricing model

Caterpillar Caterpillar Inc., Peoria/USA

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CDAX Performance Index Composite DAX

CIQ S&P Capital IQ Inc., a business of the McGraw-Hill Companies, New York

City/USA

CLA Cargo Line A

Clarkson, 2012 "Offshore forecast club report, Spring 2012", Clarkson Research Services

Limited, London/United Kingdom, 2012

CNHDTC China National Heavy Duty Truck Group Company Limited, Jinan/China

Co. Company

Corporate Center Central area consisting of the group holding MAN SE and other companies

Daimler Daimler AG, Stuttgart

DAF DAF Trucks N.V., Eindhoven/Netherlands, a brand of PACCAR

DAX Deutscher Aktienindex (German Stock Index)

DCF Discounted cash flow

Defenceweb.co.za, 2012 "Armoured vehicles MRO market grows while overall market shrinking",

www.defenceweb.co.za, 2012

dena, 2012 dena market analysis 2012: Status and outlook for the worldwide develop-

ment of renewable energies, Deutsche Energie-Agentur GmbH, Berlin, 2012

Deutsche Bank, 2012 "Cement outlook 2013", Deutsche Bank AG, Frankfurt am Main, December

2012

Deutsche Börse AG Deutsche Börse AG (German Stock Exchange), Frankfurt am Main

Dongfeng Dongfeng Motor Corporation, Wuhan/China

E Expected (estimation)

EBIT Earnings before interest and tax

EBITDA Earnings before interest, taxes, depreciation and amortisation

e.g. For example

Eicher Motors Eicher Motors Limited, Delhi/India

EIU Economist Intelligence Unit Limited, London/United Kingdom

et. seq. and the following

EU European Union

EUGH Europäischer Gerichtshof (Court of Justice of the European Union)

EURO-Leasing EURO-Leasing GmbH, Sittensen

EV Enterprise value

e.V. Eingetragener Verein (incorporated association)

EvoBus EvoBus GmbH, Kirchheim unter Teck

Ferrostaal Ferrostaal Aktiengesellschaft, Essen

First Automotive Works First Automotive Works Co., Ltd., Changchun/China

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FY Fiscal year(s)

GAZ OAO GAZ, Nizhny Novgorod/Russia

GE General Electric Company, Fairfield/USA

GDP Gross domestic product

GmbH Gesellschaft mit beschränkter Haftung (German company with limited liabi-

lity)

GVW Gross vehicle weight

GW Gigawatt

HGB Handelsgesetzbuch (German commercial code)

HHI Hyundai Heavy Industries Co., Ltd., Ulsan/South Korea

hp Horsepower

HR B Handelsregister Abteilung B (trade register section B)

HSH, 2013 "Shipping quarterly 1-2013", HSH Nordbank, February 2013

Hyundai Hyundai Motor Company, Seoul/South Korea

IAS International accounting standard

IDC, 2011 Statement by IDC Research, Framingham/USA, 2011

IDW Institut der Wirtschaftsprüfer in Deutschland e.V. (Institute of Public Audi-

tors in Germany, Incorporated Association), Dusseldorf

IDW S 1 IDW Standard: Grundsätze zur Durchführung von Unternehmensbewertun-

gen (Principles for the performance of business valuations), as at

2 April 2008

i.e. Id est

IEA International Energy Agency, Paris/France

IEA, 2012 IEA – World Energy Outlook 2012

IFRS International Financial Reporting Standard

IHS, 2012 ”Automotive Medium and Heavy Commercial Vehicle Industry Forecast”,

IHS Global Insight, 2012

Inc. Incorporated

IPIC International Petroleum Investment Company, Abu Dhabi/UAE

ISIN International Security Identification Number

Isuzu Motors Isuzu Motors Ltd., Tokyo/Japan

IT Information Technology

Iveco Iveco S.p.A., Turin/Italy ("Iveco")

KAMAZ OAO KAMAZ, Kazan/Russia

KPMG KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin

KPMG, 2011 "Competing in the global truck industry", KPMG, September 2011

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kW Kilowatt

LMC Automotive Information service provider in the automobile sector, division of LMC In-

ternational Ltd, Oxford/United Kingdom

LMC, 2012 LMC Automotive, Q4 2012

LNG Liquefied natural gas

Ltd. Limited

Ltda. Sociedade Limitada (limited company in Brazil and Portugal)

Mahindra Mahindra & Mahindra Ltd., Mumbai/India

MAN FORCE TRUCKS MAN FORCE TRUCKS Private Limited, Akurdi/India

MAN Group Consolidated MAN SE and its direct and indirect affiliates

MAN SE MAN SE, Munich

MAN Trucks India MAN Trucks India Private Limited, Akurdi/India ("MAN Trucks India")

Management Engineers &

AutoValue, 2010

"How to Move in Moving Markets? The Global Perspective of the Truck

Industry", Management Engineers and AutoValue, 2010

manroland manroland AG, Offenbach

maritime-insight,

2012

"maritime-insight Shipbuilding Outlook Club, October 2012", mari-

time-insight, Västra Frölunda/Sweden

MarketLine, 2012 "Global cement", MarketLine (a division of Datamonitor Ltd, Lon-

don/UK), October 2012

M toe million tonnes of oil equivalent (energy unit measure)

MAZ OAO MAZ, Minsk/Belarus

mbH Mit beschränkter Haftung (with limited liability)

MDT MAN Diesel & Turbo division

MDT SE MAN Diesel & Turbo SE, Augsburg

Mercosur Mercado Común del Sur (joint domestic market in South America)

MFI MAN Finance division

MFI GmbH MAN Finance International GmbH, Munich

Mitsubishi Mitsubishi Motor Corporation, Tokyo/Japan

ML MAN Latin America division

Moody’s Moody’s Investors Service, New York/USA

MPC MPC Industries GmbH, Hamburg

MTB MAN Truck & Bus division

MTB AG MAN Truck & Bus AG, Munich

MW Megawatt

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Navistar Navistar International Corporation, Warrenville/USA

NAFTA North American Free Trade Agreement

No. Number

N.V. Naamloze Vennootschap (public limited liability company in the Nether-

lands)

OAO Otkrytoje Akzionernoje Obschtschestwo (russian public company)

OECD Organisation for Economic Co-operation and Development

OLG Oberlandesgericht (Higher Regional Court)

OPV Offshore patrol vessel

p.a. per annum

PACCAR PACCAR Inc., Bellevue/US

P&L Profit and loss statement

P/E Price-earnings ratio

PPA Purchase price allocation

PR61 Planning round 61

PROCONVE Programa de Controle da Poluição do Ar por Veículos Automotores

(emission standard in Brazil)

PwC PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsge-

sellschaft, Frankfurt am Main

R&D Research and development

Region West B.V. MAN Region west B.V., Vianen/The Netherlands

Renault Trucks Renault Trucks SAS, Saint-Priest/France

Renk Renk division

Renk AG Renk Aktiengesellschaft, Augsburg

RFC Rolling forecast

RMMV Rheinmetall MAN Military Vehicles GmbH, Munich

ROS Return on Sales

S. Page or clause

S.A. Société Anonyme (limited company in France, Luxembourg, Spain and Bel-

gium)

SAS Société par actions simplifiée (simplified public company in France)

SBU Strategic business unit

Scania Scania AB, Södertälje/Sweden

SE Societas Europaea

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SG&A Selling, general & administrative

Siemens Siemens AG, Munich

Sinotruk Sinotruk (Hong Kong) Ltd., Hong Kong/China

SIPRI Stockholm International Peace Research Institute (www.sipri.org)

SKD Semi Knocked Down

S.p.A. Società per Azioni (public limited liability company in Italy)

S&P Standard & Poor's, a division of The McGraw-Hill Companies, Inc., New

York/USA

t ton(s)

Tata Motors Tata Motors Limited, Mumbai/India

TGA Trucknology generation A

Triade Western Europe, North America and Japan

Truck & Bus GmbH Truck & Bus GmbH, Wolfsburg

UAE United Arab Emirates

UPL Corporate planning

UralAZ OAO Ural AZ, Oblast Tscheljabinsk/Russia

USA United States of America

USD United States Dollar

VAT Value added tax

VCI, 2013 "Die deutsche chemische Industrie 2030 - VCI-Prognose-Studie", Verband

der chemischen Industrie e. V., January 2013

Volkswagen AG Volkswagen Aktiengesellschaft, Wolfsburg

Volvo Volvo AB, Gothenburg/Sweden

WKN Wertpapierkennummer (security identification number)

WpÜG Wertpapiererwerbs- und Übernahmegesetz (securities acquisition and ta-

keover act)

WTO World Trade Organization

XETRA Exchange Electronic Trading

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A. Engagement and scope of work

1. The management board of Truck & Bus GmbH (formerly: Volkswagen Coaching Gesellschaft mbH),

Wolfsburg ("Truck & Bus GmbH") has appointed PricewaterhouseCoopers Aktiengesellschaft

Wirtschaftsprüfungsgesellschaft, Frankfurt am Main ("PwC"), with engagement letter dated 9 Janu-

ary 2013 and the executive board of MAN SE, Munich ("MAN SE") has appointed KPMG AG

Wirtschaftsprüfungsgesellschaft, Berlin ("KPMG"), (PwC and KPMG hereinafter together referred to as

"we") with engagement letter dated 18 January 2013 to prepare a joint expert opinion on the equity

value of MAN SE as well as on an appropriate recurring compensation payment and cash compensation

in accordance with §304 AktG, § 305 AktG ("joint expert opinion").

2. The reason for this valuation is the intended domination and profit and loss transfer agreement in

accordance with § 291.1 AktG between Truck & Bus GmbH, a 100 % direct affiliate of Volkswagen AG,

Wolfsburg ("Volkswagen AG") and MAN SE. The joint expert opinion on the equity value of MAN SE will

serve to determine the appropriate cash compensation pursuant to § 305 AktG as well as to determine

the appropriate recurring compensation payments pursuant to § 304 AktG for the outside shareholders

of MAN SE.

3. In accordance with § 293.1 AktG, the domination and profit and loss transfer agreement is subject to

approval by the general shareholders’ meeting of MAN SE. The valuation date is the date of the general

shareholders’ meeting of MAN SE at which the resolution is adopted and which has been scheduled for

6 June 2013.

4. We performed our valuation in accordance with the German valuation guideline established by the

Institute of Public Auditors in Germany, Incorporated Association (Institut der Wirtschaftsprüfer in

Deutschland e.V.): IDW S 1 ‘Principles for the Performance of Business Valuations’ as at 2 April 2008

(IDW S 1). In accordance with this standard, we acted as an independent expert and determined an ob-

jectified equity value.

5. The joint expert opinion has been prepared exclusively for internal use by Truck & Bus GmbH, Volks-

wagen AG and MAN SE for the purpose of the joint report on the domination and profit and loss transfer

agreement ("contract report") to be prepared by the parties to the agreement. Internal use also includes

written and verbal reports to shareholders of MAN SE as well as disclosure pursuant to § 293f.3 AktG

and the shareholder's option of inspection of the joint expert opinion in connection with the general

shareholders’ meeting of MAN SE. The management board of Truck & Bus GmbH and the executive

board of MAN SE may attach this expert opinion to their contract report according to § 293a AktG. Fur-

thermore, the joint expert opinion can be used in connection with a possible subsequent legal proce-

dure as well as the reference required by the court appointed auditor within the scope of the verifica-

tion of appropriateness of the compensation and recurring compensation payments according to

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§ 293b.1 AktG. The joint expert opinion may not be published, duplicated or used for any purpose other

than those mentioned above. Without our prior written consent, this may not be forwarded to third

parties for any purposes other than those mentioned above. Consent will not be denied for undue rea-

sons.

6. This valuation and our responsibilities, including responsibilities towards third parties, are governed by

the "General Engagement Terms" as at 1 January 2002, which are attached to this joint expert opinion.

7. We conducted our work from January 2013 to April 2013 in the business premises of MAN SE as well as

individual affiliates of MAN SE in Munich and Augsburg, of Volkswagen AG in Wolfsburg and in the of-

fices of PwC and KPMG at various locations. Our valuation is primarily based on the following documents

made available to us:

• Audited consolidated financial statements of MAN SE as well as of Renk Aktiengesellschaft, Augs-

burg ("Renk AG") in accordance with International Financial Reporting Standards ("IFRS") for the fi-

nancial years 2010 to 2012, each issued with an unqualified audit opinion by PwC,

• Audited consolidated financials of the subgroups Truck & Bus AG, Munich ("MTB AG"), MAN Diesel

& Turbo SE, Augsburg ("MDT SE"), MAN Finance International GmbH, Munich ("MFI GmbH") in ac-

cordance with IFRS for the financial years 2010 to 2012, each issued with an unqualified audit opin-

ion by PwC,

• Audited annual financial statements of MAN SE, MTB AG, MDT SE, Renk AG and MFI GmbH in accor-

dance with German GAAP for the financial years 2010 to 2012, each issued with an unqualified audit

opinion by PwC,

• Consolidated financial planning figures of MAN SE comprising profit and loss statements, balance

sheets as well as cash flow statements including relevant explanations, for the years 2013 to 2017,

• Financial planning for the divisions MAN Truck & Bus ("MTB"), MAN Finance ("MFI"), MAN Latin

America ("ML"), MAN Diesel & Turbo ("MDT"), Renk as well as the Corporate Center,

• Documents and information relating to the mandatory offer of Volkswagen AG to all external share-

holders of MAN SE for the acquisition of their shares pursuant to § 35.2 WpÜG as at 31 May 2011,

• Articles of Association and excerpts from the Commercial Register of MAN SE and of important af-

filiates in the respective latest versions,

• Final draft of the domination and profit and loss transfer agreement between Truck & Bus GmbH

and MAN SE in the version dated 18 April 2013 ("draft of the domination and profit and loss transfer

agreement") as well as preliminary drafts,

• Final draft of the Letter of Affiliation and Comfort of Volkswagen AG to MAN SE dated 18 April 2013,

• Final draft of the contract report in the version dated 18 April 2013 as well as preliminary drafts,

• Other documents and information relevant for the valuation.

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8. Further information was provided to us by the executive board of MAN SE and managers and employees

named by the board (together "management of MAN SE" or "management"). The executive board of

MAN SE, the executive board of Volkswagen AG and the management board of Truck & Bus GmbH have

provided us with a written statement to the effect that all material information and explanations given

to us in connection with the preparation of our joint expert opinion are both complete and correct.

9. Our valuation is based on the documents provided for the purpose of this valuation. We have assessed

these critically, but have not verified them with reference to an annual audit. We have verified the plau-

sibility of the financial planning figures based on the historical financial development, the current legal

and economic conditions as well as through market studies, analyst reports and industry reports and

have discussed the same with the management of MAN SE. We have not conducted individual audits

with reference to §§ 316 et. seq. HGB. These were not part of our engagement.

10. Please note that the calculations specified in this report have been rounded. Since the calculations were

in fact made with exact values, addition or subtraction of table values may lead to subtotals and totals

that deviate from those presented in these tables.

11. In the context of the valuation, no particular difficulties as defined in § 293e.1, sentence 2, no.3 AktG

have occurred.

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B. Principles and methods of valuation

I. Basics of the valuation

12. The principles and valuation procedures described below embody standards which are generally ac-

cepted in current business valuation theory and practice and are recognised in jurisdiction.

13. According to IDW S 1 as amended in 2008, the value of a business is determined by the future benefits

the business will generate on the basis of the key success factors inherent to the business at the time of

valuation. The key success factors comprise factors such as the products, market position, organisation,

management, employees as well as the innovative capacity of the business. Assumed that merely finan-

cial objectives are pursued, the value of a business is determined by the capacity of the business to gen-

erate financial surpluses for the shareholders through the combination of all factors which influence the

earnings potential.

14. The value of a business may be determined by either the dividend discount method or the discounted

cash flow method ("DCF"). Both methods are basically equivalent since they share the same theoretical

basis (capitalisation of future benefits) and, when using the same financing assumptions, lead to identi-

cal results. In our joint expert opinion, the dividend discount method was applied.

15. Both methods first determine the present value of the financial surpluses generated by the assets es-

sential for the business (operating assets). Assets (including liabilities) that could be separated from the

business and sold without affecting the actual purpose of the business are classified as non-operating

assets and valued separately. Therefore, the value of a business generally equals the sum of the present

values of financial surpluses that can be derived from the operating and non-operating assets.

16. According to the dividend discount method, the equity value is derived directly from the net income to

shareholders. The discounted net income to the company owners subject to the derivation of the equity

value results mainly from the financial surpluses generated by the company. Financial planning figures

are generally prepared based on historical profitability. In the context of a valuation, only those financial

surpluses should be considered that result from specific measures that have already been initiated, or

that originate from a sufficiently documented and substantiated business concept as at the valuation

date.

17. The principles of the IDW S 1 as amended in 2008 distinguish between real and pseudo synergy effects.

Real synergy effects are surpluses that can only be materialised through the domination and profit and

loss transfer agreement between Truck & Bus GmbH and MAN SE. Pseudo synergy effects can be im-

plemented without the execution of this measure. Real synergies would thus include measures, which

would not be executable without concluding the domination and profit and loss transfer agreement. On

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the other hand, pseudo synergy effects include the synergies expected from measures that can be exe-

cuted even without the contract between the companies. These pseudo synergy effects should be con-

sidered in the valuation if they are allotted to the valuation object.

18. In determining the value of a business, it is generally assumed that all available financial surpluses

resulting from a documented business concept as at the valuation date will be distributed, subject to

any applicable legal restrictions. Retained earnings as well as their use must be taken into account when

determining the net earnings to shareholders.

19. In order to value a business, the projected future financial surpluses need to be discounted to the valua-

tion date using an appropriate interest rate (discount rate). The discount rate serves to measure the

series of expected financial surpluses against an alternative investment different to the investment in

MAN SE shares.

20. Due to the relevance of personal income taxes to the business value, it is necessary to characterise the

tax situation of shareholders in the framework of objectified business valuations. In case of legally and

contractually motivated valuations within the meaning of IDW S 1 as amended in 2008, the standardisa-

tion is based, in accordance with long-standing legal practice and valuation experience, on the tax situa-

tion of a domestic taxpayer, subject to full taxation ("direct standardisation"). To this end, appropriate

assumptions regarding the personal tax charge on net earnings generated by the company to be valued

and the alternative investment must be made.

21. If it is beneficial to sell the operating and non-operating assets rather than continue the business opera-

tions, the valuation must be based on the liquidation value of the business as well unless this is not pos-

sible on account of legal or factual limitations. This applies at least, if the company has no operating

business and consists only of non-operating assets and liabilities (OLG Düsseldorf 4 October 2006- I-26

W7/06 AktE). This condition does not apply to MAN SE. However, in order to verify whether the liquida-

tion value exceeds the equity value, the liquidation value of MAN SE was roughly determined as at the

valuation date and compared with the equity value determined by us according to the dividend discount

method.

22. The net asset value resulting from an asset-based approach has no independent informative value as

part of a business valuation. The net asset value is the reconstruction cost or replacement value of all

existing intangible and tangible assets (and liabilities) present in the business. Since the market value of

equity of a business as a going concern is determined on the basis of its future earnings potential and

since the net asset value is neither based on future projections nor represents an enterprise value, the

latter was not determined.

23. Since the shares of MAN SE have been admitted to various stock exchanges for trading, it would be

possible to determine the cash compensation using observable share prices of MAN SE. However, there

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can be strong arguments opposing a cash compensation derived exclusively from the share price, since

share prices depend on numerous special factors such as the size and constriction of the market, on

random trading turnovers as well as on speculative influences and influences that are not related to the

value and can thus be subject to unpredictable variations and developments.

24. The application of share prices (market capitalisation) cannot replace a business valuation according to

the described principles if this valuation uses a more detailed base compared to information available to

the capital market and integrates the capital market considerations into the valuation methodology. The

valuation described in this joint expert opinion is based on an analysis of historical data and on long-

term corporate planning, which is not publicly accessible in this level of detail and scope.

25. The Federal Constitutional Court (Bundesverfassungsgericht or "BVerfG") and the Federal Court of

Justice (Bundesgerichtshof or "BGH") have ruled in multiple cases that the share price should be gener-

ally considered as minimum value when determining a cash compensation for outside shareholders in

connection with some special purpose business valuations (e.g. recurring compensation payment and

compensation in accordance with §§ 304, 305 AktG) (compare e.g. BVerfG, decision dated 27 April 1999,

1 BvR 1613/94, BGH, decision dated 12 March 2001, II ZB 15/00; BGH, decision dated 19 July 2010, II ZB

18/09). However according to the Federal Constitutional Court, the requirement to determine the ap-

propriate compensation based on the share price does not mean that it should always be the only deci-

sive factor. Exceeding the share price is acceptable under constitutional law.

26. Refer to section F.I for the development and relevance of the share prices of MAN SE.

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II. Appropriate cash compensation according to § 305 AktG

27. A domination and profit and loss transfer agreement must amongst others include the obligation of the

other party to the contract to - on demand of a outside shareholder - acquire the shares in return for an

appropriate cash compensation defined in the agreement (§ 305.1 AktG). In the present case, the draft

of the domination and profit and loss transfer agreement proposes a cash compensation (§ 305.2 no.

3 AktG).

28. According to the knowledge of financial studies, jurisdiction (compare BVerfG decision dated 27 April

1999 – 1 BvR 1613/94; DB 1999, page 1695) and the valuation practice, the equity value is the correct

basis for determining the compensation as per § 305 AktG. Thus, the value of a company as a whole

needs to be considered. This will therefore correspond to the postulate of compensation at full value of

shares developed by the jurisdiction. Therefore, the equity value of MAN SE has to be determined in-

cluding all affiliated companies and the compensation per share has to be derived from this value.

III. Appropriate recurring compensation payment according to § 304 AktG

29. According to § 304.1 sentence 1 AktG, a domination and profit and loss transfer agreement must ar-

range for an appropriate recurring compensation payment for the outside shareholders with a recurring

payment (compensation payment) related to the shares in the share capital. According to § 304.2 sen-

tence 1 AktG, at least the annual payment per share, which could probably be distributed as an average

profit per share according to the previous earnings situation of the company and its future earnings

prospects under consideration of appropriate depreciations and fair value adjustments, however with-

out a retention of other profits, should be assured as compensation payment. According to § 304.1 sen-

tence 2 AktG a domination agreement without profit and loss transfer must guarantee a reasonable

minimum compensation of the earnings of the dominated company to the outside shareholders.

30. The discounted dividend value based on the corporate financial planning figures considers - with regard

to interest effects - the expected payments (dividends and retention of earnings) between company and

shareholders. With respect to a normalised annual compensation payment, the legislative body does

not relate the payment obligation to the expected earnings that vary year by year, but refers to the av-

erage amount per share that could probably be distributed under consideration of appropriate depre-

ciations and fair value adjustments, however without retention of other earnings. The determination of

an average amount per share should thus consider the volatility of profits or losses, but be converted

into a uniform average amount per share.

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C. Description of the valuation object

I. Legal and tax situation

31. MAN SE was founded through a change in legal form from MAN Aktiengesellschaft to a Societas Eu-

ropaea ("SE") and has been registered in the Commercial Register at the district court of Munich since

2009 under HR B 179426 and under the name MAN SE with its headquarters in Munich. The latest entry

in the Commercial Register is dated 14 March 2013.

32. The fiscal year corresponds to the calendar year.

33. Purpose of the company according to § 2 of the Articles of Association in the version dated 1 April 2010

is

• the investment in companies of all kinds, in particular companies engaging in mechanical engi-

neering, plant engineering, vehicle manufacturing and engine production as well as trade,

• manufacturing of such products as well as the processing of materials of all kinds.

The company is authorised to conduct all business and take all measures deemed necessary or useful for

attaining the company's objectives.

34. The registered share capital of MAN SE as at the date of this joint expert opinion is € 376,422,400. It is

composed of 147,040,000 no-par value bearer shares, which are subdivided into

140,974,350 common shares and

6,065,650 non-voting preferred shares.

According to § 4.2 sentence 2 of the Articles of Association of MAN SE, shareholders may not claim de-

livery of physical share certificates.

35. In accordance with § 17.1 of the company’s Articles of Association, every common share grants one vote

in the general shareholders’ meeting. The general shareholders’ meeting especially decides on the

shareholder representatives of the supervisory board, the appropriation of net profits, on the formal

discharge of the executive board and the supervisory board as well as on the appointment of the exter-

nal auditor.

36. Holders of preferred shares do not have voting rights at the general shareholders’ meeting, except for

cases prescribed by law. However, according to § 24.3 of the Articles of Association of MAN SE, holders

of preferred shares are entitled to a preferred dividend of € 0.11 per preferred share. This preferred

dividend of € 0.11 is payable in advance but is not an additional dividend.

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37. The executive board is authorised to increase the share capital, with the consent of the supervisory

board, by up to € 188,211,200 by issuing common bearer shares on one or more occasions against cash

contributions and/or noncash contributions in the period up to 31 March 2015.

38. Moreover, the general shareholders’ meeting on 1 April 2010, resolved to contingently increase the

share capital by up to € 76,800,000. The contingent capital increase will only be implemented to the

extent that the holders of convertible bonds or bonds with warrants or with conversion obligations is-

sued for cash consideration by MAN SE or its Group companies by virtue of the authorising resolution of

the general shareholders’ meeting on 1 April 2010, exercise their conversion rights or options or settle

their conversion obligations, and provided that other forms of settlement are not used. We have been

informed that no convertible bonds or bonds with warrants or with conversion obligations have been

issued up to the end of our valuation work.

39. The common and preferred shares of MAN SE are traded on the German electronic stock exchange

trading platform Xetra, as well as on all seven German stock exchanges (Berlin, Düsseldorf, Frankfurt am

Main, Hamburg, Hanover, Munich and Stuttgart).

40. The common shares have been assigned the German security identification number ("WKN") 593700 as

well as the international security identification number ("ISIN") DE0005937007. The preferred shares of

the company have been assigned the German WKN 593703 and the ISIN DE0005937031.

41. Until 24 September 2012, the common shares of the company were listed in the German stock index

"DAX" of Deutsche Börse AG, Frankfurt am Main ("Deutsche Börse AG"). Deutsche Börse AG decided on

a change in composition of the DAX as part of its annual review in September 2012. Due to the low free

float of the common shares of MAN SE, the common shares of the company no longer fulfilled the crite-

rion of Deutsche Börse AG to be retained in the DAX. Accordingly, the common shares of MAN SE were

transferred to the Mid-Cap-DAX ("MDAX"), effective 24 September 2012. The common shares of MAN

SE are listed in further stock exchange indices, including HDAX, CDAX, Euro Stoxx®, Stoxx® Europe 600

and Euro Stoxx® TMI Industrial. The preferred shares of MAN SE are listed in the CDAX.

42. On 3 October 2006, Volkswagen AG announced its acquisition of a 15.06 % share in MAN SE. On

26 February 2007, Volkswagen AG increased its voting rights to 29.9 %. With the acquisition of further

shares in MAN SE, Volkswagen AG exceeded the threshold of 30 % of the voting rights on 9 May 2011

and was, according to the German Takeover Act, obligated to submit a mandatory offer to all external

shareholders of MAN SE to acquire the remaining shares. The takeover price fixed within the scope of

the mandatory offer was € 95.00 per common share of MAN SE and € 59.90 per preferred share. By the

end of the acceptance period, 29 June 2011, the offer for 35,857,607 common shares and 164,613 pre-

ferred shares was accepted. After the approval from all necessary regulatory authorities was granted,

the transaction was completed on 9 November 2011 and the share of Volkswagen AG increased to a

total of 55.90 % of the voting rights and 53.71 % of the share capital in MAN SE.

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43. The takeover price fixed within the scope of the mandatory offer is not relevant with respect to the

determination of the recurring compensation payment and cash compensation in connection with the

domination and profit and loss transfer agreement. First, the consideration of prior takeover prices with

respect to the determination of the recurring compensation payment and cash compensation is not

envisaged by law. Second, overall economic as well as company-specific conditions have changed signifi-

cantly after the mandatory offer was submitted. Earnings before interest and taxes decreased from

€ 1,256 million in 2011 - the financial year which ended shortly after the completion of the mandatory

offer - by 50.4 % to € 623 million (compare note 238). In addition, as at the time the statement on the

mandatory offer was prepared by the executive and supervisory board, financial planning figures for

2012 were significantly higher than the actual earnings before interest and taxes in 2012. Moreover, at

that time a more positive economic outlook, as indicated for example based on the GDP of MAN’s cen-

tral markets, was generally anticipated. Consequently expectations for the fiscal year 2013 and the years

to follow were more optimistic as compared to the present valuation of the company. This is reflected in

the low price of MAN common shares prior to the announcement of the planned domination and profit

and loss transfer agreement.

44. Volkswagen AG increased its share in MAN SE through further acquisitions and exceeded the threshold

of 75 % of the voting rights in MAN SE with a voting interest of 75.03 % and an interest in the share capi-

tal of MAN SE of 73.41 % on 6 June 2012.

45. On 9 January 2013, Volkswagen AG informed MAN SE about the intention to conclude a domination and

profit and loss transfer agreement with MAN SE as a dominated company, in order to establish an inte-

grated commercial vehicle group. At that date, Volkswagen AG held 105,769,788 common shares and

2,626,244 preferred shares in MAN SE at that time, which corresponds to 75.03 % of the voting rights,

and 73.72 % of the share capital of MAN SE.

46. MAN SE is an indirect affiliate of Volkswagen AG and is fully consolidated in the group financial state-

ments of Volkswagen AG since 9 November 2011.

47. Based on the approval by the general shareholders’ meeting of Truck & Bus GmbH on 16 April 2013, all

shares of MAN SE held by Volkswagen AG, consisting of 105,769,788 common shares and 2,626,244

preferred shares, were contributed to the capital reserve of Truck & Bus GmbH. In addition, according to

§ 272.2 no.4 HGB, a cash contribution amounting to € 3.25 billion will be paid into the capital reserve of

Truck & Bus GmbH on 25 April 2013. Volkswagen AG is the sole shareholder of Truck & Bus GmbH with a

nominal share capital of € 10 million.

48. The shareholder structure of MAN SE for common and preferred shares as at the date of this joint

expert opinion is as follows:

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Shareholders of MAN SE Number of common

shares

in %

of common shares

Truck & Bus GmbH 105,769,788 75.03

Free float 35,204,562 24.97

Total 140,974,350 100.00

Shareholders of MAN SE Number of preferred

shares

in %

of preferred shares

Truck & Bus GmbH 2,626,244 43.30

Free float 3,439,406 56.70

Total 6,065,650 100.00

Source: Volkswagen AG

49. The organisational structure of the company as well as the capital shares in major individual companies

on the valuation date, which are in some cases held indirectly by MAN SE, are as shown below:

Source: MAN SE

50. On 31 December 2012, the consolidation group included 135 affiliated companies and MAN SE. Fur-

thermore 9 investments were recognised applying the equity method, 11 investments are recognised at

MAN SE

Munich

Renk AG

Augsburg

MAN Diesel & Turbo

SE

Augsburg

MAN Truck & Bus AG

Munich

MAN Latin America

Indústria e Comércio

de Veículos Ltda.

Sao Paulo/Brazil

Sinotruk Ltd.

Hong Kong/China

Scania AB

Södertälje/

Sweden

100.00% 100.00%100.00% 76.00%

MAN Finance

International GmbH

Munich

100.00%

13.35%

(17.37% of the voting rights)25.00% + 1 share

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amortised cost, and additional 60 investments were not included in the consolidated financial state-

ments (MAN Group).

Tax situation

51. Based on domination and profit and loss transfer agreements, a fiscal unity for corporate and trade tax

purposes exists between MAN SE and the following MAN Group companies in Germany:

• MAN Truck & Bus AG, Munich,

• MAN Diesel & Turbo SE, Augsburg,

• MAN Ferrostaal Beteiligungs GmbH, Munich,

• MAN GHH Immobilien GmbH, Oberhausen,

• MAN Grundstücksgesellschaft mbH, Oberhausen,

• MAN HR Services GmbH, Munich,

• MAN Finance International GmbH, Munich,

• MAN Versicherungsvermittlung GmbH, Munich,

• MAN IT Services GmbH, Munich,

• MAN Beteiligungs GmbH, Munich.

52. Due to further subsidiaries of these companies, with which domination and profit and loss transfer

agreements have been concluded, further indirect fiscal unities for income tax purposes exist between

MAN SE and companies of the MAN Group. There are also fiscal unities for value added tax ("VAT") pur-

poses between MAN SE and these as well as other companies.

53. According to management information, MAN SE's corporate income tax loss carryforwards amounted to

approximately € 639 million and the trade tax loss carryforwards amounted to approxi-

mately € 521 million as at 31 December 2012. Moreover, several domestic and international affiliates of

MAN SE had corporate income tax loss carryforwards amounting to a total of € 633 million, of which

approximately € 334 million are usable. Non-usable loss carryforwards relate to companies in countries

where loss carryforwards may only be utilised for a limited time period and to companies with insuffi-

cient earnings prospects for the utilisation of loss carryforwards.

54. As at 31 December 2012, the corporate tax credit of MAN SE amounted to approximately € 7.76 million.

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55. The tax assessment of MAN SE, including 2008, has been closed and is subject to subsequent audit as

per § 164.1 AO. Tax returns for subsequent financial years are currently being prepared.

56. An external tax audit for the assessment periods 2002 to 2005 has largely been completed and covered

the audit fields of corporate income tax, trade tax and VAT. The respective tax assessment notices is-

sued in 2012 are subject to subsequent audit. The external tax audit for the financial years 2006 to 2010

for corporate tax, trade tax and VAT had already started in 2012 and was completed for smaller compa-

nies of the fiscal unity.

II. Economic fundamentals

1. Business activity

a) General information

57. The MAN Group is one of the leading players in commercial vehicles and mechanical engineering in

Europe. It mainly supplies trucks, buses, diesel engines, turbomachinery as well as special gear units.

58. The MAN Group focuses on the business areas Commercial Vehicles and Power Engineering.

59. With regard to the business area Commercial Vehicles, the MTB division is one of Europe’s leading

manufacturers of trucks and buses and the ML division represents the largest truck manufacturer in

Brazil. In addition, MAN SE holds an interest of 25 % plus one share in the capital of Sinotruk (Hong

Kong) Ltd., Hong Kong/China ("Sinotruk").

60. In the business area Power Engineering, the MDT division is a globally leading developer and manufac-

turer of large-bore diesel engines for use in ships and power plants and also specialises in the develop-

ment and production of turbo compressors, industrial turbines as well as chemical reactor systems. This

business area is supplemented with a majority holding in Renk, a global manufacturer of gear units, pro-

pulsion components and testing systems.

b) MAN Truck & Bus division

61. The core market of the MTB division, whose leading entity is MTB AG, is the European commercial

vehicle market. MTB also serves markets outside Europe, especially the Russian, Asia-Pacific and Arabian

as well as the African market. MTB has production facilities in four European countries as well as in

South Africa and India. Its products range from general-purpose trucks with a gross vehicle weight

("GVW") of 7.5 t to 44 t and special-purpose vehicles with a gross train weight of up to 250 t, through

buses and coaches, to diesel and gas engines for on- and off-road uses. Operations are supplemented

with an extensive range of services and the sale of used vehicles.

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62. To support its commercial vehicle business MTB also offers financing solutions (loans and leases) as well

as supplementary services, particularly insurance solutions, through MFI. In addition, MFI’s subsidiary

Euro-Leasing GmbH, Sittensen ("EURO-Leasing") offers short- and long-term rental solutions for com-

mercial vehicles. The predominant function of MFI and its subsidiaries within the MTB division is how-

ever to promote sales of new vehicles. Due to the close linkage of MFI and MTB’s commercial vehicle

business MFI will be presented as part of the MTB division in the following.

63. MTB uses the brand MAN as a product brand in the truck as well as in the bus business. With the series

TGX and TGS (heavy trucks), TGM (medium trucks) and TGL (light trucks), MTB is a full range manufac-

turer producing trucks in a range from 7.5 t to 44 t and offering solutions for the national and interna-

tional heavy duty long-haul transport, the heavy-duty and building site traffic as well as the short-haul

and distribution transport. With the series Cargo Line A ("CLA"), MAN Trucks India Private Limited,

Akurdi/India ("MAN Trucks India") offers a truck for the Indian market as well as selected markets in

Africa and Asia. In the bus segment, MTB offers coaches (MAN Lion’s Coach), intercity buses (MAN Lion’s

Regio), city buses (MAN Lion’s City series) as well as chassis. Coaches are also sold using the premium

brand NEOPLAN.

64. The diesel and gas engines from MTB cover a range from 37 kW (50 hp) to 1,324 kW (1,800 hp) and are

offered as 4- and 6-cylinder in-line units and as 8- and 12-cylinder V engines. Besides the use in the

group’s own trucks and buses, the engines are also offered to third-parties, for power generation in

cogeneration plants and as drive units in agricultural machinery, rail vehicles, ships and boats and spe-

cial-purpose vehicles.

65. In the fiscal year 2012, MTB sold 74,680 trucks and 5,286 buses, achieving revenues of € 8,822 million.

This equals a sales decrease in volumes of 4.1 % compared to the previous year. Including subcontracted

employees, 34,879 employees were employed at the end of the financial year 2012.

c) MAN Latin America division

66. The ML division, whose leading entity is MAN Latin America Indústria e Comércio de Veículos Ltda., São

Paulo/Brazil, concentrates on the production and sale of commercial vehicles and buses (mainly bus

chassis) in Latin America and the southern part of Africa.

67. The product range covers trucks with a GVW of 5 t to 74 t, which are mainly marketed under the Volks-

wagen brand. ML offers the following Volkswagen branded truck series: "Delivery" from 5 t to 10 t,

"Worker" from 13 t to 31 t and "Constellation" from 13 t to 63 t. Moreover, the MAN branded TGX se-

ries was launched in the Brazilian market in 2012. In addition, the Volkswagen branded ADVANTECH

series sold in South America is equipped with MAN engines.

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68. In 1993, ML launched its first bus chassis (model VW 16.180 CO) and has, since then, been active in the

bus market. ML offers in total eight different chassis for city and intercity buses.

69. All ML vehicles produced for the Brazilian market and delivered in March 2012 or later fulfil the Brazilian

standard PROCONVE P-7 (comparable to the Euro V standard).

70. The main production facility of ML is located in Resende/Brazil. Light trucks and buses are also manufac-

tured at the production facility in Querétaro/Mexico in SKD assembly.

71. ML has developed the concept "Consórcio Modular" for the facility in Resende, in which the actual

manufacturing of the vehicles is done by partner companies. ML employees are only involved in the

product development and quality assurance as well as for sales and customer service. "Consórcio Modu-

lar" is characterised by low capital employed and low investment requirements.

72. At the end of fiscal year 2012, ML employed a total of 1,937 employees, while approxi-

mately 3,800 employees worked in the "Consórcio Modular" production network.

73. In fiscal year 2012, ML sold 45,829 trucks and 10,476 buses, generating revenues of € 2,870 million. This

equals a sales decrease in volumes of 21.9 % compared to the previous year.

74. ML uses an extensive dealer network in Brazil and the other countries served. In Brazil, vehicle manufac-

turers can sell their products to end customers only through dealers. Overall, ML cooperates with ap-

proximately 265 authorised dealers in Latin America, of which approximately 150 are in Brazil.

d) MAN Diesel & Turbo division

75. The MDT division, whose leading entity is MDT SE, is one of the globally leading developers and manu-

facturers of large-bore diesel engines, turbo compressors and industrial turbines for maritime and sta-

tionary applications as well as of chemical reactor systems. With revenues of € 3,780 million in the fiscal

year 2012, the division contributed 23.9 % of the company’s total revenues. As at 31 December 2012,

MDT employed 14,863 employees.

76. MDT consists of three strategic business units (SBUs): Engines & Marine Systems, Power Plants, and

Turbomachinery. The revenue split for these three SBUs is illustrated in the following graph:

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MAN Diesel & Turbo – Revenues according to SBUs

Source: MAN SE

77. The SBU Engines & Marine Systems develops two-stroke diesel engines for propulsion systems in large

vessels and develops and manufactures four-stroke diesel engines that are used for propulsion systems

for smaller vessels and as auxiliary engines. The engines cover a power range from 450 kW to 87,000

kW. Moreover, the SBU Engines & Marine Systems delivers turbochargers for large-bore diesel engines

as well as propellers and complete ship propulsion systems. After-sales services are offered worldwide

under the brand MAN PrimeServ.

78. MDT is the global market leader for large-bore two-stroke diesel engines with capacities of 2,000 kW to

87,000 kW. Due to their enormous sizes, these engines that are used for large bulk carriers, tankers and

container vessels are manufactured by licensees in the surrounding of shipyards, especially in South

Korea, Japan, and China. The four-stroke engines cover an output range from 450 kW to 21,600 kW and

can run with both liquid and gaseous fuels. The four-stroke engines are mainly used in all types of cargo

vessels, passenger ships, cruise vessels, towboats, dredgers, cable-laying ships, fast ferries and marine

ships. Additionally, the engines can also be used as on-board power gensets. These generator sets have

a power range from 450 kW to 11,200 kW. MDT manufactures the four-stroke engines in its facilities in

Germany, France and India. In fiscal year 2012, the SBU Engines & Marine Systems was the largest of the

three SBUs with revenues of € 1,552 million (2011: € 1,670 million). The order intake amounted to

€ 1,296 million in fiscal year 2012 (2011: € 1,605 million).

79. The SBU Power Plants manufactures and sells stationary diesel and gas engines for power generation,

ranging from small emergency generators up to turnkey power plants with capacities of up to 400 MW.

41.8% 46.3% 41.0%

22.3% 17.9% 20.5%

35.9%35.8%

38.5%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2010 2011 2012

€million

Engines & Marine Systems Power Plants Turbomachinery

3,6103,7803,766

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The four-stroke diesel and gas engines offer capacities of 450 kW to 18,900 kW, the two-stroke engines

of up to 80 MW amongst others. The MDT engines can be powered with diesel, heavy foil, bio-fuels or

gas as well as with a combination of diesel and gas. The SBU Power Plants also offers systems for com-

bined heat and power generation, diesel combined cycle and expandable, modular concepts. The busi-

ness activities also include the operation and maintenance of power plants.

80. In 2012, the order intake in the power plant business increased by 4 % to € 668 million (2011:

€ 640 million). This was mainly due to large orders from emerging and developing countries, where de-

mand for MDT power plant solutions is high, in order to bridge the energy supply gap quickly. Diesel and

gas engine power plants are primarily used as temporary decentralised solutions to cover the base load.

In addition to order intakes, revenues could also be increased in fiscal year 2012. With € 773 million

(2011: € 647 million), revenues were approximately 20 % higher than in the previous year.

81. The SBU Turbomachinery offers a wide range of turbomachinery products. Among others, the product

range includes compressors as well as gas and steam turbines for the oil and gas industry, the processing

industry and for the power generation. This SBU also offers turnkey machine lines including power tur-

bines and auxiliary units, reactors for the chemical and petrochemical industry as well as special devices

for research facilities.

82. Contrary to the general market development, the SBU Turbomachinery increased its order intake in

fiscal year 2012 by approximately 7 % to € 1,546 million (2011: € 1,447 million). Although the orders of

new compressors and turbines declined due to the economic contraction in the overall market, there is

still a considerable need for capital spending at a number of industrial facilities. These requirements

result from the global population growth and the expanding middle class in emerging countries and the

resulting demand for energy and primary materials. Emerging and developing countries, especially Brazil

and China, were the key regions in 2012. The SBU also offers after-sales services for turbomachinery

using the brand MAN PrimeServ. In comparison to the previous year, revenues of the SBU could be in-

creased considerably by approximately 13 % to € 1,455 million mainly due to the business activities in

China (2011: € 1,293 million).

e) Renk division

83. Renk AG is a publicly listed subsidiary of MAN SE and a global manufacturer of special gear units, propul-

sion components and testing systems. MAN SE holds 76.0 % of the company’s share capital. The com-

pany is a leading manufacturer in tracked vehicle transmissions of different sizes as well as in slide bear-

ings for electrical machinery. Renk also has a leading position in the market for special gear units used

for marine and industrial purposes. The product portfolio also includes different types and performance

categories of couplings. In addition, Renk manufactures testing systems used in development, produc-

tion and quality assurance mainly in the automotive, rail and aviation industries.

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84. In 2012, order intakes increased by approximately 15 % from € 456 million (2011) to € 525 million. In

addition, Renk generated revenues of € 476 million (2011: € 389 million). This corresponds to approxi-

mately 3 % of the total revenues of MAN SE in 2012.

85. In addition to production facilities in Augsburg, Rheine, Hanover and Berlin, Renk operates production

facilities and sales companies all over the world. The company employed 2,245 people (2011:

2,013 employees) as at 31 December 2012.

86. Renk’s business is divided into four SBUs: Vehicle transmissions, slide bearings, special gear units and

standard gear units.

87. In the SBU vehicle transmissions Renk is a leading manufacturer of fully-automatic transmissions for

medium and heavy tracked vehicles and also offers a wide range of high-performance test beds for vari-

ous sectors.

88. Renk’s automatic power-shift transmissions are designed for all modern diesel engines, for rear and

front installation. The transmissions are controlled and monitored electronically. They are predomi-

nantly manufactured at the production site in Augsburg.

89. Renk’s test beds activities are associated with the SBU vehicle transmissions. Renk designs and manufac-

tures customised test beds for the development, production and quality assurance of motor vehicles,

helicopters, rail car components, tracked vehicles and wind turbines.

90. Located in Hanover/Germany, the SBU slide bearings together with ADMOS-Gleitlager Produktions- und

Vertriebsgesellschaft mbH, Berlin, as well as the American sales company Renk Corporation, Dun-

can/USA, supply hydrodynamic lubricated slide bearings. These slide bearings are used in electric mo-

tors, generators, pumps, fans, water turbines, production plants and marine applications.

91. The SBU special gear units comprises the production of large-scale gear units at the Augsburg site of

Renk AG and at Renk-MAAG GmbH, Winterthur/Switzerland. The product range covers stationary

transmissions for various industrial applications, amongst others for the cement industry, through turbo

transmissions with high transmission applications of up to 140 MW to complex transmissions for fast

ships and marine applications with transmission capacities of up to 80 MW.

92. The SBU standard gear units includes the production of large-scale gear units at the Rheine facility of

Renk AG. One of the core areas are vessel gear units for merchant shipping, ferries, LNG tankers and

supply vessels. The SBU also manufactures transmissions for turbine systems and couplings for industrial

applications. In 2011, Renk’s offshore wind power gear unit business was relocated from Augsburg to

Rheine.

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2. Market and competition

a) Preliminary remark and economic indicators in comparison

93. Our market and competition analysis focuses on the markets and areas of activities that are significant

for the MAN Group. Therefore, we analysed and described the underlying markets of the divisions MTB,

ML, MDT and Renk in more detail.

94. In the past years, the world economy had to face the effects of the financial and sovereign debt crisis

and was thus characterised by volatile and partly reduced growth rates. This difficult economic envi-

ronment strained the development of the Gross Domestic Products ("GDPs") of the markets that are

relevant for the MAN Group. In the EU-countries and in Brazil, the two most important markets of the

MAN Group especially in 2009, the real GDP decreased significantly. Based on the data of The Economist

Intelligence Unit Ltd., London/United Kingdom ("EIU"), the GDP in Germany, the most important market

for the MAN Group within the EU, decreased by 5.1 %, the Brazilian GDP by 0.3 %. After a worldwide

economic recovery in 2010, with considerably positive GDP growth rates, especially in China with

10.4 %, the growth rates have again been declining since 2011 and have again been negative in the EU (-

0.3 % in 2012). A recovery of the world economy with moderately increasing GDP growth rates is again

expected from 2013 onwards. In individual countries of the EU, low growth rates of less than 1.0 % are

expected for 2013. Up to 2017, slightly higher growth rates of the respective GDP as compared to 2012

are forecast for all the markets under consideration, except for China.

95. The development of inflation rates also faced the effects of the financial and sovereign debt crisis. After

a worldwide low inflation level in 2009, the inflation rates in all relevant markets increased up to 2011.

In 2012, the inflation rates were marginally below the level of 2011. For the EU countries, EIU forecasts

a decline in the inflation rate from 2.5 % in 2012 to 2.1 % in 2017. For Germany, nearly stable inflation

rates of approximately 2.0 % are expected (2.1 % in 2012, 2.0 % in 2017). For Brazil, a slightly declining

inflation development from 5.4 % (2012) to 4.9 % (2017) is assumed. On the other hand, increasing infla-

tion rates have been forecast for China and South Korea, the main markets of the MAN Group in Asia. In

2012, the inflation rate for China amounted to 2.6 %, while the South Korean inflation rate amounted to

2.2 %; according to the EIU forecasts, the inflation rate in China will increase to 4.0 % in 2017 and to

3.1 % in South Korea.

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96. The GDP growth rates as well as the inflation rates over time in the most important markets for the

MAN Group are illustrated in the following overview:

b) Market positioning and competitive environment in the MAN Truck & Bus division

Truck

Global truck market

97. The global truck and commercial vehicle market depends considerably on the general economic devel-

opment and the resulting demand for transport services. The commercial vehicle market is divided into

several categories according to the GVW.1

1 The consideration thus focuses on the vehicle market with a gross vehicle weight of over 6 t that is relevant for

MTB.

GDP growth rate

Difference, % 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

Germany -5.1% 4.0% 3.1% 0.9% 0.7% 1.6% 1.3% 1.3% 1.4%

Brazil -0.3% 7.5% 2.7% 1.0% 3.5% 3.8% 3.5% 3.7% 3.5%

China 9.2% 10.4% 9.3% 7.8% 8.5% 7.8% 7.7% 7.3% 6.4%

South Korea 0.3% 6.3% 3.6% 2.1% 2.9% 3.8% 3.9% 4.0% 4.0%

Russia -7.8% 4.5% 4.3% 3.4% 3.3% 3.7% 4.1% 4.1% 4.0%

India 8.2% 9.6% 6.9% 5.2% 6.5% 7.3% 7.3% 7.5% 7.5%

European Union -4.3% 2.1% 1.6% -0.3% 0.0% 1.2% 1.5% 1.6% 1.5%

…

World -2.3% 3.9% 2.6% 2.1% 2.3% 2.9% 2.9% 2.9% 3.0%

Inflation

Difference, % 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

Germany 0.2% 1.2% 2.5% 2.1% 1.8% 1.9% 2.1% 1.9% 2.0%

Brazil 4.9% 5.0% 6.6% 5.4% 6.1% 5.7% 5.4% 5.1% 4.9%

China -0.7% 3.2% 5.5% 2.6% 4.3% 4.1% 3.9% 4.2% 4.0%

South Korea 2.8% 2.9% 4.0% 2.2% 2.6% 2.8% 2.9% 3.1% 3.1%

Russia 11.7% 6.9% 8.4% 5.1% 6.3% 6.2% 5.7% 5.1% 5.0%

India 10.8% 12.0% 8.9% 9.3% 8.8% 8.0% 7.0% 6.6% 7.1%

European Union 0.7% 1.9% 2.7% 2.5% 2.2% 2.1% 2.3% 2.1% 2.1%

…

World 1.5% 3.0% 4.1% 3.4% 3.4% 3.5% 3.4% 3.3% 3.3%

Source: EIU, February/March 2013

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98. The following chart gives an overview of the expected development of global truck sales with a GVW

over 6 t according to regions:

Global truck sales (in thousand units)

Source: LMC, 20122

99. Two developments can be observed when considering the development of the truck market. On the one

hand, the significant dependency of the truck market on the overall economic development is reflected

especially in the financial market crisis around the year 2009 (refer to e. g. KPMG, 2011). On the other

hand, it becomes apparent that the market growth mainly results from the growth of the emerging

markets, especially from the BRIC countries (Brazil, Russia, India and China), while the fully developed

and mature markets of the triad (West Europe, North America and Japan) only show marginal growth.

100. Beyond the development of sales volumes, other trends can also be observed in the commercial vehicle

market. The most important trends are given below:

• Development of a noticeably increasing middle class segment,

• The customers’ focus on the total cost of ownership,

• Increasing significance of environmental protection ("Green Fleet"),

• Increasing significance of Asian manufacturers to the disadvantage of European and American

manufacturers.

2 LMC Automotive is one of the leading data providers in the automobile sector and offers turnover and produc-

tion forecasts for passenger cars and trucks as well as forecasts for the supply and demand of engines and

transmissions.

2,231

2,340 2,206

1,811

2,495

2,626

2,321 2,455

2,729 2,885

2,986 3,166

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Europe North America Asia Mercosur Africa and Australia Other

CAGR 2012-17: 6.4 %

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Cyclicality of the truck market

101. The commercial vehicle industry is subject to a noticeable cyclicality. In comparison with other indus-

tries, the commercial vehicle industry reacts heavily to cyclical changes with respect to both the speed

of adjustments as well as volatility. As a result, fluctuating sales volumes and revenues of truck manu-

facturers can regularly be observed in the course of an economic cycle.

102. The central driver of this development is the real Gross Domestic Product with the input factors private

consumption, gross investments, public expenditures as well as export surplus. When these factors and

thus the overall economic environment improve, this usually has a positive effect on truck sales. Other

relevant macroeconomic drivers are the interest level and the development of the producer price indi-

ces. Besides these macroeconomic indicators, the development of industries that are relevant for the

truck market is also important. These include, for instance, the logistics as well as the building industry.

Changes in these industries often have direct effects on the truck market. In addition to quantitative

factors, there are also qualitative aspects that are important for the development of truck sales. These

include regulatory and legislative initiatives such as the harmonisation of the truck toll in Europe, modi-

fications in emission standards, safety regulations as well as conditions for driving permits in inner-city

environmental zones.

Emerging markets

103. In the last two decades, the significance of various regional truck markets in the global market has

considerably changed in favour of the emerging countries. Especially the BRIC countries have strength-

ened their importance in the truck market at the expense of the triad countries. An analysis by the Bos-

ton Consulting Group (BCG, 2012) shows that the world market share of the triad countries has reduced

from 56 % in 2000 to 17 % in 2010. In the same period, the BRIC countries have increased their share of

worldwide truck sales from 33 % to 74 %. The authors of the study also expect that the truck markets in

the BRIC countries will offer attractive opportunities in future, even though the high growth rates from

the past can probably no longer be attained in future. In the long term, infrastructure problems will

probably brake Russia’s growth. For China, a market slow-down is expected due to expiry of the gov-

ernmental economic stimulus packages that drove the truck market in the past. Yet the European truck

market will also offer opportunities for growth in the coming years due to the catch-up effect from the

financial and sovereign debt crisis. However, growth forecasts for the European market depend on

when the financial and sovereign debt crisis has finally been overcome.

104. Overall, the outlook for the development of the global truck market is positive. The expected average

annual growth in sales for the period from 2012 to 2017 is 6.4 %. The highest level of growth is expected

in Asia, with an average growth rate of 7.7 % p.a. for the period from 2012 to 2017 followed by Europe,

as well as Africa and Australia with average growth rates of 6.3 % and 6.1 % p. a. in the same period.

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Trends

105. One of the most important trends in the truck market is the shift from the low price segment to the

middle class segment.3 Currently the truck market is dominated by two segments, the premium and the

low price segment (only Brazil has a large middle class segment). While the low price segment is concen-

trated in emerging markets and developing countries, customers in mature markets predominantly de-

mand premium products. The authors of the BCG study expect this situation to change in this decade

and the middle class segment to play the leading role in the global truck market at the expense of the

low price segment. Moreover, the authors of the study anticipate the middle class segment to account

for almost half of global truck sales by 2020, for the BRIC countries; they even expect a share of about

70 %. According to their forecast, the middle class segment of the BRIC countries will generate about

44 % of the global truck sales by 2020, while that share amounted to 25 % in 2010. The graph below

gives an overview of the expected development:

Expected development of market segments in the BRIC countries

Source: BCG, 2012

106. The shift to the middle class segment is the result of government programmes, investments in the

infrastructure of emerging countries and regulations, such as the introduction of stricter emission stan-

dards and safety regulations4. Rising customer expectations regarding quality and the professionalisa-

tion of the transport industry in emerging markets are also significant.

3 Trucks are divided into the three segments of low price, middle class and premium based on multiple criteria,

such as price, compliance with exhaust emission standards, equipment, performance and cost focus, which are

cumulatively used to classify individual models according to the corresponding segments (cf. BCG, 2012)

4 Brazil, for example, introduced the exhaust emission standard PROCOVNE P-7 in 2012 and the introduction of

PROCOVNE P-8 is expected in the future, though the time of introduction is still uncertain.

75%

19%

95%

14%

63%

21%

5%

41%

4%

76%

36%

71%

71%59%

19%

40%

1%9%

1%9%

29%41%

0%

20%

40%

60%

80%

100%

2010 2020 2010 2020 2010 2020 2010 2020

Russia India China Brazil

Low price segment Middle class segment Premium segment

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107. So far the world market has been dominated by two groups of manufacturers – globally acting premium

manufacturers and local manufacturers in the low price segment – the future focus on the middle class

segment presents new challenges to global manufacturers,. While global manufacturers primarily supply

the premium segment in triad countries, local manufacturers focus on the low price segment in emerg-

ing markets. In order to be competitive in the middle price segment, global premium manufacturers will

need to reduce costs and complexities and achieve a lower level of mechanisation. In line with this trend

a relocation of many of their activities to emerging market countries is expected.

108. Another trend in emerging markets is the increasing relevance of total cost of ownership when purchas-

ing new trucks. Total cost of ownership is already of central importance in mature markets. This trend is

another reason for the shift in demand from the low price segment to the middle class segment in

emerging market countries. According to the authors of the BCG study (BCG, 2012), fuel and mainte-

nance costs make up more than three quarters of the total cost of ownership of trucks in the low price

segment. With fuel prices rising, customers increasingly demand fuel-efficient trucks to reduce operat-

ing costs. Improved reliability and longer life at equal or lower operating cost are also increasingly deci-

sive factors when purchasing new vehicles.

109. Closely related to total cost of ownership, the idea of a "green fleet" will also become more important.

Regulatory authorities are promoting environmental protection around the world by increasingly strin-

gent emission standards, such as the European emission standards.5 This development demonstrates

the increasing relevance of environmental protection. The keyword "green fleet" summarises the trends

to optimise efficiency as well as the use of sustainable technologies and alternative fuels. According to

current expectations, in the long-term perspective a continuous development and optimisation of diesel

engines is the preferred alternative from a cost-benefit point of view. Hence, it is expected that diesel

engines will remain the primary mode of driving for trucks in the future. This gives especially established

American and European manufacturers a competitive advantage, since they have decades of experience

in diesel technology. Despite the advantages of optimising diesel engines, however, hybridisation of

engines is also pressing ahead. However, since purchasing decisions in the commercial vehicle industry

are above all characterised by economic efficiency, costs of hybrid drive systems will have to be signifi-

cantly reduced with a simultaneous increase of efficiency in the future.

Competitive environment

110. The global commercial vehicle market is comparatively fragmented as the activities of most manufac-

turers are primarily focused or even limited to their own regional market. This is particularly true for

truck manufacturers from emerging market countries. Global manufacturers are increasingly attempting

5 Exhaust emission standards like the Euro standard set limits for vehicles on the emission of carbon monoxide,

nitrogen oxides, hydrocarbons and particles and subdivide these into emission classes. In Germany, assignment

to an emission class has an effect on e. g. calculation of the motor vehicle tax.

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to establish themselves in emerging markets by founding joint ventures and cooperations with local

manufacturers. Examples include the partnerships between Navistar International Corporation, Warren-

ville/USA ("Navistar"), and Mahindra & Mahindra Ltd., Mumbai/India ("Mahindra"), MAN SE and Si-

notruk or Daimler AG, Stuttgart/Germany ("Daimler" ) and OAO KAMAZ, Kazan/Russia ("KAMAZ") and

Beiqi Foton Motor Co., Ltd., Beijing/China, respectively. Moreover, the truck markets in triad countries

are already strongly consolidated.

111. As the graph below shows, Daimler is the world market leader with a market share of 13.1 % in 2012

based on worldwide sales of trucks with a GVW over 6 t. Dongfeng Motor Corporation, Wuhan/China

("Dongfeng") and Volvo AB, Goteborg/Sweden ("Volvo"), follow in second and third place with world

market shares of 7.5 % and 7.2 %. The MAN Group is in eighth place worldwide with a share of 4.5 %.

Market shares in recent years show a trend of Asian manufacturers like Dongfeng, First Automotive

Works Co., Ltd., Changchun/China, or China National Heavy Duty Truck Group Company Limited, Ji-

nan/China ("CNHDTC"), succeeding in expanding their market shares in comparison to global manufac-

turers (KPMG, 2011), although the development in 2012 contradicts this long-term trend.

Global market shares for Trucks > 6 t

Source: LMC, 2012

Regional markets

Europe

112. According to EIU's forecast, an average real GDP growth rate of 1.2 % can be expected for the 27 EU-

member states in the period from 2013 to 2017. The expected recovery of the European economy from

the financial and sovereign debt crisis also implies positive expectations for the European truck market

development. As the graph below shows, LMC Automotive forecasts a compound annual sales growth of

3.4%

5.2%

4.9%

3.7%

4.6%

6.9%

7.3%

6.7%

8.5%

11.3%

3.7%

4.5%

4.5%

5.2%

5.2%

5.7%

6.8%

7.2%

7.5%

13.1%

0% 2% 4% 6% 8% 10% 12% 14%

Navistar

CNHDTC

MAN Group

Isuzu

Paccar

CFAWG

Tata

Volvo

Dongfeng

Daimler

2012 2011

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6.3 % in the period from 2012 to 2017. However, growth varies considerably between individual mem-

ber states. In particular, for the countries that were hit especially hard by the financial and sovereign

debt crisis - like Spain, Portugal, Ireland and Greece - very high growth rates between 15.2 % and 47.4 %

are expected. To what extent this potential for growth can actually be realised in this period is strongly

dependent on how quickly the crisis will be overcome. When considering the expected growth rates, it is

further important to remember that they mostly represent a recovery of the markets to a pre-crisis level

rather than organic, sustainable market growth (Management Engineers & AutoValue, 2010).

Truck sales - Europe (in thousand units)

Source: LMC, 2012

113. The European truck market is comparatively heterogeneous. While the premium segment with an

emphasis on total cost of ownership prevails in Western Europe, the truck market in Central and Eastern

Europe is characterised by the low and middle price segments. Individual markets are mostly dominated

by local manufacturers. While manufacturers like Volvo, MAN Group, Scania AB, Södertälje/Sweden

("Scania"), and Daimler dominate the markets in Western Europe (LMC, 2012), Russian manufacturers

like KAMAZ, OAO GAZ, Nizhny Novgorod/Russia ("GAZ"), and OAO MAZ, Minsk/Belarus ("MAZ"), hold a

leading position in Central and Eastern Europe (IHS, 2012).

Germany

114. According to EIU's forecast, an average real GDP growth rate of 1.3 % is expected in the period from

2012 to 2017 indicating a recovery of the truck market. New purchases, however, will largely be limited

to replacement purchases. A possible positive effect on truck sales might also result from pull-forward

effects of new purchases because of the introduction of the mandatory Euro VI standard for all newly

232

300

277 265

277

316

350

376

0

50

100

150

200

250

300

350

400

2010 2011 2012 2013 2014 2015 2016 2017

CAGR 2012-2017: 6.3%

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registered trucks in Germany as of January 2014 (IHS, 2012). In the midterm, the most important growth

factors for the German truck market will be the overall macroeconomic development and the backlog

demand for replacement purchases that has built up during the financial and sovereign debt crisis (IHS,

2012).

115. The graph below displays a sales forecast for the German truck market. According to LMC Automotive,

the compound annual growth rate for the period from 2012 to 2017 will be 3.3 %. While the compound

annual growth for trucks with a GVW of 6-15 t is 1.6 % p.a., growth for trucks with a GVW over 15 t is

considerably higher at 4.1 %. Consequently, sales of the 6-15 t segment are expected to decrease from

32 % in 2012 to 29 % in 2017.

Truck sales – Germany (in thousand units)

Source: LMC, 2012

116. Like in the previous year, Daimler with the brand Mercedes-Benz remains the market leader in the

German truck market in 2012, with a market share of 39 %. MAN Group is in second place with a market

share of 26 %. No other manufacturer in Germany has a market share greater than 10 %. The German

market can hence be described as highly concentrated.

32%31% 32% 32% 31% 31% 30% 29%

68%

69%

68%68% 69%

69%70%

71%

0

10

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013 2014 2015 2016 2017

GVW 6-15 t GVW>15 t

73

89

81 77

80

86 91

95

CAGR 2012-17: 3.3 %

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Market shares in Germany

Source: LMC, 2012

Russia

117. In contrast to many other emerging markets, the Russian economy was significantly affected by the

financial market crisis and continues to be influenced by its ramifications. According to EIU's forecast, an

average real GDP growth rate of 3.8 % is expected for the period from 2012 to 2017. This forecast eco-

nomic development is expected to have a positive impact on future truck sales. However, according to

BCG's assessment, Russia's long-term growth will be hindered by infrastructural problems caused by its

size and extreme climate in certain areas as well as low investment in the country’s infrastructure in the

past. The graph below shows the sales forecast for the Russian truck market with a GVW over 6 t. The

expected compound annual growth rate for the period from 2012 to 2017 is 4.2 %.

3.5%

1.1%

2.2%

6.0%

6.7%

7.7%

9.3%

26.7%

36.7%

4.3%

1.0%

2.4%

5.7%

6.2%

7.8%

7.9%

26.1%

38.6%

0% 10% 20% 30% 40% 50%

Other

Mitsubishi

Renault Trucks

Scania

Volvo

IVECO Trucks

DAF

MAN Group

Mercedes-Benz

2012 2011

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Truck sales – Russia (in thousand units)

Source: LMC, 2012

118. The Russian commercial vehicle market has so far been strongly influenced by Europe. About 30 % of

domestic demand for trucks is met by foreign manufacturers (KPMG, 2011). Nevertheless, the Russian

truck market is currently characterised by low technical standards and a dominating low price segment.

However, due to the introduction of stricter emission standards, a modernisation and a quality im-

provement of the Russian truck fleet is expected. Beyond that it is generally assumed that the Russian

government will continue to release more stringent emission standards in the future (BCG, 2012). Both

developments may lead to the middle class and premium class segments achieving higher growth rates

at the expense of the low price segment and becoming the major segments in the future.

119. The graph below illustrates the competitive situation in the Russian truck market. Despite the fact that

many manufacturers from the triad countries have established themselves in the Russian market, this

already concentrated market remains dominated by local manufacturers. Market leader is the Russian

manufacturer KAMAZ with a market share of 31.5 % in 2012. GAZ and MAZ follow with market shares of

18.9 % and 9.3 % respectively. MAN Group is the leading foreign manufacturer in the Russian truck mar-

ket with a market share of 7.2 % and takes the fourth place. The dominance of local manufacturers with

trucks in the low price segment is based on historical reasons and partly also caused by protectionist

measures of the Russian government that make it difficult for foreign companies to serve the Russian

market. However, this situation is expected to change in the future due to Russia's accession to the

World Trade Organization (WTO) in 2012. Nevertheless, the potential positive effects of Russia's WTO

accession may be reduced by the introduction of the "utilization fee". The "utilization fee" is charged on

imported vehicles from foreign manufacturers and could overcompensate for the reduction of tariffs

due to Russia’s WTO accession. If the "utilisation fee" is restricted to importers only, localising the pro-

23%21%

22% 28% 28% 27% 27% 27%

77%

79%78%

72% 72% 73%

73%73%

81

125

132139

144140

154162

0

20

40

60

80

100

120

140

160

180

2010 2011 2012 2013 2014 2015 2016 2017

GVW 6-15 t GVW > 15 t

CAGR 2012-17: 4.2 %

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duction could possibly help to avoid these protectionist measures. In addition, demand is increasingly

shifting towards technically developed, environmentally friendly trucks (KPMG, 2011). This provides

triad manufacturers with the opportunities to expand their competitive position in the Russian market.

Market shares in Russia

Source: LMC, 2012

India

120. According to EIU's forecast, an average real GDP growth rate of 7.2 % is expected in the period from

2013 to 2017. Approximately the same figures apply to the Indian truck market. As the graph below

shows, a compound annual sales growth of 7.6 % is expected for the Indian truck market with a GVW

over 6 t in the period from 2012 to 2017. While the expected compound annual growth rate for trucks

with a GVW of 6-15 t is 4.3 %, the expected growth for trucks over 15 t is considerably higher at 10.4 %.

This will reduce the share of the 6-15 t segment from 50 % in 2012 to 43 % in 2017.

11.4%

2.3%

5.0%

6.0%

6.0%

7.9%

7.5%

10.8%

12.0%

31.2%

9.1%

3.6%

3.8%

4.2%

6.2%

6.3%

7.2%

9.3%

18.9%

31.5%

0% 5% 10% 15% 20% 25% 30% 35%

Other

Mercedes-Benz

Scania

Hyundai

Volvo

UralAZ

MAN Group

MAZ

GAZ

KAMAZ

2012 2011

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Truck sales – India (in thousand units)

Source: LMC, 2012

121. The low price segment currently dominates the Indian market (BCG, 2012). However, it is expected that

a middle class segment will develop and replace the low price segment over the long term.

122. The introduction of more stringent emission standards is one of the most important driving forces

behind the modernisation of the Indian truck fleet. In 2010, the Indian government changed its national

emission standards from Bharat II (corresponds to Euro II) to Bharat III (corresponds to Euro III), while

urban emission standards were increased from Bharat III to Bharat IV (corresponds to Euro IV) (BCG,

2012). According to the BCG study, national emission standards are expected to be raised to Bharat IV in

the near future as well. Another driving force is the expected expansion and improvement of the infra-

structure network. For example, investments in the expansion of a national highway system are in-

tended to allow for a pan-Indian long-distance travel and transportation.

123. With regard to competition, the Indian truck market is highly concentrated and primarily dominated by

the local manufacturer Tata Motors Limited, Mumbai/India ("Tata Motors"), with a market share of

59.1 % in 2012. Other leading competitors include Ashok Leyland Limited, Chennai/India ("Ashok Ley-

land"), and Eicher Motors Limited, Delhi/India ("Eicher Motors"), with market shares of 21.4 % and

12.1 % respectively. Joint ventures and cooperations with local manufacturers are also gaining in impor-

tance in India, such as for example between Volvo and Eicher Motors or Navistar and Mahindra. The

individual companies’ market shares for the years 2011 and 2012 are as follows:

48% 47% 50% 50% 47% 45% 44% 43%

52% 53%50% 50%

53%55%

56%57%

311 309281 292

331

363385

405

0

50

100

150

200

250

300

350

400

450

2010 2011 2012 2013 2014 2015 2016 2017

GVW 6-15 t GVW>15 t

CAGR 2012-17: 7.6 %

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Market shares in India

Source: LMC, 2012

Bus

Global bus market

124. The global market for buses with a GVW over 8 t can be divided into the categories of city buses, inter-

city buses and coaches.

125. Compared to the truck market, the bus market is less dependent on general economic developments

and macroeconomic factors. Rather government and tourism expenditures comprise the quantitative

influencing factors on the bus market. The city bus segment is particularly dependent on government

spending, as city buses are normally financed by the public sector. In times of tight government budgets

- like in many European countries - there are often delays in planned bus fleet renewals which have cor-

responding negative effects on the market development. Due to the consequences of the financial and

sovereign debt crisis, this can currently be observed in particular in southern European countries. How-

ever, many German municipalities have also been forced to reduce their spending. The intercity and

coach segments are rather dependent on the development of tourism spending.

126. Legislative initiatives and government incentives further influence the bus market. Examples of this

include the elimination of the train monopoly in Germany, legislative initiatives such as the require-

ments to wear seatbelts or to provide seats and access for disabled travellers, or the grant of EU subsi-

dies. In addition, an analysis of the bus market must take into account replacement cycles and special

events like the Olympic Games and the FIFA World Cup that lead to increased demand for transporta-

tion.

0.3%

0.1%

0.0%

0.8%

2.1%

3.1%

12.1%

19.2%

62.1%

0.3%

0.3%

0.8%

1.4%

2.2%

2.4%

12.1%

21.4%

59.1%

0% 10% 20% 30% 40% 50% 60% 70%

Other

Volvo

Mercedes-Benz

Mahindra

Swaraj Mazda

AMW

Eicher Motors

Ashok Leyland

Tata Motors

2012 2011

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127. Bus orders are often awarded through tenders. This is particularly true for the city bus segment. In the

other two segments tendering plays a less important role, but nevertheless competitive tenders may

also be used e.g. for military orders.

128. Due to the high amount of tenders and a great number of competitors, the bus market is subject to an

intense competition. In addition, contracts awarded by the public sector often come with conditions

requiring a certain degree of localisation of the bus production. As a result, the worldwide bus market is

highly fragmented with regional markets being usually dominated by local manufacturers.

129. Future growth in the global bus market will primarily be driven by growth in emerging countries. Most

developed countries already have a good infrastructure with a fully developed public transportation

network, which limits the bus market growth potential. The demand in emerging countries is therefore

mainly driven by replacement investments. However infrastructure investments in emerging countries

offer significant growth potential. Another difference between developed European countries and

emerging countries is the ratio of integral buses (fully equipped vehicles consisting of a chassis and a

body) to bus chassis only. While mainly integral buses are produced in Europe, emerging countries are

often buying only chassis that are built upon by local manufacturers afterwards. These vehicles are not

only technically simpler and cheaper than integral buses, but also more compatible with the often

poorly maintained road network.

Trends

130. One trend is the increasing urbanisation of emerging countries. This urbanisation is expected to have a

positive influence on the sales of buses (especially city buses), since a bus network is one of the cheap-

est solutions to establish a municipal infrastructure.

131. Furthermore, bus sales in developed countries are expected to be positively impacted by demographic

changes and the accompanying ageing of the population, since travelling by bus or coach is generally

more attractive to older people than it is to younger people.

132. In addition, an increase in environmental awareness and stricter environmental regulations are also

influencing the bus market. One example is the increased use of "Park and Ride" solutions.

133. On the other hand, both increasing numbers of low-cost airlines and improvements in public rail trans-

portation networks pose a risk to the sales potential in the bus market.

Europe

134. The European bus market has not yet recovered from the aftermath of the financial and sovereign debt

crises, with sales figures declining since 2009. In addition it is important to note that sales have peaked

in 2008 and 2009 driven by EU subsidies. The European bus market is not expected to recover before

2014. The expected compound annual growth rate from 2012 to 2017 is 3.2 %. The expected sales fig-

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ures are shown in the following graph:

New bus registrations > 8 t in Europe (in thousand units)

Source: Analyse & Prognose, 2012

135. Contrary to the truck market, the introduction of the Euro VI-standard will most likely have no notice-

able impact on the growth of the bus market as public investors are generally driven by demand rather

than the introduction of new emission standards. One factor that should positively affect the bus market

is the recently enacted EU law requiring the installation of a lift and two seats for wheelchair users in

every bus as of 2015. This amendment of the law will predominantly affect coaches and intercity buses,

since most city buses have already been adapted to that requirement.

136. A rebound to pre-crisis levels is expected in the coming years for the mature and saturated European

bus market. Although, a stable level of bus sales is expected in the long run, historical trends indicate

declining sales since the 1970s.

137. Because of the fragmented market structure, individual European markets are dominated by local

manufacturers. The Daimler-owned EvoBus, Irisbus owned by Iveco S.p.A., Turin/Italy ("Iveco"), MTB,

Volvo and Scania are among the leading manufacturers in Europe.

138. Based on the number of new registrations, Germany is the second largest European bus market behind

France with approximately 19 % market share in 2012. Because of the liberalisation of long-distance bus

lines in Germany, a precise sales forecast is currently hardly possible. It is still uncertain whether there

will be a significant growth in the intercity bus segment, since at first long-distance line operators will

most likely play the role of a middleman and will probably use the spare capacities of travel businesses

rather than build their own fleets. Moreover, it is expected that no new lines, but rather extensions to

17% 17% 19% 20% 19% 18% 17% 17%

83% 83% 81% 77% 77% 77% 79% 81%

3%4%

5% 4% 2%26 26

24 2426

28 28 28

0

5

10

15

20

25

30

2010 2011 2012 2013 2014 2015 2016 2017

Germany

Europe without Germany

Liberalisation of long-distance bus service

CAGR 2012-17: 3.2 %

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existing lines with stops in Germany will be established. In the graph above (Note 134), the expected

impact of the long-distance bus deregulation is depicted separately. A compound annual growth rate of

1.3 % (without deregulation of long-distance lines in Germany) is expected for the period between 2012

and 2017. According to the Omnibus study conducted by Analyse & Prognose, EvoBus along with MTB

dominate the German bus market with market shares in 2011 of approximately 50 % and 30 %, respec-

tively (Analyse & Prognose, 2012).

c) Market positioning and competitive environment in the MAN Latin America division

Truck - Brazil

139. According to EIU’s forecast, an average annual growth rate of 3.6 % is expected for the Brazilian econ-

omy from 2013 to 2017. The forecasts for the Brazilian truck market are also positive. As shown in the

graph below, LMC Automotive expects a compound annual truck sales growth rate of 4.1 % from 2012

to 2017. While the expected growth rate for trucks with a GVW of 6-15 t is 1.7 %, the expected annual

growth rate for trucks over 15 t is significantly higher with 5.2 %. Consequently, the sales share of trucks

from 6 -15 t is expected to decline from 34 % of the total sales in 2012 to 30 % in 2017.

140. However, the growth of the Brazilian truck market is being hampered by the country’s underdeveloped

infrastructure. Only 12 % of the roads in Brazil are paved, while the percentages of paved streets in India

and Russia are 47 % and 81 % respectively (BCG, 2012).

141. Major sport events like the FIFA-World Cup in 2014 and the 2016 Summer Olympics are expected to

have a positive impact on the public transportation system, but will have no noteworthy impact on the

quality of the long-distance infrastructure that trucks heavily rely on. Nevertheless it is expected, that

these events will have a stimulating effect on the Brazilian economy as a whole and therefore the Brazil-

ian truck market as well.

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Truck sales – Brazil (in thousand units)

Source: LMC, 2012

142. In contrast to other emerging countries, the middle class truck segment is already predominant in Brazil.

The premium segment is also significant due to the maturity of the Brazilian market, while the low price

segment is of minor importance. This market structure is expected to remain in the future. The quality

increase of the Brazilian truck fleet is especially driven by stricter safety and emissions standards. The

introduction of the emission standard PROCONVE P-7 (equal to Euro V) in 2012 was one important in-

fluencing factor. The impending introduction of the PROCONVE P-8 standard (equal to Euro VI) is also

expected to further affect truck sales. There is however no consensus yet, when exactly it will take

place6. For the coming years BCG expects that the middle class segment will retain its dominant position,

although its share is expected to decline from 71 % in 2010 to 59 % in 2020. Correspondingly, the pre-

mium segment is expected to increase to approximately 40 % of total Brazilian truck sales by 2020 (BCG,

2012).

143. A key success factor in the Brazilian middle and premium segments is a supply of trucks tailored to cope

with the country’s poor infrastructure. From a regulatory perspective a local production is another key

to success. Foreign manufacturers are released from import tariffs only when they manufacture 60 % or

more of their production domestically. Finally, distribution and service networks are continuously gain-

ing importance due to rising customer expectations.

144. As shown in the following graph, the Brazilian truck market is dominated by global manufacturers, who

control the market with products customised for the Brazilian market. These vehicles are generally more

6 BCG assumed in their 2012 study, that the new standard will go into effect in 2017.

32% 34%34% 33% 33% 32% 29% 30%

68% 66%

66%67%

67%68%

71%70%

162 166

132

144152

161

147

161

0

20

40

60

80

100

120

140

160

180

2010 2011 2012 2013 2014 2015 2016 2017

GVW 6-15 t GVW > 15 t

CAGR 2012-17: 4.1 %

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robust, simpler and cheaper than their equivalents in triad countries. MAN respectively ML is the market

leader in Brazil with a share of 30.7 %, followed by Mercedes-Benz and Ford Motor Company with re-

spective shares of 26.7 % and 15.9 %. Agrale S.A. is one of the few local manufacturers that could de-

fend its position as a niche provider of special-purpose vehicles.

Market shares in Brazil

Source: LMC, 2012

Bus - Brazil

145. As is commonly seen in emerging countries, the Brazilian bus market is characterised by the separate

manufacturing of bus chassis and bodies. With over 20,000 units sold in 2012 the Brazilian bus market is

approximately comparable in size with the European market. The size of the Brazilian market is a result

of the fact that personal transportation is virtually exclusively done using the road system. Rail and air

transportation are only being used to a minor extent. Another influencing factor are the infrastructure

and the automobile industry incentive programmes provided by the Brazilian government. These in-

clude for example the announced and partially in 2012 implemented purchase of 8,570 school buses.

146. An increasing demand is expected in the coming years because of the two major events: the FIFA World

Cup in 2014 as well as the 2016 Summer Olympics.

147. Just like the truck market, the Brazilian bus market is mainly dominated by global players. ML has as-

sumed a leading competitive position along Daimler, while Agrale is the only domestic manufacturer

that was able to retain a relevant market share finding themselves behind Daimler and ML as one of the

leading market competitors (IHS, 2012).

0.3%

1.1%

6.4%

8.1%

10.9%

17.2%

25.4%

30.7%

0.3%

0.4%

6.8%

7.8%

10.8%

15.9%

26.7%

30.7%

0% 5% 10% 15% 20% 25% 30% 35%

International

Agrale

Iveco

Scania

Volvo

Ford

Mercedes-Benz

MAN

2012 2011

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d) Market positioning and competitive environment in the MAN Diesel and Turbo division

Engine & Marine Systems

148. The development in shipbuilding over the last years was marked by an increase in capacity. From 2001

to 2011, the transport capacity grew at a total of approximately 95 % (maritime-insight, 2012). The fol-

lowing graph shows the long-term development of shipbuilding orders from 1980 to 2016. The year

2007 represents the highest number of order intakes. Average construction times of 2-3 years, as well as

bottlenecks in shipyards and parts manufacturing during the order peak, have resulted in significant

capacity expansions in the sea-borne trade until the year 2011 and higher revenues for the shipbuilding

industry.

Order intake by ship type (quantity)

Source: maritime-insight, 2012

149. From 2001 to 2011, the maritime trade volume increased by approximately 63 %. This in comparison to

the increase in capacities disproportionately low development was also caused by the decline in de-

mand due to the global financial and economic crises. The persistent European sovereign debt crisis

causes a further decrease in demand. The resulting overcapacities increase further by previously con-

tracted ship orders that are currently being delivered. Such overcapacities are most significant for con-

tainer ships, freight ships ("Bulker") and tankers.

150. This development has influenced profitability in the ship market. Charter rates are currently at histori-

cally low levels (HSH, 2013) so that container and tanker shipping businesses are unable to cover their

costs of capital, while "Bulker" shipping businesses are unable to cover even the operating costs.

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Tankers Bulkers Container ships Passenger ships Offshore & Service Other

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151. The slump in demand in merchant shipping (comprised of container, bulkers and tankers) has been

somewhat weakened by a less severe order decrease for offshore, passenger and other ships. As a re-

sult, orders for merchant ships accounted for approximately 67 % of total orders in 2007, and approxi-

mately 50 % in 2012 (maritime-insight, 2012).

152. Overall, these circumstances led to a decline in ship orders in 2012 and a corresponding price pressure

on ship and ship components manufacturers.

153. The HSH Nordbank forecast in February 2013 (HSH, 2013) a further stagnation of charter rates for 2013

and no recovery of the charter rates before the end of 2014 for container ships, freight ships

and tankers.

154. Maritime-insight assumes a low point in ship orders in 2012 and expects an order increase beginning in

2013 to a level approximately 20 % higher than the average from 1980 to 2003 (maritime-insight, 2012).

This expectation relies mainly on the assumption that global trade will continue to grow and on the re-

lated stronger demand for transport capacity. However, the increase in transport capacity is expected to

be covered by larger ships with a significantly larger carrying capacity. Therefore from 2011 to 2021,

ship sales are expected to increase 0.9 % p.a., while the average increase in carrying capacity is assumed

to be 3.6 % p.a. (maritime-insight, 2012).

155. MDT manufactures four-stroke engines for ships up to approximately 5,000 gross registered tons and for

cruise liners up to 60,000 gross registered tons. Larger ships are usually powered by two-stroke engines

and although MDT develops such engines, they are licensed to and manufactured by partner companies

near the shipyards.

156. Stricter requirements for four-stroke engines concerning the emission of nitrogen and sulphur oxides as

well as improved efficiency could lead ship-owners to modernise their fleet. Therefore, both for envi-

ronmental and cost reasons an increased demand is expected in the coming years for dual-fuel motors

that can use both gas and diesel as fuel or even for pure gas engines in the long run. An increasing de-

mand for gas as an energy source is currently causing high demand for liquid gas transportation ships,

also known as LNG-Tankers.

157. The four-stroke engine market is highly competitive. The Wärtsilä Corporation, Helsinki/Finland ("Wärt-

silä") is the market leader with 38 % (2011), followed by MDT with 17 % and Hyundai Heavy Industries

Co., Ltd., Ulsan/South Korea ("HHI"), with 10 % (Source: MDT). The shipyard operator HHI founded the

brand Himsen in 2001 and since then could considerably extend its market share. Following this strat-

egy, the possibility exists that other large shipyards with their machine production could also enter the

market as direct competitors to MDT. MDT is the market leader for two stroke engines with a market

share of approximately 80 %, with Wärtsilä having approximately 18 % (Source: Wärtsilä). Nevertheless,

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it should be considered, that the manufacturing takes place exclusively over licensees located near the

shipyards.

Power Plants

158. The SBU Power Plants of MDT operates as a manufacturer of stationary diesel and gas engines that are

used to generate electricity. Generally these engines are used for the propulsion of generators in decen-

tralised diesel and gas engine power plants with a total deployable capacity of up to 400 MW. Due to

low investments requirements and a relatively short construction time compared to contemporary

power plants, diesel and gas power plants are being used as a temporary solution for a decentralised

covering of base loads especially in developing countries. With increasing energy demand a shift to large

power plants is following as a long term solution. The market for diesel and gas power plants lies there-

fore in developing countries which are in the beginning stages of their economic development. In devel-

oped countries MDTs power plant solutions are used mainly as emergency power or peak load generat-

ing units. Since diesel and gas engines have an estimated life expectancy of 20 to 30 years regional sales

change accordingly over the years. In comparison to the market as a whole, diesel and gas engines that

are deployed to generate electricity represent only a niche market (Source: MDT).

159. Likely growth indicators for the relevant market are the energy and electricity demand growth rates, as

well as the energy production in the respective countries. The growth in demand for energy is deter-

mined by the overall economic development and is expected to lie slightly lower than the overall eco-

nomic growth rates in the next few years. By 2035 the worldwide energy demand is expected to in-

crease by approximately 35 %, or on average by 1.2 % p. a. (IEA, 2012). The increase in energy demand is

especially attributable to the rising population and growing wages.

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Development of the global energy demand

Source: IEA, 2012

160. However, the increasing demand for energy is predominantly coming from non OECD countries. In

North and South America, energy demand in 2035 is expected to be only 4.8 % higher than the current

level, while in Europe an increase of only 0.5 % is expected. On the other hand, demand in emerging and

developing countries is expected to increase significantly. China and India are showing average yearly

growth rates of 1.9 % and 3.2 % respectively. China alone is expected to contribute approximately 33 %

to the global growth in energy demand by 2035.

161. In particular, the demand for natural gas is forecast to rise significantly by 2035, with an estimated

growth of 50 %. The demand for electricity from oil and coal is also expected to continue to grow 14 %

and 21 % respectively in the same period. In both cases, growth is again driven by an increasing demand

from non-OECD countries. Approximately 50 % of the growth in oil demand can be traced back to China.

Oil demand is expected to grow by 2.2 % p. a. in China, and by 3.3 % p. a. in India until 2035. However, in

OECD countries the demand for oil and coal is expected to decrease. By 2035 the demand for coal in

Europe is expected to decline to approximately 60 % of its 2010 level. The demand for oil is also ex-

pected to decrease on average by 1.0 % p. a. in Europe, and by 1.4 % in the USA until 2035. The decreas-

ing demand is mainly driven by an increasing efficiency and an on-going shift to alternative fuels in the

transportation business. Consequently, the proportion of global energy demand for fossil fuel energy is

expected to decrease from approximately 81 % to approximately 70 % in 2035.

162. Renewable energy sources are increasingly gaining importance as an alternative to fossil fuels. A signifi-

cant growth is forecast until 2035 for renewable energies. The IEA predicts a total growth of 82.8 % (IEA,

2012). Renewable energies are assumed to show the highest growth of all energy sources and are con-

8,779

12,730

13,989

14,922

15,675

16,417

17,197

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1990 2010 2015 2020 2025 2030 2035

millio

n to

e

1.9%

1.9%

1.3%

1.0%

0.9%

0.9%

CAGR

KPMG PwC

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sequently expected to contribute a higher share to the total energy consumption, going from approxi-

mately 20 % in 2010 to approximately 31 % in 2035.

163. The development in electricity demand of the particular region will dictate the building of new power

plants. The development in electricity demand and generation, especially in developing countries, is

therefore of significant relevance to the SBU Power Plants. The demand for electricity is expected to

grow faster than any other energy related area with an estimated growth rate of 71 % or 2.2 % p.a. be-

tween 2010 and 2035. More than 80 % of this increase will come from non-OECD countries, with more

than 50 % from China and India.

164. Furthermore, electricity prices are expected to increase by 15 % in the forecast period, mostly caused by

increasing primary energy prices. The power generation capacity is expected to increase in line with

demand. The capacity will thus grow by approximately 72 % in total between 2010 and 2035. The energy

sources with the highest contribution will most likely be gas and wind with expected capacity growth of

nearly 50 %. In addition, long-term trends show a shift from diesel- and heavy oil-powered power plants

towards plants powered by natural gas or alternative energy sources. This means for MDT that more

and more dual fuel motors or gas motors will be required. The development of electricity generation by

fossil fuels is shown below:

Electricity generation by fossil fuels:

Source: IEA, 2012

165. Electricity generation is expected to increase in Asia, as well as in those markets that MDT identified as

their target markets. In Africa and the Middle East the average annual growth rates are approximately

3.0 % with a declining growth trend in the long run. This will ultimately result in a slow-down of the ca-

CAGR

5.1%

1.8%

1.9%

3.6%

0.0%

4,5616,600 6,629 6,401

2,929

7,847

11,163

14,528

-

5,000

10,000

15,000

20,000

25,000

1990 2010 2020 2035

TWh

OECD Non-OECD

-0.2%

CAGR

CAGR

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pacity increase. The forecast trends in energy generation from different regions are shown below:

166. Wärtsilä was the market leader for medium-speed motors in 2011 with a market share of 51 %. MDT

followed with a market share of 24 %, of which nearly half was attributable to licenses. On third and

fourth places followed HHI and Caterpillar Inc., Peoria/USA ("Caterpillar") with 8 % and 7 % respectively.

Wärtsilä is also the market leader in the increasingly relevant gas engine market with a market share of

approximately 71 % in 2011. MDT had a market share of 13 % followed by HHI with 3 % and Caterpillar

with 2 % (Source: MDT).

Turbomachinery

167. The SBU Turbomachinery provides compressors, gas and steam turbines and reactors for the oil and gas

industries, the processing and energy generation industries, as well as complete machinery trains for the

chemical and petrochemical industries. The developments in the production, pipeline transport and

processing of oil and gas as well as in the chemical and petrochemical industries are therefore the main

drivers of the SBU Turbomachinery.

168. Especially the technologically advanced production of oil and gas from offshore and other unconven-

tional sources has been identified as a relevant growth market for the SBU Turbomachinery. One third

of the total oil and gas supply is currently provided by offshore sources, with the total share expected to

increase in the future.

169. The oil and gas supply is necessarily dependent on the discovery and exploration of new sources. There-

fore, a forecast can be made based on the discovery of new oil and gas fields in the near past as well as

the number of discovered, but not yet explored sources. From 2001 to 2011 on average 102 oil and gas

offshore fields were explored each year. The number of producing fields has increased by 3.9 % p. a. in

the same timeframe. It is estimated that an average of 115 oil and gas fields will be explored every year

from 2012 to 2020. Compared to the past, a higher number of new sites is required to maintain the

same output, since more and more fields are being exploited (Clarkson, 2012).

CAGRs 1990-2010 2010-2020 2020-2035 2010-2035

OECD 1.8% 0.9% 0.7% 0.8%

Eastern Europe / Eurasia -0.6% 1.6% 1.3% 1.4%

Asia (Non-OECD) 8.4% 5.5% 2.6% 3.8%

Middle East 6.8% 3.8% 2.6% 3.0%

Africa 3.8% 3.6% 2.6% 3.0%

Latin America 4.0% 2.8% 1.9% 2.3%

Non-OECD 4.7% 4.5% 2.4% 3.2%

EU 1.3% 0.5% 0.5% 0.5%

Worldwide 3.0% 2.8% 1.8% 2.2%

Source: IEA, 2012

Electricity development by regions

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170. The oil output was roughly constant from 2001 to 2012 (CAGR 0.5 %), while the gas production in-

creased by 5.2 % p. a. due to improved production methods and the discovery of extensive deposits.

Development of offshore oil and gas production

Source: Clarkson, 2012

171. It is commonly assumed that throughout the next two to three decades no shortcomings are expected

as the ebbing of easily accessible reservoirs can be compensated by technologically advanced explora-

tion methods and extension of transportation channels. The share of gas production from unconven-

tional sources is expected to increase from 14 % in 2010 to 26 % in 2035 (IEA, 2012), even though the

usage of shale gas and coal bed methane is discussed controversially. In addition, the further exploita-

tion of deep sea oil and gas deposits is expected, especially since the utilisation of these extraction

technologies is economically reasonable at the current levels of gas and oil prices. According to forecasts

and based on an initial price of USD 112 per barrel of Brent oil in 2012, future oil prices will range from

USD 104.50 (2013) to USD 115.00 (2017) (EIU, 2013).

172. The significant gas price differences that could be observed between different local markets in the

recent past can be attributed to the use of unconventional extraction methods in the USA and the re-

sulting increase in supply. This development is illustrated in the following graph. These gas price differ-

ences might be the reason for the increased demand for transport capacity like LNG tankers, although

gas exports are subject to government regulation in the USA.

5,000

10,000

15,000

20,000

25,000

30,000

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

in t

ho

usa

nd

b

arre

ls p

er d

ay

in m

. cu

bic

fe

et p

er d

ay

Offshore gas production (left axis) Offshore oil production (right axis)

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History of gas prices in USD per million Btu

Source: BP, 2012

173. However, in the long run oil and gas prices, and thus investments in the corresponding infrastructure,

are not exclusively determined by production sources and technologies but rather by the demand for

these energy sources. Overall, a moderate increase in demand is expected with an average yearly

growth rate of 0.5 % for oil and 1.6 % for gas from 2010 to 2035. In total, the share of oil and gas in the

primary energy mix is predicted to fall from approximately 54 % in 2010 to approximately 51 % in 2035

(IEA, 2012).

174. In the chemical market MDT’s turbo machinery are especially used for the production of nitrogen based

fertilisers, and in petrochemical applications for the production of ethylene. The expected long-term

growth rates for the fertiliser and the petrochemical industries are shown in the following graph:

-

2

4

6

8

10

12

14

16

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Japan (LNG) European Union USA

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Development of the chemical industry 2011 – 2030 (production)

Source: VCI, 2013

175. Population growth and the establishment of a growing middle class in developing countries are the main

drivers of the chemical market. This development is also connected with the demand for energy. From

2009 to 2020, Brazilian, Chinese and Indian energy consumption is projected to grow on average by

3.2 % p. a, 3.6 % p. a. and 3.2 % p. a. respectively. Russia shows slower expected growth rates of 1.3 %

p. a. (EIU).

176. The competition for the SBU Turbomachinery is especially high for machinery used in the oil and gas

production due to an intensive price competition. According to company information, MDT’s market

share for oil and gas industry compressors is approximately 16 %. In other markets, e.g. the chemical

industry, MDT’s average market share is approximately 24 %. The main competitors in the turbo ma-

chinery market are General Electric Company, Fairfield/USA ("GE"), Siemens AG, Munich/Germany

("Siemens"), Dresser-Rand Group Inc., Houston/USA ("Dresser Rand"), Elliott - a brand of Ebara Corpora-

tion, Tokyo/Japan - Caterpillar and Mitsubishi Heavy Industries, Ltd., Tokyo/Japan ("MHI") (Source:

MDT). It is expected that the price pressure in the turbo machinery market will continue to rise due to

an increasingly intense competition.

1.8%

1.3%

0.4%

4.5%

3.2%

4.5%

0%

1%

2%

3%

4%

5%

Germany chemistry

(general)

Germany fertilisers Germany

petrochemicals

World chemistry

(general)

World fertilisers World petrochemicals

CA

GR

20

11

-2

03

0

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e) Market positioning and competitive environment in the Renk division

Definition of the relevant markets

177. Across the four SBUs Vehicle Transmissions, Special Gear Units, Standard Gear Units and Slide Bearings,

Renk has a diversified range of applications of its products in various markets.

178. The SBU Vehicle Transmissions basically refers to the market for military equipment, and in specific the

market for tracked vehicles. The world market for military equipment is geographically limited due to

government restrictions on exports. Important markets are located in Europe and Asia.

179. The SBU Special Gear Units serves the market for military equipment with navy gear units, in particular

the market for marine ships. Additionally, turbo gear units are primarily used in the power industry,

most of all for conventional energy production. Gear units used in cement mills are manufactured for

cement mill constructors.

180. The SBU Standard Gear Units provides marine gear units especially for four-stroke engines used in the

civilian shipbuilding industry. In the recent past, especially the segment for LNG tankers gained impor-

tance. In addition, the SBU offers gears for offshore wind power plants with capacities from 5 MW,

turbo gear units and couplings.

181. Similar to the SBU Special Gear Units, the SBU Slide Bearings operates in the power as well as the elec-

trical engineering industry. Moreover, the bearings are also deployed in two and four-stroke engines for

ships.

Market for military equipment, especially tracked vehicles and naval vessels

182. According to analyses by the Stockholm International Peace Research Institute ("SIPRI") worldwide

defence expenditures stagnated in 2011, after having experienced a ten year continuous growth.7 How-

ever, the situation basically varies if looked at from a regional perspective. In North America and the

largest European markets (i.e. Germany, Great Britain, France), defence expenditures are generally de-

clining. In Southern Europe, military expenditure was also reduced due to the sovereign debt crisis. In

contrast, a positive market development is predicted for Russia and Eastern Europe since military

equipment, which was purchased during the Cold War, will be discharged and needs to be replaced by

modern equipment. Demand for military equipment is also expected to increase in the Middle East due

to the political situation and the on-going potential for conflict.

183. An increasing demand for military equipment is also expected in the Asia-Pacific region as in comparison

to western countries the region has a relatively high need for modernisation and is characterised by

territorial disputes.

7 On average by 4.5 % p.a. from 2001-2009

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184. The trend to extend the useful life of military equipment works in the opposite direction. Amongst

others, this trend results from cost cutting measures, which are of special importance for the govern-

ments of countries that have been hit by the financial crisis. In part, these cost cutting measures have a

direct effect on the investment budgets for military equipment. However, these investment projects are

basically long term in nature and initiated based on strategic needs. Hence, fiscal constraints should lead

to the deferral of future investment projects rather than their complete cancellation.

185. The global market for tracked vehicles is – based on year 2011 – expected to shrink slightly by a total of

4.0 % until 2021 (IDC, 2011). A stronger decline is expected in the market for armoured infantry fighting

vehicles, where Renk offers a newly developed gear unit. This development is shown in the following

graph:

Worldwide development of the market for armoured infantry fighting vehicles (2011-2021)

Source: IDC 2011

186. The related decline in new orders should be partially offset by increasing revenues from after-sales

business (www.defenceweb.co.za, 2012). The development of a secondary market for older and used

tanks where countries offer their decommissioned models supports this development.

187. With regard to the market development for naval vessels it can be generally noted that requirements

towards the fleets have changed in past years. To this end, a development towards ever more flexible

actions and hence to smaller types of ships has taken place (AMI International, 2011). The market out-

look for gears for naval vessels (frigates, corvettes, speedboats, offshore patrol vessels ”OPV”) is funda-

mentally positive (AMI International, 2010). Growth potential is particularly seen in the OPV segment

(AMI International, 2011).

188. Due to geopolitical developments (e.g. the threat of piracy) as well as partially outdated fleets further

growth potential is identified in the Asia-Pacific region.

6.1

7.2 6.7

6.3 6.5 6.2

5.3 5.1 4.9 4.8 4.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

in b

n.

US d

oll

ar

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Market for energy production

189. Since the market for energy production is relevant to both, Renk and MDT, please refer to the respective

overview in paragraph C.II.2.d).

190. According to projections made by IEA, 2012, global production capacities will on average grow annually

between 2010 and 2035 with regard to fossil fuels by approximately 1.5 %, nuclear energy by approxi-

mately 1.9 % and hydropower by approximately 2.0 %, respectively.

Market for cement plants

191. The most important growth driver for cement plant construction remains economic and population

growth in developing and emerging countries and the associated demand of cement of the construction

industry. This is illustrated by the fact that over the last two decades, global cement consumption has

grown on average by 5.2 % p. a., whereas China’s cement consumption grew disproportionally higher by

an average of 10.5 % p. a.

192. In 2011, China was the largest buyer of cement, accounting for a share of 56 % of global consumption.

India followed with a share of 6.4 %, the USA with 2.1 %, Brazil with 1.8 % and Russia with 1.5 %.

193. Cement producers’ demand for new cement plants was rather moderate in 2011 and 2012 due to a shift

in investments caused by restrictive measures in the infrastructure and real estate sector (e.g. decline of

construction activity in China) as well as a weak economic development in many regions.

194. Following these past periods of comparably moderate growth, a positive outlook is expected for the

global cement market. However, depending on the respective source from which the data is retrieved a

wide range of annual growth rates from approximately 5 % to 10 % can be observed. For instance, the

cement plant supplier FLSmidth & Co. A/S, Valby/Denmark, expects an average growth rate of approxi-

mately 4 % to 5 % p. a. for the next years. Whereas a more optimistic estimate of an average growth

rate of 10.7 % p.a. is shown for the time period from 2011 to 2016 in the "Global Cement" study (Mar-

ketLine, 2012). According to Deutsche Bank AG, Frankfurt am Main (Deutsche Bank, 2012), the annual

growth rate is expected to range between 5.5 % and 6.8 % from 2013 to 2015.

195. It remains questionable, whether these comparably high growth rates will directly lead to investments

in new cement plants, since already established plants are not yet utilised to full capacity. According to

analyses by Deutsche Bank, in 2011 production capacity utilisation was at 75 % on a global level and at

81 % in China.

Market for civilian shipbuilding

196. The market for civilian shipbuilding as one of MDT’s core markets is already described in detail in Para-

graph C.II.2.d). With regard to Renk, sales volumes for ships with two-stroke engines are of minor impor-

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tance, since gear units are typically not built into two-stroke engines due to low-rotation speeds; how-

ever, couplings and slide bearings are used.

197. The market for LNG tankers which is served by Renk with gears for diesel, gas and electric combination

propulsion systems is currently experiencing a temporary boom. This development stems from a grow-

ing demand for gas as source of energy. While this trend is predicted to persist throughout 2013, the

market is expected to be saturated in the medium term as a result of the significant build up in capacity.

Market for offshore wind power plants

198. Renk supplies gears for offshore wind power plants with a nominal capacity of at least 5 MW. The mar-

ket for offshore wind power plants differs from the onshore market as the technical installation and

commissioning of offshore plants is more complex. In the past, the development was affected by techni-

cal problems, missing grid infrastructure, restrictive financing as well as political uncertainties concern-

ing public incentives (dena, 2012). Nevertheless, offshore projects offer structural advantages when

compared to onshore projects because of more stable wind conditions as well as higher average wind

velocities.

199. Up to now, offshore plants predominantly were erected in the North and the Baltic Sea. It’s also Europe

where the highest growth rates are expected. In addition, the development of markets in America, Can-

ada, South Korea and Taiwan is expected. Tests are currently being carried out in China and Japan.

200. In principal, wind power plants can be designed with or without gears. As a consequence, Renk’s market

share depends on the extent to which technologies based on gears will be applied in the future. So far,

onshore plants are predominantly equipped with gears and offshore plants almost exclusively use gears.

Gearless offshore plants are a less tested concept (Energie und Technik, 2012). The biggest advantage of

plants with gears is a lower weight due to smaller generators as well as their compact design. Since most

large generators use permanent magnets, which require at current highly priced rare earths, they are

comparatively more expensive. However, the possibility that gearless plants will become more estab-

lished for offshore wind power plants cannot entirely be ruled out. Siemens, as well as GE have already

developed gearless offshore solutions.

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201. Between 2010 and 2035, IEA expects an average annual increase of the installed capacity by 7.1 % (IEA,

2012). The growth forecasts for the most important regions are depicted in the following table:

Source: IEA, 2012

202. Whether or not aforementioned market forecasts can be translated into potential sales volumes for

wind turbine gear units depends on several factors: Firstly, the future demand for plants with gears and

secondly, the construction of offshore wind power plants with comparably large plant size. Within this

context, it has to be considered that to date time delays were rather common in the development of

offshore wind power plants. Furthermore, an increase in competition seems probable due to the high

degree of standardisation.

Wind power: Installed capacity CAGR

GW 2010 2015 2020 2025 2030 2035 2010 2035 2010-2035

World 198 390 586 760 924 1,098 3.8% 11.8% 7.1%

USA 40 68 93 117 140 161 3.7% 12.1% 5.7%

EU 85 134 182 222 257 288 9.3% 23.0% 5.0%

Japan 2 5 9 16 22 25 0.8% 7.1% 10.1%

Eas tern Europe/Euras ia 1 4 6 10 14 19 0.3% 3.4% 11.2%

China 45 123 200 254 293 326 4.5% 13.6% 8.3%

India 13 27 44 62 80 97 6.9% 12.0% 8.4%

Brazi l 1 4 9 12 13 15 0.8% 6.1% 11.6%

Middle Eas t 0 1 2 4 10 23 0.0% 5.2% 24.7%

% of total production

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3. Net assets, financial position and results of operations

203. We conducted the analysis of consolidated net assets, financial position and results of operations on the

basis of MAN SE’s end of year financial statements, prepared in accordance with IFRS, for the fiscal years

2010 to 2012. The statements have all been audited and issued with an unqualified audit opinion.

a) Net assets and financial position

204. The consolidated balance sheets for the MAN Group prepared in accordance with IFRS as of reporting

date 31 December for the fiscal years 2010 to 2012, respectively, are displayed as follows:

Source: MAN SE

MAN Consolidated Balance Sheet as at 31 December

€ million 2010 2011 2012

Intangible assets 1,914 1,883 2,140

Property, plant and equipment 2,064 2,091 2,245

Equi ty-method investments 2,085 838 521

Financia l investments 51 1,251 1,702

Assets leased out 1,755 2,303 2,501

Noncurrent financia l services receivables 838 953 1,071

Deferred tax assets 1,159 1,078 1,335

Other noncurrent assets 180 226 237

Noncurrent assets 10,046 10,623 11,752

Inventories 2,852 3,513 3,373

Trade receivables 1,982 2,331 2,141

Current financia l services receivables 495 532 575

Current income tax receivables 133 117 58

Assets held for sa le 139 0 0

Other current as sets 713 596 652

Marketable securi ties 14 1 1

Cash and cas h equiva lents 1,057 957 1,366

Current assets 7,385 8,047 8,166

Assets 17,431 18,670 19,918

Subscribed capi ta l 376 376 376

Capi ta l reserves 795 795 795

Retained earnings 4,483 4,428 4,263

Accumulated other comprehens ive income 280 -71 116

Noncontrol l ing interests 56 62 69

Total equity 5,990 5,590 5,619

Noncurrent financia l l i abi l i ties 1,973 1,976 2,966

Pens ions and other post-employment benefi t 226 378 591

Deferred tax l iabi l i ties 849 724 958

Other noncurrent provis ions 653 709 684

Other noncurrent l i abi l i ties 722 951 1,106

Noncurrent liabilities and provisions 4,423 4,738 6,305

Current financia l l i abi l i ties 876 1,194 2,333

Trade payables 1,981 2,324 2,006

Prepayments received 762 823 908

Current income tax payables 534 623 147

Other current provis ions 1,465 1,485 1,166

Other current l i abi l i ties 1,400 1,893 1,434

Current liabilities and provisions 7,018 8,342 7,994

Liabilities 17,431 18,670 19,918

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205. The intangible assets mainly compromise goodwill recognised in conjunction with acquisitions by the

MTB, ML und MDT divisions, capitalised development costs as well as licences, software and similar

rights. They increased from € 1,914 million as at 31 December 2010 to € 2,140 million as at 31 December

2012. As at the reporting date 2012, € 208 million were attributable to the goodwill resulting from the

increase in the shares in the former joint venture company MAN FORCE TRUCKS Private Limited,

Akurdi/India ("MAN FORCE TRUCKS"), now MAN Trucks India Private Limited, Akurdi/India ("MAN Trucks

India").

206. The increase in fixed assets from € 2,064 million as at 31 December 2010 by 8.8 % to € 2,245 million as

at 31 December 2012 is mainly due to investments for replacement and maintenance. In addition to

this, investments were made for growth-related reasons in capacity expansions for different locations as

well as in the development of new products and measures for quality improvements and efficiency in-

creases in production. The fixed assets as at 31 December 2012 include land and buildings amounting to

€ 1,010 million, production plant and machinery of € 764 million, other plant, operating and office

equipment of € 315 million as well as prepayments and construction in progress amounting to € 156

million. As at the 2012 reporting date, the fixed assets include investment property with a carrying

amount of € 20 million.

207. The investments comprise associated companies that are accounted for using the equity method as well

as financial investments. As at the 2012 reporting date, the investments mainly include the 25 % equity

interest in the associated company Sinotruk (€ 399 million according to the equity method), the 13.35 %

equity interest in Scania (€ 1,656 million) held as financial investment, as well as the 49 % interest in the

associated company RMMV (€ 75 million according to the equity method). Until the beginning of Janu-

ary 2011, the shares in Scania were accounted for using the equity method and thereafter were re-

corded as an available-for-sale financial asset in accordance with IAS 39. The decrease in the carrying

amount of investments amounting to € 47 million between 2010 and 2011 mainly reflects the lower fair

value of the investment in Scania at the end of 31 December 2011 compared with the carrying amount

as at 31 December 2010. The increase in investments of € 134 million between 2011 and 2012 mainly

reflects the higher fair value of the investment in Scania as at 31 December 2012 and the lower carrying

amount of equity-method investments. The decrease in carrying amounts (change of € -190 million for

Sinotruk and € -41 million for RMMV) was due to the impairment losses recognised on the investments

in Sinotruk and RMMV, as well as the change in the presentation of the shares of the former joint ven-

ture MAN FORCE TRUCKS, which was fully consolidated as at 31 December 2012.

208. Assets leased out increased from € 1,755 million as at the 2010 reporting date by € 746 million to

€ 2,501 million as at the 2012 reporting date. This resulted in particular from the initial consolidation of

two companies in fiscal year 2011 as well as a higher volume of sales with buyback obligations at MTB.

Assets leased out primarily relate to commercial vehicles which are leased on the basis of operating

leases or sold to customers with buyback options.

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209. The current and noncurrent financial services receivables include finance lease receivables as well as

customer and dealer finance receivables. These increased from € 1,333 million as at 31 December 2010

by € 313 million to € 1,646 million as at 31 December 2012 mainly due to an increase of finance lease

receivables from € 1,050 million as at the 2010 reporting date to € 1,304 million as at the 2012 reporting

date.

210. Deferred tax assets arise in particular from obligations and other provisions, pensions and similar obli-

gations as well as corporate and trade tax loss carryforwards. As at 31 December 2010, the deferred tax

assets amounted to € 1,159 million and increased to € 1,335 million as at 31 December 2012.

211. The other current and noncurrent assets remained rather unchanged at the level of the 2010 reporting

date (€ 893 million), at € 889 million as at the 2012 reporting date. As at 31 December 2012, these as-

sets mainly included other tax receivables amounting to € 207 million, VAT receivables of € 165 million

as well as prepaid expenses of € 100 million.

212. The increase in inventories by 23.2 % to € 3,513 million as at 31 December 2011 as compared to the

previous year was mainly due to the increased business volumes in the two business areas Commercial

Vehicles and Power Engineering as well as partially increased stock-keeping periods. The subsequent

reduction by 4.0 % to € 3,373 million as at 31 December 2012 was mainly attributable to the reduction

in remaining Euro III vehicles, which had been accumulated in particular at ML at the end of 2011. Inven-

tories amounted to € 3,373 million as at 31 December 2012 and included work in progress and finished

products (€ 2,294 million), merchandise (€ 499 million), raw materials, consumables and supplies (€ 445

million) as well as prepayments (€ 135 million).

213. Trade receivables increased mainly due to volume-related factors, by 17.6 % from € 1,982 million as at

the 2010 reporting date to € 2,331 million as at 31 December 2011. The subsequent reduction by € 190

million to € 2,141 million as at 31 December 2012 was mainly due to the reduction in business volumes

in the Commercial Vehicles business area.

214. As at 31 December 2010, the 30 % interest in Ferrostaal Aktiengesellschaft, Essen ("Ferrostaal")

amounting to € 139 million, was reported as asset held for sale.

215. Cash and cash equivalents increased due to the nature of the business by € 309 million from € 1,057

million as at the 2010 reporting date to € 1,366 million as at the 2012 reporting date.

216. Despite positive net income of € 247 million, equity declined by € 400 million to € 5,590 million as at

31 December 2011 as compared to 31 December 2010. The reduction is mainly due to negative currency

translation differences (change of € -187 million) as well as an increase in actuarial losses on pensions of

€ 148 million. In addition, the development of equity was influenced by the agreements signed with

International Petroleum Investment Company, Abu Dhabi/U.A.E. ("IPIC"), and MPC Industries GmbH,

Hamburg ("MPC"), in connection with the disposal of Ferrostaal, and accordingly decreased net income.

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As at 31 December 2012, equity increased marginally by approximately 0.5 % to € 5,619 million. This

development resulted from a positive net income of € 189 million and the increased fair value meas-

urement of the investment in Scania amounting to € 457 million recognised in other comprehensive

income. This increase was partially offset by dividend payments for fiscal year 2011 of € 342 million, a

decrease of the positive currency translation difference (€ -192 million) as well as the increase in actuar-

ial losses on pensions of € 146 million.

217. Current and noncurrent financial liabilities increased in fiscal year 2011 in comparison to the previous

year by a total of € 321 million, in particular due to an increase in bank borrowings. The increase in fi-

nancial liabilities by € 2,129 million to € 5,299 million as at 31 December 2012 resulted from the issu-

ance of new bonds.

218. The increase of pension obligations from € 226 million as at 31 December 2010 to € 591 million as at

31 December 2012 is mainly due to the application of comparably lower discount rates for the meas-

urement of provisions.

219. Tax liabilities (deferred tax liabilities and current income tax payables) declined from € 1,383 million as

at 31 December 2010 to € 1,105 million as at 31 December 2012. The decline reflects the additional tax

payments arising from the tax audit for the years 2002 to 2005.

220. The slight increase in other current and noncurrent provisions from € 2,118 million as at 31 December

2010 to € 2,194 million as at 31 December 2011 is mainly attributable to provisions of € 65 million that

were recognised on the basis of information obtained to date in connection with the investigation of

irregularities in the transfer of four-stroke marine diesel engines at MDT in fiscal year 2011. The de-

crease in other current and noncurrent provisions to € 1,850 million as at 31 December 2012 was mainly

due to a decline in miscellaneous other provisions for business risks amounting to € 186 million.

221. Other current and noncurrent liabilities increased from € 2,122 million as at the 2010 reporting date to

€ 2,844 million as at the 2011 reporting date and decreased in 2012 by 10.7 % to € 2,540 million. This

development is mainly due to the settlement of obligations entered into at the end of November 2011

in connection with the sale of Ferrostaal, as well as the concurrent settlement of the litigation with IPIC.

222. Due to volume-related factors, trade receivables increased by € 343 million to € 2,324 million as at the

2011 reporting date in comparison to the previous year. Due to the market-driven decline in production

volumes in fiscal year 2012, trade receivables decreased by € 318 million to € 2,006 million as at 31 De-

cember 2012, which represent levels close to fiscal year 2010.

223. Prepayments received increased due to the MAN Group’s business development from € 762 million as

at the 2010 reporting date to € 908 million as at the 2012 reporting date despite a lower level of order

intakes at MDT in fiscal year 2012.

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b) Results of operations

224. MAN Group’s results of operations is displayed in the following table, based on MAN SE’s end of year

company financial statements, prepared in accordance with IFRS, for the fiscal years 2010 to 2012.

These statements have been audited and issued with an unqualified audit opinion.

Source: MAN SE

MAN Group Income Statement

€ million 2010 2011 2012

Revenue 14,675 16,472 15,772

Cost of goods sold and services rendered -11,400 -12,791 -12,499

Gross margin 3,275 3,681 3,273

Other operating income 516 622 540

Sel l ing expenses -1,095 -1,173 -1,181

Genera l and adminis trative expenses -741 -854 -950

Other operating expenses -1,142 -979 -877

Net income of financia l investments and equi ty-method

investments 470 -41 -182

Earnings before interest and taxes (EBIT) 1,283 1,256 623

Net interest expense -158 -134 -312

Earnings before tax (EBT) 1,125 1,122 311

Tax expense -338 -434 -122

Loss from discontinued operations -65 -441 0

Earnings after tax 722 247 189

of which attributable to noncontrol l ing interests 9 9 12

of which attributable to shareholders of MAN SE 713 238 177

Gross income margin 22.3% 22.3% 20.8%

EBIT margin 8.7% 7.6% 3.9%

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225. Revenues increased in fiscal year 2011 in comparison to the previous year by 12.2 % to € 16,472 million

and subsequently reduced in fiscal year 2012 by 4.2 % to € 15,772 million. The revenues are divided

between the different divisions as follows:

Source: MAN SE

226. The Commercial Vehicles business area (MTB and ML) contributed significantly to the increase in reve-

nues of the MAN Group in fiscal year 2011 with an increase in revenues by 18.7 % from € 10,586 million

in fiscal year 2010 to € 12,563 million in fiscal year 2011. In fiscal year 2011 MTB accounted for € 8,984

million due to a revenue increase of 20.7 % in comparison to the previous year due to high order intake.

In fiscal year 2011, ML generated revenues of € 3,579 million and managed to increase revenues, par-

ticularly in the Brazilian market by 9.9 % from a total of 65,630 vehicles to 72,102 vehicles.

227. The reduction in revenues in the Commercial Vehicles business area in fiscal year 2012 by 6.9 % from

€ 12,563 in fiscal year 2011 to € 11,692 million resulted particularly from the introduction of the

PROCOVNE P-7 emission standard in Brazil (corresponding to Euro V) as well as the deterioration in the

economic situation in connection with difficult financing conditions for customers, which had a negative

impact on ML revenues. As a result of a weaker market for commercial vehicles in Europe, MTB’s reve-

nues declined by 1.8 % to € 8,822 million and were also below prior-year level.

228. Revenues in the Power Engineering business area (MDT and Renk) declined by € 170 million to € 3,999

million in fiscal year 2011. The decline was mainly attributable to a decrease by 4.1 % from € 3,766 mil-

lion (2010 fiscal year) to € 3,610 million (2011 fiscal year) at MDT. Despite an improved order intake,

MDT's revenues declined as a result of longer project throughput times and lower order intake from

previous years. The decrease compared with the prior year is mainly attributable to the Power Plants

SBU, which recorded € 190 million less revenue for billing reasons as projects with long throughput

times were billed in fiscal year 2010, increasing revenues by € 233 million to € 839 million as compared

to fiscal year 2009. The business volume in the SBU Engines & Marine Systems and the SBU Turbo-

machinery remained more or less stable. Revenue development at Renk was also impacted by long

Revenue by division

€ million 2010 2011 2012

MAN Truck & Bus incl . MAN Finance 7,446 8,984 8,822

MAN Latin America 3,140 3,579 2,870

Business area Commercial Vehicles 10,586 12,563 11,692

MAN Diesel & Turbo 3,766 3,610 3,780

Renk 403 389 476

Business area Power Engineering 4,169 3,999 4,256

Corporate Center/Consol idation -80 -90 -176

Revenue MAN Group 14,675 16,472 15,772

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throughput times typical for large-scale gear unit construction. Despite of an increase in order intake,

revenues decreased by 3.5 % to € 389 million.

229. In fiscal year 2012, however, the Power Engineering business area generated revenue of € 4,256 million,

exceeding prior-year level by 6.4 %. This increase was mainly attributable to the MDT division, which

recorded revenue increases in the SBUs Turbomachinery and Power Plants resulting from deliveries for

the Chinese market as well as the delivery of several large dual-fuel engines for a power ship. The reve-

nue of the SBU Engines & Marine System remained below prior-year figures as a result of the tense eco-

nomic situation in the shipbuilding sector. In total, the MDT division increased its revenue by 4.7 % from

€ 3,610 million in fiscal year 2011 to € 3,780 million in fiscal year 2012. As a result of the positive devel-

opment of order intake, Renk increased its revenues in comparison to the previous year by 22.4 % to

€ 476 million in fiscal year 2012.

230. Cost of goods sold and services rendered increased in line with revenues in fiscal year 2011. As a result,

the gross margin recorded a profitability of 22.3 % following an increase of € 406 million. This corre-

sponded to the profitability of the previous year. In fiscal year 2012, cost of goods sold and services ren-

dered did not decrease to the same extent as revenues. The gross margin decreased by € 408 million

and profitability declined to 20.8 %. This development reflects the increasing pressure on prices MAN

Group, in particular MTB, faced in fiscal year 2012. The decrease in gross margin at MDT resulted from a

drop in licence business in the SBU Engines & Marine Systems as well as from effects from project-

specific provisions for plants under construction in the SBU Power Plants.

231. The composition of other operating income is displayed as follows:

Source: MAN SE

232. Other operating income mainly contains income generated by financing activities of MFI, which are

recorded as income from financial services. Also included are gains on financial instruments, which re-

sult from the remeasurement of foreign exchange positions and currency and interest rate hedges. The

increase of other operating income by 20.5 % in fiscal year 2011 in comparison to the previous year is

mainly due to the transfer of assets to the joint venture with Rheinmetall AG, Düsseldorf, which resulted

Other operating income

€ million 2010 2011 2012

Income from financial services 150 162 203

Gains from nonrecurring items - 111 -

Gains on financial instruments 115 101 57

Other trade income 50 34 44

Gains on disposal of property, plant, and equipment,

and intangible assets 10 14 6

Miscellaneous other income 191 200 230

Other operating income 516 622 540

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in a nonrecurring earnings effect of € 111 million. In fiscal year 2012, other operating income decreased

to € 540 million and hence, was slightly above the level of fiscal year 2010.

233. Selling expenses grew more slowly than revenues, increasing by 7.1 % from € 1,095 million in fiscal year

2010 to € 1,173 million in fiscal year 2011 and were roughly on a comparable level at € 1,181 million

despite decreasing revenues in fiscal year 2012.

234. General and administrative expenses increased in fiscal year 2011 by 15.2 % from € 741 million in fiscal

year 2010 and by 11.2 % to € 950 million in fiscal year 2012 due to project-related matters and in-

creased personnel expenses. The number of employees increased within the respective period by

14.9 % from 45,693 to 52,481 in fiscal year 2012.

235. Other operating expenses mainly contain expenses for research and development, which were not

allocated to contract related production costs as well as expenses from financial services, impairment

losses on inventories and miscellaneous other expenses.

Source: MAN SE

236. The significant decrease in other operating expenses by 14.3 % to € 979 million in fiscal year 2011

resulted mainly from lower project-specific provisions in the SBU Power Plants as compared to the pre-

vious year. In fiscal year 2011, a total of € 72 million relate to losses from nonrecurring items and com-

prise € 65 million provisions in the MDT division which were recognised in connection with the investi-

gation of irregularities in the transfer of four-stroke marine diesel engines for possible on-board retrofit

solutions and for expenditures for specialists engaged in connection with the investigation. The remain-

ing € 7 million relate to cost commitments for the establishment of a job creation company at the now

insolvent printing press manufacturer manroland AG, Offenbach.

237. The net income from financial investments and equity-method investments in fiscal year 2010 resulted

mainly from reversals of impairment losses on the Scania investment in the amount of € 357 million,

resulting from improved economic conditions as well as from MAN's share of Sinotruk's net income, an

investment that is accounted using the equity method. In fiscal year 2011, the income from investments

declined significantly to € -41 million. This decline was mainly the result of the impairment loss of € 677

Other operating expenses

€ million 2010 2011 2012

Research and development -373 -390 -428

Impairment losses on inventories -94 -129 -94

Expenses from financial services -100 -90 -123

Losses from nonrecurring items - -72 -

Legal, audit and consulting costs -70 -57 -29

Losses on financial instruments -39 -52 -39

Bad debt allowances on receivables -84 -41 -67

Miscellaneous other expenses -382 -148 -97

Other operating expenses -1,142 -979 -877

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million recognised on the Scania investment as well as the effect of the initial recognition of this invest-

ment at fair value and the related reclassification to financial investments, amounting to € 495 million.

The net income from financial investments and equity-method investments decreased to € -182 million

in fiscal year 2012, in particular due to impairment losses on the investments in Sinotruk (€ 190 million)

and on RMMV (€ 41 million). This decrease was offset by dividend income from the investment in Scania

amounting to € 60 million.

238. Earnings before interest and taxes decreased by 2.1 % in fiscal year 2011 and declined further by 50.4 %

to € 623 million in fiscal year 2012. It is divided between the divisions as follows:8

Source: MAN SE

239. The increase in EBIT in the MTB division in fiscal year 2011 from € 158 million in fiscal year 2010 by

€ 518 million is mainly due to increased sales volumes and is reflected to virtually the same extent in

gross profit. Besides decreasing sales volumes, which are accordingly reflected in gross profits, the sub-

sequent decrease of EBIT by € 503 million in fiscal year 2012 can additionally be attributed to a signifi-

cant increase in selling expenses.

240. The decline in revenues in the ML division by € 270 million from fiscal year 2010 to fiscal year 2012 was

partially offset by a reduction of selling expenses during the same period. Hence, EBIT declined by a

total of only € 133 million from fiscal year 2010 to fiscal year 2012.

8 In this respect, it should be noted that the performance measure for assessing and managing the performance of

a division as defined by MAN Group is operating profit which corresponds to EBIT adjusted for earnings effects

from purchase price allocations and nonrecurring items. The calculation of ROS, which is the ratio of operating

profit to revenue, is based on this earnings measure. The MAN Group aims for a ROS of 8.5 % +/-2 percentage

points.

Earnings before interest and taxes (EBIT) by division

€ million 2010 2011 2012

MAN Truck & Bus incl . MAN Finance 158 676 172

EBIT margin 2.1% 7.5% 1.9%

MAN Latin America 271 301 138

EBIT margin 8.6% 8.4% 4.8%

MAN Diesel & Turbo 439 395 437

EBIT margin 11.7% 10.9% 11.6%

Renk 52 53 66

EBIT margin 12.9% 13.6% 13.9%

Corporate Center/Consol idation 363 -169 -190

1,283 1,256 623MAN Group EBIT

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241. The development of earnings (EBIT) in the MDT division is comparatively stable. A reduction in gross

profit from fiscal year 2010 to fiscal year 2012 was partially offset by lower other operating expenses.

Hence, EBIT declined by a total of only € 2 million from fiscal year 2010 to fiscal year 2012.

242. The increase in earnings (EBIT) by € 13 million in the Renk division in fiscal year 2012 was due to a sig-

nificant increase in revenues by € 87 million from € 389 million to € 476 million, which was reflected in

the improved gross profit.

243. The fluctuations in EBIT in Corporate Center/Consolidation are primarily due to changes in the result

from financial investments and equity-method investments (cf. note 237).

244. The results of fiscal year 2011 were particularly impacted by the results of the purchase price allocations

performed as part of the acquisition of ML in fiscal year 2009, which amounts to € -99 million as well as

from the interest in Sinotruk acquired at the end of 2009, amounting to € -10 million. In fiscal year 2012,

effects from purchase price allocations totalled € -110 million. Of this amount, € -91 million relate to ML,

€ -12 million to the joint venture with RMMV and € -7 million to the investment in Sinotruk.

245. Net interest expense includes net interest on pensions and interest payable on tax liabilities as well as

interest on bank balances and bank liabilities. The decrease in net interest expense by € 24 million in

fiscal year 2011 in comparison to the previous year mainly resulted from higher gains on the sale of se-

curities. The subsequent increase in net interest expense by € 177 million was mainly due to interest

expenses relating to additional tax payments arising from the tax audit for the years 2002 to 2005.

246. The tax expense increased in fiscal year 2011 in comparison to the previous year by 28.3 % to € 434

million. Correspondingly, the tax rate increased from 30.0 % in fiscal year 2010 to 38.6 % in fiscal year

2011, in particular due to prior-periodic taxes and valuations of financial investments that are not rec-

ognised for tax purposes. In fiscal year 2012 the tax expense decreased to € 122 million and the tax rate

increased to 39.2 % in particular due to the non-tax-deductible impairment losses on investments.

247. In fiscal year 2011, the loss from discontinued operations mainly included the agreements signed with

IPIC and MPC in connection with the disposal of Ferrostaal (€ -434 million). The remaining losses of € 7

million were due to the remeasurement of potential obligations from the corporate sale of manroland in

2006.

248. Throughout the historical period, net income decreased from € 722 million (2010) by a total of € 533

million to € 189 million (2012) due to the reasons set out above and in particular due to a decrease in

sales volumes with almost unchanged selling expenses and general and administrative expenses which

decreased to a disproportionately low extent.

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c) Adjustment of the results of operations

249. In order to enable comparability of previous earnings with the company’s forecast figures, earnings have

to be adjusted for exceptional, one-off and/or items relating to other time periods. The following ad-

justments for the past three fiscal years have been applied by us for valuation purposes only:

Source: MAN SE

250. We identified the result from financial investments and equity-method investments as item to be ad-

justed for valuation purposes in the time period under review since they did not result from operating

activities of the consolidated companies.

251. With respect to the MTB division, the following earnings components were identified and adjusted for in

the relevant time period under review:

• MTB AG generated earnings of approximately € 4 million in fiscal year 2011, resulting from the ac-

quisition of individual sales companies in Belgium and France as well as the sale of shares in a joint

venture, which was recorded as other operating income.

• In relation to its past investment in the joint venture MAN FORCE TRUCKS, the MTB division re-

corded additional one-off expenses related to a claim waiver which totalled approximately € 7 mil-

lion in fiscal year 2011.

• The development and sales activities of wheeled military vehicles were combined in the newly

founded joint venture RMMV in fiscal year 2010. The production facilities of the Vienna plant were

Adjustments to the results of operations

€ million 2010 2011 2012

Earnings before interest and tax (EBIT) 1,283 1,256 623

Income from financia l and at-equi ty investments -470 41 182

MTB divi s ion

Resolution of Joint Venture MAN Region West B.V. -4

Cla im waiver on Joint Venture MAN FORCE TRUCKS 7

RMMV - deconsol idation effect from the contribution

of the production faci l i ties of the Vienna plant -111

MDT divi s ion

Valuation adjustment on accounts receivables aga inst

manroland 2

Provis ions for extraordinary factors 39 -88

Reserves in connection wi th investigation of

i rregulari ties in MDT's transfer of four-s troke marine

diesel engines (Project Poseidon) 65

Valuation adjustment on overdue cla ims at the

Danish branch 13

EBIT after adjustments 813 1,295 730

EBIT margin 8.7% 7.6% 3.9%

EBIT margin after adjustments 5.5% 7.9% 4.6%

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therefore integrated into the joint venture at the end of 2011. An amount of € 111 million resulting

from this deconsolidation and the simultaneous acquisition of 49 % of the activities contributed by

Rheinmetall to the joint venture were recorded as other operating income.

252. With regard to the MDT division, the following exceptional and one-off income items were identified

and correspondingly adjusted for.

• In connection with the insolvency of the formerly associated company manroland, claims in the

amount of € 2 million were written down in 2011 which mainly comprised reimbursements of costs

for the training centre and energy supplies.

• In addition, as at 31 December 2011 provisions for extraordinary factors in the amount of € 39 mil-

lion were recognised. In the following year provisions for extraordinary factors amounting to € 88

million were released to income.

• Provisions in the amount of € 65 million were recognised in connection with the investigation of

irregularities in MDT’s transfer of four-stroke marine diesel engines in fiscal year 2011.

• At the Danish branch of MDT SE, overdue claims in the amount of € 13 million referring to Chinese

customers were written off in fiscal year 2012.

4. Major success factors of the MAN Group’s business model

Commercial Vehicles business area (MTB and ML divisions)

253. In the market and competitive environment that has been described, the business area Commercial

Vehicles demonstrates a number of strengths and opportunities:

• High reputation of the MAN brand, in particular in Europe.

• Introduction of the MAN brand to Brazil and Latin America with planned localisation from 2014,

opening up additional potential in the heavy duty area.

• Significant market share of the truck and bus divisions, both in the domestic market in Germany as

well as in Brazil.

• Established modern technologies and a broad service portfolio.

• Market developments in developing and quickly developing countries could positively influence the

sales potential for quality high-value MTB and ML products in the medium- to long-term; by way of

the investment in Sinotruk and the subsidiary MAN Trucks India MAN Group is present in the antici-

pated growth markets China and India.

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• ML’s ‘Consórcio Modular’ business model, in which the partners are also suppliers and investors,

allows less capital to be employed and lowers investment needs.

• Extension of after sales operations, e. g. increasing the availability of replacement parts reduces the

inoperative time of the customer’s vehicles and thereby increases customer satisfaction and loyalty.

• Expected synergy effects resulting from the close cooperation with Volkswagen AG and Scania, in

particular in the areas procurement, manufacturing as well as research and development.

• Regulatory environment with regard to further development of emission standards

(EURO/PROCONVE) regularly leads to MAN’s customers exchanging their fleets ahead of time.

254. On the other hand, the following weaknesses and risks are faced:

• Due to considerable cyclicality of the business area Commercial Vehicles economic fluctuations and

shrinking core markets have significant impact on the business development.

• Heavy fluctuations in capacity utilisation of production plants due to economic fluctuations leads to

elevated uncertainty with regard to fixed-cost-coverage.

• Significant build-up of overhead at MTB in the recent past; margin improvement relies on respective

volume increases and realisation of savings potentials.

• Production plants predominantly located in high-wage countries; the current MTB vehicle portfolio

is particularly centred on modern industrial nations (in respect to equipment and quality).

• Vendors from the Asian market may make inroads into the core market in Europe and hence, in-

crease the already substantial levels of competition in Europe.

• The market share in Latin America may be impacted by price pressure and increasing competition as

well as an incomplete product portfolio with regard to the truck segment from 3.5 to 5 t.

• Sales risks in Russia due to the introduction of the ” utilization fee” which may make the import of

trucks to the Russian market unattractive.

• Current liquidity position of MAN Group (negative cash flow from the 2012 business activities) limits

the scope for larger investment prospects in the business area Commercial Vehicles; potentially re-

sulting investment backlog could prove to be a competitive disadvantage in the medium to long-

term.

Power Engineering business area (MDT and Renk divisions)

255. In the market and competitive environment that has been described, the business area Power Engineer-

ing demonstrates the following strengths and opportunities:

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• High reputation of the MAN and Renk brands, in particular due to longstanding expertise and long-

term customer relationships.

• Market-leader in the field of two-stroke engines and in Renk’s field of tracked vehicle transmissions,

as well as high market share in the remaining business areas.

• Diversified and promising future product and services portfolio, in particular dual-fuel diesel and gas

engines as well as engines that can be operated with gas only; in addition, technological leadership

with special gears from Renk.

• Expanding after sales activities with worldwide service and sales presence.

• Positive influence of the increasing energy consumption in developing and emerging countries as

well as developing prosperity with a need of decentralised energy supply. The expected growth of

the middle class in the developing and emerging countries ensures the demand for products that

are produced by using MDT’s turbomachinery, particularly in the chemical industry sector.

• The increasing globalisation, population growth and the related increase in world trade are drivers

of a medium-term recovery in the shipping market.

• The trend for stronger environmental protection in combination with increasing energy prices leads

to demand for more efficient engines (lower emissions at lower fuel consumption).

256. On the other hand, the following weaknesses and risks are faced:

• Maintaining and respectively improving the technological competitiveness in the engines business is

associated with high capital investments in new product developments.

• Currently low levels of capacity utilisation in the SBU Engines & Marine Systems and high fixed costs.

• Turnkey projects in the SBU Power Plants are accompanied by increased project risks.

• Medium term overcapacity in the shipping market (2013 and 2014) and corresponding risks from

continuing market weaknesses.

• Intensification of competition and entry of new competitors from the Asian market as well as risks

from increasing product piracy.

• Renk has a dependency on a few large customers, whose large-scale projects can be delayed or

stopped. In the military field, the business is mainly dependent upon export permits from the Ger-

man federal government.

• Impact of fiscal and sovereign debt crisis on the real economy results in lower consumption com-

bined with weaker global trade.

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D. Determination of equity value

I. Basis for valuation

1. Valuation approach and assumptions

257. The following section provides an overview on the methodological approach for the determination of

the equity value of MAN SE. The equity value comprises the fair value of the operating business derived

using the dividend discount method, the fair value of non-operating assets as well as any other assets

that were valued separately (special value items).

258. The valuation object is MAN SE, including its subsidiaries and associated companies. For the purpose of

this valuation, we assumed that the business subject to valuation will continue as a going concern in the

future. MAN SE’s equity value pursuant to the dividend discount method has been determined on the

basis of its consolidated financial forecasts according to IFRS.

259. For the determination of the equity value using the dividend discount method, projections for a detailed

planning period (Phase I) as well as subsequent periods (Phase II; terminal value) are required. Phase I

comprises a period of five fiscal years from 2013 to 2017. These projections are based on the company’s

forecasts for the fiscal years 2013 to 2017, which we previously assessed on the basis of actual figures

for the fiscal years 2010 to 2012 in order to determine their plausibility. For this purpose, extraordinary

and non-recurring items as well as items that relate to other time periods in the company’s income

statement were identified for the fiscal years 2010 to 2012. Subsequently, these items were adjusted in

order to derive a normalised EBIT for the fiscal years 2010 to 2012 (cf. note 249 et seqq.). A further as-

sessment of the plausibility of the assumptions underlying the planning was based on the planning

documentation and information provided by the company as well as external industry and market data.

For Phase II an expected long-term average EBIT is assumed. This pertains the periods as of the fiscal

year 2018. Actual results for each fiscal year from 2018 onwards can and will deviate from this average

EBIT.

260. The consolidated financial planning figures include all consolidated affiliated companies. The consoli-

dated financial planning figures are depicted and explained in more detail in section D.II.1. In addition,

MAN SE has several direct and indirect investments in companies that are not subject to consolidation.

We separately considered the associated investment income as a part of MAN SE’s income of invest-

ments.

261. All expected synergy potentials from a closer cooperation with Volkswagen AG and Scania, which may

be leveraged irrespective of the execution of the domination and profit and loss transfer agreement

("pseudo synergy effects"), are fully reflected in the financial forecasts. In contrast to pseudo synergy

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effects, the synergy potentials, which can only be realised in case of a domination and profit and loss

transfer agreement ("real synergy effects"), are neither included in the financial planning figures nor

relevant for this valuation. Of the expected synergy effects of approximately € 200 million p. a. gener-

ated on Volkswagen AG-group level, sustainable pseudo synergy effects attributable to MAN SE amount

to approximately € 125 million p. a. These arise primarily from material cost savings and economies of

scope from joint purchasing.

262. The starting point for the dividend discount method is the derivation of future EBIT of MAN SE. In order

to determine distributable earnings based on the EBIT of MAN SE we next derived and considered the

income from investments and the net interest result.

263. MAN SE’s net interest result for the planning periods was derived using an integrated financial model,

which is based on income statements and balance sheets for each year of the financial planning. In ac-

cordance with general valuation principles, the distribution policy for Phase I is assumed to be congru-

ent with the financial planning figures of MAN SE.

264. Subsequently, corporate income taxes as well as personal income taxes of the owners were deducted

from the projected pre-tax income. Corporate income taxes include foreign income taxes as well as for

domestic income the applicable German trade taxes, corporate income taxes and the solidarity sur-

charge. Some of the companies comprised in the MAN group exhibit substantial tax loss carryforwards.

To the extent to which these tax loss carryforwards can be utilised, the respective amounts were con-

sidered as tax deductions for the derivation of income taxes. Noncontrolling interests of the MAN

Group’s subsidiaries were deducted from earnings after taxes. The earnings after noncontrolling interest

are available to MAN SE’s shareholders. The earnings distributable to the MAN SE shareholders were

discounted to the valuation date in order to obtain MAN SE’s equity value according to the dividend

discount method.

265. The MAN Group has non-operating assets consisting of land and buildings. In our valuation, non-

operating assets were not considered with their respective income. Instead, these assets were valued

separately and added to the equity value of the operating assets. For valuation purposes we notionally

assumed a disposal of non-operating assets. The earnings attributable to shareholders from the disposal

of these assets were assumed to be generated at the valuation date. In addition, MAN SE has of a corpo-

rate income tax credit, which was considered as a special value item. The corporate income tax credit

will be recovered throughout the planning period through disbursements from the financial administra-

tion. Hence, the associated cash flows were discounted to the valuation date.

266. For the purpose of our valuation we did not consider any diluting effects from contingent capital. Ac-

cording to the information provided there are no financial instruments outstanding, which could lead to

a dilution of the share capital.

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267. The relevant valuation date for the determination of the equity value of MAN SE is 6 June 2013. On this

day the general shareholders’ meeting of MAN SE shall approve the domination and profit and loss

transfer agreement.

268. Consequently, all of MAN SE’s cash flows that will accrue after 6 June 2013 (including the entire cash

flows of the current fiscal year 2013) have to be taken into account for the valuation. The technical

valuation date is 31 December 2012. All projected earnings were discounted to this technical valuation

date. The equity value determined for 31 December 2012 was subsequently compounded to 6 June

2013. The equity value as of 6 June 2013 served as the basis for determining the appropriate cash com-

pensation and the appropriate recurring compensation payment.

2. Forecasting procedure and accuracy

Preliminary remarks

269. The uncertainty of future expectations must be considered when estimating future earnings. Both, risks

and opportunities must be considered equally. Earnings in the past may provide an initial guidance.

270. The analysis of the past fiscal years, as well as the adjustment of selected positions of the income state-

ment of the company, serves the purpose of enhancing the assessment of basic assumptions underlying

the financial planning.

271. In the course of the retrospective analyses, adjustments were made for extraordinary and non-recurring

income and expenses as well as those that relate to other periods. These adjustments have no effect on

the determination of the equity value as the valuation result is based on projections of future fiscal

years. Any adjustments to results of past periods merely serve information purposes and the assess-

ment of the plausibility.

Forecasting procedure

272. The financial planning of MAN SE comprises projected income statements, cash flow projections and

projected balance sheets, prepared in accordance with IFRS. The detailed planning period covers the

time period from 2013 to 2017.

273. The financial planning is part of the regular internal planning and reporting process of MAN SE. Gener-

ally, a long-term financial planning covering the upcoming five fiscal years is prepared in the course of

the strategic planning process by the end of the second quarter of each fiscal year. In September 2012,

the financial planning figures were, for the first time, submitted to Volkswagen AG by the executive

board of MAN SE to be included within the group planning process of Volkswagen AG ("planning round

for the fiscal years 2013 to 2017", in brief “PR61").

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274. A more detailed budget, covering a three-year period, ("Unternehmensplanung", in brief "UPL") is

subsequently prepared in the fourth quarter of each fiscal year. The UPL for the fiscal years 2013 to

2015 was finalised in November 2012.

275. For the respective current fiscal year, quarterly updates are prepared, based on the latest business

developments. The update for the fiscal year 2013 was prepared within the context of the "Rolling Fore-

cast", in brief "RFC1" in the first quarter, and adopted at the end of March 2013.

276. Thus, the financial planning figures underlying the valuation consist of the RFC 1 for the fiscal year 2013,

the UPL for the fiscal years 2014 and 2015 and the PR61 for the fiscal years 2016 and 2017.

Forecast accuracy

277. We have conducted our analysis of the forecast’s accuracy with respect to revenues, gross margin and

EBIT. In this context, we identified the most important deviations between planning and actual figures.

An overview of the comparison is presented in the following table. Please note that actual figures before

adjustments are displayed.

Source: MAN SE, PwC/KPMG-Analysis

2010

278. Due to an unexpectedly strong economic recovery in 2010, which followed the extraordinarily strong

economic decline of the year before, revenues increased much more than originally projected. This de-

velopment was supported primarily by the increased global demand for commercial vehicles. As a result,

the business area Commercial Vehicles recorded a significant increase in revenues of approximately

36 %, which had not been anticipated to this extent. Especially in the ML division the forecast was ex-

ceeded. The positive impact of the economic recovery on MTB’s actual revenues and EBIT was also

much greater than expected. In the MDT division, the forecast was exceeded by approximately 8 % due

to an increase in demand in the SBU Engines & Marine Systems, particularly for two-stroke engines.

Likewise, the higher gross margin of the company in the fiscal year 2010 is the result of the unexpected

strong recovery in the commercial vehicles market. Regarding EBIT, a write-up of the investment in

Scania, amounting to € 357 million, led to an additional positive deviation from the original forecast.

2011

279. The business development in 2011 was driven by the continued and unexpectedly strong recovery in the

global economy. MTB budgeted revenues at the same level as the previous year due to uncertainties

Planned/actual data MAN Group

Deviation from 2010 Deviation from 2011 Deviation from 2012

€ million 2010E 2010 abs. % 2011E 2011 abs. % 2012E 2012 abs. %

Revenue 12,383 14,675 2,292 18.5% 15,069 16,472 1,404 9.3% 17,383 15,772 -1,611 -9.3%

Gross margin 2,568 3,275 707 27.5% 3,321 3,681 360 10.8% 3,963 3,273 -690 -17.4%

EBIT 403 1,283 880 218.0% 958 1,256 298 31.1% 1,463 623 -840 -57.4%

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arising from the financial and economic crisis. However, MTB was able to increase its revenues by ap-

proximately 19.8 %. Due to new emission standards, customers unexpectedly pulled forward a large

amount of their investments resulting in further demand and causing that the revenues in the ML divi-

sion were clearly exceeded in 2011. In the MDT division revenues showed a positive deviation of ap-

proximately 3 % against budgeted levels. Overall, a less favourable development in the SBU Power

Plants was compensated by a clear improvement in the SBU Engines & Marine Systems. Due to higher

than expected revenues, a gross margin in line with planning assumptions as well as relatively moderate

increases in overhead costs, the group-wide EBIT exceeded budgeted figures.

2012

280. The fiscal year 2012 was characterised by a downturn in the market environment, caused among other

reasons by the on-going sovereign debt crisis, which had not been accounted for in the forecasts on

such a scale. Against this background, MTB exhibited a negative deviation in revenues of approximately

13.0 %, which was primarily attributable to lower sales volumes in Europe. In its budget, ML had under-

estimated the impact of the accelerated purchases in 2011 because of the new emission standard. Thus,

ML showed a negative deviation of 8.0 % against budgeted revenues. For MDT, revenues in 2012 were

close to the budgeted figures, although minor shifts occurred at the level of the individual SBUs. The

lower than expected gross margin resulted from the fact that costs could not be adjusted to the same

extent those revenues had decreased compared to the previous year. The group-wide EBIT was 57.4 %

below projections, which can mainly be ascribed to the MTB division. Lower margins, lower capacity

utilisation in the plants as well as an increase in selling and administration expenses ratios adversely

affected earnings, as additional personnel was hired especially in the areas sales, services, research and

development and quality assurance to account for expected future revenue growth.

281. The analysis of the planning accuracy shows that the planning processes have become more difficult due

to the volatile economic conditions since the beginning of the financial and sovereign debt crisis. The

majority of deviations between the company's actual and forecast figures can be attributed to unfore-

seeable or difficult to predict market developments, which were mainly caused through a variety of

exogenous economic factors However, taking the elements of uncertainty currently prevailing in the

markets as well as the detailed planning procedure that is based on the assessment of the persons re-

sponsible for the planning into account, we deem MAN Group’s financial forecasts to be a suitable basis

for valuation purposes despite of the deviation described above.

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II. Financial projections

1. Financial planning of earnings before interest and taxes (EBIT)

a) Financial planning of the MAN group

282. The consolidated financial planning figures at MAN Group level for the period until the fiscal year 2017 is

displayed below:

Source: MAN SE

283. Revenues are expected to increase throughout the planning period from € 15,772 million in 2012 by

€ 6,266 million to € 22,039 million in 2017. This is primarily attributable to a planned increase in revenue

in the business area Commercial Vehicles, which contributes more than 80 % of the total revenue

growth. The MTB division expects an increase of revenues of almost 30 % or € 2,538 million in the plan-

ning period. The ML division also contributes a significant part to the revenue growth bearing in mind

ML’s plans to almost double revenues from € 2,870 million in 2012 to € 5,528 million in 2017. The ex-

pected revenue increase at MDT over the same period is approximately 32 % or € 1,220 million. The

revenue of the Renk division is expected to increase from € 476 million in 2012, by € 117 million (25 %),

to € 593 million in 2017. For the detailed planning assumptions underlying these projections on division

level we refer to the sections below.

284. MAN SE expects an increase in consolidated gross profit at the group level throughout the planning

period by € 1,909 million from € 3,273 million in 2012 to € 5,182 million in 2017. The planned improve-

ment of the gross margin over the same period, from 20.8 % in 2012 to 23.5 % in 2017 results from a

less than proportional increase in cost of goods sold compared to revenues across all divisions. The larg-

est absolute and relative improvement of the gross margin is expected for the MTB division. This is

mainly attributable to the planned reduction in cost of materials alongside improvements in the pro-

MAN Group Income Statement

€ million 2012 2013E 2014E 2015E 2016E 2017E

Revenue 15,772 15,799 17,805 19,658 20,779 22,039

Cost of goods sold and services rendered -12,499 -12,471 -13,891 -15,233 -15,991 -16,856

Gross margin 3,273 3,327 3,914 4,425 4,788 5,182

Other operating income 540 354 499 517 559 576

Sel l ing and genera l and admini strati ve expenses -2,131 -2,138 -2,183 -2,201 -2,187 -2,193

Other operating expenses -877 -987 -1,255 -1,374 -1,425 -1,500

Earnings before interest and taxes (EBIT)* 805 557 975 1,367 1,735 2,065

Revenue growth rate -4.2% 0.2% 12.7% 10.4% 5.7% 6.1%

Cost of goods sold ratio 79.2% 78.9% 78.0% 77.5% 77.0% 76.5%

Gross income margin 20.8% 21.1% 22.0% 22.5% 23.0% 23.5%

Selling and general and administrative expenses ratio 13.5% 13.5% 12.3% 11.2% 10.5% 10.0%

EBIT margin* 5.1% 3.5% 5.5% 7.0% 8.3% 9.4%

EBIT margin after adjustments 4.6%

* EBIT does not include income from investments .

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curement process, plus an improved integration of the production, development and procurement de-

partments as well as a higher utilisation of the production facilities. The expected improvement of ML’s

gross margin also contributes to the disproportionally high increase of the gross profit at the group

level.

285. For other operating income an increase of 6.8 % is expected throughout the planning period, from

€ 540 million in 2012 to € 576 million in 2017. The observable developments within the different divi-

sions compensate each other to a large extent.

286. For selling and general and administrative expenses, an increase is expected from € 2,131 million in

2012, to € 2,193 at the end of the planning period. In total, a less than proportional increase compared

to the increase of revenues until 2017 is assumed. Main driver for this development will be a tighter cost

management as well as regressively planned new hires in specific with regard to MTB. An adjustment of

the number of selling and administration staff is targeted to ensure the competitiveness in comparison

to direct competitors.

287. Other operating expenses are expected to increase from € 877 million in 2012 by € 623 million to

€ 1,500 million in 2017 or. Nearly half of the planned increase is attributable to the MTB division, where

it mainly results from directly expensed development costs.

288. Particularly due to the less than proportional increase of projected expenses in comparison to revenues,

it is expected that earnings will increase significantly and that the EBIT margin (without income from

investment) will improve accordingly. MAN SE’s management expects an improvement of the EBIT mar-

gin from 5.1 % in 2012 to 9.4 % in 2017, which equates to an EBIT margin improvement of more than

80 %.

289. Taking into account the increasingly intensive competition, we consider the financial planning figures for

the fiscal years 2013 to 2017 at the MAN Group level to be distinctly ambitious but still feasible.

Whether or not projected results will materialise in the fiscal years 2013 to 2017 is mainly dependent on

the ability to realise costs of material savings, the successful implementation of a reduction in overheads

(especially in the administration and sales departments), an increase of the capacity utilisation in the

production facilities of MTB and ML as well as a sustainable economic recovery in particular in MTB’s

core markets.

b) Financial planning of MAN Truck & Bus

290. MTB’s key figures for the fiscal years 2013 to 2017 - compared to the adjusted figures of the fiscal year

2012 - are as follows:

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Source: MAN SE, MTB AG

Business development

291. Following a reduction in the European market volume in 20129 for trucks over 6 t to approximately

274,000 units (2011: approximately 301,000 units), MTB expects a further decline to approxi-

mately 271,400 units in 2013. For the remaining planning years a moderate growth of the European

market is expected. The growth mainly represents a recovery of the European truck market, which has

been severely affected by the financial and sovereign debt crisis. Stronger growth is expected from 2015

onwards.

292. The expected market recovery is characterised by broad growth in all European regions. The highest

growth rates are, however, expected for countries that have been heavily affected by the crisis such as

Italy and Greece, and for Eastern European countries. For 2017 MTB expects a market volume of

322,000 units for trucks over 6 t based on an extrapolation for the years 2015 to 2017. The market vol-

ume expected by MTB is below LMC Automotive’s forecast. The main reasons are lower growth expec-

tations for Southern European countries like Italy and Spain, but also for Germany and France. With

regard to the Southern European markets, LMC Automotive's forecast assumes a recovery to pre-crisis

levels by 2015. However, from today's perspective, this is associated with a high degree of uncertainty.

Taking into account that the first few months of fiscal year 2013 have shown only moderate growth for

MTB, a market recovery to any significant extent - as forecast by LMC Automotive - is yet still highly

uncertain from MTB’s perspective.

293. Compared to long-term averages, we regard MTB’s forecasts for Germany and France as reasonable.

Considering the historically high accuracy of MTB’s market forecasts, we regard MTB's overall market

forecast as appropriate.

294. After a decrease of MTB’s market share for trucks over 6 t to 17.0 % (2011: 17.9 %), MTB is planning to

increase its market share gradually to 18.0 % by 2015. The decline in 2012 was mainly due to the aggres-

9 Compared to LMC Automotive (see Section C.II.2) MTB uses a slightly different definition of the European region

to report market volume.

MAN Truck & Bus incl. MAN Finance

CAGR

€ million 2012 2013E 2014E 2015E 2016E 2017E 2012 - 2017

Revenue 8,822 8,889 9,870 10,500 10,900 11,360 5.2%

Depreciation and amortisation 231 263 271 309 326 343 8.2%

Capi ta l expendi tures 640 406 541 576 601 625 -0.5%

EBIT* 230 257 433 573 747 952 32.8%

EBIT margin* 2.6% 2.9% 4.4% 5.5% 6.9% 8.4%

Employees 34,879 34,446 33,779 33,788 33,524 33,265 -0.9%

* EBIT does not include income from investments .

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sive market presence of competitors. In 2012, Mercedes-Benz was able to gain market share - among

other factors - due to the launch of the second generation of the Actros at the end of 2011. In addition,

competition is increasing from the mid-class segment through market players such as DAF Trucks N.V.,

Eindhoven/The Netherlands ("DAF"), whose products are increasingly being seen as an appropriate al-

ternative by customers. To win back market share MTB is accelerating technical innovations and imple-

menting a stronger customer focus. Until the planned launch of the new heavy series, the existing prod-

uct ranges will be continuously enhanced by the staged introduction of technical improvements in order

to increase their attractiveness for customers. Moreover the sales force will be reoriented towards a

stronger customer focus, and the range of supporting services will be steadily expanded and improved.

This includes a suitable range of financing solutions, to be marketed by MFI, and intended to support the

growth in new vehicle sales.

295. Outside Europe, Russia is the largest and most important single market for MTB. However, due to the

utilization fee introduced on 1 September 2012 the forecast for the Russian market is currently highly

uncertain. As long as the utilization fee will continue to be applied for importers only, MTB assumes that

in the medium term the requirements to avoid the utilization fee can be met by increasing the localisa-

tion of the production. Based on the currently high level of uncertainty, MTB has forecast a decrease in

sales in Russia for 2013. For the following years, it is assumed that the potential of the Russian market

will be accessible to MTB. Another relevant market for MTB is Turkey. Until 2017 an average annual

growth rate comparable to market expectations for Turkey was considered in the planning. Other

growth markets are Brazil and the Middle East. For the Middle East an average annual growth in double

digit percentages is planned. Important sales markets in the Middle East are Saudi Arabia, the United

Arab Emirates and Oman. For the CLA series the most important sales market is India, for which, for the

years 2013 - 2017, constant sales volumes have been assumed.

296. The intense competition in the European truck market, as well as the partly difficult economic condi-

tions on the demand side, cause that increases in costs can only be partly passed on to customers and

must therefore amongst others be compensated by efficiency gains to avoid a decrease of the operating

margin. Significant price increases are therefore only expected in 2014 due to the compulsory introduc-

tion of the Euro VI standard. From 2015 onwards, MTB assumes considerably smaller price increases.

297. The sales volumes in the European bus market also declined in 2012 to approximately 26,000 units

(2011: approximately 29,000 units). Given the dependency on public spending, the financial and sover-

eign debt crisis also affected the bus market. MTB expects a recovery of the bus market to approxi-

mately 30,500 units in 2017. This expectation is slightly above the market forecast by Analyse & Prog-

nose, 2012. The expected market growth results on the one hand from a recovery of Southern European

countries that were severely hit by the financial and sovereign debt crisis such as Italy and Spain, as well

as the recovery of Eastern European countries such as Bulgaria, Romania, Czech Republic or Poland,

whose market volumes have fallen sharply since the peak year in 2008. On the other hand, the major

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Western European states such as Germany, France and Great Britain will also be contributing to the

expected growth.

298. The combined market share of MAN and NEOPLAN for buses over 8 t was 12.6 % in 2012 (2011: 13.6 %).

Especially Mercedes-Benz and the VDL Bus & Coach bv, Valkenswaard/The Netherlands, gained market

share in 2012. One reason for the slight decrease in MTB's market share was the launch of the second

generation of the Citaro city buses by Mercedes-Benz. For the planning period MTB expects they will be

able to sustain their market share at 12.7 %. As the market share of MAN and NEOPLAN is below 10 % in

the growth regions of Southern and Eastern Europe, this implies an increasing market share in these

markets. The continuous update of the product range, for example, the launch of a new generation of

the "Jetliner" series, which was presented in mid-2012, is supposed to contribute to this increase.

299. Major bus sales markets outside Europe are Russia, South Africa, Mexico and Asia (e. g. Hongkong,

Malaysia, The Philippines and Singapore). A modest growth is expected in these markets. In many non-

European markets bus chassis and bodywork are regularly built separately. As MTB predominately acts

as an integral bus manufacturer, MTB can utilise the growth in these markets only to a limited extent. In

addition, the MAN and NEOPLAN buses, which belong to the premium segment, are often too expensive

for growth regions like India. Furthermore, requirements found in tenders (e. g. a partly localised pro-

duction), often impede the market entry for MTB.

300. Due to the high competition in the market for busses and orders often awarded through tenders, price

increases are hard to achieve in the bus business. Hence, in total the volume effect outweighs the price

effect considerably with regard to the revenue planning. As opposed to the truck market, for buses only

minor price increases are expected from the introduction of the Euro VI standard.

301. For the other business units (used vehicles, after-sales as well as engines and components), constant

growth in line with the expected increase in sales for new trucks and buses is expected for the planning

period.

302. The used vehicle business primarily supports new vehicle sales, and is used to resell financed vehicles or

vehicles sold with a buy back obligation. Similarly to the new vehicle business, the used vehicle business

is also volatile throughout the economic cycle. For the planning years MTB therefore assumes growth

rates linked to the expected development of the new vehicles business.

303. The after-sales business is set to be continuously expanded over the coming years. Different initiatives

have been identified to optimise the after-sales business, some of which have already been imple-

mented. These include an expansion of after-sales services across Europe, an extension of the portfolio,

more attractive pricing, as well as training and incentivising of employees. For the planning period an

average growth rate of 2.7 % is expected.

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304. MTB also plans to actively expand the engine and component business. Significant drivers for the ex-

pected growth are the industrial and agricultural as well as the onroad business, meaning the installa-

tion of engines in trucks and buses. Based on 2012, a compounded annual growth rate of 4.6 % is ex-

pected until 2017.

305. Overall, the expected revenue growth of 5.2 % p. a. on average to € 11,360 million in 2017 is mainly

based on the expected recovery of the European truck market as well as the expected growth of non-

European markets. In addition, a moderate growth of MTB’s market share is expected. Finally, the sys-

tematic expansion of the after sales business as well as the engine and components business is also sup-

posed to contribute to the revenue growth. In total, from 2014 onwards the truck business is expected

to grow faster than the bus business shifting the revenue mix slightly towards the truck business. Plan-

ning risks primarily stem from uncertain development of the Russian market caused by the introduction

of the utilization fee in 2012.

Earnings before interest and tax (EBIT)

306. The gross margin is expected to continuously improve from 2013 onwards throughout the planning

period. This is due to an optimisation of the procurement performance achieved through realising sav-

ings in materials costs. Benchmarking analysis showed potential for optimisation, and initiatives were

introduced to ensure that the identified potentials can be achieved. The most important actions to im-

prove the procurement processes are a bundling of purchases, renegotiation or new negotiations with

suppliers, as well as technical optimisations of the product with regard to a reduction of the costs of

material. Pseudo synergy effects from the cooperation with Volkswagen AG and Scania, which are ex-

pected to increase steadily up to € 125 million by 2017, have also been considered. A sustainable im-

provement of the procurement performance of 2.6 % for 2013 and of 2 % p. a. for 2014 onwards is ex-

pected. In addition, it is expected that warranty costs will increase less than proportionally compared to

revenues by systematically expanding the quality organisation. MTB also expects a positive effect on the

gross margin due to a higher capacity utilisation of production plants resulting in economies of scale.

307. MTB's selling, general and administrative expenses (SG&A expenses) have risen in the past years be-

cause of new hires due to an expected market recovery. This has contributed to a reduction of the oper-

ating margin. MTB’s ratio of SG&A expenses to revenues is significantly higher than for most of its com-

petitors. Therefore, MTB intends to consequently reduce the SG&A expenses throughout the planning

period by reducing personnel expenses using the regular employee turnover in the sales, administrative

and technical departments. In addition, controlling of overhead expenses has been intensified. MTB

plans to reach its targeted SG&A expense ratio of approximately 10 % - 11 % of revenues until 2016.

308. MTB’s SG&A expenses also include the overhead expenses of MFI. These expenses mainly consist of

personnel and IT expenses, as well as depreciation and amortisation. Because of new hires as part of the

continuous expansion and professionalisation of the comparatively young business, and the introduction

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of a new IT system, an increase of SG&A expenses predominantly in the years up to 2015 is expected for

MFI.

309. MTB's other operating expenses throughout the planning period mainly comprise research and devel-

opment expenses. Research and development expenses in relation to revenues are expected to increase

during the planning period, reaching the target level of 5.0 % of revenues from 2015 onwards. Devel-

opment costs are partly capitalised and amortised over the following years. Further elements of the

other operating expenses include the depreciation of inventories (finished products and used vehicles),

and other depreciation and amortisation expenses.

310. For MFI, other operating income includes interest income from the financing and leasing business, as

well as other income such as provisions from insurance brokerage. Interest income is expected to in-

crease throughout the planning period mainly because of the expected expansion of the portfolio from

€ 2,934 million in 2012 to € 4,404 million in 2017. This expansion is based on MTB’s planned sales devel-

opment as well as the assumed increasing penetration rates and average financing volumes.

311. The corresponding interest expenses and risk costs are shown under other operating expenses. While

the gross margin is expected to remain almost constant compared to 2012 during the planning period,

MFI expects to be able to increase the net margin steadily until 2015 by reducing the risk costs, espe-

cially in countries heavily affected by the financial and sovereign debt crisis such as Italy and Spain, as

well as for Russia. From 2015 onwards only marginal increases of the net margin based on a normalised

level are expected.

312. In total, MTB’s planning figures assume a constant improvement of the EBIT margin to 8.4 % in 2017.

The improvement of the EBIT margin is - to almost equal parts - the result of a reduction of the costs of

goods sold ratio as well as the SG&A expense ratio. Both expense ratios are expected to decrease by

almost four percentage points by 2017. The improvement is partly based on expected synergies result-

ing from a closer cooperation with Volkswagen AG and Scania (see note 261). In contrast, an increase of

other operating expenses is expected, which mainly results from increased research and development

expenses.

313. Overall, in our opinion MTB’s financial planning can be characterised as ambitious but feasible. How-

ever, a successful realisation of the expected operating results for the years 2013 to 2017 depends sig-

nificantly on the successful implementation of the targeted savings in materials costs, the successful

reduction of SG&A expenses, especially in the administration and sales organisation, the realisation of

expected synergies and a sustainable economic recovery. Based on the documents and information

provided we considered all pseudo synergy effects for the present valuation.

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Employees

314. Expecting an economic recovery after the 2009 financial crisis, MTB significantly increased its workforce,

especially in 2011. However, the continued financial and sovereign debt crisis deterred the recovery of

the truck sales market causing new hires to significantly adversely affect the operating margin. There-

fore, - although the number of employees in development projects is assumed to increase - a reduction

of the workforce is planned for the planning period, especially in 2013 and 2014, to reduce the SG&A

expense ratio.

Depreciation, amortisation and capital expenditures

315. In the planning period the focus is on the development of a new heavy truck series (TGX/TGS), as well as

the optimisation of the production and sales network. Investments therefore are mainly planned for

new production facilities (e.g. cab painting), investments in product maintenance and enhancements, as

well as the sales organisation. Planned depreciation and amortisation expenses increase in the planning

period due to rising capital expenditures, as well as higher research and development expenses and the

resulting amortisation of capitalised development expenses (for the new heavy truck series).

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c) Financial planning of MAN Latin America

316. ML’s key figures for the fiscal years 2013 to 2017 - compared to fiscal year 2012 - are as follows:

Source: MAN SE, ML

Business development

317. ML’s sales volume forecast for the Latin American truck and bus market is based on both internal ex-

perience from the ML sales network and external market studies.

318. After the market volume of the Brazilian truck market over 5 t decreased in 2012 to approximately

136,600 units (2011: approximately 171,200), ML expects a moderate recovery of the Brazilian market in

2013 and continuous growth for the remaining planning period. Among other things, the growth expec-

tations are backed by government incentives introduced at the beginning and in the course of 2012.

These include tax incentives, favourable financing conditions, a government infrastructure investment

programme, as well as direct purchases of trucks and (school) buses. Further stimulating effects for the

Brazilian truck market are expected from the upcoming major sport events: the FIFA-World Cup in 2014

and the 2016 Summer Olympics. In addition, ML expects a beneficial effect - mainly for the heavy and

extra-heavy vehicle series - from the exploitation of new discovered mineral resources. As the average

age of the commercial vehicle fleet in Brazil is over 16 years, in the medium term there will also be a

substantial need for replacement investments. Overall, ML expects sales growth rates of 9.0 % p. a. on

average until 2017 leading to a market volume of 210,000 units for trucks over 5 t. More stringent emis-

sion standards, i. e. the introduction of PROCONVE P-8 (comparable to EURO VI), are not expected

within the planning period. ML’s forecast market development for Brazil for trucks over 5 t is signifi-

cantly above the expectations of LMC Automotive, and should therefore be considered as optimistic.

319. Following an increase of ML’s market share in Brazil in 2012 for trucks over 5 t to 30.3 % (2011: 29.7 %),

ML expects a decrease of its market share to approximately 27 % for 2013. The expected loss of market

share is on the one hand due to increasingly intensive competition and on the other hand due to the

MAN Latin America

CAGR

€ million 2012 2013E 2014E 2015E 2016E 2017E 2012 - 2017

Revenue 2,870 3,025 3,635 4,344 4,901 5,528 14.0%

Depreciation and amortisation 145 123 143 123 104 147 0.3%

of which attributable to PPA 92 76 60 43 28 25 -22.7%

Capi ta l expendi tures 100 160 176 218 182 170 11.2%

EBIT 137 139 220 312 422 525 30.7%

EBIT margin 4.8% 4.6% 6.0% 7.2% 8.6% 9.5%

8.0% 7.1% 7.7% 8.2% 9.2% 10.0%

Employees 1,937 2,102 2,102 2,102 2,102 2,102 1.6%

EBIT margin (excl. PPA

depreciation)

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fact that the strongest growth is expected in the extra-heavy market segment, in which ML so far is only

present to a smaller extent. In the course of the planning period ML expects to regain a market share of

approximately 28 %. To regain market shares and to overcome the increasing intensive competition, ML

is focusing on technical innovations and continuous product enhancements as well as on the expansion

of its product portfolio. Examples are amongst others the introduction of the MAN TGX series in Brazil in

2012 and the MAN D08 engine, also introduced in 2012. In addition, ML is currently developing the new

Phevos series, which will replace the VW Delivery series in the market segment up to 10 t. Moreover,

the Phevos series will add a smaller truck in the 3.5 t segment to ML’s product range.

320. The Brazilian bus market also decreased in 2012 to a volume of approximately 28,800 units (2011:

34,600). In the bus market ML also expects the market to recover within the planning period to ap-

proximately 42,000 units in 2017. These expectations are well above external market expectations. ML’s

expectations are based on a quicker than anticipated recovery of the Brazilian economy in conjunction

with the positive effects from the government incentives and the two upcoming major sport events

described above.

321. ML’s market share for buses over 8 t was 27.9 % in 2012 (2011: 32.2 %). Thus, ML still ranks second in

the Brazilian bus market behind Mercedes-Benz. For the planning period ML expects to steadily increase

its market share to over 30 %. In order to achieve this, the introduction of a new bus chassis series as

well as further product innovations is planned.

322. ML’s overall planned sales growth for trucks and buses is more optimistic than that of current market

studies. The aspired sales forecast is therefore ambitious, and to a large extent dependent on the overall

development of the Brazilian economy.

323. Besides the sales in the domestic market, ML also exports a significant portion of its manufactured

vehicles. ML’s most important export markets are other Latin American countries like Mexico, Argen-

tina, Uruguay, Peru and Chile, as well as some African markets, like Angola, Nigeria and South Africa.

Especially in the emerging countries in Latin American there is significant sales potential due to the ex-

pected growth of these regions.

324. Overall, ML expects an average growth rate of approximately 14 % p. a. from the export business to

17,000 units in 2017. One key driver of this positive development, in addition to an increased competi-

tiveness due to the revision and expansion of the product portfolio, is especially the expansion of the

sales and service network in the individual markets. Towards the end of the planning period, a further

positive effect promoting ML’s competitiveness in the export markets is expected from the introduction

of the Phevos series.

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325. The price effect is of minor importance compared to the volume effect in the truck as well as in the bus

business during the planning period. However, ML expects continuous price increases during the plan-

ning period in both the domestic and export markets.

326. The development of revenues is therefore primarily driven by the expected volume growth. In total, an

average annual growth rate of 14.0 % is expected for the planning period up to 2017. The growth rate

for domestic and export sales contribute in approximately equal parts to the expected growth. From

2013 to 2015 the highest growth rates are expected for extra-heavy vehicles. On the one hand this is

based on the introduction of the TGX series, and on the other hand on the higher expected demand due

to the major sport events as well as a positive development of the overall economy. In 2016 and 2017

an increasing demand for light trucks is expected due to the continuous growth of the metropolitan

areas. To meet the growing demand for light trucks the introduction of the Phevos series is planned for

this period.

327. Compared to the truck business, ML expects lower growth rates in the bus market leading to a slightly

decreasing share of the bus business in terms of ML’s total revenues. ML assumes that in the medium-

term the bus business will represent about 16 % of its total revenues.

328. ML does not differentiate between revenue and order intakes as, in the Brazilian market, long-term

orders are not common. Customers rather tend to purchase finished vehicles or order their vehicles at

short notice depending on current requirements.

Earnings before interest and tax (EBIT)

329. ML’s management expects to be able to reduce the cost of goods sold in relation to revenues by ap-

proximately two percentage points by 2014. The costs of goods sold mainly comprise costs of materials,

the cost of goods sold of the Mexican production facility, expenses for warranty provisions as well as

depreciation and amortisation and freight costs.

330. As under the production concept "Consórcio Modular" the actual production of the vehicles is carried

out by partner companies at the Resende plant, cost of materials represents the bulk of cost of goods

sold. The purchasing costs for the manufactured vehicles, as well as the services provided by the partner

companies are bundled as costs of materials. "Consórcio Modular" allows ML to react flexibly and rap-

idly to changes in demand. As the employees working in production are mainly employed by partner

companies, the proportion of fixed costs is relatively low in Brazil.

331. The employees directly employed by ML are only involved in product development, quality assurance,

as well as sales and customer service. The cost of goods sold, which arise from these employees, hence

represent only a small share of the cost of goods sold.

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332. The currently still relatively high costs of goods sold in the second production facility are supposed to be

reduced during the planning period using efficiency-increasing programmes and an expansion of the

"Consórcio Modular" concept.

333. Alongside the expected revenue growth, selling expenses are also planned to increase up to 2015. The

increase in costs results mainly from expected product launch costs, for example for the TGX series

launched in 2012. Towards the end of the planning period sales expenses are expected to move towards

a normalised level. The general and administrative expenses in 2012 were characterised by IT related

one-off costs. For 2013 a reduction of general and administrative expenses is expected. In the following

years moderate cost increases are assumed. Overall however, ML expects that economies of scale can

be achieved as a result of the planned growth of the operating business, and that the ratio of SG&A ex-

penses with regard to revenues will therefore be reduced accordingly.

334. ML's other operating expenses in the planning period mainly include research and development ex-

penses. Due to the Phevos project, higher research and development costs are expected for the plan-

ning period. Since a significant part of the development costs is planned to be capitalised, the additional

expenditure will not be fully reflected in the operating margin.

335. Due to savings, for example as part of the measures to improve the profitability in Mexico, as well as by

achieving economies of scale, ML expects a significant improvement of the operating margin from 2014

onwards. Due to the production concept "Consórcio Modular" and the resulting flexibility of operating

costs, ML's EBIT margin varies much less than unusual in this industry. The expected EBIT increase to

€ 525 million in 2017 is therefore mainly the result of the planned expansion of the operating business.

The expected operating margin is approximately equal to historical levels. The planning therefore seems

ambitious, mainly because of the growth expectations for the Brazilian market, but feasible.

Employees

336. At the end of the fiscal year 2012 ML employed a total of 1,937 people, who primarily work in the prod-

uct development and quality assurance, as well as sales and customer service. Additionally approxi-

mately 3,800 people were employed by partners or service providers in the production concept "Con-

sórcio Modular". The directly employed workforce is expected to stay constant in the planning period

from 2013 onwards; salaries and wages were indexed using the expected inflation rates. For 2013 the

recruitment of 165 new employees is planned in order to manage the future revenue growth. The num-

ber of employees working in the production concept "Consórcio Modular" is expected to rise to over

6,700 in 2015. This increase is reflected in ML’S increasing cost of materials.

Depreciation, amortisation and capital expenditures

337. Within the planning period the major capital expenditures at ML result from the development of the

Phevos series and from the modification of the paint shop in the Resende plant. In addition, a further

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part of the capital expenditures is used for establishing the local production of engines and components

for the MAN D08 engine series. The planned depreciation and amortisation of fixed assets and of intan-

gible assets capitalised as part of the acquisition of ML are below the level of capital expenditures in all

planning years.

338. Due to the "Consórcio Modular" concept, capital expenditures at ML are relatively low compared to

revenue growth.

d) Financial planning of MAN Diesel & Turbo

339. The key figures from MDT for fiscal years 2013 through 2017 are presented - in comparison with the

adjusted figures for fiscal year 2012 - as follows:

Source: MAN SE, MDT

Business and Revenue Development

340. In fiscal year 2012, MDT was able to increase revenues by approximately 5 % compared to the previous

year. The order intake, however, declined by approximately 5 % to € 3,510 million particularly due to the

regressive trend in the shipbuilding market. The order backlog decreased from € 3,805 million at the end

of fiscal year 2011 to € 3,367 million as at 31 December 2012. Thus an expected decrease in revenues by

approximately 6 % to € 3,570 million results for fiscal year 2013. In subsequent years of the planning

period, MDT expects a recovery of the business situation and an average annual increase of the order

intake by 9.4 % from 2012 to 2017. In the same period and based on the higher level of fiscal year 2012,

the revenues are expected to increase by 5.8 % p.a. on average until 2017. In the period between 2013

and 2017 MDT plans an increase in revenues of 8.8 % p.a. on average. The planned increase in order

intake results in the full utilisation of existing capacities and an order backlog of € 5,379 million in 2017.

This is equal to an average volume of order backlog of more than one year.

341. Regarding the SBU Engine & Marine Systems the MDT division recorded an order intake amounting to

€ 1,296 million in fiscal year 2012. For the fiscal years 2013 and 2014 the company expects an on-going

MAN Diesel & Turbo

CAGR

€ million 2012 2013E 2014E 2015E 2016E 2017E 2012 - 2017

Order intake 3,510 3,800 4,250 4,950 5,200 5,500 9.4%

Revenue 3,780 3,570 4,000 4,550 4,800 5,000 5.8%

Depreciation and amortisation 82 91 105 112 120 129 9.4%

Capi ta l expendi tures 149 158 148 148 173 182 4.0%

EBIT* 357 239 397 579 619 645 12.6%

EBIT margin* 9.4% 6.7% 9.9% 12.7% 12.9% 12.9%

Employees 14,863 15,200 16,000 17,200 17,700 17,900 3.8%

* EBIT does not include income from investments and in 2012 i s adjusted by extraordinary i tems.

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slowdown of the commercial shipbuilding market. Hence, a significant reduction of license revenues

from two-stroke diesel engines was considered. Due to the increasing after-sales business, revenues of

€ 1,410 million (2013) are above order intake levels for the fiscal year 2012. In accordance with an as-

sessment of the current market for four-stroke diesel engines, a slight recovery of ship orders is ex-

pected in 2013. Based on this, the expected increase in revenues of 14.0 % in fiscal year 2014 should

particularly result from a recovery in the business of four-stroke engines as well as from increasing reve-

nues in the after-sales business. An increase in revenues by 12.6 % to € 1,809 million is planned for fiscal

year 2015, which represents a higher level than in 2011 with € 1,670 million. Aside from the successive

introduction of new products starting from 2015 (to a large extent from 2016), the management of MDT

expects this increase in particular with regard to the recovery of the commercial ship building market.

Furthermore, the after-sales business in particular is supposed to contribute to the high revenue levels

projected for 2015. Considerable growth of the installed basis from the peak stage of the ship building

market also contributes thereto during the planning period. Additional growth is also supposed to be

generated from the expansion of the global organisation, in particular with regard to the sales organisa-

tion as well as the after-sales business. Based on the already high level of revenues of fiscal year 2015,

the company expects a comparably moderate development in fiscal years 2016 and 2017, with revenues

of € 1,863 million in 2017. This is consistent with the previously shown stable development of the ship-

ping market from this date onwards. Overall, we consider the planning of revenues in the SBU Engine &

Marine Systems to be plausible.

342. The market development for the SBU Power Plants is primarily determined by the overall economic

development. After the significant growth rates achieved particularly in 2011, the economic develop-

ment remained behind expectations in 2012. The order intake in 2012 amounted to € 668 million and

ranges partially up to three years. In fiscal year 2013, MDT expects the revenues in the SBU Power Plants

to amount to € 628 million (2012: € 773 million). This takes into account, that a major large-scale project

in Brazil does not start to generate revenues until fiscal year 2014. A slight recovery of the market is

expected in the emerging and developing countries starting from 2013, since the generally high energy

demand will remain unchanged. The trend towards a more decentralised energy supply also contributes

to the planned development of revenues.

343. Besides the manufacturing and distribution of generator sets for power generation, the SBU Power

Plants also provides turnkey power plants as a general contractor. In October 2008, MDT received an

order from a French power company to construct turnkey diesel power plants on Corsica and in the

overseas departments of La Réunion, Guadeloupe and Martinique. In the period between 2010 and

2012 this project contributed approximately half of the revenues achieved with turnkey power plants

and according to the current state of knowledge, it should be finished until fiscal year 2015. The share of

additional contracts on turnkey power plants in revenues should rise successively in the planning period,

and therefore capacities that become available after the project with the French power company is fin-

ished could be used for various other projects. MDT explains the increase in revenues in the SBU Power

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Plants by approximately 29 % to € 1,146 million in 2016 by projects, which are newly granted during the

planning period and contribute to the revenues from fiscal year 2016 onwards. In addition, MDT intends

to successively increase the market share of the SBU Power Plants through, among other things, a fur-

ther expansion of the global sales organisation and newly developed products that are expected to en-

ter the market mostly from 2016 onwards. During the planning period the growth of the installed basis

of engines will contribute to an increase in revenues generated through the after-sales business.

344. Overall, the projected revenues in the SBU Power Plants are expected to increase by 10.1 % p.a. on

average in the period between 2012 and 2017 and hence, in 2017 with € 1,250 million should be almost

twice as high as expected for fiscal year 2013. Within this context, the company intends to significantly

expand its market share. Gas engines will be of increasing relevance in the projected market develop-

ment. Currently, Wärtsilä holds an important market position in this sector. Based on this, we consider

the planned increase in revenues in the SBU Power Plants as ambitious but feasible.

345. In contrast to the general market trend, the order intake of the SBU Turbomachinery was in 2012 with

€ 1,546 million approximately 7 % higher than in the previous year (€ 1,447 million). With the economic

slowdown, the sale of new compressors and turbines has slightly decreased. Nevertheless, the SBU was

able to increase the order intake both from chemical and fertiliser plants and the oil and gas sector as

well as from the after-sales business. For instance, a Brazilian customer extended one contract con-

cluded with MDT in 2002 on maintenance, servicing and operational support of 20 MAN gas turbines

and compressors on four Brazilian offshore platforms for another five years. The key regions in 2012 for

the turbo machinery business were also primarily emerging and developing countries, in particular Brazil

and China.

346. In 2013 the SBU expects an increase in turnover from € 1,455 million by 5.2 % to € 1,531 million mainly

due to the increased order intake in 2012. In 2013 and 2014, MDT expects a continuously positive, but

slightly weaker growth for the process industry in emerging countries. Due to population growth, there

is basically a high long-term demand for basic materials. The pricing pressure will continue to increase

nonetheless, due to more intense competition. For the process industry markets, future growth consid-

ered in the planning is especially stemming from gas and steam turbines, screw compressors, very large

air separation units as well as turbo machinery for the production of fertilisers and ethylene.

347. The expected positive market development in the oil and gas industry is the result of the exploitation of

new deep-sea oil reserves as well as investments in the extraction and sea transport of natural gas. Due

to a comparatively low price of natural gas, especially in the US, this should lead, among others, to new

developments in energy infrastructure, transport, petro chemistry and production. The development to

use natural gas as an alternative to oil basically has a positive impact on all major regions. MDT there-

fore expects further growth in the oil and gas industry in 2013 and 2014. Additional growth is planned in

sales and after-sales business as a result of the expansion of the global organisation.

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348. Revenues in the SBU Turbomachinery are planned to increase to € 1,854 million by the year 2015. The

company expects the business to be stabilised on this level that is approximately 27 % above the reve-

nue in 2012. The revenue is expected to slightly decrease by 1.7 % in 2016 and increase by 3.5 % to

€ 1,887 million in the following year. This development is associated with an expected cyclic nature of

the business and results from price and competition effects.

349. An average revenue growth of 5.3 % is planned in the SBU Turbomachinery for the period from 2012 to

2017. The long-term demand for oil and gas is expected to increase on average by approximately 0.5 %

for oil and 1.6 % for gas. Due to increasingly complex extraction methods in more remote extraction

areas, comparably higher growth in the relevant market for turbo machinery for oil and gas exploitation

and for pipeline transport is expected in the medium-term. The growing middle class in developing

economies as well as further population growth indirectly increases the demand for turbo machinery

that is used in the production of basic materials and fertilisers. However, competitors much larger than

MDT take part in the market for turbo machinery and hence, the market is characterised by an increas-

ing pricing pressure. Based on this, we consider the planning of revenues in the SBU Turbomachinery

overall as plausible.

Earnings before interest and tax (EBIT)

350. Despite the slightly increased revenues of MDT in fiscal year 2012, the EBIT margin, adjusted for special

effects, significantly decreased from 13.4 % (2011) to 9.4 %. This was in particular caused by a decrease

in the gross margin from the license business, a continuing high competitive pressure in the new engines

business of four-stroke engines with an associated underutilisation in the SBU Engines & Marine Sys-

tems as well as increased costs related to large plant construction projects in the SBU Power Plants.

Both an increase in the after-sales business and the SBU Turbomachinery partially compensates these

effects.

351. For the fiscal year 2013 MDT expects a further decline of the EBIT by approximately € 118 million. Ac-

cordingly, the EBIT margin is expected to decrease further by 2.7 percentage points to 6.7 %. The cause

for this expected decline is on the one hand a further deterioration of the situation in the shipping mar-

ket, in particular with regard to the construction of large commercial vessels and the associated de-

crease in revenues from licenses. On the other hand, significant adverse effects to EBIT margin are still

expected especially in fiscal year 2013 from large plant construction projects in the SBU Power Plants.

The negative effects resulting from large plant construction projects are expected to decrease substan-

tially in fiscal year 2014. Additionally, a declining margin in the SBU Turbomachinery contributes to the

decline of the EBIT margin in fiscal year 2013.

352. The increase of the EBIT margin through fiscal year 2015 can be traced back to approximately equal

parts to developments in the SBUs Power Plants and Turbomachinery. With regard to the SBU Engines &

Marine Systems no significant contributions to an increase of the EBIT during this period are expected

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by MDT. This is due to the situation in the ship building market that is expected to continue to be tense,

primarily with regard to the license business for two-stroke engines used in commercial ships. Addition-

ally, margins in the area of four-stroke engines will further decrease until the launch of major product

innovations starting from fiscal year 2016. With regard to the SBU Power Plants the negative effects

from large plant construction projects are expected to significantly decrease in 2014. The after-sales

business as well as effects of the planned and partially initiated cost-saving measures should in particu-

lar contribute to the improvement of profitability until 2015 in the SBU Turbomachinery.

353. From 2016 onwards, MDT expects a stabilisation of the EBIT margin at 12.9 %. This EBIT margin is ap-

proximately 1.4 percentage points above the average adjusted EBIT margin from 2010 to 2012. The

company has taken into account the offsetting effects from the different cycles of the SBUs. Next to

margin effects resulting from the introduction of new products, the SBU Engines & Marine Systems ex-

pects a recovery of the shipbuilding sector of commercial vessels, which will lead to increased license

revenue. In contrast, a cyclical-related decline in the profitability in the SBU Turbomachinery is ex-

pected. To this end, the effects from the intended cost-saving measures are expected to be exceeded by

an increase in the intensity of competition and the resulting pricing pressure. For the SBU Power Plants

the company expects a stable development of profitability in 2016 and 2017.

354. Adjusted for one-time special effects, the EBIT margin amounted to 11.6 % in 2010, 13.4 % in 2011 and

9.4 % in 2012. The EBIT margin in 2016 and 2017 is in the upper range of the historical EBIT margins. In

this regard, we consider the planned development of the EBIT margin of MDT to be plausible, although,

on the basis of the assumed continuously positive economic trend, to be rather ambitious. This conclu-

sion incorporates the expected business situation of relevant competitors.

Employees

355. On 31 December 2012, MDT employed 14,863 employees, including temporary workers. The increase of

approximately 6 % compared to the previous year is basically due to the development of distribution,

service and research departments as well as due to the consolidation of additional companies.

356. Despite declining revenues MDT plans an increase in the number of employees, including temporary

workers, by 2.3 % in 2013. The increase in the number of employees is associated with the intended on-

going internationalisation as well as the expansion of the global organisation. To this end, the interna-

tional after-sales business-activities as well as sale capacities are planned to be enhanced in particular.

Overall, with an average increase of 3.8 % p.a., the number of employees is planned to increase less

than the intended average annual growth of revenues of 5.8 % p.a. during the planning period. An in-

creased utilisation of existing capacities has been taken into account.

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Depreciation, amortisation and capital expenditures

357. In order to maintain its competitiveness, MDT significantly increased its investment activities in fiscal

year 2012 and invested approximately 4 % of revenues. Capital expenditures were focused on the pro-

duction and development of engines as well as on the manufacturing and testing sites of the SBU Tur-

bomachinery located in Oberhausen and Zurich.

358. MDT plans the launch of new generations of engines and other product innovations primarily from the

year 2016 onwards. Accordingly, almost one fifth of the total capital expenditures are earmarked for

capitalised development costs until and including the year 2015. This portion gradually decreases in the

following years up until 2017. A significant portion of the remaining capital expenditures in tangible

assets is also related to product innovations, test beds in particular. The other key part of the invest-

ments in this period refers to replacement capital expenditures. The increase of the capital expenditures

volume in 2016 and 2017 is associated with the planned revenue growth. The capital expenditures ratio

(capital expenditures in relation to revenue) decreases from 4.4 % to 3.3 % in the period between 2013

and 2015 and continues at 3.6 % for 2016 and 2017. The average capital expenditures ratio amounts to

3.4 % in the periods from 2010 to 2017 and 3.8 % from 2012 to 2017.

359. The planned increase of depreciation and amortisation is associated with the increase of capital expen-

ditures in the past as well as in the planning period. The average depreciation ratio (in relation to reve-

nues) amounts to 2.4 % in the period from 2010 to 2017 and to 2.5 % in the period from 2012 to 2017,

respectively. In 2017 the depreciation ratio is expected to amount to 2.6 %.

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e) Financial planning of Renk

360. Renk’s key figures for the fiscal years 2013 to 2017 are presented - in comparison with the fiscal year

2012 - as follows:

Source: MAN SE, Renk

Business and revenue development

361. Renk's order intake is expected to increase during the planning period by approximately € 36 million

from € 525 million in 2012 to € 561 million in 2017 (CAGR: 1.3 %). Within this context, it has to be con-

sidered that in 2012 the level of order intake was relative high, primarily due to the intake of major long-

term contracts for vehicle transmissions and special gear units.

362. During the detailed planning period, the projected development of revenues is positively affected by the

comparably high order intake in the past fiscal year 2012. Revenues are expected to increase from € 476

million in 2012 to € 593 million in 2017 (CAGR: 4.5 %).

363. For the planning year 2013, it is projected that Renk’s order intake from the sale of vehicle transmissions

will increase significantly. This is mainly due to the expected signing of a major contract regarding the

delivery of gear units for tracked vehicles. For the fiscal year 2014, no comparable major contracts are to

be expected, which contributes to the expected decline of order intake. In subsequent years, expected

order intake from various projects requiring vehicle transmission and being known in the market were

taken into account. Apart from the project business, annual order intakes and revenues from the spare

parts and maintenance business for vehicle transmissions were considered.

364. The revenues from the sale of vehicles transmissions can be predominantly ascribed to a few major

projects. For simplification purposes, the possibility that corresponding timelines might be postponed,

the scope of projects might be adjusted or projects might be even abandoned was not taken into con-

sideration. Projects awarded at short notice might also bring some compensatory effects. Renk’s over-

proportional increase in revenues from 2013 to 2014 is mainly attributable to the start-up of the above

mentioned major projects.

Renk

CAGR

€ million 2012 2013E 2014E 2015E 2016E 2017E 2012 - 2017

Order intake 525 545 502 533 573 561 1.3%

Revenue 476 474 563 559 578 593 4.5%

Depreciation and amortisation 14 17 18 18 19 19 5.3%

Capita l expenditures 28 37 33 36 35 28 0.2%

Employees 2,245 2,333 2,407 2,430 2,457 2,501 2.2%

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365. Renk’s slide bearings business is characterised by comparably high quantities as well as the intense

competition. In addition, the global market is saturated on the supply side and, the products offered by

Renk in particular are subject to a high degree of standardisation.

366. Comparable to the vehicle transmission business, order intakes for special gear units are also affected

by major contracts. In 2012, major contracts for special gear units were concluded in the marine busi-

ness, resulting in an expected decrease of order intake in 2013. Principally, Renk expects to win further

major contracts, for instance from the Asia-Pacific and the South American regions, for highly sophisti-

cated gear units in the marine business. Hence, projected order intake in the marine business is ex-

pected to remain at a high level until 2016. Towards the end of the detailed planning period, it is ex-

pected that the scope of investment programmes currently observable in the market will be reduced,

which will affect a decrease of order intake. It is projected that this effect will be partially offset by an

upturn in the stationary gear sector whose outlook was subdued in the recent past as well as in the be-

ginning of the detailed planning period. Following a phase of reluctance of investments caused by the

financial and sovereign debt crisis, expected market recovery is predominantly linked to the business

with gear units for the cement industry but also to other major industrial applications that are depend-

ent on economic cycles. In the stationary gear sector the business volume is predominately influenced

by the spare parts and maintenance business.

367. Over the last years, the Renk’s standard gear business has benefited from a temporary boom in demand

for LNG tankers. Currently, the demand for LNG tankers is declining due to significantly increased trans-

port capacity. This results in the decreased order intake in 2012 as well as an expected decline of order

intake in the planning year 2013. Subsequently, Renk anticipates a recovery in the remaining commer-

cial shipbuilding market, which is currently at a low level due to low freight rates. In addition to this, an

order intake for gears for offshore wind power plants with a capacity above 5 MW is expected. The pos-

sibility that gearless wind power plants, which are in the prototype phase for the performance class of

above 5 MW that is relevant for Renk, will be successful in displacing already proven systems with gears,

was not considered in the forecast.

368. Particularly at the beginning of the planning period, Renk expects significant revenues from the sale of

standard gear units due to a good order situation for gears for LNG tankers. Under the consideration of

the intense competitive environment, revenues from gears for wind power plants are expected to ex-

hibit a moderate increase during the planning period.

369. Overall and mainly due to the consideration of major projects in the planning figures as well as the

relatively stable development of revenues starting from 2014, we consider the revenues projected by

Renk to be plausible.

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Earnings before interest and tax (EBIT)

370. During the planning period, it is expected that Renk’s EBIT will increase from € 65 million in the fiscal

year 2012 to € 80 million in the fiscal year 2017, representing an average growth of 4.2 % per year. To

this end, cost of goods sold is generally planned at product group level except for major projects, which

are planned at the level of the respective project. Key parameters are the anticipated use of materials,

the projected utilisation of employees and, especially important for the SBUs Vehicle Transmissions and

Special Gear Units, projected warranty obligations. In principal, the derivation of projected gross mar-

gins for future orders is based on past experiences and expected market trends, such as the increased

competition in the market for wind power gear units. As soon as order-specific special effects are known

or expected, they are considered in the forecasts.

371. The selling expenses partially include project-specific expenses and are characterised by the fact that

the business has become more consulting intensive. In the slide bearing business highly competitive

markets require a high degree of assistance and consulting efforts. The vehicle transmissions and special

gear unit business customers also have increasingly extensive and time-consuming requirements regard-

ing the documentation accompanying the orders.

372. The other operating income of the past years is mainly comprised of gains from currency differences

and derivatives. In the planning period, other operating income and expenses are not expected to be

high since balances from hedging are expected to offset each other.

373. Other operating expenses primarily consist of research and development, write-downs, loss provisions

and scrapping. Operating expenses ratios in relation to revenues are projected to be lower in compari-

son to the past years.

374. Within the planning period, resulting EBIT margins are projected to remain nearly constant and, in

comparison to the past periods from 2010 to 2012, almost unchanged. From 2013 to 2017, the EBIT

margin is expected to range between 12.7 % and 13.6 %. Mainly due to the well-established business

model as well as the relatively diversified product portfolio offered by Renk as a manufacturer of special

gears, we consider the projection of a relatively stable development of EBIT margins to be comprehen-

sible and appropriate.

Employees

375. A moderate increase of the number of employees, from 2,245 employees in 2012 to 2,501 employees in

2017 is projected for the Renk division. Hence, the expected average increase of 2.2 % per year is less

than proportional in comparison to the expected development of revenues.

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Depreciation, amortisation and capital expenditures

376. As in the recent past starting from 2008, expected capital expenditures in the planning period are af-

fected by a renewal programme of production processes. The programme is already completed for the

sites in Rheine and Hanover and is projected to be carried out at the site in Augsburg in 2015. Conse-

quently, the capital expenditures ratio (capital expenditures in relation to revenues) decreases from

7.8 % (2013) to 4.8 % (2017) during the planning period. Nevertheless, Renk continuously invests in

state-of-the-art production processes in order to maintain its competitiveness, which is also reflected in

the almost stable development of the EBIT margin. The derivation of planned capital expenditures in

accordance to projected revenues is comprehensible since higher business volumes regularly require an

expansion of machinery and plants as well as an increase in productivity in the light of basically satu-

rated markets and stable EBIT margins.

377. Particularly as a result of the investment programme described above, projected depreciation and

amortisation steadily increases during the planning period. The peak is anticipated in 2016, followed by

a slight decrease in 2017. In relation to revenues depreciation ratios are expected to range between

3.7 % (2013) and 3.1 % (2017). This almost matches with depreciation and amortisation ratios that were

observable in the past, ranging between 3.0 % (2012) and 3.3 % (2011).

f) Financial planning of the Corporate Center and consolidation

378. The central area "Corporate Center" includes MAN SE, as the group holding, and eleven other compa-

nies, in which primarily the Shared Service Centres such as Personnel and IT Services are organised cen-

trally.

379. The Corporate Center as the strategic management centre at the head of MAN Group is responsible for

the strategic and structural development of the group, the development of management resources and

the central controlling as well as the external reporting, taxation and corporate communication. In addi-

tion, the Corporate Center handles the central financial management, which primarily includes financing

and liquidity management of the MAN Group as well as processing internal payment transactions.

380. The figures for the central area, including the consolidation effects of the MAN Group for the fiscal years

2013 through 2017 are presented - in comparison with the fiscal year 2012 - as follows:

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Source: MAN SE

381. The development of revenues is primarily due to consolidation effects and reflects the increasing sales

and service relationships between MTB and ML as a result of the TGX-deliveries to Brazil.

382. The EBIT of the central area is primarily influenced by personnel and material expenses, being part of

the general and administrative expenses, as well as other operating expenses and income.

383. The planning of increasing personnel expenses in the detailed planning period is performed taking into

account the expected wage increases and rising variable remuneration components with a relatively

constant workforce in the central area and the shared service companies.

384. In addition, project-related expenses and fees for external consulting services are included in the ex-

penses of the administration. Expenses for public relations activities and sponsorship are taken into

account in the planning as well.

385. The other operating income was to a large extent developed constantly during the detailed planning

period and comprises mainly the allocations from intercompany services of the Shared Service Center as

well as income from foreign currency and hedging transactions.

386. The other operative expenses are to a large extent held constant during the detailed planning period as

well. They include all expenses not assigned to the functional expenses, in particular insurance premi-

ums, write-downs on accounts receivables and other taxes.

2. Earnings before interest and tax (EBIT) in the terminal value

387. We have based our analysis for the derivation of a long-term average achievable EBIT from the fiscal

year 2018 onwards on the historical and planned profitability of the MAN Group. For our analyses we

differentiated between revenues and operating profit of each division:

MAN Corporate Center / Consolidation

CAGR

€ million 2012 2013E 2014E 2015E 2016E 2017E 2012 - 2017

Revenue -176 -159 -262 -296 -400 -443 20.3%

EBIT* -60 -138 -151 -173 -131 -136 17.7%

* EBIT does not include income from investments .

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MTB

388. MTB’s sustainable revenues amounting to € 10,500 million were derived based on long-term trends and

correspond to annual sales of 87,000 trucks and 5,500 buses. For the derivation of the sustainable reve-

nues the cyclical nature of the truck and bus business was taken into account based on analyses of the

competitive environment and an analysis of MTB’s long-term development in the past (2001 to 2012)

and the entire planning period (2013 to 2017), so in total a period of 17 years. The sustainable revenues

of € 10,500 million are slightly higher than the average revenues planned for the detailed planning pe-

riod, which amount to approximately € 10,300 million.

389. Long-term analyses of MTB’s historical and projected EBIT margins show average EBIT margins of ap-

proximately 5.0 % - 6.0 %. The historical average EBIT margin for the fiscal years 2001 to 2012 was ap-

proximately 5.0 %, for a shorter period from 2004 to 2012 an average EBIT margin of approximately

5.5 % was achieved. Historical long-term average EBIT margins of comparable companies are approxi-

mately equal to 6.0 %. Taking the cyclical nature of the business and potential synergies with Volks-

wagen and Scania into account and given the current environment, we consider an EBIT margin for the

MTB division of 6.0 % - representing a sustainable average EBIT margin - as ambitious, but feasible for a

medium- to long-term perspective.

ML

390. Our derivation of the sustainable revenues for the ML division of € 5,000 million is based on a long-term

assessment of the Latin American truck and bus market and the management’s targeted market shares

in these markets. Also considering the past and projected development of ML over the period between

2010 and 2017 - taking the major sport events in 2014 and 2016 into account - sustainable average

revenues of € 5,000 million are appropriate. This value corresponds to a production of approximately

93,000 units p. a.

Sustainable revenues and EBIT*

Revenue

EBIT

margin* EBIT*

€ m. % € m.

MAN Truck & Bus incl . MAN Finance 10,500 6.00% 630

MAN Latin America 5,000 8.25% 413

MAN Diesel & Turbo 5,050 11.75% 593

Renk 550 13.30% 73

Corporate Center/Consol idation -447 n.a . -137

MAN Group 20,653 7.61% 1,572

* EBIT does not include income from investments.

Source: PwC/KPMG analysis

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391. The sustainable EBIT margin for the ML division of 8.25 % was derived on the basis of the average EBIT

margins of the period 2008 to 2012 (approximately 8.0 %), the detailed planning period (approximately

8.5 % adjusted for depreciation and amortisation resulting from the PPA) and the projected increase of

profitability at the end of the planning period. By observing an appropriate timeframe, the cyclical na-

ture of the trucks & bus business was adequately addressed.

MDT

392. Based on long-term trend analyses of the past as well as the projected development in the detailed

planning period (2001 to 2017), we consider the revenues of € 5,000 million expected for 2017 to be

appropriate. The revenues of € 5,000 million are neither at the bottom nor the top of the range of the

cycle that can be observed for the business. The sustainable revenues of the MDT division amounting to

€ 5,050 million were therefore derived from the projected revenues of 2017 by applying a growth rate

of 1.0 %. The sustainable revenues adequately reflect the long-term business cycles, the intense compe-

tition, and the stabilising after-sales business.

393. MDT was able to improve its profitability in the past. MDT’s long-term average EBIT margin (2001 to

2017) is slightly below 10 %. Over a shorter period from 2010 to 2017 the average EBIT margin is 11.2 %.

Assuming that loss-generating projects in the SBU Power Plants are not sustainable an EBIT margin of

more than 12 % can be derived. On the contrary it needs to be considered that in the past as well as in

the planning period the level of depreciation and amortisation has always been below capital expendi-

tures. Therefore, the EBIT does not adequately reflect its cash generating power. As, in the long-term,

the level of depreciation, amortisation and capital expenditures will converge, we considered the differ-

ence of approximately 1.0 percentage points between depreciation and amortisation on the one hand

and capital expenditures on the other hand for the derivation of the sustainable EBIT margin. The sus-

tainable EBIT margin was set at 11.75 %. This EBIT margin is also in line with actual and projected EBIT

margins of comparable companies in the Power Engineering industry.

Renk

394. Based on the cyclicality of the plant and engine construction business as well as the assessment of Renk

AG’s management, we consider sustainable revenues of € 550 million as appropriate for Renk. Accord-

ing to the information provided, the capacity of Renk allows revenues of up to approximately € 600 mil-

lion. Considering the sustainable reinvestment rate, we regard sustainable revenues of € 550 million -

which are close to the maximum capacity utilisation - as appropriate to reflect a sustainable average

over differing business cycles.

395. The company targets a sustainable reinvestment rate of 5.0 % of revenues. This is below the long-term

average for the period between 2010 and 2017 of 6.2 %. Due to the current reinvestment programme

we consider the lower sustainable reinvestment rate as appropriate. Accordingly, we consider a sustain-

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able EBIT margin of 13.3 %, reflecting an eight year average over the period 2010 to 2017

as appropriate.

Corporate Center/Consolidation

396. The sustainable earnings of the Corporate Center/Consolidation were derived based on the last planning

year, considering a sustainable growth rate of 1.0 %.

MAN Group

397. Overall, the assumptions result in sustainable revenues of € 20,653 million and an EBIT of € 1,572 million

for the years from 2018 onwards. This equates to an EBIT margin of 7.6 %.

398. When assessing the EBIT margin it needs to be considered that the expected income from investments

that are not fully consolidated - in particular Scania and Sinotruk - is not included in the EBIT, but sepa-

rately taken into account as part of the income from investments (see note 400 et seq.). Considering the

expected income from investments as part of the EBIT would increase the EBIT margin by 1.1 percent-

age points to approximately 8.7 %. Considering the income from investments based on the company’s

planning for the last planning year would result in a ROS margin of 8.3 % for the terminal value.

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3. Net dividends after personal income tax

399. We derived the projected net dividends of the shareholders using the projected EBIT under considera-

tion of the income from investments and interest result, the income taxes of the company, noncontroll-

ing interests as well as income taxes of the shareholders. Based on the procedure and assumptions de-

scribed below, the expected net dividends to shareholders were derived as follows:

400. Due to the low ownership interest in the companies and the specifications of the Swedish and Chinese

laws governing stock exchange dealings, no financial planning figures for the investments in Scania and

Sinotruk were provided to MAN SE. Based on the available consensus estimates of analysts MAN SE

estimates the expected dividend payments from Scania as well as the result of equity investments for

Sinotruk for planning purposes. To reflect the total earnings potential of the investments reflecting both

the dividends distributed as well as retained earnings, we fully considered the income from investments

based on the consensus regarding the net profit for the present valuation.

401. The income from investments was carried forward using average growth rates. Regarding the terminal

value of Scania, average net profits were derived from average analyst forecasts in the planning period

considering economic cycles. For all planning years a full distribution of earnings during the same peri-

ods was assumed for both, Sinotruk and Scania for the purpose of simplification:

MAN SE

Net dividend payments Terminal Value

€ million 2013E 2014E 2015E 2016E 2017E from 2018

Earnings before interest and taxes (EBIT) 557 975 1,367 1,735 2,065 1,572

Income from investments 137 175 218 225 232 221

Net interest result -131 -94 -95 -98 -67 -56

Earnings before tax (EBT) 564 1,056 1,490 1,862 2,230 1,737

Income taxes -41 -133 -302 -404 -545 -448

Net Income 523 923 1,188 1,458 1,684 1,288

of which attributable to noncontrol l ing interests -9 -12 -11 -12 -12 -11

of which attributable to shareholders of MAN SE 513 912 1,176 1,446 1,672 1,277

Retention -327 -688 -775 -1,000 -1,157 -639

Dividend payments 187 224 401 446 515 639

Personal income tax from the dividend payments -49 -59 -106 -118 -136 -168

Dividend payments, net of personal income tax 138 165 295 328 379 470

Notional ly a l located va lue contributions of retention 639

Personal income tax from the contributions of retention -84

Growth-related retention -80

Net dividend payments to be discounted 138 165 295 328 379 944

Source: MAN SE forecasts, PwC/KPMG analysis

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402. As a plausibility check a benchmark against the current market capitalisation of the two investments

was conducted. This analysis shows that the discounted income from investments considered in the

financial planning figures exceeds the proportionate market capitalisation of both investments as at the

end of our valuation work.

403. Other investments (e. g. the 49.0 % share in RMMV) and non- consolidated investments are summarised

as other financial investments. The operating non-consolidated investments were considered on the

basis of the higher of the proportionate net profit of the last fiscal years or the return on the propor-

tionate equity applying the cost of equity of the MAN Group. In favour of a higher enterprise value, all

other non-operating consolidated investments were considered based on the return on the proportion-

ate equity applying the cost of equity of the MAN Group. This means that in favour of the outside share-

holders it was assumed that even the non-operating investments earn their respective cost of capital.

404. The net interest result was derived based on cash and cash equivalents and interest-bearing debt of the

MAN Group as of 31 December 2012 and using an integrated balance sheet and financing plan. Besides

the planned capital expenditures, depreciation and amortisation, the expected development of the net

current assets and long-term provisions were also considered to derive the net interest result. The ex-

pected reduction of the (negative) interest result is caused by the expected retention of net profits that

will be explained in the following.

405. For the interest-bearing net debt average annual interest rates of 3.0 % to 4.0 % were applied based on

existing debt, bonds, loan agreements and pension provisions, as well as future refinancing volumes. We

applied a sustainable interest rate on interest-bearing debt of approximately 3.5 %.

406. The income tax burden was determined on the basis of the applicable income tax rate on earnings

before taxes according to IFRS. Any systematic differences between the tax base and the projected earn-

ings before taxes according to IFRS were taken into account using separate calculations.

407. For earnings accrued in Germany, the trade tax, the corporate income tax and the solidarity surcharge

were considered for the calculation of income taxes.

408. The MAN Group has total trade tax loss carryforwards in Germany in the amount of approximately

€ 576 million and corporate income tax loss carryforwards of about € 700 million. To the extent these

MAN SE

Income from investments Terminal Value

€ million 2013E 2014E 2015E 2016E 2017E from 2018

Scania 117 135 159 161 162 146

Sinotruk 18 26 41 41 41 41

Other financial investments 3 14 19 24 29 34

Income from investments 137 175 218 225 232 221

Source: MAN SE, CIQ

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tax loss carryforwards can be used, they were considered in the calculation of the income tax burden to

reduce the tax payments. The tax loss carryforwards that cannot be used stem from entities in countries

where tax loss carryforwards can only be used for a limited period and the expected earnings are not

sufficient for using the existing tax loss carryforwards.

409. For the trade tax unity an average trade tax collection rate of 444 % was applied to calculate trade taxes.

This results in an average effective tax rate of 8.1 % in the detailed planning period taking into consid-

eration the deviations between the tax base and the earnings before tax according to IFRS. At Renk and

the EURO-Leasing average trade tax collection rates of 439 % and 380 % have been applied. This results

in average effective trade tax rates of 15.1 % and 1.4 % in the detailed planning period.

410. Corporate income tax for the consolidated German tax unity, Renk and EURO-Leasing was uniformly

determined at a statutory tax rate of 15.0 %. The solidarity surcharge was calculated using a rate of

5.5 % on top of the respective corporate income tax. The average effective corporate income tax rate

incl. the solidarity surcharge in the detailed planning period is 5.4 % (German fiscal unity), 15.5 % (Renk)

and 1.7 % (EURO-Leasing).

411. The payments entitlement of approximately € 1.6 million p. a. until the year 2017 resulting from the

corporate income tax credit of MAN SE were considered as a special value item (see section D.V.2).

412. For all earnings that accrued abroad, we, for simplifying reasons, distinguished between the entities in

Brazil and all other foreign entities. For the Brazilian entities, income taxes were determined applying a

nominal tax rate of 34.0 % and taking into account the tax loss carryforwards of approximately

€ 98 million.

413. The calculation of income taxes for all the other foreign companies was summarised to simplify the

calculation. The income taxes were calculated applying a weighted average tax rate of 24.5 % for these

foreign entities. The total tax loss carryforwards of these other foreign entities of the MAN Group sum

up to € 207 million. To the extent these tax loss carryforwards can be used, they were deducted in the

determination of the relevant tax base.

414. The non-controlling interests result from Renk AG. MAN SE holds a capital share of 76.00 % of Renk AG.

Taking into consideration the stocks held by Renk AG itself, this results in an effective capital share of

approximately 78 %, so that a share of non-controlling interest of approximately 22 % was deducted.

415. For the detailed planning period retained earnings were considered in line with the financial planning of

the MAN Group. The company plans on average for the planning period a distribution ratio of approxi-

mately 31 % of the respective net profit of each period of MAN Group. The retained earnings will in par-

ticular be used to finance net current assets (that is expected to develop in line with revenues) and capi-

tal expenditures and to retire debt. Based on these assumptions retained earnings are not notionally

attributed to the net dividends for the shareholders, but taken into account as capital available for the

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determination of capital requirements. Retained earnings are therefore implicitly considered in the cal-

culation of the interest result.

416. From 2018 onwards a sustainable average dividend distribution ratio of 50.0 % of the net income after

noncontrolling interests was assumed. This dividend distribution ratio is based on historical dividend

distribution ratios observed for German companies. Applying this assumption, the value resulting from

retained earnings is directly notionally attributed to the shareholder and thus does not result in any

changes of the sustainable net interest result of the MAN Group for the present valuation.

417. As the equity value is determined from the perspective of the company’s shareholders, the sharehold-

ers’ tax burden on dividends and capital gains (notionally added retained earnings) must be taken into

account.

418. When valuing German corporate entities, it must be taken into account that interest income as well as

dividend payments are subject to a uniform nominal tax rate of 25 % plus solidarity surcharge, regard-

less of the individual circumstances of the particular shareholder. The same applies for realised capital

gains for acquisitions since 1 January 2009.

419. Different effective tax burdens result due to differing times of cash inflows and realisation of capital

gains. The effective tax rate on interest income and dividend payments generally equals the nominal tax

rate. The effective tax rate on retained earnings leading to capital gains, however, depends on the effec-

tive date when the capital gains are being realised. The effective tax rate decreases with the holding

period of a share. Shareholders will therefore be tempted to lengthen the holding period of a share in

order to minimise the effective tax rate on capital gains. Consequently, the assumption of longer holding

periods in combination with the associated effect from discounting, leads to an effective tax rate on

capital gains that is significantly lower than the nominal tax burden of 25 % plus solidarity surcharge. We

therefore applied an effective tax rate equal to half of the nominal tax rate plus solidarity surcharge.

420. The growth-related retained earnings in the terminal value, take into account that the future growth of

balance sheet items associated with the expected growth of income statement items as well as the fi-

nancial surpluses is partly also financed with equity to retain a constant capital structure. The retained

earnings required to finance the expected balance sheet growth is therefore not to be included in the

value arising from the retained earnings directly attributed to the shareholders.

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III. Determination of the discount rate

421. For business valuation purposes, future earnings are discounted to the valuation date, using an appro-

priate discount rate. The discount rate is based on the (expected) return on a comparable alternative

capital investment. The discount rate represents the minimum return on capital that the business must

realise in order to ensure that shareholders are not worse off than they would have been, if they had

invested in the next best alternative investment. When determining objectified business values, the

alternative investment and the corresponding return are generally characterised by an investment in a

bundle of publicly listed corporate shares (stock portfolio), adjusted to incorporate the risk structure of

the business subject to valuation. In the case of direct standardisation of personal income taxes, the

future earnings to be discounted are reduced for personal income taxes. In addition, the discount rate is

also to be applied after the deduction of personal income taxes.

422. When assessing returns on investments in shares, usually there is a need to distinguish between the

risk-free rate and the risk premium. The potential growth of the earnings subsequent to the detailed

planning period is to be assessed and taken into consideration as a growth rate deduction in the dis-

count rate.

1. Risk-free rate

423. In accordance with the recommendations of the IDW, we based the determination of the appropriate

risk-free rate on a yield curve, which we determined by taking into account the current interest rates as

well as interest structure data published by the German Federal Bank (Deutsche Bundesbank). The ap-

plied interest structure data consists of estimates, which have been calculated on the basis of observed

current yields of (quasi) risk-free coupon bonds, i. e. government bonds, government obligations and

treasury bills.

424. The determined interest rate curve establishes the connection between interest rates and terms to

maturity applicable for zero bonds with no credit default risk. The use of zero bond factors derived from

the interest rate curve that are appropriate in terms of maturity ensures the required equivalence with

the principle of equivalent maturity between the alternative investment and the future earnings subject

to valuation.

425. From the determined interest rate curve, we derived a uniform risk-free rate of about 2.50 % (pre per-

sonal income taxes), based on a three-month average (covering the period from January 2013 to March

2013), and taking into account the structure of the future earnings subject to valuation. The resulting

risk-free rate was rounded to ¼-percentage points in order to smooth short-term market fluctuations as

well as potential estimation errors, in particular regarding long-term returns on investments. Consistent

with the assumptions made in determining the risk premium, the risk-free rate is adjusted for the per-

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sonal income tax rate, amounting to 25 % plus solidarity surcharge. This leads to a risk-free rate after

personal income taxes of 1.84 %.

426. Regarding possible valuation effects that might arise due to a change in interest rates in the time period

between the end of our valuation work and the day of the general shareholders’ meeting, the 6 June

2013, please refer to notes 486 and 502.

2. Risk premium

427. Entrepreneurial activities always involve risks and opportunities. Therefore, the future earnings cannot

be forecast with certainty. In order to consider these entrepreneurial uncertainties (entrepreneurial

risks), market participants require a risk premium in addition to the risk-free rate.

428. To ensure risk equivalence with the future earnings to be discounted, the determination of the risk

premium must be based on the risk structure of the entity subject to valuation.

429. In order to determine the risk premium for the entity subject to valuation and according to the defini-

tion of the alternative investment, reference can be made to models for establishing prices in capital

markets. These models allow an evaluation of the entity-specific risk premia, based on the market risk

premium derived for a market portfolio. Pursuant to professional standards, we applied the Tax Capital

Asset Pricing Model (Tax CAPM) to estimate the risk premium.

430. On the basis of the Tax CAPM, the entity-specific risk premium is obtained by multiplying the beta factor

of the entity subject to valuation with the market risk premium. The beta factor measures the corporate

risk in relation to the market risk. A beta factor above 1.0 means that the equity value of the company

responds more than average to market fluctuations. A beta factor below 1.0 reflects that the value re-

sponds, on average, less than proportionally to market fluctuations.

431. Considering current market observations, capital market studies and implicitly derived market risk

premiums based on forecasts by financial analysts and rating agencies as well as the currently applicable

tax legislation regarding the taxation of dividend payments and capital gains as well as the standardisa-

tion of the tax situation, we deem a market risk premium after personal income taxes of 5.5 % to be

appropriate. The approach is in line with the current statement of the Special Committee for Business

Valuation and Business Management (Fachausschuss für Unternehmensbewertung und Betrieb-

swirtschaft, in brief "FAUB") of the IDW, dated 19 September 2012. According to the aforementioned

statement, parameter changes attributable to the financial crisis have to be taken into consideration

when determining the risk premium, in particular an altered risk tolerance. In comparison to recent

years, this has resulted in higher market risk premiums at present.

432. As MAN SE is a publicly listed company, it is possible to estimate MAN SE’s beta factor by applying

appropriate econometric models. However, it must be taken into account that throughout the period

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covered by our analysis, Volkswagen AG increased its interest in MAN SE. Thus, it cannot be ruled out

that MAN SE’s share prices are influenced by factors other than the original risk of the company and that

they are hence distorted (cf. section F.I). We have therefore determined the beta factor on the basis of a

peer group analysis.

433. Nevertheless, we have analysed the beta factor of MAN SE for plausibility purposes as well. We deter-

mined the beta factor of MAN SE based on data from the financial information service provider S&P

Capital IQ, a company of The McGraw-Hill Companies, New York City/USA ("CIQ"). On the basis of

monthly returns on investment of the common stock, the beta factor of MAN SE is approximately 1.30.

Considering average debt to equity ratios throughout the regression period and assuming full equity-

financing ("unlevered beta factor" or "beta factor for a debt-free entity"), we determined a beta factor

of approximately 1.10.

434. To derive the beta factor of the peer group, we have also relied on the capital market data of CIQ. As far

as the selection of the peer group is concerned, generally a comparison with companies from the same

industry, which offer similar products and are subject to comparable market structures, is appropriate. A

complete congruence with the peer group companies is neither possible nor necessary. However, future

cash flows of the peer group companies and of the entity subject to valuation should be subject to a

largely matching operational risk.

435. For purposes of the valuation of MAN SE, in a first step we have analysed the main business areas and

have determined key influential factors for the two business areas Commercial Vehicles and Power En-

gineering. In a second step, potential peer group companies, which operate in the same industry as

MAN SE were identified. Additionally, we considered the listing on a stock exchange as well as a suffi-

ciently liquid trading for our peer group selection. It has to be noted that it is generally not possible to

find two entities that are comparable in their entirety. However, we deem the level of operating risk

derived by the peer group analysis to be comparable overall.

436. Applying these selection criteria, we have identified the following ten peer group companies that are

comparable in their business activities to those of MAN SE:

AB Volvo

AB Volvo, Gothenburg/Sweden ("Volvo"), is a globally operating manufacturer of heavy commercial

vehicles. The company produces and sells trucks for medium and heavy transport for commercial and

construction purposes, compact and heavy construction equipment, buses and bus chassis, ship en-

gines, gas turbines and parts for aircraft engines. Moreover, Volvo offers its customers financing and

insurance services. In fiscal year 2012 Volvo generated revenues of € 35,241 million (2011:

€ 34,755 million) and an EBIT of € 2,045 million (2011: € 3,012 million). This is equivalent to an EBIT

margin of 5.8 % (2011: 8.7 %). The geographical distribution of revenues shows Europe (37 %) as the

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strongest market, ahead of America (33 %), Asia (23 %) as well as Africa and the rest of the world (7 %).

With 63 %, the trucks division accounted for the majority of total revenues, followed by the construction

equipment division with 21 % and the bus division with 7 %.

Isuzu Motors Ltd.

Isuzu Motors Ltd., Tokyo/Japan ("Isuzu Motors"), builds and sells light to heavy transporters, buses and

shuttle buses, cars and diesel engines for automotive, industrial and maritime applications. Revenues for

the fiscal year 2012, which ended on 31 March 2012, were € 12,755 million (2011: € 12,117 million). An

EBIT of € 883 million (2011: € 610 million) was achieved. This is equivalent to an EBIT margin of 6.9 %

(2011: 5.0 %). The sales focus is on the Asian market. In fiscal year 2011, Isuzu Motors generated 70 % of

its revenues in Asia, with Japan contributing 40 % to total revenues. Accounting for 5 %, North America

was the second-biggest market of Isuzu Motors.

PACCAR Inc.

PACCAR Inc., Bellevue/USA ("PACCAR"), is a globally operating provider of light, medium and heavy

transporters as well as related spare parts and accessories. PACCAR also designs, produces and sells

diesel engines for trucks and offers its customers financial and leasing services. In 2012 PACCAR gener-

ated revenues of € 12,899 million (2011: € 12,629 million) and an EBIT of € 1,352 million (2011:

€ 1,312 million). This is equivalent to an EBIT margin of 10.5 % (2011: 10.4 %). The USA contributed 48 %

of total revenues. Europe and the rest of the world followed with 25 % and 27 % respectively.

Scania AB

Scania is a globally operating producer of trucks, buses and coaches as well as industrial and ship en-

gines. Furthermore, the company offers a wide range of services and financial services. Volkswagen AG

holds 71.81 % of voting rights and 49.29 % of the share capital of Scania. In fiscal year 2012 the company

generated revenues of € 9,569 million (2011: € 10,113 million) and achieved an EBIT of € 963 million

(2011: € 1,388 million). This result is equivalent to an EBIT margin of 10.1 % (2011: 13.7 %). The largest

market for Scania is Europe, where 52 % of revenues were generated, while America contributed 23 %

(mainly attributable to Latin America) and Asia 10 % to global revenues. The trucks division at Scania

contributed the largest share in revenues (61 %), while services and buses accounted for 21 % and 9 %

respectively.

Daimler AG

Daimler, is a German manufacturer of passenger cars and commercial vehicles of all kinds as well as a

provider of corresponding financial services. In the area of heavy trucks, Daimler is the global market

leader with a market share of about 15 %. In fiscal year 2012, Daimler was able to achieve revenues of

€ 114,297 million (2011: € 106,540 million) and generate an EBIT of € 8,615 million (2011:

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€ 8,755 million). This is equivalent to an EBIT margin of 7.5 % (2011: 8.2 %). The largest share of reve-

nues was generated in Europe (34 %). This is followed by the NAFTA regions (North American Free Trade

Agreement: Canada, Mexico, USA) with 28 % and Asia with 22 %. At 52 %, the passenger car segment

contributes the largest share in revenues. The truck segment accounted for 26 % of 2012 revenues,

while financial services, vans and buses followed with 11 %, 8 % and 3 % respectively.

Hino Motors Ltd.

Hino Motors Ltd., Tokyo/Japan ("Hino Motors"), is a manufacturer of trucks, buses and diesel engines, in

which the Toyota Motor Corporation, Tokyo/Japan has a majority interest (50.2 % of share capital and

50.7 % of voting rights). In the trucks segment, Hino Motors produces light, medium and heavy trans-

porters for commercial and construction purposes. Diesel engines are assembled in the production of

Hino Motors’ trucks and buses but are also marketed for other industrial applications. In fiscal year

2012, which ended on 31 March 2012, the company generated revenues in the amount of

€ 11,976 million (2011: € 10,637 million), translating into an EBIT of € 190 million (2011: € 157 million).

This is equivalent to an EBIT margin of 1.6 % (2011: 1.5 %). Hino Motors’ main sales market is the do-

mestic Japanese market, with a revenue share of 68 %. A further 24 % of revenues are accounted for by

other Asian countries.

Navistar International Corporation

Navistar International Corporation, Lisle/USA ("Navistar"), is an international producer of medium to

heavy trucks and transporters for private, commercial, military and construction purposes, buses, diesel

engines and service parts for a large number of brands of trucks and mobile homes. Moreover, the

company offers financial services. In fiscal year 2012, which ended on 31 October 2012, Navistar gener-

ated revenues in the amount of € 10,009 million (2011: € 9,863 million) and an EBIT of -€ 691 million

(2011: € 451 million). This is equivalent to an EBIT margin of -6.9 % (2011: 4.6 %). With a revenue share

of 78 % in the USA and Canada, it becomes clear that the company has a major focus on its domestic

market, i.e. North America. With 61 %, the truck division, which comprises all products on four or more

wheels, makes up the majority of revenues, followed by the engines division (23 %), service parts (14 %)

and financial services (2 %).

Caterpillar Inc.

Caterpillar Inc., Peoria/USA ("Caterpillar"), is a globally operating manufacturer of construction and min-

ing machinery and vehicles, diesel and gas engines as well as industrial gas turbines. Moreover, the

group offers financing and insurance products via its financial products division. Caterpillar is divided

into the segments "Energy & Power Systems", "Construction Industries", "Resource Industries" and "Fi-

nancial Products". The "Energy & Power Systems" segment bundles the activities with engines, assem-

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blies and turbines. The "Construction Industries" segment groups the design, production and sale of

construction machines, such as wheel and backhoe loaders or caterpillars. "Resource Industries" covers

vehicles and machines for mining. In fiscal year 2012 Caterpillar managed to generate revenues in the

amount of € 49,837 million (2011: € 46,439 million) and an EBIT of € 7,089 million (2011:

€ 6,161 million). The result is equivalent to an EBIT margin of 14.2 % (2011: 13.3 %). With 37 %, North

America has the largest share in revenues, followed by EMEA (24 %), Asia-Pacific (26 %) and Latin Amer-

ica (14 %). The "Energy & Power Systems" and "Resource Industries" segments each have a 32 % reve-

nue share, followed by "Construction Industries" with 29 % and "Financial Products" with 5 %.

Dresser-Rand Group Inc.

The Dresser-Rand Group Inc., Houston/USA ("Dresser-Rand"), is a global manufacturer of propulsion

technology products, such as engines, turbines and compressors. Moreover, the company operates in

the after-sales business. This covers the operation and maintenance of installed machines as well as the

related parts, and of power plants. In fiscal year 2012 the company achieved revenues in the amount of

€ 2,070 million (2011: € 1,785 million) and an EBIT of € 254 million (2011: € 200 million). This corre-

sponds to an EBIT margin of 12.3 % (2011: 11.2 %). In terms of geographical revenue distribution, with

33 % North America is ahead of Europe with 25 % and Latin America with 16 %. Asia-Pacific contributes

15 % to revenues and the Middle East and Africa 10 %. The revenue share of the propulsion technology

segment is 48 %.

Wärtsilä Corporation

Wärtsilä is an international manufacturer and provider of power plants and propulsion systems for

ships. In the "Services" segment, the company supports its customers during the service life of its prod-

ucts. The construction of power plants is grouped in the "Power Plants" segment. Propulsion solutions

for ships are brought together in the "Ship Power" segment. This includes ship design, engines, genera-

tors, reduction gears, propulsion technology, automation and power distribution systems as well as seal-

ing solutions. In fiscal year 2012 Wärtsilä was able to achieve revenues in the amount of € 4,725 million

(2011: € 4,209 million) and generate an EBIT of € 481 million (2011: € 445 million). This result is equiva-

lent to an EBIT margin of 10.2 % (2011: 10.6 %). From a geographical perspective, the company gener-

ates the largest share of its revenues (43 %) in the Asian market. Europe follows with 25 % and America

with 21 %. With 40 %, the "Services" segment contributes the largest share in revenues, followed by

"Power Plants" with 32 % and "Ship Power" with 28 %.

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437. The following overview presents the derivation of the beta factors of the peer group, based on monthly

returns over a regression period of 5 years:

438. The beta factors determined for the peer group companies were transferred into the unlevered beta

factors, considering the respective capital structures within the regression period. For the selected peer

group, unlevered beta factors ranging from 0.55 to 1.20 were determined. On average, we have calcu-

lated an unlevered beta factor of 0.93. This figure was rounded to one decimal point. Thus, an unlevered

beta factor of 0.90 was applied.

439. The unlevered beta factor of MAN SE is approximately 1.10 and therefore significantly above the aver-

age unlevered beta factor of the peer group. It cannot be ruled out that the deviation of MAN SE’s beta

factor from the peer group’s average beta factor is distorted due to the increase in the stake held by

Volkswagen AG as well as potential speculative elements throughout the period of our analysis. Thus,

we deem an unlevered beta factor of 0.90, based on the peer group’s average beta factor, to be appro-

priate for the valuation of MAN SE.

440. For the purpose of our valuation, the unlevered beta factor of 0.90 was adjusted in order to reflect the

expected future capital structure of MAN Group ("gearing" or "levering"). The adjustment of the beta

factor to the respective current capital structure was carried out in each fiscal year of the planning pe-

riod and for Phase II.

3. Growth rate

441. Future growth in earnings results from their retention and their reinvestment as well as organically from

price, volume and structural effects. In Phase I, these growth potentials are directly reflected in the

forecasts and thus in the future earnings. In the phase of the terminal value (Phase II), the growth from

retained earnings is also reflected in financial surpluses via the "notionally allocated value contributions

Name Headquarters Beta factor Debt ratio Beta unlevered

AB Volvo Gothenburg/Sweden 1.50 66.3% 0.98

Is uzu Motors Ltd. Tokyo/Japan 1.32 30.5% 1.06

PACCAR Inc. Bel levue/USA 1.29 29.3% 1.04

Scania AB (publ ) Södertä l je/Sweden 1.29 40.3% 0.97

Da imler AG Stuttgart/Germany 1.37 120.6% 0.73

Hino Motors Ltd. Tokyo/Japan 1.39 97.2% 0.80

Na vis tar Interna tiona l Corpora tion Lis le/USA 1.26 200.9% 0.55

Caterpi l lar Inc. Peoria/USA 1.60 71.6% 1.02

Dress er-Ra nd Group Inc. Hous ton/USA 1.11 15.7% 0.99

Wärts i lä Oyj Abp Hels inki/Finland 1.26 6.0% 1.20

Average among comparable companies 1.34 0.93

Source: CIQ, PwC/KPMG ana lys i s

Peer group beta factor

5 years, monthly, 60 data points

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of retention". In Phase II, additional growth potential is taken into account for valuation purposes by

allowing for a growth rate discount on the discount rate.

442. EIU economic forecasts expect inflation rates of 1.8 % to 2.3 % p. a. for Germany and the EU from 2013

to 2017. When evaluating MAN Group’s sustainable growth potential, several factors have to be taken

into account, such as projected volumes in the respective business areas, expected market shares and

pricing policies for newly acquired or renewed contracts. Furthermore, exchange rate developments are

relevant for foreign business activities. The MAN Group generally assumes constant foreign exchange

rates as at the valuation date. Thus, it is implicitly assumed that the possible deterioration of a foreign

currency, which is a planning currency, such as the Brazilian Real compared to the Euro, will be compen-

sated by a corresponding inflationary growth of cash flows in the respective home country. The same

rationale must be valid for the determination of the sustainable growth rate. Thus, the sustainable

growth rate must overall correspond to the level of growth in the Euro-zone.

443. We assume MAN Group’s sustainable average growth rate to be 1.0 %. The growth rate is below ex-

pected inflation rates for Germany and the EU. This is due to fierce competition as well as the partially

tense markets.

4. Derivation of the discount rate

444. The derivation of the discount rates is summarised in the following table. Changes in the risk premium

result from changes in the underlying financial structure of the company in the detailed planning period

as well as in the phase of the terminal value:

MAN SE

Cost of capital Terminal Value

2013E 2014E 2015E 2016E 2017E from 2018

Risk-free rate 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%

Personal income tax from risk-free rate -0.66% -0.66% -0.66% -0.66% -0.66% -0.66%

Risk-free rate, net of sharholder income tax 1.84% 1.84% 1.84% 1.84% 1.84% 1.84%

Market ri sk-premium, net of persona l income tax 5.50% 5.50% 5.50% 5.50% 5.50% 5.50%

Debt to equity ratio 25.10% 24.75% 22.61% 18.83% 15.62% 10.64%

Beta relevered 1.06 1.10 1.08 1.04 1.03 0.98

Risk premium 5.82% 6.06% 5.95% 5.70% 5.67% 5.40%

7.66% 7.90% 7.79% 7.55% 7.51% 7.24%

Termina l growth rate -1.00%

7.66% 7.90% 7.79% 7.55% 7.51% 6.24%

Source: PwC/KPMG analysis

Cost of equity, net of personal income tax

Cost of equity, net of personal income tax, after growth discount

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IV. Value of operating assets

445. The discounted dividend value of the operating assets of MAN SE as at 6 June 2013 can be derived from

the net distributions to shareholders to be discounted, the value contribution from profit retention and

the period-specific discount rates (adjusted for the capital structure).

446. In order to determine the present values of the net distributions, the projected earnings must be dis-

counted individually for each fiscal year from 2013 to 2017. Regarding the average distributable earn-

ings as well as the notionally added value from profit retention from fiscal year 2018 onwards, the pre-

sent value is calculated according to the formula for the terminal value. The present value of the termi-

nal value also has to be discounted to the valuation date.

447. As at the valuation date 6 June 2013, the value of the operating assets of MAN SE under the dividend

discount method amounts to € 11,831 million in total.

V. Value of the separately valued assets

1. Properties and buildings

448. Non-operating assets in terms of IDW standard S 1 as amended in 2008 are assets which can be freely

disposed of without affecting the actual corporate business (functional differentiation criterion). These

non-operating assets have to be valued separately. Taking these guidelines into account, real property

and buildings which are non-essential for the operational business, i.e. which do not relate to produc-

tion, administration, sales etc., were identified as non-essential operating assets. Apart from investment

property with a fair value of approximately € 64 million, land in South America with a fair value of ap-

proximately € 7 million was classified as non-operating asset. Investment property mainly comprises

company premises, residential buildings and hereditary building rights that are not used by MAN Group

any more. Taking corporate income taxes on capital gains into account (no application of personal in-

come taxes), the total value for non-operating property amounts to approximately € 57 million.

MAN SE

Determination of the discounted dividend value Terminal Value

€ million 2013E 2014E 2015E 2016E 2017E from 2018

Net dividend payments to be discounted 138 165 295 328 379 944

Discount rate 7.66% 7.90% 7.79% 7.55% 7.51% 6.24%

Present va lue factor 0.929 0.861 0.799 0.743 0.691 11.066

Present value 128 142 236 244 262 10,451

Discounted dividend value as at 31 December 2012 11,462

Accumulation factor 1.032

Discounted dividend value as at 6 June 2013 11,831

Source: PwC/KPMG analysis

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2. Corporate tax credit

449. As at 31 December 2012, MAN SE has a corporate tax credit of approximately € 8 million, which pre-

sumably will be paid out until 2017. Discounted to the day of the general shareholders’ meeting in 2013,

the corporate tax credit amounts to approximately € 7 million.

450. Thus, the total of non-operating assets and separately valued items were included at approximately

€ 64 million.

VI. Equity value

451. Taking the discounted dividend value of the operating assets as well as the value of the separately

valued assets into account, the equity value of MAN SE as at 6 June 2013 is calculated as follows:

452. As at the valuation date 6 June 2013, the equity value of MAN SE amounts to € 11,894 million.

VII. Liquidation value

453. In case it proves to be more advantageous to separately dispose of all operating assets and non-

operating assets in comparison to a valuation under the going concern premise, the liquidation value

should form the basis for the valuation to the extent that there are no legal or actual constraints. This

approach is at least applicable if the entity no longer conducts an operating business and solely consists

of non-operating assets (OLG Düsseldorf 4 October 2006- I-26 W7/06 AktE). Although the going concern

premise is assumed to be valid for the valuation at hand, MAN SE’s liquidation value was roughly deter-

mined on the basis of the most recent available information regarding the net asset position of the

Special items

€ million

Non-operating assets 57

Corporate tax credi t 7

Special items 64

Source: MAN SE, PwC/KPMG analysis

Equity value

€ million

Discounted dividend value as at 6 June 2013 11,831

Special items 64

Equity value as at 6 June 2013 11,894

Source: MAN SE, PwC/KPMG analysis

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company from the consolidated financial statements as at 31 December 2012. In this respect, it was

reviewed whether the liquidation value exceeds the equity value based on the dividend discount

method. The corresponding calculations are described below.

454. The value of the assets is determined by the market for the assets to be liquidated. In our calculations,

we assumed that the fixed assets can be disposed of almost at the carrying amount. Deferred tax assets

were assumed to be not recoverable due to their inability to be used. For reasons of simplification we

assumed the carrying amounts as at 31 December 2012 as estimate for a liquidation value for other

assets,while taking into account the reduced proceeds resulting from receivables and inventories when

determining the liquidation value.

455. Furthermore, for the determination of the liquidation value, trade names and patents of the MAN

Group must be considered. Since these intangible assets are internally generated, they generally cannot

be capitalised in the balance sheet. Nevertheless, it is possible to sell trade names and patents. To de-

termine the liquidation value of the intangible assets, we have taken into account the fair value of the

trade names on the basis of notional royalty payments. Furthermore, we have calculated a rough esti-

mate of the fair value for patented technology.

456. The company’s debts must be deducted from the assets determined on this basis. For reasons of simpli-

fication, these were, except for deferred tax liabilities, which are generally without value in the case of

liquidation, considered at their balance sheet value as at 31 December 2012. Additionally, the costs aris-

ing from liquidation, e.g. winding-up costs and social plan expenses must be deducted. At the same

time, it should be taken into consideration that the liquidation phase is associated with considerable

costs with at the same time decreasing revenues. The liquidation value assessed on this basis is signifi-

cantly below the dividend discount value and is therefore irrelevant for the valuation of MAN SE and the

derivation of the value per share.

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E. Plausibility assessment of the equity value on the basis of multiples

I. General approach

457. The valuation practice uses simplified valuation procedures based on market multiples to assess the

plausibility of the valuation results on the basis of the dividend discount method or a DCF method. The

value of a company based on market multiples is determined by the product of key financial figures of

the company and the respective multiple.

458. Appropriate multiples can be derived from capital market data of stock exchange listed comparable

companies ("peer group") or from comparable transactions and applied to the company subject to

valuation. However, it is important to remember that in general no company is fully comparable to an-

other. Therefore, valuations based on multiples are generally used to determine a range of possible

equity values comprising the actual equity value. For transaction multiples it needs to be considered

that actually paid purchase prices are highly dependent on the subjective expectations of the involved

parties. Therefore, they can for example reflect expected synergies and other subjective expectations.

Hence, the relevance of transaction multiples for the assessment of the plausibility of an objectified

equity value is generally lower than that of trading multiples. Correspondingly, we only considered com-

parable companies for the following analysis.

459. For market-based valuation approaches multiples can be derived based on different key figures:

• EV/revenues (enterprise value to revenues): Enterprise multiple, can offset differences resulting

from company specific capital structures to a certain extent and assume an almost equivalent oper-

ating profit margin. The enterprise value comprises the equity value defined as a market value of

equity as well as the market value of net debt and therefore differs from the equity value that is de-

termined in the present valuation.

• EV/EBITDA (enterprise value to earnings before interest, taxes, depreciation and amortisation): En-

terprise multiple, can offset differences resulting from company specific capital structures, assumes

comparable capital expenditures for depreciating assets and possibly smoothes differing investment

cycles.

• EV/EBIT (enterprise value to earnings before interest and taxes): Enterprise multiple, can offset dif-

ferences resulting from company specific capital structures.

• P/E (Price-earnings multiple): Equity multiple, focusing on the companies’ earning potential after all

expenses (in particular after interest and taxes) as a reference to determine the equity value. The

multiple therefore requires comparable capital structures.

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460. For the market-based valuation the same peer group as for the derivation of the beta factor was consid-

ered. For the selection criteria please refer to the description in note 434 et seqq.

II. Derivation of the multiples

461. While the dividend discount method explicitly uses the expected future cash flows to determine the

equity value, multiples are generally based on forecast revenues or earning figures of a single base year

in the near future. Longer-term earnings expectations, characteristic earnings development and risks are

reflected in the multiple. Under certain assumptions, income-based approach and market-based ap-

proach can lead to the same result.

462. Crucial factors of a market-based valuation are the forecast key figures and the peer group selection to

determine the respective multiples.

463. Among the peer group companies, there are partly differences between the actual operating margins

achieved in the past and achievable future operating margins. As the EV/revenues multiple does not

consider the cost structure of the company to be valued, this multiple is of only limited validity for the

plausibility assessment of the present equity value and was therefore not considered.

464. The explanatory power of the price-earnings multiple is affected by the capital structure and various tax-

related issues. Both aspects can basically be avoided by applying enterprise multiples. We have there-

fore not applied price-earnings multiples.

465. Accordingly, we considered EV/EBITDA and EV/EBIT multiples of the peer group companies for the

market-based valuation of MAN SE. The enterprise value used for the calculation of EV/EBITDA and

EV/EBIT multiples comprises the market capitalisation plus interest-bearing debt, net pension liabilities

and noncontrolling interests of the peer group companies less cash and cash equivalents.

466. To derive the multiples we have considered the average EBITDA and EBIT estimates of the peer group

companies for the fiscal years 2013 and 2014 as provided by the financial information provider CIQ. At

the time our valuation was performed, the number of EBITDA and EBIT estimates available for the peer

group companies for fiscal years after 2014 was not sufficient.

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467. The following multiples of peer group companies were determined:

III. Multiple valuation

468. In order to derive the enterprise value, the determined multiples of the peer group companies are

multiplied with the key figures EBITDA and EBIT expected for MAN Group in fiscal years 2013 and 2014:

Multiples

2013 2013 2014 2014 2013 2013 2014 2014

EV EBITDA EV/EBITDA EBITDA EV/EBITDA EBIT EV/EBIT EBIT EV/EBIT

Peer group € m. € m. multiple € m. multiple € m. multiple € m. multiple

AB Volvo 37,927 4,023 9.4x 4,943 7.7x 2,395 15.8x 3,310 11.5x

Isuzu Motors Ltd. 8,642 1,402 6.2x 1,570 5.5x 1,093 7.9x 1,228 7.0x

PACCAR Inc. 17,230 1,364 12.6x 1,579 10.9x 1,020 16.9x 1,120 15.4x

Scania AB (publ) 20,960 1,522 13.8x 1,710 12.3x 1,160 18.1x 1,350 15.5x

Daimler AG 122,548 12,830 9.6x 14,549 8.4x 7,887 15.5x 9,377 13.1x

Hino Motors Ltd. 6,207 867 7.2x 1,028 6.0x 511 12.1x 628 9.9x

Navistar International Corporation 5,641 365 15.4x 702 8.0x 173 32.6x 493 11.4x

Caterpillar Inc. 79,319 7,953 10.0x 9,326 8.5x 5,897 13.5x 6,895 11.5x

Dresser-Rand Group Inc. 4,116 441 9.3x 543 7.6x 378 10.9x 466 8.8x

Wärtsilä Oyj Abp 7,630 699 10.9x 753 10.1x 566 13.5x 625 12.2x

Minimum 4,116 365 6.2x 543 5.5x 378 7.9x 466 7.0x

Median 12,936 1,383 9.8x 1,575 8.2x 1,093 13.5x 1,174 11.5x

Mean 31,022 3,147 10.4x 3,670 8.5x 2,323 13.8x 2,549 11.6x

Maximum 122,548 12,830 15.4x 14,549 12.3x 7,887 18.1x 9,377 15.5x

The abnormal value of EV/EBIT multiple for Navistar International Corporation in 2013 was not considered in the analysis.

Source: CIQ

Valuation based on market comparables

2013 2014 2013 2014

EV/EBITDA EV/EBITDA EV/EBIT EV/EBIT

multiple multiple multiple multiple

Minimum 6.2x 5.5x 7.9x 7.0x

Median 9.8x 8.2x 13.5x 11.5x

Mean 10.4x 8.5x 13.8x 11.6x

Maximum 15.4x 12.3x 18.1x 15.5x

EBITDA incl . income from investments 1,196 1,692

EBIT incl . income from investments 694 1,150

Enterprise value, € million

Minimum 7,376 9,314 5,490 8,089

Median 11,680 13,924 9,353 13,200

Mean 12,489 14,395 9,581 13,375

Maximum 18,484 20,745 12,543 17,844

plus specia l i tems 64 64 64 64

plus cash and cash equivalents 1,367 1,367 1,367 1,367

less financia l l iabi l i ties and pens ions -4,244 -4,244 -4,244 -4,244

less noncontrol l ing interests -139 -139 -139 -139

Market value of equity, € million

Minimum 4,423 6,361 2,538 5,137

Median 8,727 10,972 6,401 10,248

Mean 9,537 11,442 6,629 10,422

Maximum 15,532 17,793 9,590 14,892

Source: CIQ, PwC/KPMG analysis

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469. Based on the median and average EV/EBITDA multiples of the peer group companies, the enterprise

value of MAN SE is in a range between € 11,680 million and € 14,395 million. To determine the market

value of equity, interest-bearing liabilities, noncontrolling interests and the net pension liabilities of the

MAN Group as at the valuation date are deducted, while any existing cash and cash equivalents and the

value of special items of the MAN Group are added. The resulting equity value (market value of the eq-

uity), is in a range between € 8,727 million and € 11,442 million. The determined equity value based on

the dividend discount method plus the value of special value items of the MAN Group of in total

€ 11.894 million is thus above the equity value range of the EBITDA-multiple valuation.

470. Based on the median and average EV/EBIT multiples of the peer group companies, the enterprise value

of MAN SE is in a range between € 9,353 million and € 13,375 million. To determine the market value of

equity, interest-bearing liabilities, noncontrolling interests and the net pension liabilities of the MAN

Group as at the valuation date are deducted, while any existing cash and cash equivalents and the value

of special items of the MAN Group are added. The resulting equity value (market value of the equity), is

in a range between € 6,401 million and € 10,422 million. The determined equity value based on the divi-

dend discount method plus the value of special items of the MAN Group is thus above the equity value

range of the EBIT-multiple valuation.

471. The lower equity values resulting from the market-based valuation can mainly be explained by the

intrinsic assumptions of multiple valuation assuming both comparable growth prospects and compara-

ble risk profiles of the peer group companies. The growth expectations of the MAN Group with regard to

EBITDA and EBIT are, to some extent, significantly above the expected growth rates of the peer group

companies. Thus, the dividend discount value is above the equity value based on market expectations.

The market-based valuation therefore clearly shows the ambitious character of the financial planning

figures of the MAN Group as well as the relatively low earnings level of the MAN Group at the beginning

of the detailed planning period.

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F. Determination of appropriate cash compensation pursuant to § 305

AktG and the recurring compensation payment pursuant to § 304

AktG

I. Share price

472. With regard to the decision of the Federal Constitutional Court (BVerfG) on 27 April 199910, the share

price of the entity to be valued should be compared to the value per share based on the dividend dis-

count method for the purpose of determining the cash compensation. According to the decision of the

BVerfG, an existing market price shall not be disregarded when determining the cash compensation.

Hence, the market price basically forms the lower limit of the appropriate cash compensation. A lower

value may only be considered, if the market price exceptionally does not reflect the fair value of the

entity to be valued. The decision of the BVerfG was confirmed and further specified by the decisions of

the Federal Court of Justice ("BGH") on 12 March 200111 and on 19 July 201012.

473. The following graph shows the market price developments of common and preferred shares of MAN SE

for the period from 1 January 2009 to 1 April 2013:

Source: Capital IQ, KPMG-PwC-Analysis

10 File No. 1 BvR 1613/94, BVerfGE 100, 289 et.seq.

11 File No. II ZB 15/00, ZIP 2001, Page 734-737.

12 File No. II ZB 18/09, NJW 2010, Page 2657-2660.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

0

20

40

60

80

100

120

€

MAN SE common and preferred shares

Trading volume (common shares, in thousands) Trading volume (preferred shares, in thousands)

Closing price (common shares) Closing price (preferred shares)

13.04.12: Ad-hoc

communication of MAN

SE.

VW AG acquires further

shares in MAN SE

31.05.11: VW AG submits

a mandatory offer

for MAN SE

9.1.13: MAN SE ad-hoc

communication on BGAV

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474. According to the decision of BGH on 12 March 2001, the determination of the respective share price is

generally based on a reference price obtained from the average market prices over a period of three

months prior to the general shareholders’ meeting, which will decide on the matter. However, this is

only possible if not contradicted by certain impacts. The use of average prices is supposed to eliminate

possible manipulative influences as well as short-term distortions. The decision of the BGH of

12 March 200113, which was strongly criticised in legal literature, was corrected by the decision of the

BGH on 19 July 2010 to the effect, that henceforth the share price used as the basis for appropriate cash

compensation has generally to be determined as a weighted average price of a three-month reference

period prior to the announcement date of the matter on hand.

475. During the three-month reference period (see note 474) between 9 October 2012 and 8 January 2013 -

the last trading day prior to the public announcement of the intention to conclude a domination and

profit and loss transfer agreement – trading volume of common and preferred shares of MAN SE was

recorded on all trading days. Hence, there is no evidence in the case on hand, that individual sharehold-

ers were unable to sell their shares at the stock exchange due to low trading volumes. In addition, there

is no evidence that these market prices were manipulated. However, it was observed that the share

prices of the common and preferred shares increased prior to the mandatory offer of Volkswagen AG

dated 31 May 2011 as well as prior to the public announcement of the acquisition of additional shares in

April 2012. A further increase of common and preferred share prices was observable in connection with

the public announcement dated 9 January 2013 regarding the intended domination and profit and loss

transfer agreement. Overall, there are no indications that these market prices could be considered as

not being relevant as specified by law when determining the appropriate cash compensation in accor-

dance with § 305 AktG.

476. The weighted average share prices determined according to § 31.7 WpÜG in conjunction with § 5.3

WpÜG-Angebotsverordnung and published by the Federal Financial Supervisory Authority, Bonn

(Bundesanstalt für Finanzdienstleistungsaufsicht or "BaFin"), for the three-month period between

9 October 2012 and 8 January 2013 amounted to € 79.08 per common share and € 73.39 per preferred

share of MAN SE.

13 BGH ZIP 2001, 734.

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477. The following share price movements could be observed from 9 October 2012 to 8 January 2013:

MAN SE common and preferred shares

Source: BaFin, Capital IQ, PwC/KPMG-Analysis

478. In case of a longer time gap between the public announcement of the matter and the day of the general

shareholders’ meeting as well as indications based on the share price development which would imply

that adjustments are required, the BGH decided that the share price would have to be extrapolated in

accordance with the general or industry specific performance, considering the share price development

from the date of announcement of the matter. Since the time period between the announcement of the

intention to conclude a domination and profit and loss transfer agreement on 9 January 2013 and the

general shareholders’ meeting of MAN SE on 6 June 2013, which decides on the matter, merely amounts

to approximately five months, the above described decision of the BGH is not applicable. This time

frame is solely required for the determination and the audit of the appropriate cash compensation and

the appropriate recurring compensation payment as well as to prepare and convene the general share-

holders’ meeting within the stipulated period. Hence, an extrapolation of share prices is not required in

the case on hand.

479. By its decision on 27 April 1999 the BVerfG noted that the actual price paid by the dominant shareholder

for the shares in the controlled company may not be considered when determining the value of the

share ownership in order to calculate the appropriate cash compensation in accordance to § 305 AktG,

since this price regularly does neither relate to the "true" value of the share ownership of the outside

shareholder, nor to the fair value of the shares. The subjective considerations of a shareholder, who is

willing to accept excessive prices within the course of a measure in accordance with corporate law, are

55

60

65

70

75

80

85

55

60

65

70

75

80

85

€

Volume weighted share prices (common shares) Volume weighted average share prices over 3 months (common shares)

Volume weighted share prices (preferred shares) Volume weighted average share prices over 3 months (preferred shares)

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of no importance to third parties. This opinion is adopted by the prevailing view in legal literature as

well as in decision made by the highest court. A similar decision was taken by the Court of Justice of the

European Union (Europäischer Gerichtshof or "EuGH") on 15 October 200914. According to the EuGH, the

Community law does not include any general principle of law under which outside shareholders are

protected by an obligation of the dominant shareholder, when acquiring or exercising control of a com-

pany, to acquire their shares under the same conditions as those agreed upon when a shareholding con-

ferring or strengthening the control of the dominant shareholder was acquired.

II. Determination of the appropriate compensation

480. MAN SE has issued common as well as preferred shares of a total of approximately 147 million shares.

The preferred share is entitled to a preferred dividend of € 0.11 as opposed to the common share. In ex-

change, bearers of preferred shares do not have voting rights except for cases prescribed by law (see sec-

tion C.I).

481. Based on the planned dividend payments by MAN SE, preferred shares have no economic advantage as

compared to common shares, since the planned dividends of at least approximately € 1.25 per share are

significantly higher than the preferred dividend right of € 0.11. In contrast – considering the Truck & Bus

GmbH share of more than 75 % of the common shares of MAN SE – there is no relevant legal advantage in

having voting rights, as decisions at the general shareholders’ meeting can be approved solely by the

shares held by the Truck & Bus GmbH.

482. Thus, there are neither relevant exclusive characteristics for common nor preferred shares. We there-

fore conclude an equal treatment of common and preferred shares to be appropriate. Observable dif-

ferences in the share prices are mainly attributable to the inclusion in different share indices as well as

the higher liquidity of the common shares.

483. The equity value of MAN SE of € 11,894 million as at 6 June 2013 was allocated equally to the total

number of shares of MAN SE of 147,040,000 shares. The resulting value per common and preferred

share is therefore € 80.89.

484. According to the case law of the Federal Constitutional Court ("BVerfG") the share price generally repre-

sents the lower limit for the compensation. In the present case the cash compensation has to be deter-

mined based on the pro rata share of the equity value of MAN SE, since the pro rata share according to

the dividend discount method of € 80.89 is above the relevant share price of € 79.08 for common shares

and € 73.39 for preferred shares (regarding the share price see note 476). Therefore, we consider an

amount of € 80.89 per share (common and preferred shares of MAN SE) as an appropriate cash com-

pensation in accordance with § 305 AktG.

14 Rs. C-101/08, AG 2009, S. 821 ff.

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485. The determination of the cash compensation according to the dividend discount method is based on the

information received until the end of our work. However, our results will have to be adjusted, in case of

any events occurring in the period between the end of our work and the day of the general sharehold-

ers’ meeting on 6 June 2013, which affect the value of the cash compensation.

486. Due to the currently dynamic development of the economic environment and the associated effect on

interest rate conditions, changes to the risk-free rate - applied in accordance with the relevant valuation

principles – in the period between the signing of our joint expert opinion and the date of the general

shareholders’ meeting, which decides on the matter, cannot be excluded. A change in the risk-free rate

by +/-0.25 % results in a change in equity value by approximately 4 % (approximately € 3.50 per share).

As a consequence of these uncertainties, we provide a scenario analysis along with our results, which

considers the effect of risk-free rates of 2.75 % and 2.25 %. For reasons of simplification, we assumed all

other valuation parameters and procedures to remain unchanged. This applies in particular for possible

effects that might offset the change in interest rates, i.e. value-reducing effects of a declining interest

rate. The following table gives an overview of the values per share based on these assumptions:

Risk-free rate: Equity Value per share

(common and preferred shares)

2.75 % € 77.57

2.50 % € 80.89

2.25 % € 84.43

487. Applying a risk-free rate of 2.75 % would result in a compensation per common share of € 79.08, since

the relevant average share price is higher than the value per common share according to the dividend

discount method. However, the value per preferred share would be € 77.57 based on the higher divi-

dend discount value.

III. Determination of the appropriate recurring compensation payment

488. According to § 304 AktG, a profit and loss transfer agreement (same applies to domination and profit

and loss transfer agreements) must include a clause determining an appropriate compensation payment

for the outside shareholders in the form of a recurring payment (recurring compensation payment)

based on an outside shareholder’s pro rata share of the share capital. According to § 304.2 sentence 1

AktG the recurring compensation payment must at least ensure an annual payment of the expected

profit share attributable to each share considering the company’s past earnings position as well as its

future earnings potential, taking into account reasonable depreciation and valuation allowances, how-

ever without allocating any other revenue reserves. According to § 304.1 sentence 2 AktG in the case of

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a pure domination agreement without an obligation to transfer profits and losses ("isolated domination

agreement"), the dominant company has to guarantee an appropriate dividend representing an annual

profit share based on the appropriate compensation payment to the remaining shareholders. According

to the draft version of the domination and profit and loss transfer agreement such an isolated domina-

tion agreement is intended for the fiscal year 2013 of MAN SE, in case the domination and profit and

loss transfer agreement becomes effective in 2013 upon registration with the Commercial Register

(Handelsregister).

489. Generally, a company’s earnings position varies throughout the years. The volatility of earnings is ade-

quately reflected in the forward-looking discounted dividend value. This value reflects all payments be-

tween shareholders and the company considering interest and tax payments. For companies generating

profits, these payments are considered as dividends to the shareholders. In order to smooth the ex-

pected dividend payments, the legislator does not require an annually changing payment according to

the fluctuating earning expectations, but the payment of an expected average profit share per share.

Hence, the average profit per share shall consider this earnings volatility, in order to smooth these fluc-

tuations by way of a uniform average amount.

490. The recurring compensation payment was calculated as an annuity of the determined equity value of

MAN SE. With regard to the recurring compensation payment "without allocating any other revenue

reserves" according to § 304.2 sentence 1 AktG, it needs to be considered that the assumed retained

earnings do not reduce the discounted dividend value, which is the basis for the determination of the

recurring compensation payment, and therefore do not reduce the recurring compensation payment

either.

491. In its resolution dated 21 July 2003 the BGH15 decided that the outside shareholders shall be granted a

(fixed) compensation equalling the average distributable proportion of the gross profit per share less

corporate income tax (according to the applicable tax rate) to be paid by the company. The resolution

states in detail that the profit equals the profit before corporate income tax which represents the base

for the deduction of the statutory relevant amount of corporate income taxes. Furthermore in the BGH’s

view the annuity of the equity value has to be determined applying the full risk-adjusted discount rate.

Assets which have to be considered separately – in particular non-operating assets – should not be

taken into account when determining the recurring compensation payment.

492. Parts of this resolution that concerned one individual case for which the corporate income tax imputa-

tion system, which was applied until 31 December 2000, was relevant are not generally applicable. The

(usually volatile) future earnings of MAN SE are reflected in the company’s equity value taking into ac-

count the chronological sequence of the earnings as well as separately valued assets and non-operating

assets. The equity value therefore represents the payments between the company and the sharehold-

15 AktZ. II ZB 17/01, ZIP 2003, 1745.

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ers. In particular, it does not appear appropriate - notwithstanding the above mentioned procedure

outlined by the BGH - that value is permanently withdrawn from the shareholders by not considering

non-operating assets. To determine the recurring compensation payment demanded by law, the annual

compensation payment was determined therefore calculated as an annuity of the equity value of MAN

SE as at 6 June 2013. This procedure ensures that the non-operating assets are also part of the recurring

compensation payment.

493. Furthermore, the above-mentioned decision of the BGH does not consider that the recurring compensa-

tion payment – at least during the period of the contract – is more or less risk-free. Hence, an annuity

based on a fully risk-adjusted discount rate (before personal income tax) is not appropriate. In the case

of a domination and profit and loss transfer agreement there is regularly the risk of the dominant com-

pany terminating the agreement and the illiquidity of the dominant company. From that point of view,

the future recurring compensation payment is not completely risk-free. Furthermore there is the risk,

that the earning potential of the company is reduced throughout the duration of the contract and that

the shareholder participates in a company of reduced value after the contract is terminated.

494. To reduce these risks, § 5.6 included in the draft of the domination and profit and loss transfer agree-

ment between the Truck & Bus GmbH and MAN SE, determines that upon the termination of the con-

tract the entitled compensation of the outside shareholders will be reinstated with the contractually

fixed amount of € 80.89 for each common and preferred share. In this special case the business risk of a

reduced value of the MAN SE shares is therefore not applicable to the outside shareholders on conclu-

sion of this contract as long as the Truck & Bus GmbH is able to pay the appropriate compensation upon

termination of the contract. Upon termination of the contract the outside shareholders temporarily

have the option to demand the appropriate compensation offered at the time of the conclusion of the

profit and loss transfer agreement or alternatively to remain shareholder and again participate in the

business risk of MAN SE. As a result, the risk profile of the outside shareholders corresponds to that of a

bondholder after the conclusion of the profit and loss transfer agreement. As the recipient of the ap-

propriate compensation has to bear the default risk of the debtor of the appropriate compensation, in

this case based on the Letter of Affiliation and Comfort (see also § 7 of the domination and profit and

loss transfer agreement) the default risk of the Volkswagen AG, it is appropriate to derive the annuity

factor based on the default risk (credit rating) of Volkswagen AG.

495. The interest rate for the annuity (annuity factor) equals the total of the risk-free rate and an appropriate

credit spread reflecting the default risk (credit rating).

496. To objectively determine the credit spread we therefore considered the bonds issued by the Volks-

wagen International Finance N.V., Amsterdam/The Netherlands, a 100 % subsidiary of Volkswagen AG,

with long-term maturities. Amongst others we considered the € denominated bond issued in March

2013 maturing on 22 March 2033. The analysed bonds are guaranteed by Volkswagen AG. Throughout

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the last months credit spreads of up to 1.30 % could be observed for these kinds of bonds compared to

default-free government bonds of equivalent maturities.

497. In total, considering the risk-free rate we have based the calculation of the recurring compensation

payment on an interest rate (annuity factor) of 3.80 % before personal income tax.

498. Due to partially tax free income, future earnings of the MAN Group are not in total subject to German

corporate income taxes. According to the specifications of the BGH the expected distributable average

gross profit is therefore to be divided into a component with German corporate income tax burden and

a component without a German corporate income tax burden. This breakdown is derived on an alterna-

tive derivation of the equity value of MAN SE considering respectively not considering corporate income

taxes plus the resulting solidarity surcharge. Afterwards the equity value of MAN SE can be divided into

a component with corporate income tax plus solidarity surcharge and a component without these taxes.

499. The determination of the appropriate recurring compensation payment is shown in the following chart:

500. The appropriate recurring compensation payment according to § 304 AktG therefore equals € 3.30 for

each common share and preferred share (pro rata gross profit per share) less corporate income tax in-

cluding solidarity surcharge to be paid by MAN SE. The applicable corporate income tax rate including

solidarity surcharge at the time of the conclusion of the contract is 15.825 %; resulting in a corporate

income tax deduction of € 0.23 for each common and preferred share. Assuming the corporate income

tax rate remains unchanged at 15.0 % and the solidarity surcharge at 5.5 %, the recurring compensation

payment is € 3.07 for each common and preferred share (net recurring compensation payment per

share).

501. The determination of the recurring compensation payment according to the dividend discount method

is based on the information received until the end of our work. However, the valuation will have to be

adjusted, in case of any events occurring in the period between the end of our work and the day of the

Determination of appropriate recurring compensation payment (incl. corporate income

tax and solidarity surcharge)

with corporate

income tax and

solidarity

surcharge

without

corporate

income tax and

solidarity

surcharge Total

Equi ty va lue as at 6 June 2013 (€ mi l l ion) 4,653 7,242 11,894

Number of shares (common and preferred shares) 147,040,000 147,040,000 147,040,000

Equi ty va lue per share, € 31.64 49.25 80.89

Appropriate recurring compensation payment per share, € (net of personal income tax,

net of corporate tax and solidarity surcharge), annuity factor 2.798% 0.89 1.38 2.26

Personal income tax 26.375% 0.32 0.49 0.81

Appropriate net recurring compensation payment per share, € (before personal income

tax, net of corporate income tax and solidarity surcharge) 1.20 1.87 3.07

Corporate income tax incl . sol idari ty surcharge 15.825% 0.23 - 0.23

Appropriate gross recurring compensation payment per share, € (before personal

income tax, before income corporate tax and solidarity surcharge ) 1.43 1.87 3.30

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general shareholders’ meeting on 6 June 2013, which affect the value of the recurring compensation

payment.

502. In the following we also show scenarios for the recurring compensation payment which alternatively

considers the effect of risk-free interest rates of 2.75 % and 2.25 % respectively. For reasons of simplifi-

cation we assumed that all other valuation parameters and procedures remain unchanged. This applies

in particular for possible offsetting effects, which have not been taken into account. Amongst others the

development of the credit spread used to calculate the recurring compensation payment is uncertain

until the day of the general shareholders’ meeting that decides on the matter. The following table gives

an overview of the net recurring compensation payment per share based on these assumptions:

Risk-free rate: Net recurring compensation payment per share

(common and preferred shares)

2.75 % € 3.14

2.50 % € 3.07

2.25 % € 3.00

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G. Summary of results

503. The result of our joint expert opinion on the equity value of MAN SE can be summarised as follows:

• The management board of Truck & Bus GmbH has appointed PwC and the executive board of MAN

SE has appointed KPMG to prepare a joint expert opinion on the equity value of MAN SE as well as

on an appropriate recurring compensation payment and cash compensation in accordance with

§ 304 AktG, § 305 AktG, respectively.

• As at the valuation date 6 June 2013, the equity value of MAN SE amounts to approximately

€ 11,894 million. Based on the current number of 147.040.000 shares issued by MAN SE, the equity

value per common share and preferred share amounts to € 80.89.

• The average share price of MAN SE is € 79.08 per common share as well as € 73.39 per preferred

share for the three-month period between 9 October 2012 and 8 January 2013. These are lower

than the determined equity value of each share and hence, not relevant for the determination of

the cash compensation.

• The appropriate cash compensation in accordance with § 305 AktG amounts to € 80.89 per common

and preferred share.

• A domination and profit and loss transfer agreement shall include a recurring compensation pay-

ment based on the outside shareholder’s pro rata share in share capital. According to § 304.1, sen-

tence 1, § 304.2, sentence 1, the net recurring compensation payment for each common and pre-

ferred share is € 3.07 and in accordance with the case law of the BGH, the appropriate gross recur-

ring compensation payment for each common and preferred share is € 3.30.

• The determination of the appropriate recurring compensation payment as well as the cash compen-

sation using the discounted dividend method is based on the information provided to us until the

end of our valuation work. The values should be adjusted accordingly, if events should occur during

the period between the end of our valuation work and the day of the general shareholders’ meet-

ing, which could have an influence on the amount of the recurring compensation payment as well as

the cash compensation.

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504. We have prepared this joint expert opinion on the basis of the documents made available to us, the

information given to us as well as the results of our own investigations.

505. We provide this joint expert opinion to the best of our knowledge and belief with reference to the basic

principles, as they are recorded in §§ 2 and 43 of the Law Regulating the Profession of Wirtschaftsprüfer

(Wirtschaftsprüferordnung).

Munich, 18 April 2013

This English version serves only as an explanatory note and shall not be signed by us.

In case of any inconsistencies between the German and English version of our joint expert opinion,

the German version shall prevail.