220 2007 Englisch

UMSCHLAG_RENK_GB_07_eng.qxd 05.05.
2008 14:32 Uhr Seite 1
RENK AG
Ggginger Str. 73
86159 Augsburg, Germany
Phone (+49-821) 5700-0
Fax (+49-821) 5700-573
www.renk.eu
Annual Report RENK AG
An MAN Group company
2007
The structure of the MAN Group...>
At a glance
EBIT: 68 million (up from 38 million)
ROS: 15.7 percent (up from 10.5)
ROCE: 47.2 percent (up from 28.9)
EpS: 5.83 (up from 2.97)
Proposed dividend: 2.00 (up from 1.80)
Cash flow from operating activities 61 million (down from 24 million)
RENK GROUP
million
Innovative Power Transmission
2007)
2006)
Rel. change)
Order intake
439)
417)
+5)
Net sales
430)
356)
+21)
684)
672)
+2)
in %)
Order backlog
Headcount
1)
1)
Headcount incl. temporary employees
1)
1,728)
1,575)
+10)
1,854)
1,654)
+12)
Abs. change)
in million)
Operating profit (EBIT)
68)
38)
+30)
EBT
66)
35)
+31)
Net income (EAT)
40)
20)
+20)
EpS (earnings per share) in
5.83)
2.97)
+2.86)
ROS (return on sales) in %
15.7)
10.5)
ROCE (return on capital employed) in %
47.2)
28.9)
17)
17)
8)
8)
Capex (tangibles/intangibles)
Amortization/depreciation
Internally funded R&D expenditures
Cash earnings
Annual Report
RENK AG
2007
5)
1)
30)
+21)
+37)
Cash flow from operating activities
61)
24)
Cash flow from investing activities
(16)
(11)
5)
Free cash flow
45)
13)
+32)
118)
89)
+29)
Equity
(abridged)
4)
51)
1)
1) 2007 on 2006 as of December 31
FINANCIAL DIARY
Q1/2008 financial report
Annual general meeting on fiscal 2007
Semiannual financial report
April 30, 2008)

May 8, 2008)
July 30, 2008)
October 30, 2008)
Press release on financial information about 2008
February 19, 2009)
May 12, 2009)
RENKAn MAN Group Company...>
UMSCHLAG_RENK_GB_07_eng.qxd 05.05.2008 14:32 Uhr Seite 1
RENK AG
Ggginger Str. 73
Phone (+49-821) 5700-0
Fax (+49-821) 5700-573
www.renk.eu
2007
At a glance
EpS: 5.83 (up from 2.97)
RENK GROUP
million
2007)
2006)
Rel. change)
Order intake
439)
417)
+5)
Net sales
430)
356)
+21)
684)
672)
+2)
in %)
Order backlog
Headcount
1)
1)
1)
1,728)
1,575)
+10)
1,854)
1,654)
+12)
Abs. change)
in million)
68)
38)
+30)
EBT
66)
35)
+31)
Net income (EAT)
40)
20)
+20)
5.83)
2.97)
+2.86)
15.7)
10.5)
47.2)
28.9)
17)
17)
8)
8)
Cash earnings
Annual Report
RENK AG
2007
5)
1)
30)
+21)
+37)
61)
24)
(16)
(11)
5)
Free cash flow
45)
13)
+32)
118)
89)
+29)
Equity
(abridged)
4)
51)
1)
FINANCIAL DIARY
April 30, 2008)

May 8, 2008)
July 30, 2008)
October 30, 2008)
February 19, 2009)
May 12, 2009)
The MAN Group

The MAN Group is one of Europes foremost industrial players in the sector of Transport-Related Engineering, with
sales in 2007 of some 15.5 billion. As a supplier of trucks, buses, diesel engines, turbo machinery and industrial
services, MAN employs a workforce of around 55,000 worldwide. The MAN business areas hold leading positions
in their markets. MAN AG, Munich, is listed in the DAX (German Stock Index) which comprises the thirty leading
stock corporations in Germany.
MAN Nutzfahrzeuge
is the biggest among the MAN Group companies
and one of the leading suppliers of commercial vehicles
and transport solutions.
Trucks from 7.5 to 60 t for every application
Buses and coaches for regular services and
luxury tourist travel
Complete services for all vehicle-related aspects
Vehicle, marine and industrial engines
MAN Diesel
is the world leader in two-stroke marine main engines
and among the leaders in the global market for large
four-stroke diesel engines.
Two-stroke diesel engines for marine and power plant
applications
Four-stroke diesel engines for marine propulsion systems,
onboard power generation, and power plants
Combustion ignition and spark-ignited engines for stationary
power applications, on shore and offshore
Exhaust-driven turbochargers and propulsion systems
MAN Diesel PrimeServ: worldwide aftermarket services
MAN NUTZFAHRZEUGE
million
2007
2006
Order intake
12,684
10,103
Sales
10,410
8,685
1,039
698
36,591
36,206
10.0
8.0
Operating profit
Headcount at Dec. 31*
ROS (%)
*
including temporary employees
MAN DIESEL
million
2007
2006
Order intake
3,371
2,619
Sales
2,179
1,802
Operating profit
ROS (%)
*
313
229
7,383
6,862
14.4
12.7
MAN TURBO
is among the worldwide leading manufacturers of thermal
turbomachines; it has production plants in Germany, Switzerland,
and Italy.
Broad product range of compressors, turbines, and chemical
reactors
Engineering, manufacture, installation and servicing of complete
machine lines and complexes for the oil and gas sector, primary
materials industry, and for power generation
Worldwide unique center for assembling and testing machine
lines of up to 1,000 t
MAN TURBO
million
MAN Ferrostaal
is a worldwide supplier of industrial services.
Foremost prime contractor for international plant construction
in the areas of solar thermal power plants as well as biofuels,
petrochemical and industrial plants. Project development, project
management and financing arrangements for turnkey plants.
Sales and service organization for manufacturers of machines
and systems. Automotive industry services: just-in-sequence
preassembly of complete modules.
Business platform for the MAN Group.
MAN FERROSTAAL
million
2007
2006
Order intake
1,454
1,498
Salestz
1,108
908
Operating profit
ROS (%)
*
104
71
4,011
3,545
9.4
7.8
2007
2006
Order intake
1,556
1,982
Sales
1,445
1,379
Operating profit
ROS (%)
*
179
119
4,687
4,879
12.4
8.6
The MAN Group

MAN Nutzfahrzeuge
MAN Diesel
applications
MAN NUTZFAHRZEUGE
million
2007
2006
Order intake
12,684
10,103
Sales
10,410
8,685
1,039
698
36,591
36,206
10.0
8.0
Operating profit
ROS (%)
*
MAN DIESEL
million
2007
2006
Order intake
3,371
2,619
Sales
2,179
1,802
Operating profit
ROS (%)
*
313
229
7,383
6,862
14.4
12.7
MAN TURBO
and Italy.
reactors
MAN TURBO
million
MAN Ferrostaal
MAN FERROSTAAL
million
2007
2006
Order intake
1,454
1,498
Salestz
1,108
908
Operating profit
ROS (%)
*
104
71
4,011
3,545
9.4
7.8
2007
2006
Order intake
1,556
1,982
Sales
1,445
1,379
Operating profit
ROS (%)
*
179
119
4,687
4,879
12.4
8.6
05
Contents
06
07
08
12
Supervisory Board
Executive Board
Report of the Supervisory Board
Corporate governance report
22
23
23
26
32
34
38
39
44
58
61
62
Management report of the RENK Group for fiscal 2007

Economic environment
The RENK Groups business focus
Business trend and performance
Finance, asset and capital structure
Research and development
Capital expenditures
Employees
The business divisions
Risk management
Material subsequent events
Outlook
64
68
Major consolidated subsidiaries

RENK stock
71
RENK consolidated financial statements (abridged)

for the fiscal year ended December 31, 2007
75
76
79
Management representation
Six-year overview
Products and services
111
Besttigungsvermerk
113
114
Siebenjahresbersicht
Produkte und Leistungen
RENK Annual Report 2007
06
Supervisory Board
Dipl.-Ing. Hkan Samuelsson
Munich
CEO of MAN AG
Chairman
Prof. Dr. h.c. Karlheinz Hornung

Munich
Executive Board member of MAN AG
Vice-Chairman
Prof. Dipl.-Ing. (FH) Gerd Finkbeiner

Augsburg
CEO of MAN Roland Druckmaschinen AG
Klaus Ketterle*)
Augsburg
Technical clerk, RENK AG
Robert Strixner*)
Augsburg
Foreman, RENK AG
Dipl.-k. Anton Weinmann

Munich
Executive Board member of
MAN AG and
CEO of MAN Nutzfahrzeuge AG
*) elected by the employees
07
Executive Board
Ulrich Sauter
Prof. Dr.-Ing. Manfred Hirt

Augsburg
Spokesman
(up to Aug. 31, 2007)
Florian Hofbauer
Dipl.-Ing. (FH) Florian Hofbauer

Augsburg
Spokesman
(as from Sep. 1, 2007)

Ulrich Sauter
Augsburg
08
Hkan Samuelsson,
Chairman
Throughout fiscal 2007, the Supervisory Board performed the tasks and duties
incumbent on it under law and the Companys bylaws, oversaw RENK AGs
management and conduct of business and advised the Executive Board on key
issues. The Executive Board briefed us timely and comprehensively on the
business trend, as well as on business transactions and events of relevance, all
through periodical written and oral reports. Moreover, we dealt with the risk
management system, the corporate plan and the RENK Groups strategic development.
The Supervisory Board deliberated in detail on the future allocation of the
value added within Large-Gear Units since this value offers potential for
improvement at the three locations (Augsburg, Rheine, and Winterthur), as
well as on the related capital expenditures.
Another major topic on the agenda for discussion was the steps taken by
RENK AG to abide by MANs rules for compliance with the German Corporate
Governance Code.
German Corporate Governance Code
In December 2007, RENK AGs Executive and Supervisory Boards issued the declaration of conformity on the current recommendations of the German Corporate Governance Code Government Commission (as amended up to June 14,
2007). This declaration is published on RENK AGs website. The Supervisory
Board approved the corporate governance report 2007 on March 11, 2008.
Annual audits 2007
The separate financial statements and management report of RENK AG, as
well as the consolidated financial statements and group management report,
for the fiscal year ended December 31, 2007, were all examined by KPMG
Deutsche Treuhand-Gesellschaft Aktiengesellschaft, Wirtschaftsprfungsge-
09
sellschaft, Munich, the statutory auditor duly elected by the annual general
meeting, that issued its unqualified opinion on both sets of financial statements. With due regard to the focal audit areas we defined, the statutory
auditor also examined the risk management system and concluded that the
Executive Board took appropriate action and, in particular, set up a monitoring
system to ensure that trends jeopardizing the Companys continued existence
as a going concern are identified early on.
The statutory auditor attended, and reported at, our annual accounts meeting.
We took approving note of the audit results and conclusions.
According to the final results of our own review of RENK AGs separate and
consolidated financial statements and the management reports, we do not
raise any objections either. We approve the separate financial statements as
prepared by the Executive Board, which are thus adopted, as well as the consolidated financial statements. We agree with the Executive Boards proposal
(also reviewed by us) for the appropriation of net earnings.
After reviewing the final results of our own examination, we found no reasons
for objections to the Executive Boards concluding statement in the dependency report on affiliations.
Change within the Executive Board
Effective December 31, 2007, Prof. Dr. Manfred Hirt stepped down from our
Executive Board to go into retirement. Prof. Hirt had served on RENKs Executive Board since 1990, including from 1995 to August 31, 2007, as its Spokesman. We thank Prof. Hirt who orchestrated and accompanied most of RENKs
upswing in these past years for his meritorious services.
Newly appointed to the Executive Board was Dipl.-Ing. (FH) Florian Hofbauer
who was also nominated as Spokesman of RENKs Executive Board as from September 1, 2007.
We thank the Executive Board members and the employees of RENK AG and its
subsidiaries for their dedicated work and performance, and the employee representatives for their constructive cooperation in our companys interests.
Augsburg, March 11, 2008
The Supervisory Board Chairman
Hkan Samuelsson
10
11
Korean customers attending a presentation in RENKs conference room
12
Corporate governance at RENK

For RENK, corporate governance is vital in assuring transparent corporate management and control. It is the basis for an effective and trusting relationship with our
stakeholdersour stockholders, customers, employees, and suppliers.
The German Corporate Governance Code (the Code) was first introduced in 2002
and has since been annually reviewed and, where deemed appropriate, revised by the
German Corporate Governance Code Government Commission. The current version of
the Code was published on June 14, 2007. RENK carries out the Code recommendations
according to its declaration of conformity which the Executive and Supervisory
Boards issued in December 2007:
RENK AG adopted the recommendations of the German Corporate Governance Code
Government Commission subject to its declaration of conformity of December 2006
and has implemented the recommendations of the Code (as amended up to June 14,
2007) with the following exceptions:
No further Supervisory Board committees are or will be established ( 5.3.13 of the
Code) in addition to the existing Presidential Committee (formed from among the six
Supervisory Board members and in charge of Executive Board staffing issues), nor will
any separate compensation be paid for the chairmanship and membership in the
existing committee ( 5.4.7 of the Code).
We attach great importance to subject our groups corporate governance practice to
ongoing reviews and adapt it to current requirements.
Certain significant recommendations and suggestions of the Code are commented on
in detail below:
Promotion of stockholder rights

We ensure that all our stockholders have equal access to information. At the annual
general meeting, on our website at www.renk.eu under Investor Relations, and through
published financial reports, we offer all readers the opportunity to obtain their very
own view about RENK and its current situation.
In our annual report, as well as on our website at www.renk.eu under Investor Relations, RENK publishes a financial diary with all upcoming events of financial relevance, as well as the Annual Document whose publication is required by the provisions of Art. 10 German Securities Prospectus Act (WpPG) and where all relevant
corporate information of the preceding calendar year are presented in concise format.
13
Stockholders meeting
The (annual) meeting of stockholders is the platform for all RENK stockholders to
exercise their voting rights, obtain information, as well as to dialogue with the Executive and Supervisory Boards. The law confers upon the annual general meeting as corporate body the right to vote and decide on such matters as the appropriation of net
earnings, the official approval of the acts and omissions of the Executive and Supervisory Boards, as well as the election of Supervisory Board members and the statutory
auditor. Moreover, the general meeting of stockholders votes on amendments of the
articles of incorporation, bylaws and capital moves.
Altogether 250 stockholders attended the annual meeting 2007, representing 79.7
percent of RENK AGs voting stock. For participation, stockholders are required to
prove that they are authorized to vote by substantiating as of the commencement of
the 21st day prior to the annual general meeting (record date) that they own, and keep
in their portfolio, RENK stock, as well as by registering within the statutory minimum
period. The detailed requirements are specified in the invitation to the general meeting. We offer interested stockholders the option of appointing RENK staff as voting
proxies; equally acceptable as voting proxy is any bank or stockholders association to
which a due power of attorney has been issued.
As a rule, the Supervisory Board Chairman presides over the general meeting and
ensures that all business on the agenda is smoothly transacted.
RENKs annual report (including the full financial statements) is available at the
annual general meeting and the Company will also send a copy on request. In addition, we publish on our website the annual and interim reports, the current agenda
of the general meeting, as well as (in German language) the speech of the Executive
Board Spokesman. The individual depositary bank forwards the invitation to the
general meeting along with the agenda to each stockholder. This invitation with the
agenda is also published in the digital version of the German Federal Gazette and on
our website.
Interaction of Executive and Supervisory Boards

In accordance with German stock corporation legislation, RENK AG has two boards in
addition to the general meeting as a corporate body: the Executive and Supervisory
Boards closely collaborate in RENKs best interests and endeavor to add sustainable
shareholder value.
14
Either board has its own members, competencies and responsibilities. The Executive
Board is in charge of RENKs management and conduct of business while the Supervisory Board has overseeing and advisory functions. Both boards pursue their activities in accordance with applicable statutory regulations and their respective rules of
procedure. The Executive Board briefs the Supervisory Board timely and comprehensively on all relevant strategic, planning, business trend and risk position issues. Any
business subject to Supervisory Board approval is submitted to the Supervisory Board
in due course. Moreover, the Executive Board Chairman promptly reports any extraordinary event to the Supervisory Board Chairman.
Executive Board
The Executive Board is RENK AGs top management body and has two members (as of
January 1, 2008) who transact the Companys business under their joint responsibility.
An Executive Board member is appointed by the Supervisory Board. The Executive
Boards work is governed by rules of procedure.
The Executive Board determines the business goals and aims for the entire RENK
Group and is accountable for good corporate governance. A directors & officers (D&O)
insurance policy has been taken out to cover liability claims, the deductible for RENK
AG Executive Board members being capped at three fixed salaries. The risk management system is designed to assist the Executive Board in early identifying any business and financial risks.
The Executive Board duly complies with its reporting obligations to the Supervisory
Board. The acceptance by an Executive Board member of any sideline activity (including the membership in another companys supervisory board) is subject to Supervisory Board approval. Moreover, Executive Board members are obligated to report any
conflicts of interests promptly to the Supervisory Board and to their peers on the
Executive Board. In the year under review, no company of the RENK Group transacted
any business with RENK AGs Executive Board members or parties related to these.
Supervisory Board
As another corporate body, the Supervisory Board performs monitoring and advisory
functions at RENK AG and is composed of four stockholder and two employee representatives. Stockholder representatives are elected by the general meeting, employee
representatives by the workforce. The next election of employee representatives on
the Supervisory Board is scheduled for spring 2008, that of the stockholder representatives being incumbent on the annual general meeting 2008. Supervisory Board
members are elected individually (i.e., not by collective slate).
15
In the year under review, neither were any clashing interests reported by Supervisory
Board members, nor did any consultancy agreement or other contract for work or
services exist between a Supervisory Board member and the Company.
Memberships of Supervisory Board members in boards of other enterprises are listed
after the notes to the consolidated financial statements. No Supervisory Board member holds any office on a board of, or provides any consultancy services to, major
RENK competitors.
Supervisory Board members are answerable for the due and proper performance of
their functions. A directors & officers (D&O) insurance policy has been taken out to
cover liability claims, the deductible for RENK AG Supervisory Board members corresponding to the total of the Supervisory Board members annual fees.
Reportable securities transactions

Sec. 15a German Securities Trading Act (WpHG) and the applicable provisions of
the Code require any members of management and parties related to these (whether
closely related family members, legal entities or other institutions) to report to the
issuer as well as the German Federal Financial Supervisory Authority (BaFin) on the
purchase and sale of RENK shares and financial instruments based thereon. Such
reported related-party transactions (so-called directors dealings) are published on
our website at www.renk.eu under Investor Relations. In the year under review, no
such transactions were reported to RENK AG.
Accounting
The Executive Board prepares RENKs consolidated financial statements in accordance
with the International Financial Reporting Standards (IFRS), and RENK AGs separate
financial statements in conformity with German GAAP, i.e., the provisions of the German Commercial Code (HGB). The financial statements are reviewed and approved
by the Supervisory Board. In fiscal 2007, all deadlines for publication of the consolidated financial statements and the interim reports were duly kept.
Statutory audit
In the year under review, the Supervisory Board proposed that KPMG Deutsche Treuhand-Gesellschaft AG, Wirtschaftsprfungsgesellschaft, Munich (KPMG), be elected
as statutory auditor. The annual general meeting endorsed this proposal.
16
17
Gear wheels on a charging frame ready for case hardening at a temperature of 850 C.
18
Board compensation report for fiscal 2007

Remuneration of the Executive Board
The Supervisory Boards Presidential Committee is responsible for dealing with
Executive Board employment contracts and hence, in particular, for fixing the
remuneration of Executive Board members.
The aim is to stipulate a reasonable compensation, based on criteria such as each
Executive Board members duties and responsibilities, as well as the economic situation, the performance and the future prospects of RENK and the MAN Group.
Compensation components and structure

The remuneration of Executive Board members is made up of performance-unrelated
fixed salaries and payments in kind, plus pension entitlements, as well as of performance-linked components. The latter, variable, amounts comprise annually recurring
components hinging on corporate performance and long-term incentives that involve
a certain risk.
The fixed compensation is paid as monthly salary. Additional are benefits in kind,
such as the provision of a company car and the payment of insurance premiums. The
fixed compensation is periodically reviewed and, where appropriate, revised after
accounting for the general pay trend and the respective Executive Board members
responsibilities.
The business performance-related bonus payable once annually is predicated on the
value actually added to the MAN Group (MAN VA), calculated as the difference
between ROCE and WACC (weighted average capital cost). Only after ROCE has
exceeded WACC will the Executive Board be entitled to a bonus, whose amount
depends on the extent to which a predetermined MAN VA target has been achieved
or exceeded. The annual bonus is capped. The Presidential Committee determines
the targets at the beginning of each fiscal year. The value added may be adjusted to
allow for one-time factors, such as M&A transactions and the resulting effects.
19
Two-thirds of the bonus is paid cash, the remaining one-third being earmarked for the
purchase of MAN shares, patterned after the MAN stock program (MSP, see below).
The component pegged to long-term successful performance has since 2005 been
granted in the form of the MSP. Under this program, Executive Board members
receive annual taxable cash compensation of 50 percent of their fixed remuneration,
one-half of the incentive being earmarked for purchasing MAN common stock. Such
shares are acquired and held in custody centrally by MAN AG in the name and for the
account of the Executive Board members, who may freely dispose of the stock after a
3-year qualifying period. During this waiting period, the shares may not be sold,
assigned, pledged or hedged. When an MSP participant goes into retirement or separates from the MAN Group, the period is shortened to one year as from the date of
retirement or separation.
The postretirement benefits of Executive Board members encompass pensions as
retirement and invalidity (disability) income and for surviving dependants. The
postretirement benefit is a fund-based defined contribution plan. RENK pays annual
contributions of 20 percent of the fixed salary and the bonus to an MAN pension
fund. Additional contributions by deferring gross compensation are optional. The
contributions and the return thereon are maintained in individual capital accounts.
The accumulated balance of a capital account bears interest in line with the performance of selected capital market indexes whose weighting depends on the beneficiarys
age. The contributions and their yield plus the return on the plans (i.e., the pension
funds) assets correspond to the capital available. Upon retirement, the capital
account balance or the aggregate total of contributions paid, whichever is higher, will
be paid out either in one sum, in installments or as retirement pension, at the beneficiarys discretion. Upon invalidity or death, the accumulated capital account balance
or a capital corresponding to four times the fixed annual salary and the bonus,
whichever is higher, will be paid out.
Remuneration of Executive Board members in 2007

The compensation of active Executive Board members in 2007 totaled k1,726. For an
itemized breakdown by fixed, annual variable and long-term incentive components,
see the list in Note (32) to the consolidated financial statements.
20
Remuneration of the Supervisory Board

Structure and level of Supervisory Board fees are fixed by the general meeting and
governed by Art. 12 of the bylaws. These fees hinge on the functions and responsibilities of the Supervisory Board members and the Groups economic performance.
Annual compensation breaks down into these components:
a fixed basic fee of 2,100.
a variable profit-related fee
The variable fee corresponds to 200 for each 0.01 of the RENK AG dividend in
excess of 0.10 per no-par share and is capped at 6,000 each.
additional compensation for Supervisory Board (vice-)chairmanship:
The Supervisory Board Chairman receives double, the vice-chairmen 1.5 times, the
fixed and variable fees.
Moreover, Supervisory Board members are reimbursed for their out-of-pocket
expenses.
Remuneration of Supervisory Board members in 2007

The compensation payable to Supervisory Board members for 2007 totals 52,650.
For an itemized breakdown of Supervisory Board members in 2007, see the list in
Note (33) to the consolidated financial statements.
21
Series assembly of electrical bearings
22
RENK Group
Management report for fiscal 2007
Operating profit: 68 million (up from 38 million)

EpS: 5.83 (up from 2.97)
Cash flow from operating activities: 61 million
(up from 24 million)
23
Management report
Economic environmentThe RENK Groups business focus
Economic environment
The global economy was again robust in 2007 and will probably have advanced by a
real 5 percent. It was especially the newly industrialized nations that maintained their
vigorous rate of growth, with China and India, two highly populated countries concurrently on the path to industrialization.
Eurozones economy was once more strong. For the German mechanical engineering
sector, 2007 was one of the most successful since WWII. Real output of plant and
machinery mounted by around 11 percent and capacities were at their busiest.
As to 2008, signals indicate economic slowdown. Alongside exogenous factors such
as the high price of commodities and the overpriced euro versus the dollar and yen,
it is the fact that production plants are stretched to the limits of their capacity that
stifles further growth. Obstacles to any near-term capacity expansion are the
extended delivery periods and shortage of skilled labor.

RENK AG
RENK AG dates back to 1873 when Johann Julius Renk established a small workshop
for the mechanical production of gear wheels in Augsburg Lechviertel. In 1879, the
successful start-up moved to Ggginger Str., still the Groups headquarters. The prospering enterprise was transformed into a stock corporation as early as 1897; since 1923,
MAN AG has been the Companys major stockholder.
Nowadays, RENK is primarily a worldwide supplier of high-grade propulsion equipment.
Division overview
The Vehicle Transmissions division is the foremost manufacturer of fully automatic
transmissions built into medium and heavy tracked vehicles. RENKs automatic
power-shift transmissions are suitable for use with all modern diesel engines, with
rear or front installation. Electronically controlled and monitored, the units are built
at Augsburg and by the French subsidiary SESM.
Based in Hannover, Germany, the Drive Elements division supplies hydrodynamic
lubricated slide bearings for electric motors, generators, pumps, fans, water turbines,
conveyor plant, and marine use. For over 10 years we have been leaders in the market
for standard slide bearings.
24
The Special-Purpose Propulsion Systems division comprises Large-Gear Units at Augsburg. The product range covers marine gear units for fast craft with up to 30 MW
power transmission capacity as well as stationary gear units for industrial environments including wind turbine plant and for energy production. Our turbo gear units
are rated for capacities of up to 140 MW. We are presently working on even higher
capacities and speed ranges.
The Broad-Use Propulsion Systems division encompasses Large-Gear Units at Rheine
specializing in marine gear units for ferries, merchant ships, liquefied gas tankers,
and supply vessels. Also manufactured are gear units for steam turbine plants and
couplings for industrial use.
The Augsburg-based Test Systems division manufactures test rigs for R&D, production
and quality assurance applications in the auto, aviation and rail engineering markets.
Acquisitions and expansion expenditures in 2007

Following the formation of RENK-MAAG GmbH, Winterthur, Switzerland, as a 100percent subsidiary of RENK AG in January 2007, this same company acquired as of
April 30, 2007, the turbo and marine gear unit business of MAAG AG, Winterthur,
Switzerland. In the short fiscal year 2007 (May 1 Dec. 31), the organizational and
business parameters were laid for a successful fiscal 2008 at RENK-MAAG GmbH.
An additional hardening shop was set up at the Augsburg plant. The construction work
was completed and, following the commissioning of the new furnaces in the first half
of 2008, we will be able to once again fully perform in-house our own advanced hardening process for a contribution toward improved efficiency.
In order to more closely address the sharp rise in demand for slide bearings, we began
in 2007 to add another around 40 percent to the production space at the Hannover
plant. This is leading to a significant improvement especially in the areas of incoming/outgoing goods, final assembly and inspection of the bearings while creating the
necessary space for a separate painting plant. Construction will be finalized in the
spring of 2008.
25
Management report
3-D measurements of the tooth profile
26

Order intake still high
Another rush of orders for slide bearings combined with repeatedly buoyant demand
for high-duty marine gear units, especially for naval applications, again led to orders
topping the 400 million threshold. Order influx reached 439 million, a slight
5-percent growth over the prior-year 417 million. Sharing in this advance was the
contribution from the first-time consolidation of RENK Test System GmbH (RTS),
Augsburg.
Order intake: 5-year trend
million
CAGR: 7.9%
500
417
450
439
400
Total
350
324
264
300
250
200
Abroad
150
Germany
100
189
314
237
240
190
129
135
135
124
2003
2004
2005
180
199
50
0
2006
2007
Double-digit sales growth

The congenial international business climate was clearly reflected in the sales trend.
Sales rose 21 percent, from 356 million to 430 million. All five divisions contributed
to the surge. In fact, orders on hand would have propelled sales even further but for
the fully utilized production capacities and insufficient availability of certain key
components.
Sales: 5-year trend
million
CAGR: 12.6%
356
267
307
272
Total
Abroad
171
Germany 96
2003
430
178
94
2004
191
116
2005
226
130
2006
265
165
2007
27
Management report
Order backlog marching toward 700 million milestone

Despite surging sales, order backlog rose from 672 million to 684 million. At LargeGear Units, this is equivalent to 24-month production. Only Vehicle Transmissions
showed a conspicuous decline in orders received since no major international projects
were ripe for award in 2007.
Order backlog: 5-year trend
million
CAGR: 1.7%
639
Total
Abroad
Germany
609
612
672
684
485
412
154
2003
408
197
204
2004
2005
418
254
2006
397
287
2007
Operating profit again at an all-time high

RENK once more elevated its operating profit to a new all-time high in 2007. The profits and returns reported by all the divisions were again fueled by a growing volume
of business and refined business processes. The overall operating profit soared by
30 million, from 38 million to 68 million. Measured against the 21-percent sales
rise, this once more represented a far steeper increase of 79 percent. One contributory
factor was a pricing policy revised to accommodate market conditions.
Operating profit: 5-year trend
million
CAGR: 35.8%
80
68
70
60
50
38
40
30
29
20
21
2003
2004
20
10
2005
2006
2007
28
29
All the engineering designs are produced with CAD.
30
ROS/ROCEanything but average

The most important controlling benchmarks for the MAN group companies are operating profit, return on sales (ROS), and return on capital employed (ROCE).
These benchmarks are applied both at RENK Group level and for the purpose of measuring the performance of each division. They are also the yardsticks for calculating
the performance-related pay awarded to management.
ROS relates operating profit to sales. For the RENK Group, ROS is targeted at 10.5 percent as an average for an economic cycle, with a bandwidth of 2 percentage points for
strong and weak phases
With an ROS of 15.7 percent (up from 10.5), RENK was well ahead of its benchmark in
2007; in fact, all the divisions reported an ROS of over 10 percent.
ROCE relates operating profit to the weighted annual average capital employed (CE).
For this indicator, RENKs benchmark is 22 percent. In fiscal 2007, we achieved 47.2
percent (up from 28.9). The pronounced improvement in ROCE is due to the sharp
rise in operating profit. In contrast, the advance in average CE from 130 million to
143 million due to the volume of business is of subordinate significance in the
uptrend of this performance indicator.
Return ratios: 5-year trend
million
47.2
26.4
17.4
20.7
15.7
ROCE
ROS
7.5
2003
28.9
7.7
2004
9.5
2005
10.5
2006
2007
31
Management report
Dividend payout again high

Our dividend policy aims at allowing our stockholders to commensurately share in
RENKs success. According to German GAAP (Commercial Code principles), RENK AG
earned net income of 27.1 million (up from 23.8 million) for fiscal 2007 of which
13.6 million (up from 11.8 million) was transferred to the reserves retained from
earnings. Adding the profit carryover, the Companys net earnings totaled 14.0 million (up from 12.7 million) from which the Executive and Supervisory Boards will
propose to the annual general meeting to distribute a dividend of 2.00 per share
(up by 0.20). Measured against the year-end 2007 stock price of 58.00, this represents a yield of 3.4 percent.
Capital stock
RENK AGs capital stock of 17.9 million is divided into 7 million no-par shares. In the
year under review, 76 percent of RENK AGs capital stock was owned indirectly by
Munich-based MAN AG through MAN Maschinen- und Anlagenbau GmbH, Munich.
In 2007, once again no use was made of the authorization to repurchase treasury
stock. The authority expired November 8, 2007, by which date altogether 199,903
treasury shares or 2.9 percent of the total 7 million shares had been repurchased.
32

Net liquid assets upsized
In 2007 as in prior years, RENKs funding has been ensured through MAN AGs central
finance system, the latter guaranteeing the availability of the cash needed for business operations and capital expenditures, as well as securing the financial background
of transactions. RENK AG is integrated with the MAN central cash management system, as are its three consolidated subsidiaries and the subsidiary RENK-MAAG GmbH
which was not yet consolidated in 2007.
million
2007)
2006)
Opening net liquid asset
41)
36)
Net cash provided by operating activities
61)
24)
Net cash used in investing activities
(16)
(11)
Free cash flow
45)
13)
Net cash used in financing activities
(78)
(8)
Changes in consolidation group
2)
Cash-based change in net liquid assets
(31)
5)
Closing net liquid assets
10)
41)
The net cash of 61 million provided in 2007 by operating activities soared from the
prior-year magnitude. Despite the significant expansion of our business, net capital
employed in inventories and receivables showed but a minor rise. In addition, thanks
to the contracts awarded to our Special-Purpose Propulsion Systems and Broad-Use
Propulsion Systems divisions, we leveled up customer prepayments further.
The net cash used in investing activities climbed to 16 million (up from 11 million)
due to our growth strategy. The cash flow from financing activities reflects the dividend payout for the year before, but mainly the 65 million transfer of a major portion of our pension obligations to MAN Pension Trust e.V.
33
Management report
Higher business volume lifting capital employed.

Capital employed (CE) swelled by 13 million as of the balance sheet date.
ASSET AND CAPITAL STRUCTURE

million
Tangibles, intangibles, investments
2007)
2006)
67)
60)
Net CE tied down in inventories, prepayments received,

and trade receivables/payables
141)
128)
Other accruals
(47)
(41)
Other liabilities
(19)
(18)
Other working capital

Capital employed
6)
6)
148)
135)
The RENK Groups order intake and sales growth inched up capital employed, mainly
since inventories swelled by 11 million (required, in particular, for large-gear production at Augsburg) and receivables moved up 10 million as higher amounts were
invoiced toward year-end and payments by some vehicle transmission end customers
lagged behind. In contrast, we were able to push up prepayments received by 4 million, a success basically ascribable to the Large-Gear Units at Augsburg and Rheine.
34

R&D is pivotal to the market success of our products and hence our competitiveness.
Since most of these products have a long service life, ongoing refinement and new
developments in the interest of improved customer benefits are an essential ingredient of our innovation management efforts. This is also reflected in the share of
product innovations over the past five years which currently account for around
40 to 50 percent of sales.
Internally funded R&D expenses in 2007 amounted to altogether 3.6 million (down
from 4.7 million). Relevant in this context is that especially in the market for largegear units, most of the R&D input is commissioned by customers and hence not
accounted as functional R&D expenses.
At Vehicle Transmissions, the HSWL 106 was further modified for operation with
electric-motor support (hybrid drive). Due to the lack of a suitable demonstration
vehicle, the field testing planned for 2007 had to be shelved. Highly promising initial
test rig results have prompted continuation in 2008 of work on a new kind of compact, powerful electric motor for installation in military vehicles. This technology is
suitable for both hybrid and other electric motor propulsions systems.
At Special-Purpose Propulsion Systems and in line with market demands, product
development work on stationary gear units focused on the optimization of existing
types of gears, especially those installed in wind energy and high-performance turbo
plant. A part of these efforts is directed to the development of new equipment for outputs of up to 200 MW. Engineering improvements also centered on Etax technology
for upgrading gear unit efficiency. This technology was used for the first time on compressors.
In the area of high-duty marine gear units, an essential element in maintaining
RENKs technological supremacy is the development of innovations for main propeller
drive units. The advanced thrust bearing (RENK ATB) for which a patent application
has been filed, was for the first time used in combination with a complex CODAG gear
set. This thrust bearing features compensation elements allowing for displacement on
the part of the elastically mounted gears.
Low noise emission is another hallmark of our high-duty marine gears. With increasing reduction in the self-emitted noise level, frequencies generated by the diesel
engine may predominate. The interplay between engine, coupling, and gear unit on
the overall noise emission level was explored both theoretically and experimentally.
35
Management report
R&D at Rheine focused on value-analysis work for containing the in some cases substantially higher cost of materials. In terms of product R&D, work centered on refinements to couplings with adapters/spacers, turbo gear units and multidisk clutches for
marine gears.
RTS was busy on new hardware/software for a free-field-compatible system designed
to acquire military vehicle data measurements.
Prior to testing a gyrating-mass brake test rig, the technical details are agreed upon.
36
37
Assembly discussion with production and delivery scheduling staff in Large-Gear manufacture
38
Capital expenditures in fiscal 2007 totaled an unchanged 17 million, including 2
million for the stakes in RENK-MAAG GmbH, Switzerland, and in RENK Transmisyon
A.S., Turkey.
Additions to tangible assets chiefly concerned the extension to the Augsburg hardening shop and the enlargement to the Hannover production space. Both these projects
will be completed in 2008. Following the newly built production shop in Rheine the
previous year, last years expenditures went toward providing added machining capacity.
Capital expenditures: 5-year trend

million
CAGR: 24.8%
17
17
2006
2007
12
9
7
2003
2004
2005
Amortization/depreciation: 5-year trend

million
CAGR: 3.4%
2003
2004
2005
2006
2007
39
Management report
Employees
Employees
At the close of the fiscal period, the RENK subgroup employed 1,728 people (up from
1,575), including 1,656 (up from 1,493) inside and 72 (down from 82) outside Germany.
The workforce increase in Germany is due to the order growth at all the domestic
plants and the first-time consolidation of RENK Test System GmbH (headcount of 65).
The introduction of regional collectively negotiated pay scales and hence the distinction between wage earners and salaried employees was completed at all the domestic
plants and subsidiaries at the turn of 2007/2008. As a consequence, a uniform system
of collective pay will in future prevail at all the German locations.
Motivation was again encouraged in 2007 by letting employees share directly in corporate performance. One important element was once more goal transparency, since
the factors governing the incentive payment for nonexempt employees and the yearend bonus for exempts were already announced in the course of the fiscal year.
First- (apprenticeship) and second-stage training programs were once more the focal
points of our skills-enhancement efforts during the period. A mainstay of our talent
development program continues to be apprenticeship training and at the end of fiscal
2007, altogether 39 youngsters were serving gray- and white-collar apprenticeships at
Rheine and Hannover. Another 39 blue- and gray-collared were indentured at the
Augsburg-based MAN apprenticeship training center. The Hannover plant launched a
program whereby two blue-collar apprentices underwent training at a number of different enterprises. Versus 2006, the total number of apprentices rose by 13. Ongoing
training courses again centered on foreign languages and on one-off training for specific needs.
To make sure we stay successful we need to repeatedly recruit, retain, and retrain
young talent; traditionally close contacts with a number of institutes of higher education assist us in scouting for suitable candidates.
Our thanks go to all the employees for their dedicated and hence successful efforts.
We also thank the Supervisory Board employee representatives, the Works Councils,
and the Economic Committee for continuing the constructive cooperation of the past
years.
40
41
For case hardening, gear wheels are immersed in an oil bath for around 60 minutes.
42
The situation at the divisions

VEHICLE TRANSMISSIONS
million
2007
Order intake
2006
Change
57
56
+1
Sales
148
131
+17
Order backlog at Dec. 31
238
327
89
(1) Economic parameters

The past fiscal year saw no major structural changes in the international market for
conventional tracked-vehicle transmissions. Geostrategic military missions fired
demand for military-type tracked-vehicle transmissions more strongly in the USA
and Near & Middle East than elsewhere in the world. Current experience accumulated
by Western armed forces in a variety of crisis regions underscores the long-term
significance of medium- and heavy-duty tracked vehicles since they alone combine
best possible protection for their occupants with the necessary mobility. Given these
circumstances, we expect demand for such transmissions to stay steady.
(2) Key sales markets

Sizeable development and procurement contracts for tracked vehicles are in the
pipeline in the Near, Middle and Far East. 2008 will see in Turkey the development
of a new battle tank to be engineered on behalf of the Defence Ministry by Turkish
industry resorting to Korean know-how. The vehicle will preferably comprise elements
from a newly developed Korean combat tank which in turn will make it significantly
more difficult to install components such as the power pack sourced from Germany.
New medium-term market opportunities for RENK vehicle transmissions will surface
also in the UK as a result of the FRES project for which RENK has offered its HSWL 106
transmission which is undergoing Trials of Truth.
We perceive opportunities for a follow-up contract to the RK 325 and also for its installation in a new vehicle range.
Other major vehicle programs are being prepared in Asia in whose most important
markets we are strongly positioned. In some cases, these markets require partnerships
with local suppliers for which we are readying ourselves accordingly.
43
Management report
(3) Order situation

The procurement programs underway and internationally accessible for RENK were
not finalized for award in 2007 either, mostly due to delayed budget appropriation.
None of these programs on which we are working was canceled or lost to competition.
As a consequence, order intake of 57 million (up from 56 million) was chiefly generated by aftermarket business. Meriting special mention is a contract for 472 bevel gear
transmissions for the Dutch/German Boxer project. Shipments are scheduled to commence in early 2009.
Sales mounted from 131 million to 148 million, in the main and once again from
deliveries of power packs (engines plus transmissions) to India and transmissions for
the Turkish M60 conversion program, followed by the Leopard 2 programs for Spain
and Greece. Shipments of RK 325 transmissions to a customer in the Middle East also
continued as did deliveries of HSWL 284 C for the 2000 tank howitzer (the Dutch and
Italian versions). RECO wheel vehicle transmissions were delivered at a brisk rate to a
variety of customers.
Further preproduction transmissions for the new PUMA infantry fighting vehicle, our
most important project in Germany, were shipped out.
SESM continued bulk deliveries for a Polish vehicle destined for operation in Asia.
The divisions results of operations continued very healthy and a tall order backlog
worth over 200 million will keep it busy in 2008.
(4) Risks
In certain programs we again encountered delivery delays and quality problems
although the timing situation has generally eased and engineering defects, mostly
resulting from our suppliers, are being briskly remedied.
The threat of inadequate workloads is growing. Nonetheless we do believe we will be
able to book sizable follow-up contracts over the next two years; nevertheless, 2009
and 2010 may see temporary work shortages leading to shrinking sales.
44
DRIVE ELEMENTS
million
2007
2006
Order intake
93
75
Change
+18
Sales
79
64
+15
47
33
+14

In 2007, prospects for longish-term economic stability and repeated robust economic
growth led to further expenditure momentum with again increased demand in our
most important sales markets. The particularly sustained demand from Asia, fuelled
by the rapid economic ascendancy of China and India, proved the chief business
driver which, in turn, meant that the electric machinery, plant construction and shipbuilding sectors were all stretched to the limits of their capacities.
(2) Information on key products and processes

The congenial economic climate, the forecasts on the part of our most important
customers for the coming years and the derivable demand for drive elements
prompted us to decide to significantly expand production capacity at the Hannover
location. Work started mid-2007 and will probably be completed in the spring of
2008. Also, heavy expenditures were incurred for additional machining technologies
and some of the related equipment started operation as early as 2007 and other will
do so in 2008. The additional in-house production capacities will then provide the
parameters for us to keep pace with market growth in both standard and specialty
bearings without having to resort to external machining sources in most cases already
working to full capacity.
45
Management report

The rapid industrialization of the newly emerging regions, especially in Asia, is generating sustained demand for quickly installable fossil and water-powered energy production plant. In order to address these nations growing need for commodities and
energy triggered by their economic ascent, vast production plants are being built for
the purpose of conveying and processing these commodities. These, in turn, require
large numbers of electric motors and other machines with slide bearings both in the
newly industrialized countries and in those countries with the raw material deposits.
Demand is particularly robust in the case of heavy-duty drive systems used in rolling
mills and as high-end drives for the oil and gas sector. A stronger regional significance
in countries such as Brazil might well accrue to plant and machinery for producing
biofuels from renewables.
(4) Order situation

Order intake and sales again rose steeply versus a strong previous year: orders
received by 24 percent to 93 million and sales by 23 percent, from 64 million
to 79 million. We are pleased to note that standard and specialty bearings shared
equally in this growth, which was also reflected in improved operating profit.
(5) Risks
The shortage of critical upstream materials observable over recent years has meanwhile worsened and securing a supply of sufficient materials has evolved into a major
strategic challenge. Efforts are therefore underway to develop efficient additional
sources of supply outside the traditional procurement markets. The ongoing strength
of the euro versus the dollar and yen has for years now eroded earnings and any further appreciation on the part of the euro will only aggravate the situation.
46
47
20-t tensile test in Quality Assurance
48
SPECIAL-PURPOSE PROPULSION SYSTEMS

million
Order intake
Sales
Order backlog at Dec. 31.
2007
2006
Change
155
143
+12
93
85
+8
206
147
+59

Demand for our industrial gear units continued at the exceptionally robust yearearlier level in 2007, with orders for the high-duty turbo variety gaining strong
momentum. Appetite for our mill gear units was also keen, especially on the part of
Asian customers. The accumulated order backlog is largely sufficient to keep us busy
in 2008/09.
Likewise buoyant was the order situation for marine gear units, the global boom in
shipbuilding pushing order intake at RENK to an all-time high.
A major slice of incoming business comprised complex first-time contracts which
again consolidated RENKs market leadership. RENK is building its biggest ever gas turbine gear unit for an Indian aircraft carrier. Turkey ordered a further CODAG program
involving a complex transfer gear system. In cooperation with an Italian shipyard and
mechanical engineering group the worlds first CODELAG equipment was built for an
Italian/French frigate program.
Likewise showing repeated growth is the market for luxury megayachts. As a manufacturer of gear systems satisfying the highest noise suppression standards we are, of
course, profiting from this preference.

Whereas turbo gear units continue to be required worldwide, in the case of cement
plant China is still and India growingly a target market for international plant engineering companies. Another strong sales market is the Arabian Peninsula. The orders
for 5-MW wind energy equipment we were awarded, are destined for German and
French offshore installations. This is a market seen as offering mid-term outstanding
growth prospects in Europe and overseas.
49
Management report
Our advanced-engineered CODOG, CODAG and COGAG gear systems are marketed
worldwide and during the period, besides the long-running programs for the US Coast
Guard and Navy, additional market shares were acquired in India and Korea.
We presently hold around 50-percent of the prestigious market for luxury yacht gear
units; these craft are predominantly built at German and Dutch shipyards.
(3) Order situation

At 155 million, order influx was again extremely high. Demand from the cement and
plastics sectors was once more well above our capacities and is evidently continuing
unabated. Given the protracted delivery periods, price hikes on the part of our suppliers pose a certain risk to our earnings. Worldwide rising energy requirements have significantly propelled demand for turbo gear units. Demand in the wind energy sector
has grown double-digit. We booked further orders for multi-megawatt wind energy
plant and order backlog is enough to keep us busy into 2009. Plans by the plant
builders with whom we are currently negotiating, reach into 2012 and point to ongoing sustained growth.
Orders in 2007 for gear units for naval and coast guard vessels as well as megayachts
topped the high prior-year volume. Given the capacity limitations of this division,
customers have to reckon with very long delivery periods. In fact, the facilities for
building new naval gear units are booked up until 2010. Among the most important
customers are the navies and coast guards of the United States, UAE, Turkey, Denmark,
India, Oman plus German authorities such as Fishery Protection and Customs.
In line with the rush of incoming orders, sales climbed from 85 million to 93 million. In the stationary gear unit sector, additional sales were reported especially for
extruder and turbo gear units. In the case of mill gears, we also inched up prior-year
sales. Marine gear sales were chiefly for single or combined diesel gear units for patrol
vessels and corvettes. Four CODAD units were shipped to a customer in the Far East.
The biggest individual order placed was for another CODAG set of marine gears for the
shipbuilding program of the US Coast Guard. Another five sets are expected to be
ordered over the years ahead.
The rising price of oil also propelled business in RCF (RENK Constant Frequency) gear
units. The corresponding onboard power generation is derived directly from the main
diesel engine and not via fuel-intensive ancillary plant.
Rising sales, higher prices and efficiency improvements led to a clear enhancement in
profitability at Special-Purpose Propulsion Systems.
50
(4) Risks
In the area of stationary gear units, warranty claim pressure has somewhat eased now
that we are implementing quickly and everywhere technical solutions for our customers.
Our fully utilized production capacities for large-gear units at Augsburg remain a
major risk since we cannot rule out customer migration to other suppliers.
51
Management report
BROAD-USE PROPULSION SYSTEMS

million
Order intake
Sales
2007
2006
113
136
Change
23
95
72
+23
171
153
+18

Prospects can still be regarded as bright in those markets of significance to us.
Demand in the shipbuilding sector has somewhat abated but is still buoyant. The
relative composure is, in fact, due to the circumstances that the shipyards are fully
booked beyond 2009 and newly built diesel engines, unless earmarked, will only be
available starting from 2011. Also observable is a slowdown in the global economy as
such. In plant construction, in contrast, especially in the markets for power plants and
steel mills, the mood is still expansive. Raw materials extraction and energy generation are processes undergoing global modernization and expansion.
Still causing problems are the input (materials and component procurement) markets.
Although supplies of commodities and semis have basically been secured for 2008,
the bottleneck for high-alloyed steels has tightened appreciably. The capital expenditures undertaken by our suppliers will only take easing effect in the course of 2008.
Besides these delivery delays, other obstacles in particular are the steep price hikes for
high-alloyed steel and forgings.
(2) Information on important products and processes

As in the preceding years, it was the marine gear units that made up the major portion
of business in terms of volume. Alongside the still strong shipments of single-engine
gear units RSV/RSH, it is the midsize twin units that are showing the highest growth
rates. In the market for single-stage twin units, although we command a position of
technological supremacy, the strong euro versus the Japanese yen is making it increasingly difficult to contract profitable orders in the accustomed volume. Another focal
point is the propeller shaft clutch (PSC) which, although still relatively immature in
operation, has graduated to an integral redundancy component on large LNG tankers
with direct diesel propulsion. So far, this product has no rival in the marketplace.
52
The proven and well-established curved-tooth couplings in their various versions

continue to account for the lions share of orders in the coupling sector. Even though
it has long been expected that this product group would be superseded by other
lower-cost, lower-maintenance products (e.g., steel-disk couplings), the latter are in
fact gaining acceptance only slowly. We also managed to access the growing market
for largish safety clutches.
Regarding stationary gear units, we are still focusing on the use of turbo gear units in
the steam turbine market.
All processes directly designed to help to work off our order backlog are currently
being revised. In particular, the order management subprocesses are being modified.
In the case of in-plant logistics subprocesses these need to be reengineered because
the higher level of parts outsourcing entails a huge increase in the movement of
goods.

Most of the products manufactured by Broad-Use Propulsion Systems again went
to customers in Germany and elsewhere in Europe. This is true of all three product
groups. In the case of marine gears, we have two different channels for the non-European, chiefly Asian, markets. On the one hand, the units are marketed to the Asian
shipyards via European OEMs and as part of a power pack, in which case our customer
is domiciled in Europe. On the other hand, gear and PSC units for LNG tankers are
increasingly being supplied direct to the shipyards (mostly Korean) or to the Asiabased sales companies of European manufacturers.
In the couplings segment, major project-related business is transacted with Asian
end-users on an isolated basis. Non-European business in industrial gear units relates
mainly to steam turbine builders in India.
(4) Order situation

At 113 million, order intake by the division was again high. The decrease of 23 million is solely due to the marine gear units, the other two product groups showing in
some cases sharp gains. Order backlog climbed to an all-time high of 171 million.
53
Management report
Sales leapt 32 percent to 95 million, with all product groups sharing almost equally
in this expansion.
The operating profit also improved appreciably. ROS exceeded 10 percent.
(5) Risks
Our new PSC propeller shaft clutch has meanwhile accumulated initial operating
experience. In order to circumvent start-up failures, the large Korean shipyards
receive increased installation assistance.
With a view to improving the partly fluctuating quality of our suppliers, we have
stepped up our in-plant supervision and assistance services to them.
54
TESTING SYSTEMS
million
2007
(initially consolidated)
2006 1)
Change
Order intake
21
+14
Sales
16
+13
22
12
+10
1) The 2006 data represents RENK AG products and services billed to RTS GmbH.

The economic situation in the market for testing rigs and systems corresponds to the
generally highly congenial environment on the German mechanical engineering and
plant construction market, particularly in export business. This is also reflected in the
current business trend at RENK Test System GmbH (RTS).

RTS markets test rigs for the auto/commercial vehicle/rail and aviation industries.
Most of the applications relate to R&D activities. Rigs for end-of-line quality assurance
are now only marketed to the commercial vehicle community.
Within the automotive sector, the submarket comprising commercial and specialpurpose vehicles is presently buoyant in Germany and Scandinavia. Our business
model based on high quality, flexible engineering, reliable service and a large share of
in-house production sourced from RENKs gear manufacturing facilities, is now finding ready acceptance in this market segment, too.
In the car market, the competitive situation is very strained, especially among the
German OEMs. Extremely restrictive terms and conditions coupled with low prices
are making it difficult to succeed in this prestigious portion of the market.
Of considerable significance at present is the US market for helicopter transmission
test rigsmainly megacontracts booked by LABECO, the RTS subsidiary. The solid
earnings obtainable in this segment of the market are sadly, however, eroded by the
presently weak dollar. A general unwillingness to invest means that automotive projects are currently of low priority in the US market.
55
Management report
Because of insufficient customer budgets, marketing activities in Turkey and France,

launched in 2006 and 2007, are making only slow progress. In the Asian markets of
China and South Korea, inquiries have risen of late..
The sustained lack of expenditure propensity in the rail vehicle market has recently
reversed, chiefly due to inquiries received from Germany and South Korea.
(3) Order situation

Given the growing influx of orders and an order backlog which will generate further
rising sales in 2008, the present business situation may be regarded as satisfactory.
An essential component of order intake during the period was for test rigs for military
gear units, supplied in strategic collaboration together with RENK AGs Vehicle Transmissions division. The same applies to the aforementioned helicopter transmission
test rigs, likewise assignable to the military category. Both these segments are ensuring a sustained level of orders on hand. The high-margin Service/Maintenance/
Revamp/Parts unit again performed well and still harbors substantial growth potential.
(4) Risks
Due to the very high order backlog and the generally congenial market situation, we
find ourselves confronted with in-house capacity bottlenecks and supply delays on
the part of our vendors. These are risks we abate through efficient project management.
Thanks to the high-volume market and, to offset the risks, we can exploit opportunities evident in particular in higher prices for new contracts.
56
57
Assembling the gear wheels of an ETAX gear unit.
58
Risk management
Risk and reward policies
Given growing competitive pressure and rapidly changing terms of reference, the
global activities of the RENK Group are confronted with a host of business risks. Our
risk and reward policies reflect our endeavors to seize growth opportunities while
avoiding as far as possible any related unreasonable risks. Thanks to our midsize and
manageable structure and the associated flat hierarchies, any risks and rewards
accompanying major business decisions are early on identified, analyzed, assessed
and submitted to the Executive Board for approval..
Risk management at RENK is nested in a well-developed planning and reporting
system in line with MAN AGs requirements. On the basis of our strategic corporate
business plans, potential risks are assessed in good time prior to any major business
decisions while reporting procedures ensure the monitoring of such risks within the
framework of operational business. The following risk areas might have substantial
and sustained adverse impact on our asset and capital structure, financial position
and/or results of operations, although these are not necessarily the sole risks to which
we are exposed. Risks, now unknown to us or those presently considered marginal,
might likewise adversely affect our business.
Market risks and rewards

The world markets for our products are fiercely competitive, especially in terms of
pricing, product and after-sales service quality. Our own profitability largely hinges
on our ability to sustain in the medium- and long-term the technological and price
supremacy in our product lineup. Top-class technology may on occasions suffer from
temporary quality problems. Our corporate strategy embraces the possibility of such
portfolio measures as (limited) takeovers and joint ventures which, however, are
always risk-prone since they involve employee, workflow, technology and product
integration processes. Risks related to the general economic scenario and the associated fluctuations in demand and workload are countered by flexible working hour
arrangements within the limits of what is possible under labor law and capacityrelated make-or-buy decisions. Rewards, on the other hand, are identified in our
recognized technology leadership which we concentrate on consolidating and
expanding.
59
Management report
Risk management
Operational risks
Besides one-off transactions for large gear units, it is business in military vehicle
transmissions that governs the level of earnings at RENK. Characteristic of such
transactions are supply contracts extending over several years and in some cases
tied to extensive offset obligations. The international alliances entered into for such
contracts embrace a spectrum of risks extending from technological problems
encountered by our partners in the field of production and the resulting delivery
delays, to penalties on failing to meet offset obligations and know-how loss should a
partner fail to comply with the contractual stipulations. RENK addresses such risks
through ongoing development of cooperation management in order to give our partners the necessary support throughout the project phases as well as by meticulously
scrutinizing the legal facets and implications of the relevant contracts.
All contracts in our divisions are accompanied by the risk of quality problems, cost
overruns, or penalties due to unexpected technical problems, suppliers defaulting on
contract performance, or disruptions in our own value chain. The outcome may have
a negative impact on our results of operations.
Defaulting customers may also adversely affect our results of operations. Besides
by ensuring payment through documentary credits in our exports, major business
volumes are covered by obtaining credit sale insurance and/or HERMES export credit
coverage, as well as by resorting to other instruments from the international insurance gamut to cover default and nonpayment risks.
We are also exposed to volatile energy and input material prices which again rose
worldwide. These price hikes may heavily depress our earnings insofar as we are
unable to channel down to our customers the added costs or absorb these through
rationalization measures.
Personnel risks
Technological leadership is impossible without highly skilled specialist and management staff. Our future largely hinges on the degree to which we continue to succeed in
hiring, assimilating and holding on to engineers and other professionals. There is no
guarantee that in future we will still be successful in attracting and retaining highly
skilled staff. If we fail, the consequences may well be grave.
60
Financial market risks

Exchange rate fluctuations may impinge on the prices charged for goods and services
and on profit margins. Within the RENK Group, all firm customer contracts and our
own purchase orders (if denominated in a foreign currency) are hedged against
exchange rate risks. We also hedge forecasted sales from series-production business
and high-probability customer projects. One potential risk in this context is the socalled budget effect of exchange rate volatility on the general purchasing power of
customers. Under adverse conditions this may sap buying propensity with the consequential repercussions on sales and earnings.
Vigilance and a responsible response to all the typical business risks are ensured by
the MAN Groups binding rules, procedures and principles and, especially, risk awareness on the part of all the employees of the RENK Group.
Assessment of the RENK Groups risk situation

On the basis of the risk management system set up by the MAN Group, the Executive
Board notes that at the present time no risks are identifiable that might have a substantial and sustained adverse impact on the asset and capital structure, financial
position and/or results of operations of the RENK Group. The risk management system introduced and the related organizational mechanisms allow the Executive Board
to initiate adequate measures when perceiving any risk situation.
61
Management report

No events occurred after the balance sheet date of major significance to the RENK
Group and possibly leading to a reassessment. Business at the start of 2008 endorses
the statements contained in the Outlook chapter.
Installing the pinion on a turbo gear unit
62
Outlook
The mechanical engineering sectors bulging order books are reasons for looking
ahead confidently into 2008. Even if demand momentum for plant and machinery
does ease over the course of the year, production gains in the region of 5 percent are
again anticipated in the German mechanical industry.
For RENKs divisions the situation is as follows:
Based on the current order backlog, Vehicle Transmissions commands potential for
repeating the very high prior-year sales and earnings, provided nothing unexpected
happens. With follow-up orders not yet placed, we expect starting 2009 a temporary
set-back in business.
Despite the identifiable economic risks, order books are well filled beyond 2008 at
the large customers of the electrical industry sourcing their products from Drive
Elements. Given the capacity expansion expenditures at Hannover, we expect 2008
to show a continuation of growth, reflected in earnings, too.
Given the high level of capacity utilization at Special-Purpose Propulsion Systems,
the prospects for 2008/2009 here, too, are bright. The fact that even last year we were
stretched to the limits of our capacity is the sole obstacle preventing any substantial
growth in sales. We identify solid market opportunities for 5-MW wind energy gear
units, a market in which our technology is solidly positioned.
In the market for Broad-Use Propulsion Systems, we likewise reckon with a continuation of the congenial order and earnings situation beyond 2008. This upbeat assessment is based, on the one hand, on the existing high order backlogs for marine gear
units, well above twofold annual sales 2007 and, on the other, on the predictions by
the relevant trade associations. Additionally, with our range of couplings, we will in
the medium term access the growth opportunities offered by the European market.
With its broad application spectrum, our Test Systems division is well braced for the
coming fiscal years 2008/2009. Here, too, unconsolidated order backlog as of December 31, 2007, was equivalent to sales for a good two years. In the market for commercial/special-purpose vehicle applications we also observe rising expenditure propensity.
Summarizing, the RENK Group is seen to have opportunities, with sales slightly
mounting, of repeating the very strong earnings of 2007 in 2008. In terms of order
intake, we expect at least one megacontract at Vehicle Transmissions. If this materializes, there is the possibility of order intake topping the 0.5 billion level.
63
Management report
Outlook
Our capital expenditures will focus on the planned growth at Large-Gear Units in
Rheine. Work initiated on expanding the production area at Hannover will be completed. These extensions to our in-house capacities will lay the foundations for implementing our growth strategy. The expenditures earmarked can be fully funded from
the cash flow from operating activities.
This management report contains anticipatory statements and informationin
other words, statements concerning future not past events. Such statements are
identifiable by such words as expect, anticipate, intend, plan, budget, believe,
aim, assess/estimate, become, etc. Such anticipating statements are founded on
present expectations and specific assumptions and, as such, are accompanied by a
string of risks and uncertainties. There are a host of factorsmany beyond RENKs
controlthat impact on RENKs business operations, success, business strategy, and
performance. Such factors might mean that the actual results, success and performance on the part of the RENK Group significantly deviate from the anticipative,
either express or implied statements regarding results, successes, or performance.
64
Consolidated subsidiaries
CORPORATE INFORMATION
Company
Stake
%
2007
2006
Equity
mill.
2007
2006
Sales
mill.
2007
2006
Operating
profit/(loss)
2007
2006
Year-end
headcount
2007
2006
RENK Test System

GmbH, Augsburg
100
100
3.0
1.6
15.8
13.4
1.9)
1.4
65
62
100
100
0.5
1.5
19.6
12.4
(0.7)
0.7
61
70
100
100
2.5
2.9
11.0
8.9
0.4)
0.6
11
12
Socit d'Equipements,
Systmes et Mcanismes
Saint-Ouen-l'Aumne,
France (SESM)
RENK Corporation
Duncan, US
65
Consolidated subsidiaries
RENK Test System GmbH, Augsburg

For details on the economic situation refer to page 54, Management Report.
Socit dquipements, Systmes et Mcanismes (SESM), France

No follow-up orders were booked during fiscal 2007 for the SESM product ranges and
hence, order intake was limited to 5 million (down from 8 million).
In terms of sales, the company reported a substantial improvement, up from 12.4
million to 19.6 million.
The chief source of business was the shipment of ESM 350 transmissions to our Polish
customer Bumar for the PT91M vehicle, Malaysia. At the start of the year, the vehicle
tests were successfully completed in Malaysia. This was followed by the release for
shipment on the part of the end customer. In line with expectations, around 30 transmissions were shipped out in 2007, approximately one-half of the total contract volume. The second half is due for shipment in 2008. Series production start-up problems eroded earnings at SESM.
The ESM 350 is an ultramodern automatic transmission engineered for so-called
T-vehicles (T72 and others). In our view, these vehicles will continue to constitute
an important market segment. Following the successful experience with the new
transmission in the Bumar/Malaysia product, we identify in the mid and long term
significant potential for this transmission in numerous markets. In an important
Asian market, a letter of intent was signed for a new project involving a version of
the ESM 350.
Service revenue receded temporarily in 2007 due to the phaseout of demand for
ESM 500 transmissions on the part of the French army in the wake of organizational
changes. Most welcome, therefore, was the acquisition of a further service contract. In
future, SESM will also service the ENC 200 transmission series of the French AMX 30
vehicles. For the years ahead we expect service revenue to remain stable.
A modified ESM 500 transmission underwent comprehensive vehicle testing by an
Asian customer in 2007. From our vantage point, the trials proved successful and will
be completed in February 2008, possibly leading to a contract award before the end of
this year.
66
RENK Corporation, USA

The Drive Elements unit again benefited in 2007 from the high capacity utilization at
the US customers served by RENK Corporation. Growth drivers were, just as worldwide
in standard-product business, especially the electrical machinery industry and manufacturers of power plant ventilations systems. Project business was derived for followup orders for specialty bearings in marine applications. In all, the situation resulted in
an order intake growth of 15 percent to 11.4 million and a sales rise of 24 percent to
11.0 million.
Achieving these increase rates was a continuous challenge given the massive delivery
problems on the global procurement markets.
Our customers continue to report demand for our products. We cannot rule out,
however, that the problems on the financial markets will also bear on real economic
growth in the USA.
67
Installing the electronic controls on a marine gear unit.
68
RENK stock
Dividend raised to
2.00 per share
RENK STOCK INDICATORS

Price at Dec. 31
2007
2006
58.00
38.60
Earnings per share (EpS)
5.83
2.97
Cash dividend per share
2.00
1.80
Market capitalization
1)
mill.
Price-earnings ratio (PER)

Dividend yield
2)
Aggregate yield
3)
Total shares outstanding at Dec. 31

1) based on 7 million shares
2) related to the annual closing price
3) all-in return if reinvesting the
the cash dividend at the
the post-AGM month-end
406
270
9.95
13.00
3.4
4.7
55.0
32.1
6,800,097
6,800,097
69
RENK stock
Another good stock market year in Germany

Even through the global economy again showed strong growth in 2007, the economic
prospects dampened in the latter half of the year due to the stepped-up interest rates
on the credit markets, higher energy costs and an aggravation of the property market
crisis in the United States. Also having a malevolent effect on the economic climate
was the soft dollar.
Despite this, the DAX German stock market index again delivered an excellent performance over the year as a whole. At year-end 2007, it had topped 8000, a level last
exceeded in March 2000.
Exceptionally strong performance by RENK stock

The past stock market year was a particularly rewarding period for our stockholders.
At the end of September 2007, RENK stock had shown significant growth, driven by
the much improved profitability of the Group and the excellent business situation
throughout the divisions. Factors contributing to this solid performance are the
unquenchable thirst for our products and services in the markets for propulsion
technology and the further success in our cost-reduction efforts.
For the period of January through December 2007 and measured against a price
of 38.60 at December 29, 2006, RENK stock surged 19.40 to reach 58.00 as of
December 28, 2007. In all and for the full twelve months, RENK stock achieved a
solid gain of 50 percent. During the same period, the DAX rose 22 percent and the
Dow Jones EURO STOXX 7 percent.
RENK stock closing prices from Dec. 29, 2006, to Dec. 28, 2007 (e)
82.75
58.00
38.60
70
Encasing a twin marine gear unit for an LNG tanker when lowering the top section.
71
RENK consolidated financial statements
RENK consolidated financial

statements (abridged)
for the fiscal year ended
December 31, 2007
Contents
72
73
74
75
76
Income statement
Balance sheet
Cash flow statement
Six-year overview
Auditors opinion
The consolidated financial statements and group management report for the fiscal
year ended December 31, 2007, were audited by the statutory auditor, viz. KPMG
Deutsche Treuhand Gesellschaft Aktiengesellschaft, Wirtschaftsprfungsgesellschaft,
Munich, which issued its unqualified opinion thereon.
The full consolidated financial statements (including the notes thereto) are available at www.renk.eu under
Investor Relations; they will also be sent out on request.
The full annual financial information is published in German language in the digital version of the Federal
Gazette.
72
Consolidated income statement

for fiscal 2007
k
2007)
2006)
Net sales
430,382)
356,190)
Cost of sales
(325,129)
(286,669)
Gross margin
105,253)
69,521)
8,127)
4,477)
Selling expenses
(22,268)
(20,270)
General administrative expenses
(11,525)
(11,130)
Other operating expenses
(12,015)
(5,848)
810)
67,572)
37,560)
Other operating income
Net investment income

EBIT
Interest income
1,231)
742)
Interest expense
(2,586)
(3,384)
EBT
66,217)
34,918)
Income taxes
(26,549)
(14,708)
Net income (EAT)
39,668)
20,210)
5.83)
2.97)
EpS ()
73
Consolidated balance sheet as of December 31, 2007

ASSETS
k
Intangible assets
Tangible assets
12/31/2007)
12/31/2006)
1,081)
896)
63,082)
57,057)
Sundry investments
3,065)
1,767)
Deferred tax assets
6,298)
10,740)
Other noncurrent assets
1,722)
2,024)
Total noncurrent assets
75,248)
72,484)
149,671)
139,098)
97,487)
87,652)
Inventories
Trade receivables
Income tax assets
3,564)
2,771)
Other current assets
4,032)
4,010)
Cash and cash equivalents

Total current assets
10,461)
41,752)
265,215)
275,283)
340,463)
347,767)
12/31/2007)
12/31/2006)
EQUITY & LIABILITIES

k
Capital stock
17,920)
17,920)
Additional paid-in capital
10,669)
10,669)
Reserves retained from earnings
72,063)
58,507)
Net earnings
23,001)
9,129)
(380))
21)
(4,774)
(7,021)
118,499)
89,225)
Accumulated OCI: unrealized gains/losses

Accumulated OCI: statement at fair value
of pension accruals
Total equity
Noncurrent financial liabilities
136)
544)
Pension accruals
4,526)
71,833)
Deferred tax liabilities
6,459)
6,495)
Other noncurrent accruals
5,007)
8,709)
Other noncurrent liabilities
1,161)
1,342)
17,289)
88,923)
Total noncurrent liabilities and accruals

Current financial liabilities
408)
370)
Trade payables
30,815)
27,733)
Prepayments received
88,683)
80,976)
Current income tax liabilities
24,349)
11,460)
Other current accruals
42,086)
32,488)
Other current liabilities
18,334)
16,592)
204,675)
169,619)
340,463)
347,767
Total current liabilities and accruals
74
Consolidated statement of cash flows

for fiscal 2007
k
2007)
2006)
Opening cash and cash equivalents
41,752)
41,635)
EBT
66,217)
34,918)
Legal taxes
(24,808)
(14,790)
Depreciation/amortization/write-down of tangibles,
intangibles and investments
8,287)
7,508)
Increase in pension accruals
1,599)
2,147)
51,295)
29,783)
Increase in inventories
(6,389)
(17,672)
Increase in prepayments received
4,763)
24,272)
Increase in trade receivables
(7,430)
(20,942)
Increase in trade payables
2,720)
1,147)
Increase in other accruals
Cash earnings
3,341)
4,525)
(Increase)/decrease in other assets
275)
(1,206)
Increase/(decrease) in other liabilities
837)
(390)
Elimination of the net gain/loss from the disposal of

tangibles, intangibles and investments
17)
Other changes in working capital
11,169)
4,717)
60,598)
24,234)
Cash outflow for additions to tangibles and intangibles
(14,582)
(16,746)
(1,792)
179)
5,090)
(16,195)
(11,656)
Dividends paid out
(12,240)
(8,160)
(370)
(4,289)
Cash outflow for additions to investments

Cash inflow from the disposal of tangibles, intangibles
and investments
Financial liabilities redeemed

Special pension fund endowment
(65,364)
(77,974)
(12,449)
Net change in cash and cash equivalents
(33,571)
129)
(17)
(12)
Parity-related change in cash and cash equivalents

Consolidation group-related change in cash and cash equivalents
Closing cash and cash equivalents
2,297)
10,461)
41,752)
10,461)
41,752)
Breakdown of net liquid assets at Dec. 31

Financial liabilities
(544)
(914)
9,917)
40,838)
The cash flow from operating activities includes interest received at k1,231 (up from
k742), interest paid at k118 (down from k461), and income taxes paid at k12,678
(up from k11,588).
75
We represent that, to the best of our knowledge and in accordance with
applicable accounting principles, the consolidated financial statements
present a true and fair view of the RENK Groups asset and capital structure, financial position and results of operations, as well as that the group
management report describes fairly, in all material respects, the Groups
business trend and performance, the Groups position, and the significant
risks and rewards of the Groups future development.
With a view to ensuring the reliability of data for the preparation of the
consolidated financial statements and group management report as well
as for internal reporting purposes, an effective internal control system has
been installed that includes not only groupwide uniform accounting and
risk management guidelines in accordance with KonTraG (German Act on
Corporate Control & Transparency) but also an integrated controlling concept as part of a shareholder value approach, besides involving examinations and reviews by Internal Auditing. The Executive Board is thus enabled
to identify and counteract significant risks early on.
As resolved by the annual meeting of RENK AGs stockholders, the Supervisory Board has appointed KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft, as statutory auditor for fiscal 2007. KPMG has audited the
IFRS-based consolidated financial statements and issued its unqualified
opinion thereon.
The consolidated financial statements, the information underlying the
group management report, the audit conclusions, and the risk management system have all been discussed in depth together with group auditor
staff.
RENK AG
February 8, 2008
Florian Hofbauer
Ulrich Sauter
76
Six-year overview
million
2002)
2003)
2004)
2005)
2006)
Order intake
305)
324)
264)
314)
417)
2007)
439)
from Germany
140)
135)
135)
124)
180)
199)
from abroad
165)
189)
129)
190)
237)
240)
Sales
255)
267)
272)
307)
356)
430)
in Germany
106)
96)
94)
116)
130)
165)
abroad
149)
171)
178)
191)
226)
265)
585)
639)
609)
612)
672)
684)
Germany
116)
154)
197)
204)
254)
287)
abroad
469)
485)
412)
408)
418)
397)
Employees
Headcount at Dec. 31
1,531)
1,544)
1,493)
1,504)
1,575)
1,728)
Annual average headcount
1,537)
1,542)
1,514)
1,500)
1,550)
1,695)
56,563)
58,340)
59,925)
60,615)
65,910)
65,224)
11)
7)
9)
12)
17)
15)
7)
7)
7)
8)
8)
8)
Cash earnings
23)
26)
20)
28)
30)
52)
27)
(4)
28)
25)
24)
61)
15.7)
Personnel expenses per capita ()

Capital expenditures and funding
Tangible and intangible assets
Key indicators/ratios in %
ROS
9.7)
7.5)
7.7)
9.5)
10.5)
ROCE (redefined 2004)
22.5)
17.4)
20.7)
26.4)
28.9)
47.2)
Equity ratio
24.8)
26.1)
26.9)
25.7)
25.6)
34.7)
Earnings per share (EpS, acc. to IAS 33) ()
1.92)
1.59)
1.67)
2.19)
2.97)
5.83)
Dividend per share ()
1.20)
1.20)
1.20)
1.20)
1.80)
2.00)
10.42)
15.41)
15.86)
14.00)
13.00)
9.95)
RENK share data
Price-earnings ratio (PER)

Balance sheet data
Noncurrent assets
Inventories
57)
52)
61)
65)
72)
75)
116)
123)
122)
122)
139)
150)
105)
65)
78)
62)
71)
95)
52)
31)
41)
42)
42)
10)
Equity
72)
74)
77)
77)
89)
118)
Pension accruals
53)
55)
56)
70)
72)
5)
Other noncurrent liabilities and accruals
15)
15)
14)
11)
17)
12)
78)
70)
63)
57)
81)
89)
Other current liabilities and accruals
72)
70)
76)
85)
89)
116)
290)
284)
286)
300)
348)
340)
Total assets/total capital

Income statement data
Net sales
255)
267)
272)
307)
356)
430)
Cost of sales
(199)
(212)
(218)
(245)
(286)
(325)
Gross margin
56)
55)
54)
62)
70)
105)
Other operating expenses/income, net
(31)
(35)
(33)
(33)
(32)
(37)
25)
20)
21)
29)
38)
68)
(2)
(2)
(2)
(3)
(3)
(1)
Earnings before taxes (EBT)
23)
18)
19)
26)
35)
67)
Income taxes
(10)
(7)
(8)
(11)
(15)
(27)
Net income (EAT)
13)
11)
11)
15)
20)
40)
Net interest expense
77
A RENK Suprex gear unit being readied for shipment.
78
A 70-t Suprex gear unit on a low-bed trailer for transport to the customer
79
Products and services

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

Gear units for the cement industry. Spur-wheel and planetary gear units for turbomachines especially for the petrochemical industry and power generating plants. Highspeed gear units for the plastics industry. Gear units for wind turbines.
Marine gear units

Gear units for merchant vessels, ferries, cruise liners and naval craft with diesel engine
and/or turbine as well as electric propulsion, marine reversing gear units, reduction gear
units and variable-speed gears for ship generators.
Slide bearings
Standard and special versions of horizontal and vertical slide bearings for electrical
machines, air blowers/fans, compressors, pumps, turbines, and general mechanical
engineering. Slide bearings for transmissions. Marine shaft bearings and thrust bearings.
Clutches and couplings

Curved-tooth couplings for industry, marine and ocean technology, as well as for railbound vehicles; multidisk steel clutches for slow- and high-speed industrial duties,
diaphragm couplings for high-speed machinery, safety couplings. Torsionally elastic
couplings.
Testing systems
Testing rigs for development and quality assurance in the motor vehicle and aviation
industries as well as for railroad engineering.
The MAN Group

MAN Nutzfahrzeuge
MAN Diesel
applications
MAN NUTZFAHRZEUGE
million
2007
2006
Order intake
12,684
10,103
Sales
10,410
8,685
1,039
698
36,591
36,206
10.0
8.0
Operating profit
ROS (%)
*
MAN DIESEL
million
2007
2006
Order intake
3,371
2,619
Sales
2,179
1,802
Operating profit
ROS (%)
*
313
229
7,383
6,862
14.4
12.7
MAN TURBO
and Italy.
reactors
MAN TURBO
million
MAN Ferrostaal
MAN FERROSTAAL
million
2007
2006
Order intake
1,454
1,498
Salestz
1,108
908
Operating profit
ROS (%)
*
104
71
4,011
3,545
9.4
7.8
2007
2006
Order intake
1,556
1,982
Sales
1,445
1,379
Operating profit
ROS (%)
*
179
119
4,687
4,879
12.4
8.6
RENK AG
Ggginger Str. 73
Phone (+49-821) 5700-0
Fax (+49-821) 5700-573
www.renk.eu
2007
At a glance
EpS: 5.83 (up from 2.97)
RENK GROUP
million
2007)
2006)
Rel. change)
Order intake
439)
417)
+5)
Net sales
430)
356)
+21)
684)
672)
+2)
in %)
Order backlog
Headcount
1)
1)
1)
1,728)
1,575)
+10)
1,854)
1,654)
+12)
Abs. change)
in million)
68)
38)
+30)
EBT
66)
35)
+31)
Net income (EAT)
40)
20)
+20)
5.83)
2.97)
+2.86)
15.7)
10.5)
47.2)
28.9)
17)
17)
8)
8)
Cash earnings
Annual Report
RENK AG
2007
5)
1)
30)
+21)
+37)
61)
24)
(16)
(11)
5)
Free cash flow
45)
13)
+32)
118)
89)
+29)
Equity
(abridged)
4)
51)
1)
FINANCIAL DIARY
April 30, 2008)

May 8, 2008)
July 30, 2008)
October 30, 2008)
February 19, 2009)
May 12, 2009)

statements for the fiscal year
ended December 31, 2007
03

statements for the fiscal year
ended December 31, 2007
Contents
04
05
06
07

Consolidated balance sheet
Consolidated cash flow statement
Statement of changes in comprehensive income
08
08
17
22
33
47
RENK Group: notes to the financial statements

Accounting principles
Notes to the consolidated income statement
Notes to the consolidated balance sheet
Other financial information
Membership of Supervisory and Executive Board members
in other statutory boards or equivalent
Auditors opinion
The consolidated financial statements and group management report for the fiscal
year ended December 31, 2007, were audited by the statutory auditor, viz. KPMG
Deutsche Treuhand Gesellschaft Aktiengesellschaft, Wirtschaftsprfungsgesellschaft,
Munich, which issued its unqualified opinion thereon.
04

for fiscal 2007
k
Note
Net sales
[6]
2007)
2006)
430,382)
356,190)
(325,129)
(286,669)
105,253)
69,521)
8,127)
4,477)
Selling expenses
(22,268)
(20,270)
General administrative expenses
(11,525)
(11,130)
(12,015)
(5,848)
810)
67,572)
37,560)
Cost of sales
Gross margin
Other operating income
Other operating expenses
[7]
[8]
Net investment income

EBIT
Interest income
[9]
1,231)
742)
Interest expense
[9]
(2,586)
(3,384)
66,217)
34,918)
(26,549)
(14,708)
39,668)
20,210)
5.83)
2.97)
EBT
Income taxes
[10]
Net income (EAT)

EpS ()
[11]
05
Consolidated balance sheet as of December 31, 2007

ASSETS
k
Note
12/31/2007)
12/31/2006)
Intangible assets
[14]
1,081)
896)
Tangible assets
[15]
63,082)
57,057)
Sundry investments
3,065)
1,767)
Deferred tax assets
[10]
6,298)
10,740)
[18]
1,722)
2,024)
75,248)
72,484)
Total noncurrent assets

Inventories
[16]
149,671)
139,098)
Trade receivables
[17]
97,487)
87,652)
3,564)
2,771)
Income tax assets

[18]
4,032)
4,010)
[19]
10,461)
41,752)
265,215)
275,283)
340,463)
347,767)
Total current assets
EQUITY & LIABILITIES

k
12/31/2007)
12/31/2006)
Capital stock
Note
17,920)
17,920)
Additional paid-in capital
10,669)
10,669)
Reserves retained from earnings
72,063)
58,507)
Net earnings
23,001)
9,129)
(380))
21)
(4,774)
(7,021)
118,499)
89,225)
Accumulated OCI: unrealized gains/losses

Accumulated OCI: statement at fair value
of pension accruals
Total equity
[20]
Noncurrent financial liabilities
[23]
136)
544)
Pension accruals
[21]
4,526)
71,833)
[10]
6,459)
6,495)
Other noncurrent accruals
[22]
5,007)
8,709)
[26]
1,161)
1,342)
17,289)
88,923)
Total noncurrent liabilities and accruals

Current financial liabilities
[23]
408)
370)
Trade payables
[24]
30,815)
27,733)
[25]
88,683)
80,976)
Current income tax liabilities
24,349)
11,460)
Other current accruals
[22]
42,086)
32,488)
[26]
18,334)
16,592)
204,675)
169,619)
340,463)
347,767
Total current liabilities and accruals
06
Consolidated statement of cash flows

for fiscal 2007
k
2007)
2006)
Opening cash and cash equivalents
41,752)
41,635)
EBT
66,217)
34,918)
Legal taxes
(24,808)
(14,790)
intangibles and investments
8,287)
7,508)
Increase in pension accruals
1,599)
2,147)
51,295)
29,783)
Increase in inventories
(6,389)
(17,672)
Increase in prepayments received
4,763)
24,272)
Increase in trade receivables
(7,430)
(20,942)
Increase in trade payables
2,720)
1,147)
Increase in other accruals
Depreciation/amortization/write-down of tangibles,
Cash earnings
3,341)
4,525)
(Increase)/decrease in other assets
275)
(1,206)
Increase/(decrease) in other liabilities
837)
(390)
Elimination of the net gain/loss from the disposal of

tangibles, intangibles and investments
17)
Other changes in working capital
11,169)
4,717)
60,598)
24,234)
Cash outflow for additions to tangibles and intangibles
(14,582)
(16,746)
(1,792)
179)
5,090)
(16,195)
(11,656)
Dividends paid out
(12,240)
(8,160)
(370)
(4,289)
Cash outflow for additions to investments

Cash inflow from the disposal of tangibles, intangibles
and investments
Financial liabilities redeemed

Special pension fund endowment
(65,364)
(77,974)
(12,449)
Net change in cash and cash equivalents
(33,571)
129)
(17)
(12)
Parity-related change in cash and cash equivalents

Consolidation group-related change in cash and cash equivalents
Closing cash and cash equivalents
2,297)
10,461)
41,752)
10,461)
41,752)
Breakdown of net liquid assets at Dec. 31

(544)
(914)
9,917)
40,838)
The cash flow from operating activities includes interest received at k1,231 (up from
k742), interest paid at k118 (down from k461), and income taxes paid at k12,678
(up from k11,588).
07
Statement of changes in comprehensive income in 2007

k
Currency translation differences from non-German subsidiaries

Change in fair value of financial derivatives
Change in actuarial gains/losses on pensions
Pretax gains/losses directly recognized in equity, net
12/31/2007)
12/31/2006)
(301)
(182)
(100)
156)
2.247)
457)
1,846)
431)
Net income
39,668)
20,210)
Comprehensive income
41,514)
20,641)
08
Notes to RENKs consolidated financial statements

Accounting principles
(1)
General
RENK AG is a subsidiary of Munich-based MAN Maschinen- und Anlagenbau GmbH
(which is wholly owned by MAN AG, Munich) and is included as a second-tier subsidiary of MAN AG in the latters consolidated financial statements.
The subject consolidated financial statements for the fiscal year ended December 31,
2007, conform with all the International Financial Reporting Standards (IFRS, which
include the International Accounting Standards, or IAS) of the International Accounting Standards Board (IASB), London, UK. Moreover, all such Interpretations of the
International Financial Reporting Interpretations Committee (IFRIC) as require application in fiscal 2007 have been duly taken into account. All the Standards adopted by
the Commission of the European Union (EU) have been applied.
(2)
Consolidation
(a) Consolidation group
As in the previous year, too, RENKs consolidation group includes, besides RENK AG
as parent, two wholly owned subsidiaries, viz. Socit dquipements, Systmes et
Mcanismes (SESM), Saint-Ouen-lAumne, France, and RENK Corporation (RC),
Duncan, OK, USA, as well as RENK Test System GmbH, Augsburg (RTS), which was
newly consolidated in 2007.
The subsidiaries not included in the consolidated financial statements are, even in
the aggregate, of minor significance for the RENK Groups asset and capital structure,
financial position, or results of operations.
A complete listing of the RENK Groups shareholdings is deposited with the Commercial Register of the Augsburg Local Court under number HRB 6193.
(b) Consolidation principles

The consolidated financial statements are based on the financial statements of consolidated RENK subsidiaries as prepared in accordance with MANs groupwide uniform
accounting and valuation principles.
09
The purchase method is used for capital consolidation. The book values of assets and
liabilitiesparticularly intangible assetsin the acquirees accounts are reviewed
and, on certain conditions, re-accounted for and/or restated to their fair value. Any
difference between the purchase cost of the acquiree and the prorated equity is allocated to one or more cash-generating units (CGUs) and capitalized as goodwill. The
CGU including the assigned goodwill is tested for impairment at least once annually
and, if found impaired, written down to its current fair value.
All intercompany accounts (profits, gains, losses, income, expenses, receivables and
payables) among companies included in the consolidated financial statements, as
well as intercompany profits/losses from intragroup transfers of inventories and noncurrent assets, are all eliminated. Deferred taxes are calculated for consolidation
transactions recognized in net income.
(c) Currency translation

The consolidated financial statements are prepared in euros (), the short k designating 000. The functional-currency method is used to translate the financial statements of non-Euroland companies. Balance sheet lines are translated at the current,
and income statement captions at the annual average, rates. The annual average rates
are derived from the monthly means.
In the analyses of assets, accruals and equity, the fiscal year's opening and closing
balances as well as consolidation group changes are translated at the applicable current rates, while for the remaining balance sheet lines, the annual average rates are
used. Differences from the prior-year currency translation of balance sheet captions
are recognized in equity only (OCI).
The euro () exchange rates of major currencies are as follows:

CURRENCY TRANSLATION RATES
Current rate of 1 at
Average rate of 1 in
12/31/2007
12/31/2006
2007
2006
US dollar
1.4721
1.3170
1.3733
1.2572
Japanese yen
164.93
156.93
161.77
146.05
10
(3)
Accounting and valuation

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

Operating expenses are recognized when the underlying products or services are
utilized, whereas expenses for advertising and sales promotion and other sale-related
expenses are recognized when incurred. Cost of sales breaks down into the production
cost of goods sold and the purchase cost of merchandise sold. In addition to direct
materials and direct labor, production cost also comprises production-related overheads, including the depreciation of production plant and equipment.
Warranty obligations are accrued when the products are sold. Research expenses, as
well as interest and other cost of debt, are directly expensed in the period.
(c) Intangible assets

Separately acquired intangible assets are capitalized at purchase cost. According to
IFRS 3, intangibles acquired in a business combination are capitalized at fair value as
of the acquisition date. Finite-lived intangibles are amortized on a straight-line basis
over their useful lives. The amortization range of software varies between three and
five years, while licenses and similar rights or assets are amortized over the agreed
or contractual term of use. Intangible assets whose useful life cannot be determined
are not amortized but tested at least once annually for impairment. If found impaired,
they are written down to their current fair value. To this end, the value in use and/or
net fair value (NFV; i.e., fair value less costs to sell) are contrasted to an assets book
value. If the fair value of an intangible asset previously written down rebounds, the
intangible asset (other than goodwill) is written up accordingly. No goodwill was capitalized as of December 31, 2007.
Expenses incurred for developing new products or series are capitalized (i) when the
new products or series are found technically and economically feasible, (ii) when they
have been scheduled for internal use or marketing, (iii) if the expenses can be reliably
determined, and (iv) if sufficient resources are available for development project
completion, any other R&D expenditures being directly expensed. Development
11
expenditures are not capitalized unless future cash inflows are highly probable to
recover them. Capitalized development costs are amortized as from the date of market rollout. Amortization is charged on a straight-line basis, as a rule over five to seven
years. No development costs were capitalized as of December 31, 2007.
(d) Tangible assets

Tangible assets are carried at historical (purchase or production) cost, less accumulated depreciation and, where appropriate, write-down. The production cost of internally manufactured tangibles includes all direct costs (labor and materials), as well
as prorated indirect materials and indirect labor.
Unless subject to capitalization, maintenance and repair (M&R) costs are expensed,
as are interest costs in the period of their incurrence.
Tangible assets are depreciated according to the straight-line method over their estimated useful lives. Tangibles whose fair value has decreased below net book value are
written down to their current fair value. If the fair value of an asset previously written
down rebounds, the asset is written up accordingly.
The groupwide uniform asset depreciation ranges are based on the following useful
lives:
Buildings
20 to 50 years
Land improvements
8 to 20 years
Production plant and machinery
5 to 15 years
Factory and office equipment
3 to 10 years
(e) Leasing
Leases for tangible assets (investment leases) may either be capital or operating leases.
Contracts where substantially all the risks and rewards incidental to beneficial ownership of the leased asset are transferred to RENK as lessee are capitalized and therefore
treated as capital leases (a.k.a. finance leases). In these cases, the lessee capitalizes the
leased asset and recognizes a corresponding financial liability, while the lessor capitalizes a receivable under capital leases. Valuation is based on (i) the present value of the
minimum lease payments or (ii) the leased assets fair value, whichever is lower. All
other leases where companies of the RENK Group are lessees are accounted for as
operating leases, the lease payments being expensed.
12
(f) Inventories
Inventories are stated at the lower of (purchase or production) cost or net realizable
value. Production cost includes all manufacturing-related direct costs, as well as
proratable fixed and variable indirect materials and indirect labor. The allocable
overheads are mostly determined on a normal workload basis; in all other cases, their
allocation is based on the actual, if corresponding to the normal, capacity utilization
rate. General administrative and selling (GAS) expenses are not capitalized, nor are
any debt interest costs.
Raw materials and merchandise are generally priced at average purchase cost.
(g) Straight financial instruments

Straight financial instruments mainly include trade receivables from customers,
long-term loans, financial investments, securities, cash and cash equivalents, as well
as financial liabilities and trade payables. Straight financial instruments are initially
capitalized or recognized at cost and in subsequent periods carried at fair value or
amortized cost, depending on the category to which they are assigned
Loans and receivables held for purposes other than trading are generally carried at
amortized cost. Within the RENK Group, this category primarily includes trade receivables from customers, the remaining receivables, and long-term loans. Non- or lowinterest receivables with a remaining term above 3 months are discounted. Receivables expected to be uncollectible are fully written off (specific bad-debt allowance).
A flat allowance for doubtful accounts provides for the general collection risk and is
charged to the receivables portfolio, substantially on the basis of empirical data.
Financial liabilities are initially recognized at cost and thereafter carried at amortized
cost, except for financial derivatives.
(h) Financial derivatives

The MAN Group uses various financial derivatives to hedge current or planned/forecasted underlyings against currency risks. Major financial derivatives of relevance to
the RENK Group are currency forwards and forex options.
Financial derivatives are measured at fair (market) value. Fair value of currency forwards is determined on the basis of the forward rate as of December 31 for the remaining term of each contract in relation to the contracted forward rate. We determine the
fair market value of forex options by means of generally accepted option pricing techniques, key factors being the residual term, the reference interest rate and the current
exchange rate and its volatility. If their fair value is positive, financial derivatives are
shown within other current assets and, if negative, as other current liabilities.
13
For derivative financial instruments that bear a hedging relationship, the changes in
fair value in the fiscal year are recognized in accordance with the underlying hedge
type.
If the currency forward hedges an effective, firmly contracted underlying (including,
without being limited to, an uncompleted contract or a trade receivable), this is a fair
value hedge (FVH). In this case, changes in the hedges and the underlyings fair values
are recognized in net income.
Cash flow hedges (CFHs) basically include upstream exchange rate hedges for future
revenue from series manufacture and for high-probability customer projects. In this
case, any change in fair value is recognized in a separate equity line (OCI) after deducting deferred taxes. When a trade receivable from a customer is capitalized, the hedged
transaction is henceforth treated as FVH.
Any financial derivatives failing to meet the requirements for a hedging relationship
are considered instruments held for trading, and for these, any differences from fair
value remeasurement are immediately and fully recognized in the income statement.
(i) Deferred taxes

Deferred tax assets and liabilities are recognized for temporary differences between
tax bases and book values, as well as for consolidation transactions recognized in
net income. Deferred taxes are calculated at the tax rates current at December 31 for
post-2007 assessment periods, in Germany, at 31.58 percent (down from 39.9).
Deferred tax assets are not recognized unless the attendant tax reductions will very
probably materialize. Wherever tax loss carryovers are realizable they are included in
deferred taxation.
(j) Pension accruals

Pension obligations are determined according to the projected unit credit (PUC)
method by measuring the defined benefit obligations on the basis of the prorated
entitlements acquired by the balance sheet date, discounting them to their present
value and duly taking into account assumptions of the future trend of certain parameters that impact on future pension levels.
The fair value of plan assets is deducted from pension accruals. For measurement
details, see Note (21). Actuarial gains and losses are recognized in, and only in, OCI,
after duly accounting for deferred taxes.
14
(k) Other accruals

The other accruals provide for all identifiable risks and uncertain commitments
whose materialization is more likely than not, at the best estimate of the amount
required for settlement. Warranty accruals provide for the obligations on the basis
of previously incurred warranty expenses, the warranty period and the sales of
warranted products, as well as for specific warranties for known claims. Accrued
costs yet to be billed, impending losses on uncompleted contracts and other business
obligations are provided for at the best estimate of future cash outflows, as a rule the
future production cost thereof. Noncurrent accruals are discounted. Accruals for obligations owed in kind are not discounted since they are measured at current prices.
(l) Estimates and latitude

Preparing the consolidated financial statements requires certain judgment, estimates
and discretionary decisions. Our estimates are based on empirical data and other
relevant factors, as well as on a going concern. Accounting estimates and assumptions
are made to the best of our knowledge and belief, with a true and fair view of the
Groups asset and capital structure, financial position and results of operations in
mind. Although valuation reasonably allows for identifiable uncertainties, future
events may differ from such estimates. Accounting estimates and assumptions are
periodically reviewed.
The following accounting estimates as of the closing date are of particular significance:
Pension and similar obligations are measured using actuarial methods which, in turn,
hinge on assumptions of discount rates, expected returns on plan assets, pay and pension trends, and mortality.
A changed market or business environment may considerably impact on these actuarial assumptions, actual pension and similar obligations thus differing substantially.
Since the Group operates in quite a number of countries it is also subject to a multitude of tax legislations and a plethora of different tax regulations. Actually expected
income taxes as well as deferred tax assets/liabilities must be predicted for each corporate taxpayer, und this again calls for assumptions (such as the interpretation of
complex tax regulations and the ability to earn sufficient taxable income, depending
on tax type and jurisdiction). Any departure of actual assessments from assumed factors may affect tax expense or deferred taxes.
15
Depending on the underlying transaction, the measurement of certain other accrued

liabilities and similar obligations may be sophisticated and require substantial judgment and a number of estimates. Management estimates of the probability and
amount required for the settlement are, inter alia, predicated on empirical and available technical data, cost trend predictions, potential warranty claims, and the cash
inflow from realization.
(4)
Cash flow statement

The cash flow statement breaks down cash flows into those from operating, investing
and financing activities. Effects of changes in the consolidation group and exchange
rates are eliminated in the lines concerned. The net (forex) parity-related change in
cash and cash equivalents is shown in a separate line. The indirect method is used to
determine the cash flow from operating activities.
In the cash flow from operating activities, the noncash operating expenses and income, as well as the net gain/loss from fixed-asset disposal are all eliminated. Cash
earnings are shown in a separate line and represent the cash flow change attributable
to the net income or loss for the year.
The cash flow from investing activities reflects the cash outflow for tangibles, intangibles, and investments. This cash outflow is offset against the cash inflow from the disposal of tangible/intangible assets and investments.
The cash flow from financing activities mirrors the cash dividends distributed, cash
inflow from and outflow for financial liabilities redeemed or newly raised, as well as
endowments of MAN Pension Trust e.V. and non-German pension funds or plans. Cash
and cash equivalents comprise cash on hand and in bank, as well as the receivables
from MANs intragroup finance transactions.
16
(5)
Changed accounting methods and rules

(a) Newly applied rules
Fiscal 2007 saw the initial application of IFRS 7, Financial Instruments: Disclosures, and
the amendments of IAS 1, Presentation of Financial Statements. The first-time application of the IFRS 7 and amended IAS 1 rules extended the scope of disclosures for financial instruments presented in the financial statements and for capital management,
cf. Notes (17) and (29), respectively.
Further newly applied rules refer to the Interpretations published by the IFRIC and
adopted by the EU. However, the newly applied IFRIC 9, Reassessment of Embedded
Derivatives, and IFRIC 10, Interim Financial Reporting and Impairment, have not
impacted significantly on accounting.
IFRIC 7, Applying the Restatement Approach under IAS 29, Financial Reporting in
Hyperinflationary Economies, and IFRIC 8, Scope of IFRS 2, do not affect the RENK
Group.
b) Newly issued rules adopted by the EU but not applied early

On November 30, 2006, the IASB issued IFRS 8, Operating Segments, which supersedes
the previous IAS 14, Segment Reporting. IFRS 8 requires companies to take the management approach to the reporting of financial information on segments. IFRS 8 must
be applied to fiscal years commencing on or after January 1, 2009. RENK expects the
application of IFRS 8 to potentially impact on the presentation of segment reports.
In November 2006, the IFRIC issued IFRIC 11, IFRS 2Group and Treasury Share Transactions, to be applied to fiscal years commencing on or after March 1, 2007. When
applied, the Interpretation is not believed to have any significant effect on the consolidated financial statements.
17
Notes to the consolidated income statement

(6)
SALES BY GEOGRAPHICAL MARKETS

k
2007
2006
Germany
165,065
129,719
Other EU
129,013
112,145
Other Europe
7,193
6,817
106,082
88,176
22,326
17,681
Africa
545
1,425
Australia and Oceania
158
227
430,382
356,190
Asia
Americas
SALES BY OPERATING DIVISIONS

k
Vehicle Transmissions
(7)
2007
2006
147,542
131,476
Drive Elements
79,086
64,110
Special-Purpose Propulsion Systems
93,065
85,464
Broad-Use Propulsion Systems
95,127
72,413
Test Systems
15,562
2,727
430,382
356,190
OTHER OPERATING INCOME

k
2007
2006
Income from the release of accruals
749
1,669
Gains from the disposal of tangible/intangible assets
125
38
Income from other trade business

Gains from foreign exchange and hedges
Miscellaneous
343
213
3,608
1,225
3,302
1,332
8,127
4,477
18
(8)
OTHER OPERATING EXPENSES

k
R&D
2007)
2006)
3,613)
4,717)
Provisions in the year
566)
646)
Allowances for and write-down of current assets
646)
(5,218)
Losses on foreign exchange and hedges
3,201)
1,590)
Miscellaneous
3,989)
4,113)
12,015)
5,848)
The other operating expenses comprise the expenses not assigned to any of the functional expense categories (primarily to cost of sales); R&D expenses reflect only such
portion as is contract-unrelated production cost. The miscellaneous other operating
expenses include functionally unallocable personnel expenses, as well as a multitude
of single items.
The allowances for (doubtful or bad) current assets also reflect write-down charged in
prior periods to inventories and now released.
(9)
NET INTEREST EXPENSE

k
2007)
Interest and similar income
Interest and similar expenses
Interest portion of addition to pension accruals
Expected return on plan assets
2006)
1.231)
742)
(118)
(461)
(3,131)
(2,923)
663)
(1,355)
(2,642)
A total k1,194 (up from k737) of interest income and k0 (virtually unchanged) of
interest expenses are allocable to MAN AG.
(10)
INCOME TAXES
The recognized income tax expense breaks down as follows:

k
2007)
2006)
25,282)
15,536)
(474)
(746)
1,700)
(49)
Current taxes
Germany
abroad
Deferred taxes
Germany
abroad
41)
(33)
26,549)
14,708)
19
The income tax expected for 2007 was calculated by applying a total 39.9 percent
(unchanged) to EBT for the assessment period 2007, this percentage being the combined result of municipal trade income tax at 18.4 percent, corporate income tax at
25.0 percent, solidarity surtax of 5.5 percent of corporate income tax less 4.9 percentage points for municipal trade income tax deductibility from the corporate income
tax assessment base. The Corporate Taxation Reform Act 2008 cuts down as from
fiscal 2008 the current tax rate in Germany to 15 percent (plus 5.5 percent solidarity
surtax thereon) while the average municipal trade tax burden will rise to 15.75 percent.
Therefore, the deferred taxes of German companies were calculated as of December 31,
2007, at a compound tax rate of 31.58 percent (down from 39.9). As the year before,
non-German income tax rate changes had in 2007 no significant effect on the overall
tax burden.
Reconciliation of expected to actual income tax expense:
k
2007)
%)
2006)
%)
EBT
66,217)
100.0)
34,918)
100.0)
Expected income tax
26,420)
39.9)
13,933)
39.9)
(120)
(0.2)
66)
0.2)
(12)
(0.1)
827)
1.3)
Foreign tax rate differentials

Tax-exempt income/gains
Nondeductible business expenses
Taxes for previous years and sundry
Actual tax expense
(578)
(0.9)
721)
2.1)
26,549 )
40.1 )
14,708 )
42.1 )
The actual tax expense includes nonperiod income taxes of k123. Taxes of k1,886
were deferred for actuarial gains/losses.
20
Allocation of deferred taxes to balance sheet lines:

k
12/31/2007
12/31/2006
4,103
7,173
Inventories and receivables
280
2,107
Other accruals
933
913
Sundry
982
547
6,298
10,740
4,040
4,046
623
569
Deferred tax assets

Pension accruals

Noncurrent assets
Inventories and receivables
Sundry
(11)
1,796
1,880
6,459
6,495
2007
2006
39,668
20,210
6,800
6,800
5.83
2.97
EARNINGS PER SHARE

Net income (k)
Weighted average number of shares outstanding (1,000)
Earnings per share ()
In accordance with IAS 33, the number of shares issued and outstanding is divided
into the Groups net income to obtain earnings per share (EpS). No unexercised stock
options existed to dilute earnings per share, at either December 31, 2007 or 2006.
(12)
Additional notes to the income statement

Cost of sales includes the following cost of materials:
k
Cost of raw materials, supplies, and merchandise purchased
Cost of services purchased
2007
2006
144,905
121,537
37,629
30,002
182,534
151,539
21
Personnel expenses break down as follows:

k
2007
2006
Wages and salaries
91,939
82,217
Social security taxes and pension expense
18,602
19,944
110,541
102,161
Pension expense totaled k1,099 (down from k3,394) and has been allocated to the
appropriate functional categories but it does not include the interest portion contained in the periods pension provision at k3,131 (up from k2,923).
In fiscal 2007, the RENK Groups headcount averaged 1,695 employees (up from 1,550).
Breakdown of amortization/depreciation:
k
Amortization of intangible assets
Depreciation of tangible assets
2007
2006
446
413
7,841
7,095
8,287
7,508
No write-down was charged to tangible or intangible assets in either 2007 or 2006.
(13)
Total fees of statutory auditor

Statutory auditor fees pursuant to Art. 185 clause 1(17) HGB:
k
(a) Fee for statutory audit
(
Incidentals
(b) Other certification/assurance and valuation services

(c) Other services
Total fees of statutory auditor
2007
2006
173
183
12
29
220
183
The incidentals charged for the annual audit 2006 were expensed in 2007.
22
Notes to the consolidated balance sheet

(14)
INTANGIBLE ASSETS
k
Licenses, software,)
similar rights and assets)
Gross book value at 1/1/2006
3,869)
Accumulated amortization
2,860)
Balance at 1/1/2006
896)
Additions
300)
Disposals
Amortization
)
(413)
Currency translation differences
Balance at 12/31/2006
896)
3,923)
3,027)
Balance at 1/1/2007
896)
Additions
631)
Disposals
Amortization
)
(446)

)
1,081)
)
4,533)
3,452)
The amortization charged to licenses, software, and similar rights and assets is
included in the appropriate functional expense categories, mainly cost of sales.
No write-down was charged in either 2007 or 2006.
23
(15)
TANGIBLE ASSETS
k
Land)
and)
buildings)
Production)
plant)
and)
machinery)
Other plant,)
factory)
and)
office)
equipment)
Prepay-)
ments on)
tangibles,)
construction)
in progress)
Tangible)
assets)
43,328)
91,500)
20,027)
3,518)
158,373)
Accumulated depreciation
25,187)
63,917)
16,462)
105,566)
18,141)
27,583)
3,565)
3,518)
52,807)
Additions
2,047)
9,784)
1,540)
3,075)
16,446)
Book transfers
2,162)
973)
(3,135)
(4,892)
(103)
(86)
(5,081)
(1,165)
(4,946)
(984)
(7,095)
(10)
(4)
(6)
(20)
21,175)
28,498)
4,012)
3,372)
57,057)
47,434)
94,159)
19,745)
3,372)
164,710)
26,259)
65,661)
15,733)
107,653)
21,175)
28,498)
4,012)
3,372)
57,057)
525)
6,596)
1,730)
5,260)
14,111)
(90)
3,433)
(16)
(3,372)
(45)
(1)
(134)
(42)
(177)
(1,229)
(5,418)
(1,194)
(7,841)
(10)
(4)
(9)
(23)
20,370)
32,971)
4,481)
5,260)
63,082)
47,796)
101,668)
21,284)
5,260)
176,008)
27,426)
68,697)
16,803)
112,926)
Balance at 1/1/2006
Disposals
Depreciation
Balance at 1/1/2007
Additions
Book transfers
Disposals
Depreciation
The depreciation charged to tangible assets is included in the appropriate functional

expense categories, mainly cost of sales. No write-down was charged in either 2007 or
2006.
24
(16)
INVENTORIES
k
Raw materials and supplies
Work in process and finished products
Prepayments made
12/31/2007)
12/31/2006
26,710)
27,723
118,210)
105,591
4,751)
5,784
149,671)
139,098
Inventories valued at k228,470 (up from k251,528) were in 2007 recognized as cost
of sales. Inventories of k7,068 were written down (down from k12,349), the writedown totaling k1,082 (down from k1,586).
(17)
TRADE RECEIVABLES
k
12/31/2007)
12/31/2006
89,077)
81,053
Due from nonconsolidated group companies
6,190)
4,645
Due from investees
2,220)
1,954
97,487)
87,652
Due from customers
k3,471 (up from k1,961) of trade receivables has a remaining term above one but
below five years. The remaining k94,016 (up from k85,691) is either not covered
by any lock-in (fixed-rate) agreements, or now falls due in less than one year.
Movement analysis of specific allowances for bad debts among trade receivables:
k
2007)
2006)
Balance at January 1
567)
892)
Added
433)
27)
(279)
(93)
(71)
Utilized
Reversed
Exchange rate effects
Balance at December 31
(2)
907)
567)
25
Movement analysis of the specific portfolio allowances for trade receivables:

k
2007)
2006)
505)
1,624)
Consolidation group changes
13)
Reversed
(60)
(1,116)
Balance at January 1
Exchange rate effects

1)
(3)
459)
505)
The table below breaks down overdue receivables not written down:
k
Not due
2007)
2006)
69,461)
66,090)
Past due for

30 days
12,807)
10,982)
3190 days
9,726)
4,028)
91-180 days
1,600)
2,308)
181360 days
2,170)
1,871)
>1 year
1,723)
2,373)
97,487)
87,652)
A portfolio allowance accounts for the default risks in these receivables. As of the
balance sheet date, there was no indication that any of the receivables either not
specifically allowed for, written down or then past due, would go bad.
We make credit insurance contracts to manage the default risk inherent in trade
receivables from customers, mainly by obtaining Hermes cover for export receivables.
26
(18)
OTHER ASSETS
k
12/31/2007
12/31/2006
1,294
963
Loans and other receivables from third parties
22
419
Non-income tax assets
53
Financial derivatives
Reserve from employers pension liability insurance
1,668
1,573
Advances, clearing account balances
1,153
1,561
Prepaid expenses and deferred charges
1,017
1,027
547
491
5,754
6,034
12/31/2007
12/31/2006
Sundry assets
The other assets are disclosed in these balance sheet lines:

k
1,722
2,024
4,032
4,010
Pursuant to IAS 39, financial derivatives are stated at fair value; most of them are
hedges against either currency risks in customer contracts or other forex risks.
(19)
CASH AND CASH EQUIVALENTS

k
Cash on hand and in bank
Due from MAN intragroup financing
12/31/2007
12/31/2006
287
10,174
41,747
10,461
41,752
The accounts due from MAN intragroup financing reflect receivables under MAN AGs
central cash-pooling system.
27
(20)
Stockholders equity
RENK AGs capital stock of 17,920,000 is divided into 7 million no-par shares. In the
year under review, 76 percent of RENK AGs capital stock was owned indirectly by
Munich-based MAN AG through MAN Maschinen- und Anlagenbau GmbH, Munich.
k
Capital
stock
Additional
paid-in
capital
Reserves
retained
from
earnings
Net)
earnings)
)
Accumu-)
lated OCI)
Total)
17,920
10,669
46,664
8,922)
(7,431)
76,744)
Net income (EAT)
11,843
8,367)
20,210)
Dividend payout
(8,160)
(8,160)
OCI from currency translation
(182)
(182)
Balance at Dec. 31, 2005
OCI from changes in unreal.

gains/losses
156)
156)
OCI from actuarial gains/losses
457)
457)
All other changes
17,920
10,669
58,507
9,129)
(7,000)
89,225)
Net income (EAT)
13,556
26,112)
39,668)
Dividend payout
(12,240)
(12,240)
OCI from currency translation
(301)
(301)
OCI from changes in unreal.

gains/losses
(100)
(100)
OCI from actuarial gains/losses
2,432)
2,432)
All other changes

(185)
(185)
17,920
10,669
72,063
23,001)
(5,154)
118,499
In fiscal 2007, RENK AG did not exercise its authority (which expired November 8,
2007) to acquire treasury stock. As of December 31, 2007, RENK AG held a total
199,903 treasury shares in its portfolio, equivalent to 2.86 percent of the capital
stock or a stake of k512. Altogether k4,013 of the treasury stock has been offset
against equity.
The additional paid-in capital solely comprises stock premiums from increases in
RENK AGs capital stock. The other comprehensive income (OCI) included unrealized
gains/losses, largely from the remeasurement to fair value of pension accruals.
28
Dividend distribution is subject to the regulations of the German Commercial Code

(HGB), according to which cash dividends may be distributed from the Group parents (RENK AGs) net earnings; these net earnings according to German GAAP total
13,999,513.94 as of December 31, 2007. The Companys Executive and Supervisory
Boards will propose to the annual general meeting on May 8, 2008, to pay a cash dividend of 2.00 per share from said net earnings, corresponding for 7,000,000 no-par
shares to 13,600,194 after deduction of the dividends proratable to the treasury stock
(which does not rank for dividend pursuant to Art. 71b AktG).
(21)
Pension accruals
Pension accruals break down as follows:
k
12/31/2007
Pension obligations in Germany
Pension obligations abroad
12/31/2006
4,198
71,450
4,198
71,450
328
383
4,526
71,833
Employees of German RENK subsidiaries benefit from a defined contribution plan

(DCP) which centers around the accumulation of capital to be paid out on retirement
in one sum; capital redemption in the form of annuities is optional in certain cases.
The amount of pension capital is the accumulated total of annual pension modules
assigned to employees according to their pensionable pay and their age.
Fiscal 2007 saw MANs added steps toward funding the capital for German pension
obligations. Therefore, RENK transferred k65 million as endowment to MAN Pension
Trust e.V., a membership corporation under German law.
On November 30, 2007, a pension obligation volume of 35 million for around 1,600
pensioners was assigned to MAN Pensionsfonds AG (a company newly incorporated
by MAN AG) and fully funded externally. However, since RENK remains liable under
a guaranty of collection upon assignee default, the pension obligations assigned and
the related trust assets transferred to MAN Pensionsfonds AG continue to be recognized netted in the consolidated balance sheet.
Under irrevocable agreements, these trust assets are exempt from recourse or attachment by any MAN company (trustors) and earmarked solely to fund current pension
payments or settle employee claims in the case of employer insolvency. For the purpose of overseeing due and proper management and appropriation of the special
pension trust assets, security trustees independent of MAN have been appointed.
MAN Pensionsfonds AG is subject to the supervision by BaFin, the German Federal
Financial Supervisory Authority.
29
The assets held under the CTA (contractual trust agreement) are invested by several
asset managers in various funds on the capital market in accordance with specified
investment policies. The acquisition of securities issued or floated by MAN AG or an
MAN company is prohibited, as is (in Germany) any investment in real estate for
internal use.
Obligatory contributions to defined benefit plans are expected to amount in 2008 to
k276.
For RENK AG, the following pay and pension rise assumptions underlie actuarial calculations:
Discount rate
12/31/2007
12/31/2006
5.25%
4.25%
Pension rise
2.0%
1.5%
Pay rise
2.5%
2.5%
4.25%
2007)
2006
1,769)
71,833
Movements of pension accruals in the period:

k
Plan-unfunded DBO
Plan-funded DBO
68,355)
Total DBO
70,124)
71,833
Plan assets at fair value
(65,598)
4,526)
71,833
Pension accruals at Dec. 31
The present value of the DBO showed the following movements:

Present value of the DBO
k
Present value of the DBO at Jan. 1
Germany
Abroad
2007)
2006)
2007)
2006
71,450)
70,447)
383)
342
1,786)
(56)
Current service cost
1,658)
1,515)
28)
21
Interest cost
3,113)
2,905)
18)
18
87)
Past service cost

Actuarial losses/(gains)
(5,877)
(761)
(39)
Pension payments
(2,949)
(2,687)
(62)
Contributions by beneficiaries
26)
Exchange rate changes, other
589)
69,796)
71,450)
328)
383
Present value of the DBO at Dec. 31
30
Fair value of plan assets

k
2007)
2006)
Fair value of plan assets at Jan. 1
Plan reclassification
Expected return on plan assets (ROPA)
663)
Difference between expected and actual ROPA
(588)
Current contributions by employers

Special endowment by employers
Contributions by beneficiaries
Pension payments
Exchange rate changes, other
Fair value of plan assets at Dec. 31
134)
65,364)
26)
(1)
65,598)
Breakdown of net pension expense:

k
2007)
2006)
Current service cost
1,686)
1,536)
Interest cost of pension obligations
3,131)
2,923)
87)
Past service cost

(663)
4,154)
4,546)
(Gains)/losses recognized as OCI

k
Actuarial (gains)/losses at Jan. 1
Changes in fiscal year
Actuarial (gains)/losses at Dec. 31
2007)
2006)
11,684)
12,443)
(5,329)
(759))
305)
6,660)
11,684)
31
(22)
OTHER ACCRUALS
k
12/31/
2006
Warranties
Currency
transl.
diff.,
other
Utili-)
zation)
)
Provision)
in 2007)
Release)
)
12/31/
2007
23,086
20,684
133
(4,013)
10,125)
(3,843)
Unbilled costs
2,510
2,300
(2,633)
3,963)
(3)
6,137
Other business obligations
9,324
(2,210)
6,807)
(3,274)
10,647
Obligations to personnel
7,592
102
(511)
(374)
(451)
6,358
Remaining accruals
1,087
20
(349)
222)
(115)
865
41,197
2,555
(9,716)
20,743)
(7,686)
47,093
The other accruals are disclosed in these balance sheet lines:

k
12/31/2007
Warranties
12/31/2006
noncurrent
current
noncurrent
current
17,307
2,636
20,450
3,377
Unbilled costs
6,137
2,510
Other business obligations
10,647
9,324
2,371
3,987
5,332
2,260
Obligations to personnel
Remaining accruals
865
1,087
5,007
42,086
8,709
32,488
The warranty accruals provide for implied and express warranties, as well as accommodation/goodwill warranties voluntarily extended to customers. Warranty accruals
are utilized when the warranty claim takes effect, which may be anytime during the
warranty period. The accruals for unbilled costs refer to products or services yet to be
provided under contracts already invoiced (or parts thereof) and to obligations under
maintenance and service contracts. The other business obligations refer substantially
to accrued losses on onerous contracts, as well as to default/performance-related
penalties. The accruals for obligations to personnel provide for employment anniversary allowances, termination indemnities, preretirement part-time work, and statutory postretirement benefits.
32
(23)
FINANCIAL LIABILITIES
k
12/31/2007
12/31/2006
544
914
Due to banks
The accounts due to banks are not collateralized by land charges or similar encumbrances.
Financial liabilities are included in these balance sheet lines:
k
Noncurrent financial liabilities (due >1 year)
thereof due >5 years
Current financial liabilities (due within 1 year)
(24)
12/31/2007
12/31/2006
136
544
408
370
544
914
12/31/2007
12/31/2006
30,815
27,733
TRADE PAYABLES
k
Trade payables
k7 of trade payables (down from k11) has a remaining term of >1 to 5 years, all other
now falling due within 1 year.
Trade payables include k247 (up from k214) due to nonconsolidated group companies.
(25)
PREPAYMENTS RECEIVED
k
12/31/2007
12/31/2006
88,683
80,976
k22,531 of the prepayments received (down from k31,635) has a remaining term of
>1 to 5 years, all other now falling due within 1 year.
The prepayments include k5,988 (up from k3,561) received from nonconsolidated
group companies.
33
(26)
OTHER LIABILITIES
k
Liabilities to personnel
12/31/2007
12/31/2006
16,116
14,401
Currency hedges
298
Non-income tax liabilities
3,371
3,226
19,495
17,934
Remaining liabilities
The liabilities to personnel refer to wages, salaries and social security taxes not yet
due at balance sheet date, as well as to prorated vacation pay and special year-end
payments.
The other liabilities are disclosed in the following balance sheet lines:
k
12/31/2007
12/31/2006
1,161
1,342
18,334
16,592
In 2006, the other current liabilities had included the negative market values of
financial derivatives. Since they served hedging purposes, their negative market
values contrasted with increased values in the balance sheet lines of the underlyings.
Other information
(27)
Contingent liabilities
k
Guaranties and suretyships
12/31/2007
12/31/2006
953
1,477
In the year under review, RENK AG furnished MAN AG with a non-expiring payment
guaranty for the liabilities of RENK subsidiaries from the latters business relationship
with MAN.
34
(28)
Other financial obligations

Other financial obligations exist from and under leases. Future rents for the minimum terms of operating leases fall due as follows:
k
Operating leases
12/31/2007
Due within 1 year
20
12/31/2006
6
Due >15 years
16
11
36
17
12/31/2007
12/31/2006
197
606
70
674
267
1,280
k
Property rental obligations
Due within 1 year
Due >15 years
Contractual payments under capital leases fall due as follows:

k
12/31/2007
12/31/2006
Due within 1 year
429
423
Due >15 years
174
604
Total contractual payments
603
1,027
Future interest portions

Present value of capital leases
19
66
584
961
The lease payments are allocated in accordance with the underlying lease terms. Since
RENK is lessee in capital leases, leased assets were capitalized within fixed assets at a
total book value of k557 (down from k1,910).
Analysis of the present value over time:
k
12/31/2007
12/31/2006
Within 1 year
422
416
>15 years
162
545
584
961
Financial purchase obligations to third parties from pending capital expenditure

projects were within the ordinary scope of business.
35
(29)
Additional disclosures of straight financial instruments

This Note additionally highlights the significance of straight financial instruments
and discloses further details of FI-related balance sheet and income statement lines.
The book values of financial instruments, broken down according to IAS 39 valuation
category, are shown in the table below.
k
12/31/2007)
12/31/2006)
98,877)
89,817)
Monetary assets available for sale
3,065)
1,767)
At fair value recognized in net income
1,294)
963)
10,461)
41,752)
113,697)
134,299)
30,815)
27,733)
Loans and receivables

Financial assets
Trade payables
544)
914)
Other financial debts
1,708)
2,634)
33,067)
31,281)
In both 2007 and 2006, book value equaled fair value.

The interest income/expense earned/incurred in connection with financial assets and
liabilities break down as follows:
k
12/31/2007)
Interest income
Interest expense
12/31/2006)
1,442)
879)
(121)
(118)
Interest income from impaired financial assets is insignificant given the short periods
to expected receipt of payment.
The liquidity risk represents the risk that financial obligations cannot adequately be
met. In line with the IFRS 7 requirements, the table below lists only the cash outflows
for contractually agreed payments of principal and interest for straight financial
debts or liabilities. Where no due date is fixed, the liability if assigned to the earliest
maturity category. Floating- or variable-rate payments are accounted for in accordance with the terms at December 31.
36
k
<30 days
3089 days
90359 days
24,892
5,300
33
66
1,708
26,633
Trade payables
Other financial debts
15
years
>5
years
Total at
12/31/2007
616
30,815
309
136
544
1,708
5,366
925
143
33,067
Undiscounted
contractual
cash outflows
(30)
Derivative financial instruments and hedging strategies

The MAN Group is exposed to not insignificant an extent to currency and interest
rate risks for whose identification, measurement and containment a groupwide risk
management system has been set up.
(a) MAN AGs risk management
Companies of the MAN Group generally hedge their transactions against currency and
interest rate risks through MAN AGs Group Treasury, on terms as if at arms length
and using straight and derivative financial instruments.
Group Treasurys risk positions are hedged externally with banks within predetermined risk limits. Hedges are contracted according to groupwide uniform directives in
compliance with the German Act on Corporate Control & Transparency (KonTraG),
as well as with the German Minimum Requirements for Bank Trading Business
(MaH). Moreover, such contracting is subject to stringent monitoring, which is particularly ensured through the strict segregation of contracting, settlement and controlling duties.
The MAN Groups currency and interest rate risk positions are regularly reported to
MAN AGs Executive and Supervisory Boards. Compliance with guidelines and directives is checked by Internal Auditing.
(b) RENKs currency risks

Any future cash flows not transacted in the presentation currency of a group company are exposed to currency risks.
Within the MAN Group, principally all firm customer contracts and all of the MAN
Groups own purchase orders in foreign currency are hedged. Moreover, hedging
transactions provide for planned foreign-currency revenues from bulk manufacturing
business within defined limits and for high-probability customer projects (firm commitments).
37
Currencies presenting merely a minor exchange rate risk due to their close proximity
to the euro rate are hedged in isolated cases only. Equity interests or equity-type loans
in foreign currency are not subject to any hedging obligation.
As of December 31, 2007, currency hedges existed in US dollar.
k
1 year
>1 year
12/31/2007
12/31/2006)
1,146)
9,926
6,687
16,613
24,089)
Fair market values
positive
negative
total
total)
Currencies bought
(27)
1,294
1,294
693)
Notional volume
Currencies bought
Currencies sold
Currencies sold
(c) Default risks

The maximum loss risk from financial derivatives corresponds to the aggregate total
of their positive market values and thus to potential losses of assets that may be
incurred if and when contractual obligations are not honored by specific trading
counterparts. With a view to reducing this risk, financial derivatives are throughout
contracted with banks of prime standing and within specified counterparty limits.
(31)
Stock-based payments
RENK AGs Executive Board members receive stock-based payments. Up to fiscal 2004,
such payments were based on two Stock Appreciation Rights (SAR) programs, MANs
and RENKs, both of which offered cash payments depending on MAN or RENK stock
performance (phantom stock options). In fiscal 2005, the MAN Stock Program superseded both SARs, offering cash payments to eligible staff which are earmarked for the
purchase of MAN common stock.
(a) MAN Stock Program (MSP)

Under the MSP, which was implemented in 2005 and 2006, the Executive Board
members of RENK AG are granted taxable cash compensation on condition that they
appropriate 50 percent to purchase MAN common stock. Such shares are acquired and
held in custody centrally by MAN AG in the name and for the account of the beneficiaries, who may freely dispose of the stock after a 3-year qualifying period. During this
waiting period, the shares may not be sold, assigned, pledged or hedged. When an MSP
participant goes into retirement or separates from the MAN Group, the period is
shortened to 1 year as from the date of retirement or separation.
38
Contrary to the year before, the disclosures for 2007 also include shares purchased
from the prior-year bonus. Under the MSP 2007, its participants acquired a total
1,387 MAN common shares (down from 1,652) at an average price of 105.42 (up from
54.17). The cash payments are fully expensed in the year when the MSP is granted.
For the MSP 2007, they totaled k293 within RENK (up from k179).
(b) MANs SAR plan

Effective July 1, 2000, 2001, 2003 and 2004, the MAN Group had implemented SAR
plans. Executive Board members of RENK AG were granted stock appreciation rights
(SARs) which, after a 2-year qualifying period within the succeeding five years, were
exercisable and convertible into taxable income (phantom stock options), subject to
the MAN common stock price trend in absolute and relative terms.
The 2000, 2001, 2003 and 2004 plans had fully been utilized in previous years.
(c) RENKs SAR plan

In addition, RENK AG implemented its own SAR plans, each as of July 1, 2000, 2001,
and 2003. Executive Board members of RENK AG were granted stock appreciation
rights (SARs) which, after a 2-year qualifying period within the succeeding five years,
were exercisable and convertible into taxable income (phantom stock options), subject to the RENK stock price trend in absolute and relative terms
By of December 31, 2007, the SARs granted under the 2000, 2001 and 2003 programs
had fully been exercised.
The number of SARs granted under the SARP 2003 developed in 2007 as follows:
SARP 2003 )
Total SARs at January 1, 2007
3,450)
exercised in the period
(3,450)
Total SARs at December 31, 2007
0)
The market prices relevant to SAR 2003 exercise are as follows:

Strike price in
21.62 )
Minimum price for exercise in
25.94)
Maximum price for exercise in
54.77)
Market price at Dec. 31, 2007, in
58.00)
Under the SARP 2003, k63 (up from k26) was paid out in the fiscal year to RENK
AGs Executive Board members as SARs were exercised.
39
(32)
Remuneration of the Executive Board

The remuneration of RENK AGs Executive Board members consists of three components: a fixed compensation, a variable remuneration, and stock-based payments.
In addition, Executive Board members are vested with a pension entitlement. The
itemized remuneration of Executive Board active in 2007 [2006] is shown in this
table:
REMUNERATION COMPONENTS 2007 [2006]
k
Fixed)
Variable,
Stock-)
Pension
salary)
perform-
based)
expense
ance-
payments)
Total
related)
Prof. Dr. Manfred Hirt
Ulrich Sauter
Florian Hofbauer
268)
310)
93)
126[
797]
[269]
260)
[262]
[93]
[97]
[721]
171)
200)
98[
729]
[259]
[241]
[85]
[57]
[642]
86)
60)
40)
14)
200]
(9/1112/31)
Total
614)
541)
333)
238)
1,726]
[528]
[503]
[178]
[154]
[1,363]
The amount of variable remuneration for 2007 is subject to the vote of the annual
general meeting on the proposed dividend for the fiscal year.
Pension payments to former Executive Board members and their surviving dependants amounted to k219 (down from k246), while the pension obligations to such
former members and their surviving dependants were assigned and transferred to
MAN Pensionsfonds.
The Executive Board members including their memberships in other statutory supervisory and comparable boards are disclosed on pages 46 and 48.
(33)
Supervisory Board
Supervisory Board compensation is subject to the provisions of the bylaws. Accordingly, Supervisory Board members are reimbursed for their office-related expenses
and receive an annual fee which consists of a basic 2,100 and a variable fee of 200
for each 0.01 of the RENK AG dividend in excess of 0.10. The variable portion is
capped at 6,000 each. The Supervisory Board Chairman receives double, the vicechairman 1.5 times, this amount.
40
SUPERVISORY BOARD REMUNERATION 2007 IN

Name
Chairman
Prof. Dr. h.c. Karlheinz Hornung
Vice-Chairman
Membership
Fixed
Variable
period
fee
fee
Total
all year
4,200
12,000
16,200
all year
3,150
9,000
12,150
Prof. Gerd Finkbeiner
all year
2,100
6,000
8,100
Robert Strixner
all year
2,100
6,000
8,100
Klaus Ketterle
all year
2,100
6,000
8,100
Total 2007
13,650
39,000
52,650
Total 2006
13,650
39,000
52,650
Mr. Weinmann waived to claim the fees he would as Supervisory Board member have
been entitled to. For the Supervisory Board members including their memberships in
other statutory supervisory and comparable boards, turn to pages 46/47.
(34)
German Corporate Governance Code

On December 6, 2007, RENK AGs Executive and Supervisory Boards issued, and disclosed to the stockholders on the Internet at www.renk.eu under Investor Relations,
the declaration of conformity pursuant to Art. 161 AktG, which reads as follows:
RENK AG adopted the recommendations of the German Corporate Governance Code
Government Commission subject to its declaration of conformity of December 2006
and has implemented the recommendations of the Code (as amended up to June 14,
2007) with the following exceptions:
No further Supervisory Board committees are or will be established ( 5.3.13 of the
Code) in addition to the existing Presidential Committee (formed from among the
six Supervisory Board members and in charge of Executive Board staffing issues), nor
will any separate compensation be paid for the chairmanship and membership in the
existing committee ( 5.4.7 of the Code).
41
(35)
Segment reporting
For the purposes of primary segment reporting, the RENK Groups operations are segmented into the Vehicle Transmissions, Drive Elements, Special-Purpose Propulsion
Systems, Broad-Use Propulsion Systems and Test Systems divisions.
The segment financial information has been determined in conformity with the disclosure and accounting methods applied to the consolidated financial statements, too.
Intersegment transfer prices are based on product cost or cost of sales.
Segment assets comprise all operating assets, i.e., the noncurrent and current assets
excluding income tax assets and deferred tax assets.
For details of the ROS and ROCE formulas, see the management report, page 30.
SEGMENT REPORT BY REGIONS

k
Germany
Other Europe
Other world
Consolidation)
Total
Segment sales
165,065
136,206
129,111
430,382
Segment assets
305,269
20,768
4,564
330,601
14,310
200
72
14,582
Segment sales
129,719
118,919
107,552
356,190
Segment assets
328,396
26,067
4,735
(24,942)
334,256
16,114
553
79
16,746
2007
for tangibles/intangibles
2006
for tangibles/intangibles
42
SEGMENT REPORT BY DIVISIONS

k
Vehicles
Drive Elements
Transmissions
Order intake from third parties
Intersegment order intake
Total order intake
Sales to third parties
Intersegment transfers
2007
2006
2007
2006
57,575
56,446
92,881
75,045
3,204
1,805
57,580
56,446
96,085
76,850
147,542
131,476
79,086
64,110
1,498
2,305
Total segment sales
147,547
131,476
80,584
66,415
237,539
327,506
49,336
34,198
31,346
17,040
13,450
9,823
119,977
138,906
49,686
48,397
85,203
116,874
15,673
21,545
Capex
1,437
3,325
4,344
2,095
3,912
3,920
843
588
ROS
21.2%
13.0%
16.7%
14.8%
ROCE
65.6%
37.5%
46.2%
41.9%
EBIT
Segment assets
Segment debt
43
Special-Purpose
Broad-Use
Propulsion Systems
Propulsion Systems
Test Systems
Others/
Group
Consolidation
2007
2006
2007
2006
2007
2006
154,728
143,268
113,454
135,536
20,830
6,816
458
433
1,445
1,340
317
155,186
143,701
114,899
136,876
21,147
6,816
93,065
85,464
95,127
72,413
15,562
2,727
2007)
2006)
2007
2006
5)
439,473
417,111
(5,429)
(3 ,578)
(5,424)
(3,578)
439,473
417,111
430,382
356,190
697
341
1,041
1,143
263
(3,504)
(3,789)
93,762
85,805
96,168
73,556
15,825
2,727
(3,504)
(3,789)
430,382
356,190
206,574
147,136
172,371
153,613
32,376
11,731
(14,126)
(1,981)
684,070
672,203
9,819
4,151
10,935
5,726
2,022
820
67,572
37,560
81,315
76,618
68,209
68,102
12,488
3,051
(1,074)
(818)
330,601
334,256
41,996
52,024
41,097
47,727
8,255
3,236
(1,071)
(819)
191,153
240,587
3,629
4,915
5,118
6,411
54
14,582
16,746
1,836
1,740
1,633
1,260
63
8,287
7,508
10.5%
4.8%
11.4%
7.8%
12.8%
30.1%
15.7%
10.5%
26.9%
13.5%
38.2%
19.8%
177.1%
47.2%
28.9%
44
(36)
Related-party transactions
Due to its indirectly held 76-percent stake in RENK AG, MAN AG is parent of and thus a
company related to, RENK AG; moreover, MAN AGs subsidiaries are companies related
to RENK AG.
Type of legal transactions with companies of the MAN Group:
Products delivered by RENK companies to MAN companies
These primarily include marine and turbo gear units and bearings from the Hannover plant.
Products and materials sourced from MAN companies, mainly upstream material
for gear/transmission manufacture (such as castings).
Other reciprocal transfers, such as debit and credit interest for or from MAN AGs
intercompany payment transaction system, tax apportionment and cost refunds for
sundry services.
The tables below list the extent of relationships with corporate related parties. For the
compensation paid to senior management, etc. (reportable according to IAS 24), see
Notes (32) and (33) above.
SUMMARY OF LEGAL TRANSACTIONS WITH RELATED MAN GROUP COMPANIES IN 2007

k
Company
Outbound
Inbound
transfers
transfers
Other
Other
Backlog
Backlog
services
Expense
services
inbound
outbound
Income
transfers
transfers
12/31/2007
12/31/2007
MAN AG, Munich
1,026
2,267
MAN HR Services GmbH, Munich
121
Munich
MAN IT Services GmbH, Munich
1,255
9,829
1,850
1,046
76
34,230
1,414
4,326
(3)
26
13,770
106
4,404
2,719
MAN Financial Services GmbH,
MAN Diesel SE, Augsburg

MAN Diesel A/S,
Copenhagen, Denmark
MAN Diesel S.A.,
Villepinte, France
MAN Diesel Japan Ltd.,
Kobe, Japan
MAN Turbo AG Schweiz,
Zurich, Switzerland
2,240
3,112
MAN Turbo AG, Oberhausen
5,927
4,320
Other MAN companies

Total related group companies
100
343
51
26,932
1,851
3,825
2,401
58,159
1,414
45
Further legal transactions with MAN AG involve guaranties for borrowings in favor of
RENK companies (totaling k26,982 as of December 31, 2007), as well as derivative currency hedges (totaling k7,478 as of December 31, 2007).
SUMMARY OF LEGAL TRANSACTIONS WITH NONCONSOLIDATED RENK SUBSIDIARIES IN 2007

k
Company
Outbound
Inbound
Other
Backlog
Backlog
transfers
transfers
services
inbound
outbound
Expense
transfers
transfers
12/31/2007
12/31/2007
RENK U.A.E. LLC, Abu Dhabi, UAE
180
516
RENK MAAG GmbH, Winterthur, Switzerland
105
1,515
23
23
83
10,247
1,015
70
544
16
RENK LABECO Test Systems Corp.,

Mooresville, USA
COFICAL RENK Mancais do Brasil LTDA,
Guaramirim, Brazil
RESITA-RENK S.A., Resita, Romania
RENK Transmisyon Sanayi A.S.,
Ankara, Turkey
Total group companies
127
295
1,339
127
1,963
1,060
10,270
Trade receivables from and trade payables to nonconsolidated group companies are
disclosed in Notes (17) and (24). Unpaid items have neither been collateralized nor
were they written down as of December 31, 2007.
46
Supervisory Board members:

Munich
Chairman
CEO of MAN AG
Prof. Dr. h. c. Karlheinz Hornung
Munich
Vice-Chairman
Executive Board member of MAN AG
Prof. Dipl.-Ing. (FH) Gerd Finkbeiner
Augsburg
CEO of MAN Roland Druckmaschinen AG
Dipl.-k. Anton Weinmann
Munich
Executive Board member of MAN AG and
CEO of MAN Nutzfahrzeuge AG
Klaus Ketterle*)
Augsburg
Technical clerk, RENK AG
Robert Strixner*)
Augsburg
Foreman, RENK AG
*) elected by the employees
Executive Board members:

Spokesman (up to Aug. 31, 2007)
Florian Hofbauer
Spokesman (as from Sep. 1, 2007)
Ulrich Sauter
47
Supervisory and Executive Board memberships

in other statutory boards or equivalent
Supervisory Board
a) MAN Roland Druckmaschinen AG

Siemens AG
b) MAN Nutzfahrzeuge AG (chairm.)
MAN Ferrostaal AG (chairm.)
MAN Diesel SE (chairm.)
MAN Turbo AG (chairm.)
NEOMAN Bus GmbH (chairm.)
Prof. Dr. h. c. Karlheinz Hornung
a) MAN Roland Druckmaschinen AG

Demag Cranes AG
Arcandor AG
b) MAN Nutzfahrzeuge AG
MAN Ferrostaal AG
MAN Diesel SE
MAN Turbo AG
c) MAN Capital Corporation, USA (chairm.)
Prof. Dipl.-Ing (FH)

Gerd Finkbeiner
a) BWE SYSTEC AG
b) MAN Roland Vertrieb und Service Sddeutschland GmbH (chairm.)
MAN Roland Vertrieb und Service GmbH
d) MAN Roland Inc., USA (chairm.)
MAN Roland Western Europe Group B.V.,
Netherlands (chairm.)
MAN Roland CEE AG, Austria (chairm.)
DIC MANROLAND CO. LTD, Japan
MAN Roland (Korea) Ltd., Korea
Dipl.-konom
Anton Weinmann
b) MAN Truck & Bus Deutschland GmbH

NEOMAN Bus GmbH
NEOPLAN Bus GmbH
d) MAN Nutzfahrzeuge sterreich AG, Austria
(vice-chairm.)
48
Executive Board
d) RENK Corporation, USA (chairm.)

RESITA-RENK S.A., Romania
(up to 11/23/2007)
Socit dEquipements,
Systmes et Mcanismes,
France (chairm.)
Ulrich Sauter
d) RESITA-RENK S.A., Romania

(up to 11/23/2007)
Socit dEquipements,
Systmes et Mcanismes,
France
a) member of a German companys

supervisory board
b) member of a German group
companys board
c) member of a comparable
foreign board
d) member of a foreign group
companys comparable board
Augsburg, February 8, 2008
RENK AG
The Executive Board
RENK AG
Ggginger Str. 73
Phone (+49-821) 5700-0
Fax (+49-821) 5700-573
www.renk.eu

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UMSCHLAG_RENK_GB_07_eng.qxd 05.05.

2008 14:32 Uhr Seite 1

Annual Report RENK AG

An MAN Group company

The structure of the MAN Group...>

Innovative Power Transmission

Headcount incl. temporary employees

Operating profit (EBIT)

Net income (EAT)

EpS (earnings per share) in

ROS (return on sales) in %

ROCE (return on capital employed) in %

Cash flow from operating activities

Cash flow from investing activities

Free cash flow

1) 2007 on 2006 as of December 31

April 30, 2008)

Q3/2008 financial report

October 30, 2008)

Press release on financial information about 2008

February 19, 2009)

Annual general meeting on fiscal 2008

May 12, 2009)

RENKAn MAN Group Company...>

UMSCHLAG_RENK_GB_07_eng.qxd 05.05.2008 14:32 Uhr Seite 1

Annual Report RENK AG

An MAN Group company

The structure of the MAN Group...>

Innovative Power Transmission

Headcount incl. temporary employees

Operating profit (EBIT)

Net income (EAT)

EpS (earnings per share) in

ROS (return on sales) in %

ROCE (return on capital employed) in %

Cash flow from operating activities

Cash flow from investing activities

Free cash flow

1) 2007 on 2006 as of December 31

April 30, 2008)

Q3/2008 financial report

October 30, 2008)

Press release on financial information about 2008

February 19, 2009)

Annual general meeting on fiscal 2008

May 12, 2009)

RENKAn MAN Group Company...>

UMSCHLAG_RENK_GB_07_eng.qxd 05.05.2008 14:32 Uhr Seite 2

The MAN Group

including temporary employees

including temporary employees

including temporary employees

including temporary employees

UMSCHLAG_RENK_GB_07_eng.qxd 05.05.2008 14:32 Uhr Seite 2

The MAN Group

including temporary employees

including temporary employees

including temporary employees

including temporary employees

Management report of the RENK Group for fiscal 2007

Major consolidated subsidiaries

RENK consolidated financial statements (abridged)

RENK Annual Report 2007