Annual Report 2015 - Renk...Hapag-Lloyd AG Dipl.-Ing. (FH) Frank Hoffmann*) Augsburg Head of Vehicle...
Transcript of Annual Report 2015 - Renk...Hapag-Lloyd AG Dipl.-Ing. (FH) Frank Hoffmann*) Augsburg Head of Vehicle...
Annual Report
RENK Aktiengesellschaft
2015
Innovative Power Transmission
RENK – a company of the MAN Group
At a glance
RENK Group
€ million
2015 2014 Change in %
Order intake 483 666 (27.5)
Sales revenue 487 480 +1.5
Order backlog1) 812 827 (1.8)
Headcount 2,198 2,196 +0.1
Change in € million
Operating profit 68 72 (4)
Profit before tax 64 72 (8)
Profit after tax 42 49 (7)
Earnings per share in € 6.14 7.17 –
Dividend distribution per share in € 2.20 2.20 –
Operating return on sales in % 14.0 15.0 –
Capital expenditures2) 41 38 +3
Depreciation and amortization on noncurrent assets 21 17 +4
Internally financed R&D expenditures 8 8 –
Cash flows from operating activities 101 35 +66
Cash flows from current investing activities (41) (38) (3)
Net cash flow 60 (3) +63
Cash and cash equivalents1) 197 150 +47
Total equity1) 360 327 +33
1) As of December 31, 2015, as against December 31, 2014.
2) For property, plant and equipment and intangible assets
Financial reporting dates at www.renk.eu
3RENK Group Annual Report 2015 3
Contents
04 Supervisory Board
05 Executive Board
06 Report of the Supervisory Board
12 Corporate Governance
18 RENK stock
20 Management Report of RENK Group
for the fiscal year January 1 to December
31, 2015
21 Business activities and management
of RENK Group
21 Business focus
23 Internal management system and value
management
26 Business performance and economic
situation of the RENK Group
26 Economic enviroment
26 Summary by the Executive Board
27 Forecast variance analysis
29 Results of operations
35 Income statement
37 Financial position of the RENK Group
37 Principles and objectives of financial
management
37 Cash flow – Development of cash and
cash equivalents and term deposits
38 Net assets
41 Capital information/disclosures in ac-
cordance with section 315(4) HGB
43 Research and development
45 Capital expenditures, environmental
management
49 Employees
55 The segments
70 Report on risks and opportunities
80 Remuneration report for fiscal
year 2015
89 Forecast
93 RENK Consolidated Financial
Statements
for the fiscal year January 1 to
December 31, 2015
94 Consolidated Income Statement
94 Reconciliation to Total Comprehen-
sive Income for the Period
95 Consolidated Statement of Financial
Position
96 Consolidated Statement of Changes in
Equity
97 Consolidated Statement of Cash Flows
99 Notes to Consolidated Financial
Statements
99 Principles of Financial Reporting
115 Notes to the Consolidate Income State-
ment
121 Notes to the Consolidated Statement of
Financial Position
134 Other Disclosures
157 Events after the end of the reporting
period
158 Members of the Supervisory Board and
the Executive Board including their
mandates
163 Responsibility Statement
164 Audit Report for the consolidated
financial statements of RENK AG
167 Six-year Overview
4
The Supervisory Board
Dr. Ingrun-Ulla Bartölke Wolfsburg
Chairwoman of the Supervisory Board
Head of Group Accounting and External
Reporting at Volkswagen Aktiengesellschaft
Roberto Armellini*) Augsburg
Deputy Chairman of the Supervisory Board
Labor union secretary
Michael Behrendt Hamburg
Chairman of the Supervisory Board of
Hapag-Lloyd AG
Dipl.-Ing. (FH) Frank Hoffmann*) Augsburg
Head of Vehicle Transmissions at RENK AG,
Augsburg
Dr.-Ing. Hans-O. Jeske Wesel
Member of the Executive Board of MAN
Diesel & Turbo SE
Dipl.-Ing. (FH) Rainer Handschuh*) Augsburg
Chairman of the Group Works Council of
RENK AG
Chairman of the Works Council of RENK AG,
Augsburg plant and RENK Test System
GmbH
Dr. Georg Pachta-Reyhofen Niederpöcking
Former Chief Executive Officer of MAN SE
Herbert Surmann*) Rheine
Industrial mechanic
Walter Vogt*) Eltville
Labor union secretary at IG Metall Executive
Board, Frankfurt/M.
Ingo Weidner*) Ronnenberg
Mechanical engineer
As of March 3, 2016 *) Elected by employees.
RENK Group Annual Report 2015 5
Executive Board
<< BILD einfügen Vorstand >>
Dipl.-Kfm. (Univ.) Christian Hammel
Munich
Administration and Production
Dipl.-Ing. (FH) Florian Hofbauer
Landsberg
Spokesperson
Engineering and Sales
6
Report of the Supervisory Board
Ladies and Gentlemen,
In fiscal year 2015, the Supervisory Board dealt with the situation and development of the company
in depth and on an ongoing basis. It regularly and comprehensively performed its duties in accord-
ance with the law, the Articles of Association and its Rules of Procedure. We advised the Executive
Board on its management of the company and monitored its activities.
The Executive Board informed the Supervisory Board regularly and promptly by detailed written
and oral reports about business performance, relevant business events and the development of the
results of operations, net assets and financial position. In addition, the reporting to the Supervisory
Board comprised corporate planning including developments deviating from it and their causes, the
strategic focus of the company, the risk position and the content and structure of the risk manage-
ment system. In the context of its monitoring duties, the Supervisory Board assured itself that the
Executive Board has installed an effective compliance system for the RENK Group and was informed
of activities undertaken in this field.
The Supervisory Board was involved in an advisory capacity in all questions and decisions of materi-
al importance to the company. Furthermore, I consulted with the members of the Executive Board
in regular discussions outside the Supervisory Board meetings on matters and issues relevant to the
company, including business development and strategic projects.
The Supervisory Board held four meetings in fiscal year 2015; the average attendance rate was 93.6%.
In one instance the Supervisory Board adopted a resolution in writing.
In fiscal year 2015, no members of the Supervisory Board participated in only half or less than half of
the meetings of the Supervisory Board and the committees to which they belong.
Work of the committees The Supervisory Board has formed three joint committees, each consisting of two shareholder rep-
resentatives and two employee representatives: the Audit Committee, the Executive Personnel
Committee and the Mediation Committee in accordance with section 27(3) of the Mitbes-
timmungsgesetz (MitbestG – German Codetermination Act). There is also the Nomination Commit-
tee that consists exclusively of shareholders.
The Audit Committee met four times in fiscal year 2015. It dealt in depth with issues of accounting
and the annual financial statements of RENK AG, the consolidated financial statements, the man-
agement reports, the dependent company report and the audit reports of the auditor. In addition,
the Audit Committee discussed with the Executive Board the half-yearly report and the interim
reports for the first and third quarters of 2015 prior to their publication.
Other issues handled by the Audit Committee were the audit engagement for the audit of the annu-
al and consolidated financial statements for 2015 and the focus areas of the audit.
Moreover, the Audit Committee dealt with the monitoring of the accounting process, the effective-
ness of the internal control system and the internal risk management system. The Audit Committee
also discussed the internal audit system and compliance issues, and was reported to by the Chief
RENK Group Annual Report 2015 7
Compliance Officer of RENK AG. Furthermore, the Audit Committee conducted the routine sched-
uled review of the efficiency of its work.
The Executive Personnel Committee met three times in the year under review. In particular, its duty
was to prepare Supervisory Board resolutions on Executive Board remuneration and the personnel
changes in the Executive Board.
The Mediation Committee did not have to be convened in fiscal year 2015. The Nomination Commit-
tee met once in the year under review.
Issues in the Supervisory Board Regular topics of discussion in the Supervisory Board included among other things the business
performance of the RENK Group and strategic issues. Furthermore, the work of the committees was
reported on at all meetings of the Supervisory Board.
On March 5, 2015 the Supervisory Board dealt mainly with the 2014 annual financial statements
including the dependent company report. Further topics of this meeting included the coordination
of the agenda and proposed resolutions for the 2015 Annual General Meeting.
There was another meeting of the Supervisory Board before the Annual General Meeting on
June 18, 2015. The main subjects at this meeting were the personnel changes in the Executive Board
(see “Personnel changes in Supervisory Board and the Executive Board”) and Executive Board remu-
neration (for details please see the remuneration report for fiscal year 2015).
At its meeting on October 2, 2015 the Supervisory Board dealt in particular with the reports of the
Executive Board on business performance in fiscal year 2015 and the strategy of the RENK Group.
The main issues at the Supervisory Board meeting on December 11, 2015 were the implementation of
the German Corporate Governance Code and the renewal of the Declaration of Conformity as well as
the strategy of the RENK Group.
Corporate governance and the Declaration of Conformity The application of the German Corporate Governance Code in the RENK Group was the subject of
the Supervisory Board meeting on December 11, 2015. Following this meeting the Supervisory Board
and the Executive Board issued the annual declaration on the recommendations of the Code in ac-
cordance with section 161 of the Aktiengesetz (AktG – German Stock Corporation Act). This Declara-
tion of Conformity has been published on RENK AG’s website.
There were no reports of conflicts of interest among members of the Supervisory Board within the
meaning of item 5.5 of the German Corporate Governance Code in the year under review.
Further information on corporate governance at RENK can be found in our corporate governance
report.
Audit of the 2015 annual and consolidated financial statements and the dependent company report The annual financial statements and Management Report of RENK AG, and the consolidated finan-
cial statements and the Group Management Report, for the fiscal year from January 1 until Decem-
ber 31, 2015 were audited by the auditor elected by the Annual General Meeting on June 18, 2015,
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Munich. Each was
8
issued with an unqualified audit opinion. The areas of emphasis of the audit were decided by the
Supervisory Board as the regularity of deferred sales revenue from the Power Engineering business
and regularity of the elimination of intragroup debt balances. The auditor also assessed the internal
control system and the risk management system, concluding that the Executive Board has taken the
measures required in accordance with section 91(2) AktG to ensure early detection of any risks that
could jeopardize the survival of the company.
In accordance with section 312 AktG, the Executive Board prepared a report on relations with affili-
ated companies (dependent company report) for fiscal year 2015. The auditor examined the de-
pendent company report and issued the following opinion:
“Based on our audit and assessment, which we have carried out in accordance with professional
standards, we hereby confirm that
1. the factual statements made in the report are correct,
2. the company’s compensation with respect to the transactions listed in the report was not inap-
propriately high.”
The Supervisory Board endorsed the results of the audit of the dependent company report per-
formed by the auditor.
The members of the Audit Committee and the Supervisory Board members received the annual
financial statement documents including the dependent company report and the audit reports of
the auditor in time for the meetings of those bodies on March 3, 2016. The auditor reported in detail
at both meetings on the main results of his audits and was available to provide additional infor-
mation.
Taking into account the audit reports of the auditor, the conversation with him and its own findings,
the Audit Committee prepared the documents for our own audit of the consolidated financial
statements, the annual financial statements of RENK AG, the management reports for the RENK AG
and the RENK Group and the dependent company report, and reported on them at the Supervisory
Board meeting on March 3, 2016. It then recommended that we approve the annual financial state-
ments.
In the knowledge of and taking into account the report of the Audit Committee and the auditor’s
report, and in talks and discussions with him, we subjected the documents to a detailed examina-
tion. The final audit of the annual financial statements of RENK AG, the consolidated financial
statements and the management reports did not give rise to any objections. We came to the conclu-
sion that they are correct and that the assessments of the Executive Board on the situation of the
company and the Group as presented in the management reports are consistent with the assess-
ments of the Supervisory Board. At our meeting on March 3, 2016 we therefore endorsed the results
of the audit by the auditor and approved the annual financial statements and the consolidated fi-
nancial statements prepared by the Executive Board. The annual financial statements were thereby
adopted.
We examined the proposal for the appropriation of profits by the Executive Board, taking into ac-
count the interests of the company and its shareholders in particular, and endorsed the proposal.
RENK Group Annual Report 2015 9
According to the final results of our audit, there are no objections to the declaration by the Execu-
tive Board at the end of the dependent company report.
Personnel changes in the Supervisory Board and the Executive Board Effective November 30, 2015 Prof. Neumann resigned his office as a member of the Supervisory
Board of the company – at the same time as his scheduled departure from the Executive Board of
Volkswagen AG.
Prof. Neubauer resigned his office as a member of the Supervisory Board of the company with effect
from February 15, 2016.
On July 31, 2015, Mr. Ulrich Sauter left the company after serving on the Executive Board for around
20 years. The Supervisory Board appointed Mr. Christian Hammel as his successor as a member of
the Executive Board and Arbeitsdirektor (Executive Board member responsible for employee rela-
tions) effective August 1, 2015.
Our thanks We would like to thank Prof. Neumann and Prof Neubauer for their commitment to the good of our
company.
We would like to take this opportunity to express our special thanks to Mr. Sauter for his outstand-
ing work at RENK AG and for his great service to the company. Having worked for the company for
approximately 20 years, Mr. Sauter has played an enormous part in the extremely successful devel-
opment of our company.
We would like to thank the members of the Executive Board and the employees of the RENK Group
for their hard work and dedication. We thank the employee representatives for their objective and
constructive cooperation in the interests of our company.
On behalf of the Supervisory Board
Augsburg, March 3, 2016
Dr. Ingrun-Ulla Bartölke
Chairwoman of the Supervisory Board
10
<< Platzhalter Bild: Doppelseite: Bild RENK Messestand Hannover Messe 2015>>
RENK’s Hannover Fair stand 2015
11RENK Group Annual Report 2015
<< Platzhalter Bild: Doppelseite: Bild RENK Messestand Hannover Messe 2015>>
12
Corporate Governance
At RENK, the management and control of the
company are geared towards ensuring sustain-
able value added and an appropriate result in
accordance with the principles of the social
market economy.
Corporate governance is defined by the appli-
cable laws, in particular company law, the Arti-
cles of Association and internal regulations, and
by national and international standards of good
and responsible management. The German
Corporate Governance Code (Code) provides
conduct recommendations and suggestions for
the corporate governance as applied in the
RENK Group in line with acknowledged stand-
ards.
Corporate governance at RENK*) The Executive Board and the Supervisory Board
of RENK have dealt extensively with the corpo-
rate governance system and compliance with
the recommendations and suggestions of the
Code. They are aware that good and transparent
corporate governance, consistent with both
national and international standards, is essen-
tial for the responsible and long-term man-
agement of a company.
Declaration of conformity On December 11, 2015 the Executive Board and
the Supervisory Board issued the declaration of
compliance reproduced below in accordance
with section 161 of the Aktiengesetz (AktG –
German Stock Corporation Act):
*) Also “Corporate Governance Report” of the Executive Board and the Supervisory Board in accordance with item 3.10 of the German Corporate Governance Code as amended May 5, 2015.
„The Executive Board and Supervisory
Board of RENK Aktiengesellschaft de-
clare that effective immediately, the
company complies with the recommen-
dations of the Government Commission
on the German Corporate Governance
Code in the version of May 5, 2015 (as
published by the Federal Ministry of Jus-
tice in the official section of the Bundes-
anzeiger (German Federal Gazette) of
June 12, 2015) with the exception of Sec-
tion 5.4.1, Paras. 5 – 7 (disclosure of elec-
tion recommendations).
With regard to the recommendation in
Section 5.4.1, Paras. 5 – 7 in the Code on
the disclosure of certain circumstances
in election recommendations of the Su-
pervisory Board to the Annual General
Meeting, the requirements of the Code
are indeterminate and not clearly dis-
tinguished. Therefore, by way of precau-
tion, departure from the Code is de-
clared. Nonetheless, the Supervisory
Board will attempt to meet the require-
ments of Section 5.4.1 Paras. 5 – 7 of the
Code.
The Executive Board and Supervisory
Board of RENK Aktiengesellschaft fur-
ther declare that the company complied
with the recommendations of the Gov-
ernment Commission on the German
Corporate Governance Code in the ver-
sion of June 24, 2014 (as published by
the Federal Ministry of Justice in the of-
ficial section of the Bundesanzeiger of
September 30, 2014) during the period
of December 2014 to June 12, 2015 with
the execution of Section 5.4.1, Paras 4 – 6
(disclosure of election recommenda-
tions, in the version of the Code dated
May 5, 2015; Section 5.4.1 Paras. 5 – 7).
The reasons for the exceptions are stat-
ed above.
13RENK Group Annual Report 2015
From June 12, 2015 until the submission
of this Declaration of Conformity, the
company complied with the recom-
mendations of the Government Com-
mission on the German Corporate Gov-
ernance Code in the version of May 5,
2015 (as published by the Federal Minis-
try of Justice in the official section of the
Bundesanzeiger of June 12, 2015) with
the exception of Section 5.4.1, Para. 2
(length of membership in the Superviso-
ry Board) and Section 5.4.1, Paras 5 – 7
(disclosure of election recommendation).
The reasons for the departures from Sec-
tion 5.4.1 Paras. 5 – 7 are stated above.
The new recommendation in Section
5.4.1, Para. 2, which took effect from June
12, 2015, regarding the goal of the Super-
visory Board to define and observe a
limit on the length of membership in
the Supervisory Board, has been com-
plied with on y since a relevant discus-
sion and resolution by the Supervisory
Board on December 11, 2015.“
Annual General Meeting The Annual General Meeting is the forum for
shareholders of RENK AG to exercise their vot-
ing rights, to obtain information, and to engage
in a dialog with the Executive Board and the
Supervisory Board.
RENK AG’s Annual General Meeting is orga-
nized and held with the goal of providing all
shareholders with information quickly, com-
prehensively and effectively both before and
during the Annual General Meeting. The invita-
tion to the Annual General Meeting is pub-
lished in the Bundesanzeiger (the Federal Ga-
zette) and is made accessible to shareholders
and all other interest parties on RENK’s website,
together with all reports and submissions for
the Annual General Meeting.
To make it easier for shareholders to exercise
their rights in person and to facilitate voting
representatives, in addition to the option of
authorizing a bank, shareholder associations or
other persons, there is the possibility of author-
izing a RENK employee as a voting representa-
tive.
Cooperation between the Executive Board and the Supervisory Board In accordance with German stock corporation
law, RENK AG has implemented a dual man-
agement structure with its Executive Board and
Supervisory Board. Both governing bodies work
together closely for the good of the company
and strive to sustainably increase the value of
the company for the shareholders.
The Executive Board performs management
and operational functions on its own responsi-
bility, the Supervisory Board performs monitor-
ing and consulting functions. Both the Execu-
tive Board and the Supervisory Board work on
the basis of the applicable legal regulations and
their respective Rules of Procedure. The Execu-
tive Board informs the Supervisory Board
promptly and comprehensively on strategy,
planning, business development and the risk
position. Transactions and measures that re-
quire the approval of the Supervisory Board are
presented to it in time. The Executive Board
also informs the Chairman of the Supervisory
Board immediately of extraordinary events.
The Executive Board The Executive Board is the management body
of RENK AG and has two members as of De-
cember 31, 2015. The members of the Executive
Board conduct all the company’s business with
joint responsibility. The Executive Board is
appointed by the Supervisory Board. The Exec-
utive Board’s work is governed by its Rules of
Procedure.
The Executive Board determines the business
objectives for the entire RENK Group. It ensures
compliance with legal provisions, official regu-
lations and internal company policies. The
Executive Board also ensures open and trans-
parent corporate communications. The risk
management system assists the Executive
Board in recognizing business and financial
risks and taking appropriate measures to re-
duce risks.
14
In accordance with the specifications of the
German Stock Corporation Act and item 4.3.4 of
the Code, Executive Board members can per-
form sideline activities, including supervisory
board mandates outside the RENK Group, only
with the prior consent of the Supervisory Board.
The Executive Board members are further re-
quired to disclose conflicts of interest to the
Supervisory Board and the other members of
the Executive Board without delay. Executive
Board members did not report any conflicts of
interest in the year under review. In addition,
companies of the RENK Group did not perform
any transactions with members of the Execu-
tive Board or their related parties in the year
under review.
In accordance with the decision made by the
Supervisory Board on an age limit for members
of the Executive Board, appointments for
members of the Executive Board should gener-
ally end one year after they reach the age of 65.
This age limit will increase in line with the de-
velopment of the standard retirement age for
the statutory pension system and the Supervi-
sory Board reserves the right to make excep-
tions in individual cases.
In accordance with section 76(4) AktG, on Ju-
ly 27, 2015 the Executive Board set targets for
the share of women in the first and second
management levels below the Executive Board
of 0% and 12.8% respectively to be met by
June 30, 2017.
The Supervisory Board The Supervisory Board is the monitoring and
consulting body of RENK AG.
Since the Annual General Meeting of
April 24, 2013 in accordance with section 96(1)
alt. 1 and section 101(1) AktG in conjunction
with section 1(1) and section 7(1) sentence 1 no. 1
of the Mitbestimmungsgesetz (MitbestG – Ger-
man Codetermination Act), the Supervisory
Board consists of twelve members. Six of these
are shareholder representatives elected by the
Annual General Meeting and six are employee
representatives elected in line with the German
Codetermination Act.
For information on the composition of the
Supervisory Board and the Supervisory Board
committees formed plus further details of the
changes occurred in the year under review,
please see the report of the Supervisory Board
and the notes to the consolidated financial
statements.
The Supervisory Board of RENK AG updated the
goals for its composition at its meeting on
December 11, 2015. This serves the implementa-
tion of two changes in item 5.4.1 of the Code:
Firstly, given the statutory provisions that the
supervisory board of a listed company must be
at least 30% women and 30% men in the future,
the stipulation that women should be taken
into account appropriately when setting targets
has been dropped. Secondly, a standard limit
for time as a member of the Supervisory Board
must now be implemented.
Following its resolution on December 11, 2015,
and in light of the purpose of the company, its
size and the share of its international activities,
the Supervisory Board of RENK AG is endeavor-
ing to achieve a composition for the Superviso-
ry Board that takes the following elements into
account:
• at least one seat on the Supervisory Board for
persons who especially embody the criterion
of internationality;
• at least one Supervisory Board member elect-
ed by the shareholders who have no potential
conflicts of interest and are independent
within the meaning of item 5.4.2 of the Code;
• generally no persons should be considered
for election who have reached the age of 70
by the time of the election or who have al-
ready been a member of the Supervisory
Board of the company for more than 20 year.
All these criteria are met or are considered.
Supervisory Board members did not report any
conflicts of interest in the year under review.
15RENK Group Annual Report 2015
The mandates of Supervisory Board members
in bodies of other companies are shown in the
notes to the consolidated financial statements.
Remuneration system of the Executive Board and the Supervisory Board For details of the remuneration system for the
Executive Board and the Supervisory Board,
please see the remuneration report in the man-
agement report.
Compliance In fiscal year 2015 RENK systematically imple-
mented and continued to develop the compli-
ance program covering the combating of cor-
ruption, antitrust law, data privacy and money
laundering.
RENK has established compliance as an integral
part of its corporate culture. The compliance
management system is coordinated, taught and
constantly refined by the compliance officer on
the basis of the MAN SE compliance program.
He reports directly to the RENK AG Executive
Board and functionally to the Audit Committee
of the Supervisory Board.
The compliance officer is assisted by a deputy
and one other employee in the area of review-
ing business partners. The Rheine and Hanover
plants also have “compliance champions”, i.e.
managers who are not full-time compliance
employees but who have assumed special re-
sponsibility for the issue of compliance.
Furthermore, the compliance officer can use
the resources of MAN’s corporate compliance
office. In particular, training and information
materials and e-learning courses are managed
from here. Policies are adapted to RENK’s struc-
ture and business model.
The compliance organization and the introduc-
tion of new compliance measures were closely
coordinated with the Executive Board and plant
management teams on the basis of identified
risks. The Risk and Compliance Board, which
meets quarterly, is informed of the progress in
measures and coordinates the next steps.
The global protection of personal data is en-
sured by an external data protection officer,
based on a data privacy policy that applies to
the entire RENK Group.
In implementing the findings of the compli-
ance risk assessment, a clear tone from the top
in terms of integrity, emanating from the Exec-
utive Board, managers and the compliance
officer, was ensured.
Ethical principles of conduct and compliance
requirements have been stipulated for RENK in
its Code of Conduct.
In addition to the Code of Conduct for Employ-
ees, RENK has issued a Code of Conduct for
Suppliers & Business Partners that defines cer-
tain minimum ethical standards that RENK’s
suppliers and business partners must agree to
comply with.
The integrity of sales support business partners
is checked as a mandatory requirement and
they are subject to an approval process.
In the reporting period there was a review
workshop as part of a compliance certification
process by Ernst & Young. This examined the
design, adequacy and effectiveness of the RENK
compliance management system in the “anti-
corruption” area. This workshop was completed
without any objections.
The compliance officer gave presentations on
the compliance organization, compliance pro-
cesses and compliance tools at RENK and com-
municated the Executive Board’s expectations
of employees in terms of compliance at events
for various employee groups.
The compliance officer and the compliance
help desk, which can be used by all employees
for matters concerning compliance, received 31
inquiries in the reporting period. These were
answered by the compliance officer and docu-
mented.
16
Transparency On the website www.renk.eu under the “Inves-
tor Relations”, the RENK Group publishes a
financial diary with all the important dates for
shareholders. Furthermore, this website also
provides all other important information that
can be accessed by shareholders and interested
members of the public, thereby allowing the
simultaneous and comprehensive communica-
tion of relevant information. This includes
annual reports and half-yearly reports, press
releases and invitations to and agendas for the
Annual General Meetings including the other
documentation that must be published in con-
nection with the Annual General Meeting.
Furthermore, such information that must be
disclosed immediately in accordance with capi-
tal market disclosure obligations is also pub-
lished on the www.renk.eu homepage under
“Investor Relations”. In particular, examples of
such information are:
• In accordance with section 15a of the Wertpa-
pierhandelsgesetz (WpHG – German Securi-
ties Trading Act) persons with management
duties and certain related parties must report
to the issuer and the Bundesanstalt für Fi-
nanzdienstleistungsaufsicht (BaFin – German
Federal Financial Supervisory Authority) on
the purchase and sale of RENK shares and fi-
nancial instruments that reference RENK
shares. As of May 19, 2015, one member of the
Executive Board reported the sale of 500 or-
dinary shares. According to the notifications
received, the direct and indirect holdings of
shares or derivatives referencing shares by
Executive Board and Supervisory Board
members have not exceeded the threshold of
1% of the shares outstanding, either in any
individual case or in total.
• In accordance with section 15 WpHG, German
issuers of financial instruments are required
to disclose inside information that directly
relate to them without delay.
• In accordance with section 26 WpHG, German
issuers must immediately publish notifica-
tions that they receive of shares of voting
rights in the company being exceeded or fall-
en below.
Accounting and audit of the financial statements The annual consolidated financial statements
of the RENK Group are prepared by the Execu-
tive Board based on the International Financial
Reporting Standards (IFRS), as adopted in the
European Union, and the single-entity financial
statements of RENK AG in accordance with the
German Commercial Code (HGB) and the Ger-
man Stock Corporation Act (AktG). The consoli-
dated financial statements of the RENK Group
are audited by the auditor and the Supervisory
Board.
In line with the recommendation in item 7.1.2
sentence 2 of the Code, the half-yearly report is
discussed at RENK by the Executive Board with
the Audit Committee prior to its publication.
The publication deadlines for the consolidated
financial statements and the half-yearly report
stipulated in item 7.1.2 sentence 4 of the Code
are complied with.
The Audit Committee of the Supervisory Board
proposes an auditor to be elected for the com-
pany to the Supervisory Board. The Annual
General Meeting appointed Pricewaterhouse-
Coopers AG Wirtschaftsprüfungsgesellschaft as
the auditor for fiscal year 2015 on June 18, 2015.
The auditor provided the Supervisory Board
with a statement regarding its independence,
which serves as proof of the auditor’s inde-
pendence. In addition to granting the audit
mandate and agreeing the fee, the Supervisory
Board arranged the immediate reporting by the
auditor to the Supervisory Board in the event of
findings or events of material importance in
the performance of the audit of the financial
statements and of the discovery of inaccuracies
in the declaration of conformity issued in ac-
cordance with section 161 AktG.
17RENK Group Annual Report 2015
<< Patzhalter Bild Enzelseite zu Stirnradge-
triebe >>
18
RENK Stock
Stock market environment 2015
The volatility of the international stock markets
continued in 2015. While prices reached new
record highs in the first half of the year, this
was followed by a slump in the second half.
Overall, the international stock indices were up
significantly in the 2015 trading year.
The announcement of further monetary easing
by the European Central Bank led to significant
growth rates at the European stock markets in
particular. In addition, the low level of interest
rates, the weak euro against the dollar and the
economic recovery in the euro area all positive-
ly influenced the stock markets.
By contrast, there were several factors causing
prices to fall in the second half of the year: the
stock market crash and the economic slowdown
in China caused global growth concerns. In
addition, the negative news from the automo-
tive industry and the prospect of a rate hike in
the US upset capital market participants. The
Greek debt dispute and geopolitical crises such
as Russia and Syria also caused prices to decline
at times.
Regardless of this, the index for Europe’s most
important securities, the Euro Stoxx, climbed
by around 10% over 2015 as a whole. The Ger-
man benchmark index, the DAX, was also up by
10% in the year under review and closed the
year at 10,743 points.
Performance of RENK shares
The positive performance of RENK’s shares in
the previous year was confirmed in 2015. Start-
ing at EUR 83.65 at the end of 2014, the share
price climbed significantly to more than
EUR 105.00 by the end of 2015, up by EUR 21.35
or 25.52% on the figure for the previous year.
Taking into account the dividend distribution,
this meant a total return for RENK shareholders
of 28.3% in 2015.
Looking at share price performance over a peri-
od of five years (not including dividends), the
average increase in value from 2011 to 2015 was
8.5%.
The Executive Board and the Supervisory Board
will be proposing the distribution of a dividend
unchanged year-on-year of EUR 2.20 for fiscal
2015 at this year’s Annual General Meeting. This
corresponds to a dividend yield based on the
closing price for 2015 of 2.1%.
19RENK Group Annual Report 2015
Key performance indicators for RENK shares
2015 2014
Earnings per share € 6.14 7.17
Cash dividend per share € 2.20 2.20
Market capitalisation1) € million 735 586
Closing price2) € 105.00 83.65
Annual high2) € 106.00 92.90
Annual low2) € 80.01 74.64
Price-earnings ratio 17.05 11.67
Dividend yield on shares3) % 2.1 2.6
Total return on shares4) % 28.3 2.6
Number of shares outstanding 6,800,097 6,800,097
1) Based on 7 million shares
2) Daily closing price at Frankfurt stock exchange
3) Cash dividend based on closing price for the year
4) On reinvestment of cash dividend at end of month following Annual General Meeting
20
Management Report of the RENK Group for the Fiscal Year from January 1 to December 31, 2015
Order intake and operating profit remain at a high level
• Order intake € 483 million (previous year: € 666 million)
• Sales revenue € 487 million (previous year: € 480 million)
• Headcount 2,198 (previous year: 2,196)
• Operating profit € 68 million (previous year: € 72 million)
• Operating return on sales 14.0% (previous year: 15.0%)
• Earnings per share € 6.14 (previous year: € 7.17)
• Net cash flow € 60 million (previous year: € –3 million)
• Proposed dividend: distribution of € 2.20 per share (previous year: € 2.20)
Outlook 2016
• Order intake at similar level
• Sales revenue slightly higher than previous year
• Slight decline in operating profit
• Operating return on sales still in double digits
21RENK Group Annual Report 2015
Business activities and management of the RENK Group
Business focus
RENK AG The origins of RENK AG date back to 1873 when
Johann Julius Renk founded a small workshop
for the mechanical production of gear wheels in
Augsburg Lechviertel. In 1879 the young firm
moved to the Göggingen neighborhood, which
is still the Group’s headquarter today. The com-
pany was transformed into a stock corporation
as early as 1897; since 1923 RENK has been a part
of what is now the MAN Group.
Today, RENK is a key provider of premium pul-
sion technology for a wide range of applica-
tions. It has a global outlook and major produc-
tion locations in Augsburg, Rheine and Hanover.
Overview of divisions The Special Gear Units business comprises
large-gear production at RENK AG’s Augsburg
site and RENK-MAAG GmbH, Winterthur, Swit-
zerland. The product range extends from sta-
tionary gear units for a variety of industrial
applications, including the cement industry, to
turbo gear units of up to 140 MW transmission
capacity to complex gear units for fast craft
and naval applications with up to 85 MW
transmission ratings.
The Vehicle Transmissions business is a lead-
ing manufacturer of fully automatic transmis-
sions for medium-weight and heavy tracked
vehicles, and also offer a broad range of power-
ful test rigs for a variety of industries.
RENK’s automatic power-shift transmissions
are suitable for rear or front installation with all
modern diesel engines. Electronically con-
trolled and monitored, the units are built at the
Augsburg site.
Vehicle Transmissions business also includes
the French subsidiary RENK France S.A.S., Saint
Ouen l’Aumône, which currently mainly per-
forms maintenance services for French army
tracked vehicle transmissions.
RENK’s test rig activities are also assigned to
Vehicle Transmissions. RENK Test System
GmbH (RTS) in Augsburg and its US sales com-
pany RENK Systems Corporation, Camby (IN),
USA, design and produce customized test rigs
for development, production and quality assur-
ance for vehicles, aviation, railway vehicle com-
ponents, tracked vehicles and wind turbines.
The Standard Gear Units business includes
large-gear production at RENK AG’s Rheine site.
It specializes in marine gear units for merchant
ships, ferries, LNG/LPG tankers, supply vessels
and special ships. It also manufactures gear
units for turbine plants and couplings for in-
dustrial applications. The site is also been cen-
ter for RENK’s offshore wind turbine activities.
The Slide Bearings business at RENK AG’s Han-
over site and the American sales company
RENK Corporation, Duncan (SC), USA, supply
hydrodynamic, lubricated slide bearings. These
are used for electric motors, generators, pumps,
blowers, water turbines, conveyors and marine
applications. RENK has been a leading provider
for standard series for years.
22
Intensive cooperation in the Group Combining the individual strengths and prod-
uct expertise of the individual divisions means
the potential for synergies that can be lever-
aged by the divisions working together. In addi-
tion, selective product allocation allows the
optimization of large-gear unit production and
assembly capacity.
Honing the competitive edge RENK’s competitive capability is built on main-
taining its technological leadership in individu-
al application areas, its global presence in its
relevant markets and excellent service quality
tailored to the needs of our international cus-
tomers.
23RENK Group Annual Report 2015
Internal management system and value management
Internal management process in the RENK Group The RENK Group is incorporated in the internal
management process of the Volkswagen Group.
The starting point for the internal management
of the RENK Group is medium-term planning,
which is produced once per year and forms the
core of operational planning for a period of five
years.
When planning the company’s future, the indi-
vidual planning components are determined
on the basis of the timescale involved. The co-
ordinated results of the upstream planning
processes are used as the basis for the medium-
term financial planning. This comprises the
upfront investments needed for alternative
products and the implementation of strategic
options, the financial planning of the income
statement, cash flow and balance sheet plan-
ning, profitability and liquidity.
The first year of the medium-term planning
period is then fixed and a budget prepared for
the individual months.
During the year, the budget is reviewed each
month to establish the degree to which the
targets have been met. Target/actual compari-
sons, prior-year comparisons, variance analyses
and, if necessary, action plans to ensure targets
are met are used in this process. For the current
fiscal year, detailed revolving monthly forecasts
are prepared for the coming three months and
the full year. This is done taking into account
the current risks and opportunities. The focus
of internal management during a year is there-
fore on adapting ongoing operations to internal
and external circumstances. At the same time,
the current forecast serves as a basis for the
medium-term and budget planning that fol-
lows it.
Key performance indicators in the RENK Group The most important financial performance
indicators in the RENK Group are sales revenue,
operating profit and operating return on sales.
The operating return on sales is the ratio of the
operating profit generated to sales revenue. The
most important non-financial performance
indicator is order intake.
Target returns In accordance with the objectives of the MAN
Group, RENK is striving for an operating return
on sales of 9.0% within a range of +/– 2 per-
centage points throughout a business cycle in
its Power Engineering business area. In 2015 the
operating return on sales was 14.0% after 15.0%
in the previous year.
24
Operating return on sales in %
*) Owing to the change in the financial reporting of the Volkswagen Group, from fiscal year 2014 operating profit as a percentage of sales revenue is reported as the operating return on sales. To ensure comparability, the operating return on sales was also calculated for fiscal year 2013.
2014
Operating return on sales (in %)
15.0
2013 13.5
2015 14.0
*
*) Owing to the change in the financial reporting of the Volkswagen Group, from fiscal year 2014
operating profit as a percentage of sales revenue is reported as the operating return on sales.
To ensure comparability, the operating return on sales was also calculated for fiscal year 2013.
25RENK Group Annual Report 2015
<<Platzhalter Bild einfügen>>
Employees joining together the planetary stage and the ring gear of a 5-MW wind energy gear unit
26
Business performance and economic situation of the RENK Group
Economic environment At 2.5% in fiscal year 2015, the growth rate for
the world economy was down slightly by 0.2%.
Despite the expansionary monetary policy of
many central banks, inflation remained at a low
level. In the industrialized nations the econo-
mic situation improved slightly overall, while
the pace of growth eased during fiscal year 2015
in many emerging economies. The compara-
tively low energy and commodity prices slowed
the economy of the individual exporting coun-
tries dependent on this.
In Western Europe the recovery process contin-
ued, the countries in the north of Europe most-
ly saw solid economic growth and the situation
in Southern Europe stabilized in most countries.
While Central Europe was still on track for posi-
tive growth, there was a recessive development
in Eastern Europe, in particular as a result of
the Russia-Ukraine conflict and declining ener-
gy prices.
The US economy lost some momentum during
the year after a robust start. After Brazil had
achieved only modest growth in the previous
year, the country slid into recession in 2015.
Although the Chinese economy did not match
the growth rates of the past, it was still at a high
level by international standards. The Indian
economy continued its positive trend and its
growth was similar to last year.
The German economy benefited from positive
consumer sentiment and the stable situation
on the labor market in 2015. According to the
German industry association VDMA, sales reve-
nue in global mechanical engineering grew by
just 1% in real terms in 2015 – largely on ac-
count of the dramatic slowdown in growth in
China, now the number one mechanical engi-
neering country. Mechanical and plant engi-
neering in Germany is expected to have
achieved a real increase in sales of 2% in the
year under review according to preliminary
VDMA calculations.
Summary by the Executive Board In 2015 developments on the markets relevant
to RENK were again characterized by significant
fluctuations, but overall the movements re-
mained close to the ranges predicted at the
beginning of the year and adjusted slightly
during the course of the year. It is an aspect of
RENK’s business model that, especially in terms
of major projects, the timing and structure
either cannot be planned exactly or can only be
planned with difficulty. The specific nature of
customer-oriented individual production also
means that there are risks as well as opportuni-
ties in relation to the anticipated parameters.
The management of RENK can therefore posi-
tively note that while the order intake and sales
revenue of the RENK Group were in line with
expectations in fiscal year 2015, operating prof-
it and the operating return on sales performed
better than originally forecast.
The tables below provide an overview of the
individual figures forecast for the year under
review 2015 and their attainment. For detailed
information on the development of key per-
formance indicators, please see the sections
“Results of operations” and “The segments”.
27RENK Group Annual Report 2015
Forecast variance analysis for the RENK Group Results 2014 Targets 2015 Adjustment of targets
for 2015 during year Results 2015
Order intake € 666 million Significantly lower than previous year, close to € 500 million
– € 483 million
Sales revenue € 480 million Slight increase as against 2014 – € 487 million
Operating profit € 72 million Around € 60 million Significantly more than € 60 million
€ 68 million
Operating return on sales (%)
15% Double-digit, but lower than 2014 – 14%
Forecast variance analysis for Special Gear Units segment Results 2014 Targets 2015 Adjustment of targets
for 2015 during year Results 2015
Order intake € 144 million Moderate increase – € 187 million
Sales revenue € 179 million Slight decline – € 157 million
Operating profit € 26.5 million Down significantly – € 16 million
Operating return on sales (%)
14.9% Down significantly – 9.9%
Forecast variance analysis for Vehicle Transmissions segment Results
2014 Targets 2015 Adjustment of targets
for 2015 during year Results 2015
Order intake € 330 million Significantly less than previous year – € 111 million
Sales revenue € 115 million Tangible increase – € 150 million
Operating profit € 15.7 million Tangible increase – € 24 million
Operating return on sales (%)
13.7% Virtually constant Slight improvement 15.7%
Forecast variance analysis for Standard Gear Units segment Results
2014 Targets 2015 Adjustment of targets
for 2015 during year Results 2015
Order intake € 98 million Slight increase Notably higher than previous year’s level
€ 99 million
Sales revenue € 91 million Not higher than previous year’s level – € 92 million
Operating profit € 13 million Significantly less than previous year’s level – € 10 million
Operating return on sales (%)
14.6% Significantly less than previous year’s level – 10.5%
28
Forecast variance analysis for Sliding Bearings Results 2014 Targets 2015 Adjustment of targets
for 2015 during year Results 2015
Order intake € 100 million Equal to previous year’s level – € 102 million
Sales revenue € 102 million Equal to previous year’s level – € 94 million
Operating profit € 16.9 million Slight improvement – € 18 million
Operating return on sales (%)
16.6% Slight improvement – 19.2%
29RENK Group Annual Report 2015
Results of operations
Order intake of e 483 million After the historic high for order intake in the
previous year (€ 666 million), new orders fell
significantly short of this record in 2015 as
expected. The largest single order in the history
of RENK was received in 2014 at more than
€ 200 million for the new British tracked vehi-
cle platform, and test systems also had the
highest order intake in the company’s history
to date. Given the ranges necessitated by
RENK’s business model, order intake in the
RENK Group was close to the forecast figure of
€ 500 million in fiscal year 2015 at
€ 483 million. Special Gear Units business per-
formed better than expected, though Standard
Gear Units business did not quite meet expec-
tations.
Order intake in € million
2011
2012
2013
Order intake in € million
456306
150
525349
176
Total Foreign Domestic
504308
196
2014666
529137
2015483
302181
30
Sales revenue approximately level with previous year In fiscal year 2015 sales revenue for RENK
Group amounting to € 487 million (previous
year € 480 million) this was slightly higher
than in 2014, and therefore approximately in
line with original planning, which was for a
slight increase as against the previous year. The
minor excesses and shortfalls in sales revenue
in the individual business units compared to
the respective planning largely canceled each
other out. Deliveries in Slide Bearings business
were slightly below projections, the Standard
Gear Units slightly outperformed its forecast.
Sales revenue in € million
2011
2012
2014
Sales revenue in € million
389243
146
476311
165
Total Foreign Domestic
480327
153
2015487
340147
2013485
317168
2011
2012
2013
Auftragseingang in Mio €
456306
150
525349
176
Gesamt Ausland Inland
504308
196
2014666
529137
2015483
301181
31RENK Group Annual Report 2015
Order backlog again higher than € 800 million After RENK received new orders in 2015 nearly
at the level of the sales revenue in the same
fiscal year, the Group again had an order back-
log in excess of the € 800 million threshold as
of the end of 2015. As of December 31, 2015, the
order backlog amounted to € 812 million after
€ 827 million in the previous year. In Vehicle
Transmissions business the order backlog de-
clined in line with expectations on account of
increased deliveries of new transmissions, while
there was an appreciable increase in Special
Gear Units. The two other units Standard Gear
Units and Slide Bearings each saw slight growth.
Order backlog in € million
2011
2012
2014
Order backlog in € million
586302
284
634338
296
Total Foreign Domestic
827532
295
2015812
515297
2013648
325323
32
Operating profit again at a high level in 2015 In fiscal year 2015 RENK AG generated an oper-
ating profit of € 68 million as against
€ 72 million in the previous year. In particular,
this decline in profit reflected the more diffi-
cult situation on a number of sales markets
important to RENK. Despite this, the figure
achieved of € 68 million is at the upper end of
the forecast range, which was already increased
to well above € 60 million over the course of
the year.
The result for fiscal year 2015 also included the
non-recurring factor of the reorganization of
the supplier relationship with a key customer
in the offshore wind power sector. Firstly, the
payment of originally agreed purchase com-
mitments led to income of € 9 million; this was
assigned to the two business units involved,
Special Gear Units and Standard Gear Units.
Secondly, this gave rise to an impairment loss
on a test rig specifically built for this order of
€ 3 million. By contrast, the comparative figure
for the previous year had included the extraor-
dinary expenses for the disposal of the former
supplier subsidiary ADMOS.
Based on its sales revenue, the RENK Group therefore reported an operating return on sales for fiscal year 2015 of 14.0% (previous year: 15.0%). The earnings improvements in Vehicle Transmissions and Slide Bearings only partially offset the reduced earnings in Special Gear Units and Standard Gear Units.
Operating profit in € million
53
66
2011
2012
2014
Operating profit in € million
72
2013 66
2011
2012
2013
Auftragseingang in Mio €
456306
150
525349
176
Gesamt Ausland Inland
504308
196
2014666
529137
2015483
301181
2015 68
33RENK Group Annual Report 2015
<< Platzhalter Doppelseite Bild einfügen >>
COPE® cement mill gear unit with 9-megawatt rating undergoing its initial trial run
34
<< Platzhalter Doppelseite Bild einfügen >>
Installing a gearwheel weighing several tons into a marine gear housing
35RENK Group Annual Report 2015
Income statement1)
2015 2014
€ million in % € million in %
Sales revenue 487 100.0 480 100.0
Cost of sales (377) (77.5) (362) (74.4)
Gross profit 109 22.5 118 24.6
Other operating income 18 3.8 13 2.7
Distribution expenses (34) (7.0) (32) (6.7)
Administrative expenses (20) (4.0) (18) (3.7)
Other operating expenses (6) (1.2) (9) (1.8)
Operating profit 68 14.0 72 14.8
Financial result (4) (0.9) 0 0.0
Profit before tax 64 13.1 72 14.8
Income tax expense (22) (4.5) (23) (4.9)
Profit after tax 42 8.6 49 10.2
Earnings per share in € 6.14 – 7.17 –
Dividend distribution per share in € 2.20 – 2.20 –
1) Minor differences in totals or percentages in the statements and tables below may occur as a result of the commercial rounding of
amounts in the thousands of euro.
The gross margin decreased from 24.6% in the
previous year to 22.5% in fiscal year 2015. This
was due, among other things, to changes in the
product composition of the orders billed. There
were only minor structural changes in distribu-
tion and administrative expenses. The increase
in other operating income resulted from the
settlement of an originally agreed purchase
commitment from the offshore wind power
sector, which was offset by significantly lower
income from the reversal of provisions com-
pared to the previous year. The decrease in
other operating expenses is primarily due to
the cost of the deconsolidation of the former
supplier subsidiary ADMOS amounting to
€ – 4 million in the previous year.
At € 22 million in the year under review, tax
expenses were slightly below the previous
year’s figure of € 23 million. The tax rate
climbed from 32.4% in the previous year to 34.5%
in 2015. This results from the respective income
tax rates for the domestic and foreign Group
companies and from prior period and deferred
taxes. The profit after tax therefore declined
from € 49 million in the previous year to
€ 42 million in fiscal year 2015. Earnings per
share were therefore down from € 7.17 to € 6.14.
34
Income statement1)
2015 2014
€ million in % € million in %
Sales revenue 487 100.0 480 100.0
Cost of sales (377) (77.5) (362) (75.4)
Gross profit 109 22.5 118 24.6
Other operating income 18 3.8 13 2.7
Distribution expenses (34) (7.0) (32) (6.7)
Administrative expenses (20) (4.0) (18) (3.7)
Other operating expenses (6) (1.2) (9) (1.8)
Operating profit 68 14.0 72 15.0
Financial result (4) (0.9) 0 0.0
Profit before tax 64 13.1 72 15.0
Income tax expense (22) (4.5) (23) (4.9)
Profit after tax 42 8.6 49 10.2
Earnings per share in € 6.14 – 7.17 –
Dividend distribution per share in € 2.20 – 2.20 –
1) Minor differences in totals or percentages in the statements and tables below may occur as a result of the commercial rounding of
amounts in the thousands of euro.
The gross margin decreased from 24.6% in the
previous year to 22.5% in fiscal year 2015. This
was due, among other things, to changes in the
product composition of the orders billed. There
were only minor structural changes in distribu-
tion and administrative expenses. The increase
in other operating income resulted from the
settlement of an originally agreed purchase
commitment from the offshore wind power
sector, which was offset by significantly lower
income from the reversal of provisions com-
pared to the previous year. The decrease in
other operating expenses is primarily due to
the cost of the deconsolidation of the former
supplier subsidiary ADMOS amounting to
€ – 4 million in the previous year.
At € 22 million in the year under review, tax
expenses were slightly below the previous
year’s figure of € 23 million. The tax rate
climbed from 32.4% in the previous year to 34.5%
in 2015. This results from the respective income
tax rates for the domestic and foreign Group
companies and from prior period and deferred
taxes. The profit after tax therefore declined
from € 49 million in the previous year to
€ 42 million in fiscal year 2015. Earnings per
share were therefore down from € 7.17 to € 6.14.
36
<< Platzhalter Bild einfügen >>
Coordinate measuring machine with integrated rotary table for high-precision measurement of gear housing
components
37RENK Group Annual Report 2015
Financial position of the RENK Group
Principles and objectives of financial management As in previous years, the financial management
of the RENK Group was performed centrally by
MAN SE.
The aim of central financial management is to
ensure sufficient liquidity at all times, to limit
financial risks and thereby to enhance enter-
prise value.
This comprises safeguarding liquidity resources
for operating activities, investment and target-
ed growth in addition to the hedging of cur-
rency risks. Liquidity is managed by the MAN
Group’s central cash management system,
which includes RENK AG and its consolidated
subsidiaries.
Cash flow – development of cash and cash equivalents and term deposits
€ million
2015 2014
Cash and cash equivalents at beginning of period 70 167
Cash flows from operating activities 101 35
Cash flows from current investing activities (41) (38)
Net cash flow 60 (3)
Change in deposits 0 (80)
Cash flows from investing activities (41) (118)
Cash flows from financing activities (15) (14)
Net change in cash and cash equivalents 47 (97)
Cash and cash equivalents at end of period 117 70
RENK generated cash flows from operating
activities of € 101 million in fiscal year 2015
after € 35 million in the previous year. The in-
crease predominantly resulted from the chang-
es in working capital. While the effects of inven-
tories and receivables roughly offset each other,
there was a significant increase in prepayments
received in particular, which had been in de-
cline in the previous year. In particular this was
due to increases from major orders in Vehicle
Transmissions business.
As expected, there was a significant increase in
the necessary capital expenditure as part of our
longer-term investment program again in 2015,
above all at the Augsburg site; € 41 million in
total was invested in property, plant and
equipment and intangible assets after
€ 38 million in the previous year. Further de-
tails can be found in the section “Capital ex-
penditures, environmental management”.
RENK generated a net cash flow from this of
€ 60 million in fiscal year 2015 after
€ – 3 million in the previous year.
As in previous years, cash flows from financing
activities primarily included the dividends paid.
On account of the increased dividend for fiscal
year 2014, the cash outflow climbed from
€ 14 million in 2014 to € 15 million in 2015.
Cash and cash equivalents for 2015 therefore
rose from € 70 million at the beginning of the
year to € 117 million at year-end. The total of
cash and cash equivalents and deposits was up
accordingly from € 150 million to € 197 million.
38
Net assets
€ million
Dec. 31, 2015 Dec. 31, 2014
Property, plant and equipment and intangible assets 195 175
Other investments and financial investments 5 5
Inventories 171 179
Trade receivables 82 67
Other current and noncurrent assets 85 86
Taxes 10 7
Cash and cash equivalents 117 70
Assets 665 589
Equity 360 327
Pensions 16 25
Other provisions 57 50
Prepayments received 154 110
Trade payables 37 38
Other current and noncurrent liabilities 33 31
Taxes 8 7
Equity and liabilities 665 589
In line with the long-term investment policy of
RENK of ensuring the future viability of the
Group with targeted measures to renew, ex-
pand and modernize its facilities and infra-
structure, a total of € 41 million was invested in
fiscal year 2015. Property, plant and equipment
and intangible assets therefore increased from
€ 175 million as of the start of 2015 to
€ 195 million as of the end of the year.
As projects were processed over the course of
2015, inventories declined from € 179 million to
€ 171 million and receivables rose from
€ 67 million to € 82 million.
As in the previous year, the other current and
noncurrent assets include the deposit at MAN
SE of € 80 million. The rise in cash and cash
equivalents of € 47 million to € 117 million cor-
responds to the inflow of prepayments received,
predominantly for Vehicle Transmission busi-
ness.
The equity of the RENK Group rose from
€ 327 million over the course of fiscal year 2015
to € 360 million. However, given the signifi-
cantly higher total assets, the equity ratio de-
clined slightly year-on-year from 55.6% to 54.2%
as of the end of 2015 – still a figure that repre-
sents a very solid financial structure.
Provisions for pension obligations decreased from € 25 million to € 16 million during the year, due in part to further allocations to pen-sion assets. As a result of the major orders re-ceived, the level of prepayments received climbed from € 110 million as of the start of 2015 to € 154 million as of the end of the year.
39RENK Group Annual Report 2015
Dividend distribution unchanged The goal of RENK’s dividends policy is still to
allow shareholders to participate appropriately
in the company’s success on the one hand,
while ensuring RENK’s future viability by in-
creasing its equity on the other. RENK AG has
reported net income for fiscal year 2015 in ac-
cordance with the German Commercial Code of
€ 34.2 million (previous year: € 44.0 million).
The Executive Board transferred € 17.1 million
of this (previous year: € 22.0 million) to re-
tained earnings. Including retained profits
brought forward, the net retained profits there-
fore amount to € 17.9 million (previous year:
€ 55.7 million). Based on the resolution of the
Annual General Meeting at June 18, 2015
€ 40.0 million (previous year: nil) were trans-
ferred from the net retained profits to the re-
tained earnings. The Executive Board and the
Supervisory Board propose to the Annual Gen-
eral Meeting the distribution of a dividend for
fiscal year 2015 unchanged as against the previ-
ous year of € 2.20 per share. Measured against
the closing price of RENK shares as of Decem-
ber 31, 2015, of € 105, this corresponds to a divi-
dend yield of 2.1% (previous year: 2.6%).
40
<<Platzhalter: Bild einfügen>>
41RENK Group Annual Report 2015
Capital information/disclosures in accordance with section 315(4) HGB1)
The disclosures on individual matters in ac-
cordance with section 289(4) and section 315(4)
Handelsgesetzbuch (HGB – German Commer-
cial Code) are as follows.
Clause 1: Composition of subscribed capital The share capital of RENK AG of € 17.9 million is
divided into 7 million no-par value bearer
shares. There are no other classes of shares.
Clause 2: Restrictions on voting rights or the transfer of shares Each share grants one vote; there are neither
restrictions on voting rights nor restrictions
concerning the transfer of shares.
Clause 3: Direct or indirect shareholdings of more than 10% of the capital In the fiscal year MAN SE, Munich, held 76% in
the subscribed capital of RENK AG. Through
their investment in MAN SE, Truck & Bus
GmbH, Wolfsburg, its parent company
Volkswagen Aktiengesellschaft, Wolfsburg, and
Porsche Automobil Holding SE, Stuttgart, and
their controlling shareholders also indirectly
held 76% in the subscribed capital of RENK.
RENK AG was not advised of, nor is it aware of,
any other direct or indirect shareholdings in
the capital of the company exceeding 10% of
the voting rights or the relevant reporting
thresholds of the Wertpapierhandelsgesetz
(WpHG – German Securities Trading Act).
Clause 4: Bearers of shares with special rights grant-ing control. There are no special rights granting control.
Clause 5: Control of voting rights for employee shareholdings in capital There is no control of voting rights.
Clause 6: Statutory provisions and regulations in the Articles of Association on the appointment and dismissal of members of the Executive Board and amendments to the Articles of Association The appointment and dismissal of the Execu-
tive Board are regulated by section 84 of the
Aktiengesetz (AktG – German Stock Corporation
Act). Members of the Executive Board are there-
fore appointed by the Supervisory Board for a
maximum of five years. In accordance with
Article 5 of the Articles of Association, the Ex-
ecutive Board of RENK AG consists of at least
two persons. The number of members is de-
termined by the Supervisory Board.
In accordance with section 179(2) AktG,
amendments to the Articles of Association can
be resolved by the Annual General Meeting
with a three-quarter majority of the capital
represented.
Clause 7: Powers of the Executive Board to issue or redeem shares The authorization of the Executive Board to
buy back own shares ended on November 8,
2007. 199,903 own shares or 2.86% of the total
number of shares had been bought back by this
date.
1) Please also see note 20 of the consolidated financial statements for the required capital disclosures.
42
The Executive Board is authorized, with the
approval of the Supervisory Board, to dispose of
or acquire own shares in a manner other than
on the stock market or by way of offer to all
shareholders with shareholders’ preemptive
rights disapplied,
• if the own shares acquired are sold at a price
not significantly less than the market price
of the shares of the company,
and/or
• if this is done as consideration in the con-
text of a business combination or to acquire
companies or equity investments in com-
panies.
The Executive Board is also authorized, with the
approval of the Supervisory Board, to withdraw
own shares without this requiring an additional
resolution by the Annual General Meeting.
These authorizations were not exercised in the
year under review. There is no authorized capi-
tal for the issue of new shares.
Clause 8: Material arrangements in the event of a change of control following a takeover bid There are no such arrangements.
Clause 9: Compensation agreements with members of the Executive Board or employees in the event of a takeover bid There are no change-of-control regulations
either for members of the Executive Board of
RENK AG or its employees.
Closing statement by the Executive Board on the dependent company report in accordance with section 312 AktG In accordance with section 312 of the Aktien-
gesetz (AktG – German Stock Corporation Act),
the Executive Board of RENK AG has prepared a
dependent company report. It lists all the
transactions with affiliates of the MAN Group
in fiscal year 2015. The closing statement by the
Executive Board on this report ends as follows:
“The Executive Board hereby declares that,
according to the circumstances known to it at
the time that each transaction was performed,
our company received appropriate considera-
tion for each transaction.”
43RENK Group Annual Report 2015
Research and development
Constant changes and innovation in business
and society, technological progress and advanc-
ing globalization mean that companies are
always facing new challenges. Accepting and
shaping these is the basis for being able to con-
tinue to compete successfully on the market
moving ahead.
Research and development place a prominent
role in this. Most of the products in RENK’s
range have long lifecycles, hence our innova-
tion management focuses on progress that
benefits customers in addition to the targeted
development of new products. Furthermore,
the company cooperates with various universi-
ties and research institutes.
In fiscal year 2015 RENK AG invested € 8 million
(previous year: € 8 million) of its own funds in
the development of new products and the en-
hancement of existing ones. RENK therefore
also continued its long-term strategy of taking
the demand for technologically advanced con-
cepts and the growing need for integrated ser-
vice packages into account through targeted
development services in 2015.
As in previous years, development activities in
2015 for high-performance marine gear units in
Special Gear Units again mainly focused on the
optimization and advancement of the
CODELAG technology with which gas turbines
and electric motors can be variably combined
as the main drives. In addition, the AED® (Ad-
vanced Electric Drive) developed by RENK was
made ready and the first orders have already
been received. This technology is being devel-
oped continuously in order to tap further ap-
plication areas in the maritime sector.
In the stationary gear units business area, the
newly developed drive concept for vertical mill
drives for cement COPE® (COmpact Planetary
Electric Drive) was presented to the public at a
customer day. The first use of a COPE® gear unit
will take place in the most powerful cement
plant to date with the world’s largest grinding
mill for raw meal. In addition, work was also
done on the development of conventional ce-
ment mill gear units and individual turbo gear
unit series.
The development work of recent years in Vehi-
cle Transmissions resulted in the completely
new, future-proof transmission electronics
reaching production readiness in 2015. The first
deliveries to customers were already made
during the year. In addition, the product
maintenance of existing transmission series
continued.
As an equipment manufacturer, the develop-
ment activities of RENK’s test rig business cen-
ter on the alignment with the respective specif-
ic customer requirements. Parallel to to-order
development, work also concentrated on the
advancement of the hardware and software
concept for RDDS (RENK Dynamic Data System)
test rig automation and the ongoing optimiza-
tion in the area of chassis dynamometers.
R&D activities for marine gear units in Stand-
ard Gear Units business emphasized the devel-
opment and implementation of full gear unit
requirements for the world’s biggest dredger –
from pump to cutting head gear units. The
main area for other maritime, stationary and
offshore wind turbine gear unit series was the
improvement of design and technical proper-
ties.
Development activities in Slide Bearings busi-
ness focused on coating technology in 2015. In
conventional sliding materials, efforts were
mainly directed towards cutting back on re-
sources while at the same time optimizing
costs; in alternative sliding materials the team
worked intensively on qualifying RENK slide
bearings for use under demanding operating
parameters.
44
<< Platzhalter Bild einfügen >>
Preparations for an AED® test run under full-load conditions
45RENK Group Annual Report 2015
Capital expenditures, environmental management
The RENK Group invested a total of € 41 million
in property, plant and equipment and intangi-
ble assets in fiscal year 2015 (previous year:
€ 38 million). RENK’s long-term capital ex-
penditure policy is geared towards the ex-
pected requirements of the markets for its
products and services. The main considerations
are still flexibility, speed and technological
leadership in the implementation of customer-
specific requirements, without losing sight of
maintaining or optimizing competitive cost
structures.
In line with the longer-term investment strate-
gy, the Augsburg site was again the priority in
RENK’s investing activities in 2015. In Special
Gear Units, the partial completion of the new
multipurpose hall for assembly and the test bay
was at the heart of activities. Large parts of the
assembly facilities and the paint shop com-
menced operations in 2015. Work on the test
bay facilities for large and turbo gear units also
progressed rapidly, with the result that trial
operation and the subsequent transition to full
operations are expected in the opening months
of 2016. Various production-related depart-
ments will also relocate to the office space in
the multipurpose hall in the coming months.
Investing activities in Vehicle Transmissions
continued the medium-term strategy launched
in previous years as well. The goal is to set up
production so as to enable the parallel manu-
facture and repair of various gear unit series at
low cost and with small unit numbers. The
chronological prioritization of the individual
investment measures was adjusted in line with
the current demand situation – also on account
of the major order placed in the previous year.
The major system for the production of new
housings went live in fiscal year 2015 with the
associated measurement equipment. Also, the
machinery setup was completed with further
machining centers and grinding machines and
some production equipment was moved into a
newly created hall. The short and medium-term
capacity utilization situation necessitated that
the planned installation of non-model-specific
hybrid load test stands be brought forward; two
test rigs already entered production at the end
of 2015. In addition to various infrastructure
projects, a new contemporary canteen was built
in Augsburg and is open to employees, follow-
ing acceptance and trial operation, from Janu-
ary 2016.
As in the previous year, investment activity in
Standard Gear Units business in Rheine concen-
trated on targeted optimization and exten-
sion/replacement of mechanical equipment,
testing and measurement equipment and the
logistical and physical infrastructure.
At the Hanover Slide Bearings site, after the
new construction work in previous years, the
necessary extension went ahead with a land
purchase and the subsequent building of the
required parking spaces. In addition, a number
of measures to improve the production infra-
structure and workplace conditions were im-
plemented or initiated.
RENK France also took the first major steps
towards adapting the building’s infrastructure
to current requirements and legal specifica-
tions.
Environmental issues are a top priority at
RENK’s production sites. The environmental
management system (DIN EN ISO 14001) of
RENK AG and RTS GmbH at the Augsburg site
introduced in 2012 was successfully recertified
in 2015. The environmental management sys-
tems at RENK AG’s Hanover site and RENK-
MAAG GmbH in Winterthur are also certified to
ISO 14001.
RENK AG’s second environmental program is
now running at the Augsburg site. It defines the
goals and measures for protecting the envi-
ronment for 2015 to 2018. With this program,
the company is committed to implementing
46
further voluntary protective measures in the
different environmental fields that go beyond
the extent required by law.
For example, the technology used in the new
system for manufacturing housings that went
live in the year under review makes it possible
to reduce the energy used production per part
by approximately 40%.
Furthermore, the new multifunctional test bays
currently being built in Special Gear Units
business area use an electromotive brake to
convert the kinetic energy of moving masses
into electrical energy with high efficiency and
feed this back into the grid (recuperation).
At its Hanover site, RENK has changed the en-
tire lighting system in the production hall from
high-energy, high-maintenance mercury-vapor
lamps to long-lasting LED lighting. The LED
lighting is dimmable and is actively controlled.
This ensures optimal and economical indoor
lighting at any time of the day. A new cogenera-
tion plant was installed modularly in late 2015.
This cogeneration plant with a thermal priority
circuit will cover 70% of the heat requirements
of the Hanover plant while generating 20% of
its required electric power. These measures
entail significant advantages in terms of energy
efficiency, carbon footprint and energy costs.
Capital expenditures and depreciation in € million
13
24
14
28
2011
2012
2014
Capital expenditures and depreciation, amortization and impairment losses in € million
Depreciation, amortization and impairment losses Capital expenditures
17
38
201521
41
201316
30
2011
2012
2013
Auftragseingang in Mio €
456306
150
525349
176
Gesamt Ausland Inland
504308
196
2014666
529137
2015483
301181
47RENK Group Annual Report 2015
<< Platzhalter Bild einfügen >>
Assembling a large gear unit in the new multi-functional shop at the Augsburg plant
48
<< Platzhalter Bild einfügen >>
In 2015, 133 apprentices and dual-course students completed their vocational training within the RENK Group.
49RENK Group Annual Report 2015
Employees
The RENK Group employed 2,198 people as of
December 31, 2015 (previous year: 2,196). It also
had 39 subcontracted employees (previous year:
48). The number of employees in Germany was
2,031 (previous year: 2,022), at the foreign com-
panies this figure was 167 (previous year: 174).
Company pension plan A central component of the company pension
plan in place is the MAN Profit-Sharing and
Pension Plan (MPP). In addition to employer
contributions, employees have the option of
voluntary deferred compensation as part of
their personal pension provision. Such contri-
butions are free from tax and social security
contributions up to the statutory contribution
assessment ceiling. The company supports this
voluntary deferred compensation with addi-
tional top-ups.
Employee participation in business success The great commitment by employees was again
rewarded in fiscal year 2015 by allowing them
to participate directly in the company’s success.
This profit-sharing is based on the stipulated
profitability targets.
Promotion of occupational health management As a result of the statutory retirement age be-
ing raised to 67, occupational health manage-
ment has become an even higher priority at
RENK. Integration management has therefore
been introduced at all sites. This is an inde-
pendent team of representatives on behalf of
the employer, the Works Council and the repre-
sentative body for severely disabled employees
(integration team) searching for opportunities
to assist employees who have been absent for
prolonged periods due to illness. The goal is
that sickness and disability are avoided as far as
possible or overcome as quickly as possible. The
integration team has a duty of confidentiality
in its duties and works closely with the respec-
tive works physicians, safety engineers and
external partners such as the integration office.
In some cases it has been possible here to offer
employees with serious health problems alter-
native jobs where they are fully capable despite
their limitations.
There are also other actions, partially supported
by company health insurance, to increase em-
ployee awareness about health-conscious be-
havior. Thus, advice on workplace ergonomics
is provided regularly. Employees are also of-
fered free back training programs. Furthermore,
the possibilities offered by the company extend
to health weeks in the works restaurant, colon
cancer awareness, vaccination consulting and
skin screening. Occupational health manage-
ment is an important part of operational HR
work to keep employees fit for future challeng-
es as well.
Strengthening management culture The high motivation of RENK employees must
be preserved and expanded. The quality of
management performance plays a central role
in this. For this reason, the top managers of all
sites have taken on this issue on behalf of the
Executive Board and developed new manage-
ment guiding principles. The management
principles this covers are intended to focus
managers even more on their daily manage-
ment activities while giving them the oppor-
tunity to reflect. Moderated workshops were
held at all levels to inform and raise awareness
among managers. This gave managers the
chance to actively engage with the guiding
principles and to see how they specifically re-
late to their own management work. The guid-
ing principles now have to become even more
established in the company and actively prac-
ticed as an example to employees.
Employee vocational training and qualification The activities in the areas of vocational training
and qualification were stepped up further in
2015 as well.
50
The success of the vocational training concept
at RENK has again been highlighted by numer-
ous awards at all sites. At the end of 2015 a total
of 133 vocational trainees (previous year: 143)
were being trained either directly at RENK’s
individual divisions or by RENK indirectly at
the MAN vocational training center in Augs-
burg. Of RENK AG’s 121 vocational trainees (pre-
vious year: 129), the Augsburg plant accounted
for 68 (previous year: 70), Rheine for 41 (previ-
ous year: 48) and Hanover 12 (previous year: 11).
There were also six vocational training places at
RTS, five at RENK-MAAG and one at RENK
France. 19 of the 133 vocational trainees are
doing combined studies of either mechanical
engineering or mechatronics at a university
parallel to their vocational training.
The now firmly established annual qualifica-
tion interviews keep employees actively in-
volved in their own development and allow a
reasonable assessment of training needs. As
already stated above, the main issue in training
was the subject of leadership. In 2015 this cen-
tered around operational managers (foremen).
A program consisting of four modules was
carried out for these employees, most of whom
have many years of management experience.
The objective was to identify the changing chal-
lenges in their role as operational managers
and to actively develop strategies for success.
The participants were able to test the success
strategies in private practical examples and
apply effective management methods in prac-
tice.
The technicians who make a key contribution to
the company’s success with their global service
operations were also a focus of activities. First
an employee survey was carried out on techni-
cians’ expectations and satisfaction. This
helped to gage the attractiveness of the compa-
ny as an employer specifically in the area of
assembly. Deficits identified in the survey were
addressed and solutions were sought and found
together with the technicians in moderated
workshops. Initial measures to facilitate the
work of our technicians on site with customers
are already being implemented.
In addition to the established management
programs and occasional coaching activities,
there was extensive professional training and
foreign language classes. Given the increasing
internationalization, there was also more train-
ing on intercultural skills for different cultural
groups. Compliance awareness and training for
employees is still offered extensively as part of
induction events for new employees, manage-
ment programs and classroom training.
The company’s success is not least due to em-
ployees’ strong sense of identification with and
loyalty to it, which is reflected in a very low
level of staff turnover. The company’s excellent
reputation on the regional and industry labor
market, and the good contact it constantly
maintains with universities, ensures that de-
manding technical and management positions
can be filled quickly with outstanding candi-
dates.
Our thanks to the employees and their repre-sentatives We would like to thank all our employees for
their dedication and the successes achieved as a
result. Our thanks also go to the employee rep-
resentatives on the Supervisory Board, the
members of the Works Council and the Eco-
nomic Committee for continuing the open and
constructive cooperation of past years.
We will fondly remember the members of staff
and former employees who passed away in the
period under review.
51RENK Group Annual Report 2015
<< Platzhalter Bild einfügen >>
Assembling a thrust bearing for a megayacht
52
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Assembling a spur gear unit for the world’s biggest cutter head suction dredger
53RENK Group Annual Report 2015
<< Platzhalter Doppelseite Bild "Schneidkopf einfügen>>
54
<< Platzhalter Bild einfügen >>
Air-mounted measuring machine for testing and documenting high-precision gearing on gearwheels of up to
3,500 mm diameter
55RENK Group Annual Report 2015
The segments
The segment tables below show order intake
and sales revenue for the individual segments
and intersegment transactions.
Special Gear Units (Augsburg plant/RENK-MAAG)
€ million
2015 2014 Change*
Order intake 186 144 43
Sales revenue 157 179 (22)
Operating profit 15 27 (11)
Operating return on sales (%)* 9.9 14.9 (5.0)
* Calculated in € thousand
General economic conditions As in previous years, the Special Gear Units
business has again faced very different general
conditions in its respective target markets over
the course in 2015.
The marine gear units business area also oper-
ated in a market environment largely character-
ized by the procurement activities of govern-
ment contractors for marine and coast guard
naval units in 2015. These demand technologi-
cally highly sophisticated gear sets in many
cases designed to run on a single drive source
or a combination of multiple ones depending
on their deployment. The market volume for
such high-end gear solutions has expanded
massively in recent years as a result of the
growing need to replace fleet vehicles, some of
which obsolete, in a number of navies. In addi-
tion to the needs of the public sector, there is
also demand for this technology from the small
market segment of megayachts, as they also
have similar high standards of performance,
flexibility, noiselessness and smooth running.
By contrast, the situation on the markets in
which the stationary gear units business area
operates was again completely different in the
year under review. Again in 2015, the conditions
here have not noticeably changed for the better.
The low price of oil left many projects, especial-
ly offshore or deep seas ones, economically
unviable. In addition to these immediate ef-
fects, falling oil revenues in oil-producing coun-
tries caused a slowdown in investment in infra-
structure projects. In addition, lower prices for
industrial commodities such as copper, chro-
mium, zinc and nickel led to a standstill on
major projects to extract, transport and mill
these substances. The low price of oil gave rise
to a minor positive development only in the
plastics manufacturing industry. The market
for cement gear units is a key area of activity
for this business area. The widely differing
prices from region to region for the locally
traded product cement require a regionally
differentiated sales policy. As in previous years,
all sub-markets for industrial gears were subject
to intensive competitive pressure that height-
ened further for certain applications in the year
under review. RENK is responding to this with a
variety of measures to improve processes and
enhance efficiency.
The economic conditions for the Swiss compa-
ny RENK-MAAG have also not improved in the
year under review. On account of the low steel
prices, the Chinese steel industry is hardly in-
vesting in expansion any more – which is hav-
ing a corresponding effect on demand for turbo
gear units. However, there are new sales oppor-
tunities for RENK-MAAG arising from the ten-
56
dency towards energy efficiency enhancement at existing steel plants.
There is also potential in after sales business,
for both industrial and marine gear units. Per-
formance is being somewhat hampered by the
rise in the Swiss franc exchange rate since it was
unpegged by the Swiss National Bank at the
beginning of 2015.
Business development At € 186 million, order intake in Special Gear
Units in 2015 was significantly higher than the
previous year’s level of € 144 million. This was
mainly due to the renewed increase in demand
for complex marine gear unit solutions; this
segment was able to post its highest order in-
take to date. In addition to follow-up orders
under the longer-term procurement programs
of various coastguards and navies, from the
United States or Turkey, for example, orders
were also received for individual projects –
partly as packages for multiple ship sets. Of
particular note is an extensive program of the
Italian Navy. In 2015 the first order was also
received for the new RENK AED® drive module
for use in a megayacht.
There was an overall increase in orders for sta-
tionary gear units as well. Growth in orders for
gear units for the plastics processing industry
and cement mills offset declines for turbo gear
units. Further orders were placed with RENK for
the newly developed alternative vertical cement
mill drive concept COPE®.
In line with the development and composition
of order intake in the year under review and the
previous year, sales revenue in Special Gear
Units business decreased to € 157 million in
2015 after € 179 million in 2014. While the de-
cline for maritime gear units is primarily due to
billing factors, the difficult market situation
was reflected in the drop in sales revenue for
stationary gear units especially. Key sales reve-
nue drivers in 2015 were the deliveries for the
procurement programs of the US, Italian, Brit-
ish and Indian navies or coast guards and the
deliveries of ship sets for several megayachts.
Result The decline in sales revenue, a changed sales
revenue mix and the losses at RENK-MAAG led
to a significant decline in the operating profit
for Special Gear Units to € 15 million after
€ 27 million in the previous year. The result for
the year under review includes Special Gear
Units’ share of the payment received for the
purchase commitment. The operating return
on sales for fiscal year 2015 was therefore 9.9%
(previous year: 14.9%).
Outlook The market for technically sophisticated gear
units for use in navy and coast guard ships is
expected to remain at a similar level in 2016.
On the one hand, follow-up orders are antici-
pated from longer term procurement programs
from various countries, while on the other, new
procurement projects are coming up, including
in North America and Europe.
No substantial change for the better is expected
in the market environment for industrial gear
units. Continuing strong competition is still
expected in all key product segments, and thus
high price pressure is also expected as a result.
A turnaround in turbomachinery (turbo gear
units) is not foreseeable in 2016. There are pro-
spects on the small market of special gear units
for the plastics processing industry. We also
foresee opportunities in the highly competitive
market for cement mill gear units, in both con-
ventional gear unit concepts and for COPE®
gear units established on the market in 2015.
RENK-MAAG will continue to pursue the diver-
sification strategy it has embarked on in terms
of product portfolio and target markets, and
will implement various cost optimization
measures.
57RENK Group Annual Report 2015
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58
<< Platzhalter Bild Fahrzeuggetriebe einfügen >>
Motor vehicle transmission test rig for acceptance procedures under full-load conditions
59RENK Group Annual Report 2015
Vehicle Transmissions (Augsburg plant/RENK France/RTS/RENK Systems)
€ million
2015 2014 Change*
Order intake 111 330 (219)
Sales revenue 150 115 35
Operating profit 24 16 8
Operating return on sales (%)* 15.7 13.7 2.0
* Calculated in € thousand
General economic conditions The part of the world market for medium-
weight and heavy tracked vehicles accessible to
RENK as a transmission manufacturer is still
characterized by a small number of long-term
procurement programs, frequently with small
volumes and hence low annual shipments. This
basic orientation of the market remained un-
changed in 2015 as well. It is still RENK’s prima-
ry goal to be involved in most of these global
procurement programs (while safeguarding its
technology leadership). We still have good pro-
spects for receiving new series orders, though it
is difficult to estimate when they will go ahead.
In addition to a variety of political and fiscal
reasons that can affect decisions in possible
customer countries, a restrictively handled
export approval policy can also negatively in-
fluence RENK’s business prospects in the medi-
um term. Furthermore, we are increasingly
facing new competitors that are often specifi-
cally set up and aided by their respective na-
tional administrations.
Rising competitive pressure as a result of the
market entry of new providers and budget re-
strictions among public sector contractors are
causing difficulty for after sales as well. As a
quality-oriented Original Equipment Manufac-
turer (OEM), RENK is also standing by its estab-
lished high technical standards for mainte-
nance.
As in previous years, RENK France’s activities
focused on the maintenance and repair of gear
models manufactured for the French army in
the past. These long-term trade relationships
are thus relatively stable.
The positive development in the economic
conditions for the test rig market in the second
half of 2014 continued in 2015. In the segment
relevant to RTS of technologically sophisticated
test rigs, several large projects have been
awarded with a regional emphasis in Europe;
more projects are looming.
Business development As expected, order intake in Vehicle Transmis-
sions remained well behind the record level of
the previous year in 2015; among other things,
2014 had included the largest single order in
the history of RENK for the new British tracked
vehicle platform.
Order intake in Vehicle Transmissions business
in Augsburg related primarily to after sales,
including extensive orders for spare parts and
upgrades. RENK France posted an order intake
in line with the previous year’s figure.
As expected, RENK’s test rig business also failed
to match the high order intake of the previous
year in 2015. However, RTS will deliver two sys-
tems for the planned world’s most powerful
test center for large bearings. In addition, large
orders were received from the vehicle and rail
sectors.
In total, Vehicle Transmissions reported an
order intake of € 111 million in 2015. Orders
were therefore down on the record level for
2014 by € 219 million. However, the previous
year’s figure had included record highs in both
Vehicle Transmissions in Augsburg and from
RENK’s test rig activities.
60
At € 150 million, sales revenue in Vehicle
Transmissions in 2015 significantly outper-
formed the previous year’s level (€ 115 million).
This was mainly as a result of the rise in deliver-
ies of new transmissions. In addition to the
German PUMA program, these related in par-
ticular to the transmission types HSWL 354,
HSWL 284C and RK 325. RENK’s test rig sales
revenues also exceeded the comparative figure
for the previous year. These resulted from al-
most the entire product portfolio, with a focus
on applications for the wind power, automotive,
rail and aerospace industries.
Result In particular, the rise in sales revenue in Vehicle
Transmissions contributed to the significant
increase in operating profit from € 16 million in
the previous year to € 24 million in the year
under review. This corresponds to an operating
return on sales for fiscal year 2015 of 15.7% in
2015 (previous year: 13.7%).
Outlook The market for tracked vehicle transmissions
will be similar to how it was in 2015 for the
foreseeable future. The major procurement
projects of individual countries will continue to
be of key importance. The associated specific
conditions, such as demands for local content,
knowledge transfer, etc. and the effects of often
irrelevant political considerations from various
directions will crucially influence both the
scope, procurement procedures and timing of
projects. This makes it very difficult for RENK to
produce meaningful, period-based planning,
even if there are a number of potential projects
on the horizon.
RENK France is expecting stable service busi-
ness. With the global political situation remain-
ing difficult, a more significant business expan-
sion outside France is currently not foreseeable.
The market prospects for RENK’s test rig activi-
ties remain promising in 2016.
59RENK Group Annual Report 2015
At € 150 million, sales revenue in Vehicle
Transmissions in 2015 significantly outper-
formed the previous year’s level (€ 115 million).
This was mainly as a result of the rise in deliver-
ies of new transmissions. In addition to the
German PUMA program, these related in par-
ticular to the transmission types HSWL 354,
HSWL 284C and RK 325. RENK’s test rig sales
revenues also exceeded the comparative figure
for the previous year. These resulted from al-
most the entire product portfolio, with a focus
on applications for the wind power, automotive,
rail and aerospace industries.
Result In particular, the rise in sales revenue in Vehicle
Transmissions contributed to the significant
increase in operating profit from € 16 million in
the previous year to € 24 million in the year
under review. This corresponds to an operating
return on sales for fiscal year 2015 of 15.7% in
2014 (previous year: 13.7%).
Outlook The market for tracked vehicle transmissions
will be similar to how it was in 2015 for the
foreseeable future. The major procurement
projects of individual countries will continue to
be of key importance. The associated specific
conditions, such as demands for local content,
knowledge transfer, etc. and the effects of often
irrelevant political considerations from various
directions will crucially influence both the
scope, procurement procedures and timing of
projects. This makes it very difficult for RENK to
produce meaningful, period-based planning,
even if there are a number of potential projects
on the horizon.
RENK France is expecting stable service busi-
ness. With the global political situation remain-
ing difficult, a more significant business expan-
sion outside France is currently not foreseeable.
The market prospects for RENK’s test rig activi-
ties remain promising in 2016.
61RENK Group Annual Report 2015
Platzhalter Bild "Prüfstand Hubschrauber" einfügen
Helicopter gear test rig for counter rotating and classic designs
62
<< Platzhalter Bild "Antriebshohlwelle einfügen>>
Hollow input drive shaft assemblies for a 5-MW wind energy gear unit
63RENK Group Annual Report 2015
Standard Gear Units (Rheine plant)
€ million
2015 2014 Change*
Order intake 99 98 1
Sales revenue 92 91 1
Operating profit 10 13 (4)
Operating return on sales (%)* 10.5 14.6 (4.1)
* Calculated in € thousand
General economic conditions As in previous years, the situation on the mar-
kets relevant to Standard Gear Units business
was still strained in 2015; some areas even
showed a marked deterioration. The market for
commercial ship projects remained mired at a
low level. As in previous years, there was pri-
marily movement in the energy sector, both for
natural gas transportation with LNG tankers
and for offshore applications. However, the new
construction projects for larger LNG tankers are
now designed almost exclusively with two-
stroke dual-fuel engines; unlike the previously
dominant drive concepts these require no gear
units – the potential market volume for Stand-
ard Gear Units business is declining accordingly.
The market situation for turbo gear units from
Rheine worsened again considerably in 2015.
Customer suffered drastic slumps in volume of
more than 50% in some cases. The few projects
implemented, e.g. for steam turbine plants or
in process business, were fiercely competitive
and it was only possible to win an order by
making substantial price concessions. With the
low price of oil both now and for the foreseea-
ble future, planned investments have been and
are being postponed further or abandoned
altogether. The couplings market also relevant
to RENK, as in the previous year, was far below
the level of previous years. The main target
market for couplings, plant engineering, also
suffered from considerable underutilization, in
turn leading to rising price pressure and the
search for cheaper alternative providers, e.g. in
the Asian region.
As in preceding years, the market for offshore
wind power plants in Germany in 2015 was
characterized by uncertainty regarding finance,
infrastructure connectivity and subsidization
policies; few projects made it to the contract
award phase. In Asia, Japan is still the driving
force in terms of the development and plan-
ning of offshore wind turbines.
Business development The developments described on the individual
markets were also seen in the order intake for
Standard Gear Units. The significant decline in
maritime gear units and couplings, and the
further drop in orders for turbo gear units, were
only offset by a major order for offshore wind
turbine gear units. In total, Standard Gear Units
business therefore received orders of
€ 99 million in 2015 after € 98 million in the
previous year.
Sales revenue was also slightly higher than the
previous year’s level in 2015 at € 92 million
(€ 91 million). Here the rise in billing for mari-
time gear units compensated the declines in
other areas (turbo gear units, couplings and
wind turbine gear units).
64
Result The tense market situation was again reflected
in a significant decline in operating profit for
Standard Gear Units in 2015; € 10 million in
2015 marks a decrease of almost € 4 million
compared to 2014. The result for 2015 includes
the proportionate share of the payment re-
ceived for the purchase commitment and the
impairment loss on the test rig. Thus, the oper-
ating return on sales for fiscal year 2015 was
10.5% after 14.6% in 2014.
Outlook The prospects for the sub-markets relevant to
Standard Gear Units business do not give any
reason to expect a change for the better in fis-
cal year 2016. The business area of maritme
gear units for LNG tankers so very important to
this business area in previous years will con-
tract significantly; firstly due to the general
development in the oil and gas industry and
secondly on account of the growing preference
for two-stroke engine designs with no gear
units. However, opportunities may arise for
special purpose vessels.
The outlook for turbo gear unit products also
remains gloomy. The difficult situation in 2015
will continue; for standard applications there
will be further declines in volumes that it may
only be possible to partially offset with solu-
tions for special applications.
Similarly, we anticipate little potential for re-
covery on the couplings market. Here, too, only
some of the reduced volume in standard appli-
cations will be compensated for by switching to
special purpose solutions.
No specific projects for our gear unit solutions
on the offshore wind turbine gear unit market
with a pending foreseeable horizon can cur-
rently be identified in Germany. However, or-
ders could arise in the Far East.
65RENK Group Annual Report 2015
<< Platzhalter Bild "Zahnflanschen" einfügen>>
Tooth-flank grinding on an output drive unit with a diameter of 4 meters
66
<< Platzhalter Bild "Standardlager" einfügen>>
Assembling a standard E-type bearing
67RENK Group Annual Report 2015
Sliding Bearings (Hanover plant/RENK Corporation)
€ million
2015 2014 Change*
Order intake 102 100 2
Sales revenue 94 102 (8)
Operating profit 18 17 1
Operating return on sales (%)* 19.2 16.6 2.6
* Calculated in € thousand
General economic conditions As a typical component supplier for mechanical
and plant engineering as well as ship and ma-
rine technology, the Slide Bearings business was
also unable to escape the economic conditions
of its individual customer industries in 2015.
Among RENK’s European customers, their high
dependence on exports coupled with the weak-
er than expected performance in the euro area
and the uncertainties due to various political
and economic crises led to significant setbacks.
In Brazil the situation worsened significantly
once again in 2015, in the United States the
announced economic recovery also has not yet
reached RENK customers. On the contrary, the
fall in prices for oil and gas triggered a massive
collapse in investment activities in this sector.
Once a growth engine, China did not have its
usual impact in 2015, and the extensive infra-
structure projects in India previously an-
nounced only trickled through.
In particular, the sharp decline in investments
in the oil industry in 2015 also hit sophisticated
applications for the exploration, extraction,
transportation and refining of the raw material.
In addition, the decline in prices for other
commodities led to reduced demand for new
systems and spare parts for equipment, for
example, in mining sites; worldwide a higher
number of mining sites was even completely
closed in 2015. In Germany, the exit from lignite
fired-generation and the promotion of renewa-
ble energies driven by environmental policy
contributed to investment restraint among the
operators of conventional power plants.
Business development Slide Bearings business received orders of
€ 102 million in fiscal year 2015, an increase of
€ 2 million compared to the figure for the pre-
vious year (€ 100 million). At the Hanover site,
the decline in standard e-bearings was more
than offset by the growth in project-related
other horizontal bearings and related compo-
nents. In standard e-bearings, demand for
smaller bearings for electric motors was down
in particular, while in project business there
were higher orders for POD-bearings and other
ship and hydrobearings. Brisk project activity
was similarly observed in vertical bearings
applications, through these projects were not
yet implemented in the year under review.
The US sales company RENK Corporation like-
wise posted a small increase in orders, though
expectations for an expansion of business with
standardized bearings for turbo generators
went unfulfilled.
Sales revenue in Slide Bearings decreased to
€ 94 million in fiscal year 2015 after
€ 102 million in the previous year. This was
mainly due to declines in standard e-bearings,
which affected both RENK AG in Hanover and
the RENK Corporation.
Result In fiscal year 2015 Slide Bearings business gen-
erated an operating profit of € 18 million as
against € 17 million in the previous year. It
should be noted that the previous year includ-
ed the effect of the deconsolidation of the for-
mer subsidiary ADMOS of € –4 million. Slide
Bearings reported an operating return on sales
of 19.2% (previous year: 16.6%) for 2015.
68
Outlook In spite of the problems in the US and China,
positive stimulus is most likely to emerge from
these markets, mainly for energy generation
applications in the field of electrical engineer-
ing. As a result of fracking in the US, energy
generation there is focused on gas turbine
powered generators and, in particular, on the
expansion of renewable energy from primarily
wind and solar power. There are similar devel-
opments in renewable energy in Europe. Thus,
the operation of conventional power plants is
increasingly becoming unprofitable, with the
result that operators are no longer investing in
renewal or upgrades given the lack of profitabil-
ity.
The internationalization that has been ad-
vanced in recent years in the form of RENK’s
own distribution centers allows significantly
faster delivery readiness with their own local
component stocks. Thus, the prerequisites are
in place to further expand spare parts business
in addition to business with new bearings.
RENK Group Annual Report 2015 69
<< Platzhalter Bild “Motorflanschlager”
einfügen>>
Drilling the lower section of a bearing housing for a motor flange bearing SM53
70
Report on risks and opportunities*)
Company-wide risk management system Doing business means constantly being ex-
posed to risk. RENK defines risk as the threat
that events, decisions or actions will prevent us
from achieving defined goals or successfully
pursuing certain strategies. In order to leverage
market opportunities we consciously take risks
if we can thereby expect an appropriate contri-
bution to enterprise value. Risks that threaten
the company’s continued existence should not
be taken or, if they are unavoidable, must be
minimized with appropriate measures. This
requires an effective risk management system
tailored to the needs of business activities and
that provides the necessary information early
on to guide the company.
Risk management at RENK is incorporated into
the risk management system of the MAN
Group. It is an integral part of corporate man-
agement and business processes and is com-
posed of the core elements of corporate plan-
ning, including a review process during the year,
risk and opportunities management (“risk
management”), the internal control system and
the compliance system.
One of the goals of corporate planning is to
guarantee that risks and opportunities are
identified and assessed early on so that suitable
measures can be taken. Risk management is set
up at all levels to provide current and relevant
information on the development of material
risks and opportunities and on the effective-
ness of the measures taken at an early stage.
The internal control system focuses on the
close monitoring and controlling of risks, in
particular with regard to the effectiveness of
business processes, the reliability of financial
reporting and compliance with legislation and
regulations.
The RENK compliance system assists in ensur-
ing compliance with all laws applicable to the
company, internal guidelines and codes of con-
duct. It places special emphasis on the issues of
combating corruption, antitrust law, data pri-
vacy, preventing money laundering and com-
bating terrorism. Details of this can be found
under “Compliance system”.
Organization of risk management and the inter-nal control system Overall responsibility for setting up and main-
taining an appropriate and targeted system for
the early identification of risks lies with the
RENK Executive Board. On its own responsibil-
ity, RENK’s Executive Board has organized risk
management and the internal control system
to an extent and in a form in line with the re-
quirements and circumstances specific to RENK.
The industrial governance management con-
cept calls for local decision-making processes
for operations in the RENK Group. The man-
agement is responsible for ensuring that in
addition to the RENK AG, by far the most im-
portant company, the other RENK companies
are included in the risk management and inter-
nal control system to the necessary extent. The
Group-wide policy for risk and opportunities
management and the internal control system
provides the framework for a Group-wide con-
cept of risk management and the internal con-
trol system, and contains regulations for struc-
tural organization, processes and reporting.
*) Including the report according to section 289(5) Handelsgesetzbuch (HGB – German Commercial Code)
RENK Group Annual Report 2015 71
The structural organization for risk manage-
ment and the internal control system is based
on the RENK management hierarchy. Roles and
bodies have been set up with defined responsi-
bilities for risks and their monitoring. There are
coordinators for risk management and the
internal control system to ensure that the pro-
cesses defined in the Group policy are imple-
mented. They also play a part in the ongoing
development and improvement of the risk
management system. RENK has set up an inter-
disciplinary Risk and Compliance Board that
acts as a central controlling and monitoring
body for risk management, the internal control
system and compliance.
In the course of discussions by the Risk and
Compliance Board, the risk situation is assessed
and measures for managing risk and remedying
control weaknesses are resolved.
The risk management control process The standard risk management control process
comprises the phases of identification, analysis,
assessment, controlling, monitoring and com-
munication. Risks and opportunities are classi-
fied as either short-term, i.e. up to one year, or
long-term, i.e. up to five years. Risks are as-
sessed according to their probability of occur-
rence and the extent of possible loss on a gross
and net basis, whereby the net assessment
includes any measures to mitigate risk. Qualita-
tive analyses are also possible. The planned
operating profit of the respective organization-
al unit is taken as the basis for assessing the
materiality of such a net analysis. Within their
areas of responsibility, risk officers define and
implement risk-minimizing measures in addi-
tion to monitoring their effectiveness. Using
uniformly defined risk areas, any risk clusters
can be identified early on and actively handled.
The Risk and Compliance Board assesses the
current risk situation by discussing and com-
paring risks and opportunities, resolving
measures and monitoring their effectiveness.
Discussions focus on the causes of risk and
measures. The risk and opportunities situation,
and the measures taken to manage and amelio-
rate this situation, are reported to the Execu-
tive Board. Furthermore, the Supervisory Board
receives regular reports on the risk position and
any significant weaknesses of the internal con-
trol system.
Moreover, risk management and the internal
control system are subject to constant further
development in to take into account changes in
conditions and to further increase their benefit
at every level of the company.
Accounting-related risk management system and internal control system Generally, risk management and the internal
control system comprise the accounting-
related processes and all risks and controls with
regard to financial reporting. This applies to all
aspects that can significantly affect the consol-
idated financial statements. Risk management
assesses identified risks in terms of their influ-
ence on the consolidated financial statements
and takes corresponding measures to manage
and control risk.
The internal controls are intended to limit risks
of material misstatements in financial report-
ing, risks of non-compliance with regulatory
standards or due to fraud, and minimize opera-
tional and business risks (such as asset risks
resulting from unauthorized operational deci-
sions or obligations entered into). Accounting
controls have to provide reasonable assurance
that the Group’s financial reporting process is
in accordance with IFRSs, the German Commer-
cial Code and other accounting-related rules
and laws, and that it is reliable.
As has the MAN Group, RENK has structured
and documented the internal control system in
place in accordance with the recommendations
of the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) in order to
systematically assess the effectiveness of inter-
nal controls. The documentation covers all
standard business processes, including process-
es relevant to the preparation of financial re-
porting with the necessary controls. It also
comprises controls for business-specific risks.
72
The scope of the documentation is determined
by the companies that are material to the con-
solidated financial statements or whose quali-
tative characteristics imply greater exposure to
risk. It is reviewed annually based on defined
criteria.
Key elements of risk management and control
in financial reporting are the clear allocation of
responsibilities and controls in the preparation
of financial statements, transparent rules
thanks to policies on accounting and the prepa-
ration of financial statements, appropriate
regulations governing access to the IT systems
relevant to financial reporting and the clear
assignment of responsibilities when using
third-party specialists. The dual control princi-
ple and the separation of functions are also key
principles in the financial reporting process
that are implemented in the internal controls
at RENK.
The effectiveness of accounting-related internal
controls must be assessed at least once per year,
primarily in the process of preparing the finan-
cial reporting. Identified weaknesses in controls
and agreed measures are included in the quar-
terly reports to the Risk and Compliance Board.
In addition, Corporate Audit at MAN SE, acting
on behalf of the RENK Executive Board as an
independent internal auditor, assesses the reg-
ularity, the security and the management and
monitoring processes for accounting-related
internal controls. The auditor also provides an
assessment of the accounting-related processes
as part of its auditing activities.
The control environment and cross-process
controls, as a framework for a functional and
operational internal control system, are docu-
mented centrally at division level and assessed
once annually in terms of their appropriateness
and functionality.
The control system is regularly checked for
completeness, suitability and effectiveness to
ensure that the rules for reducing procedural
and organizational risks are complied with at all
levels.
Opportunities and risks RENK classifies the material opportunities and
risks at the RENK Group that can have a signifi-
cant impact on the net assets, financial position
and results of operations on the basis of the
five risk areas of market, products, processes,
employees and finance.
Market On its relevant markets, RENK anticipates op-
portunities for profitable growth in the medi-
um- to long-term in many areas. The funda-
mental global economic trends – such as
continued growth, an increased international
division of labor and the resulting rise in global
transport routes and volumes, growing demand
for energy and the necessary innovation due to
evolving global climate policy – will continue.
As part of its strategic focus, RENK is continu-
ously working to realize these market opportu-
nities.
In our opinion, risks to a continuation of world
economic growth mainly lie in structural defi-
cits that could endanger the development of
many industrial nations and individual emerg-
ing economies. In the southern euro area, the
situation of some financial institutions, whose
stability and resilience to crisis are still not
assured, is acting against a sustainable econom-
ic recovery. The consistently high private and
public debt in many places is also hampering
growth prospects and can lead to negative mar-
ket reactions. Growth declines in key countries
and regions often directly affect the global
economy and therefore constitute a central risk.
The economic development of some emerging
economies is inhibited mainly by a dependence
on capital imports and socio-political tension.
Furthermore, risks are arising from corruption,
flawed government structures and the absence
of rule of law.
Geopolitical tensions and conflicts are another
major risk factor for the development of indi-
vidual economies and regions. As a result of
rising global economic interrelations, even local
developments can harm the world economy.
For example, an escalation of the conflicts in
RENK Group Annual Report 2015 73
Eastern Europe, the Middle East or Africa can
trigger disruptions on the global energy and
commodity markets and exacerbate migration
trends. The same is true of armed hostilities,
terrorist activities or the spread of infectious
disease, which can lead to sudden and unex-
pected market reactions.
Overall, we rate the probability of a global re-
cession as low. Given these risk factors, how-
ever, a decline in global economic growth or a
phase of below-average growth rates cannot be
ruled out. As a company that operates in the
capital goods industry, RENK is also subject to
fluctuations in the investment climate. Even
small changes in growth or growth expecta-
tions can result in significant changes in de-
mand for capital goods in the relevant markets
of the RENK Group, cancellations of orders
already booked or the reorganization of longer-
term business relationships with key customers.
RENK’s methods of countering these considera-
ble risks include flexible production concepts
and cost flexibility through subcon-tracted
employees, working time accounts, short-time
work and, if necessary, contractual compensa-
tion arrangements.
The overall economic environment can also
mean opportunities for RENK, if actual devel-
opment deviates positively from forecasts.
In addition, there are risks that protectionist
efforts, minimum requirements in terms of the
share of local production in individual coun-
tries or changing competitive conditions on the
sales markets of the RENK Group adversely
affect the planned growth. The markets for
products in the military environment are also
subject to further risks on account of their
dependence on political decision-making, cash-
strapped public sectors in many countries, and
possibly demands for local content and tech-
nology transfer. Furthermore, on many markets
RENK faces substantial competitive and price
pressure that can lead to a deterioration of the
profit margins it can achieve.
Changes in legislation, affecting taxes or cus-
toms, or to other provisions in individual coun-
tries can likewise entail risks to RENK. RENK
constantly monitors and assesses its economic,
political, legal, and social environments in or-
der to take into account the resulting risks and
opportunities in a timely manner when making
business decisions.
Further information on the current develop-
ments in connection with the economic situa-
tion and the repercussions of this can be found
in the sections entitled “Economic environ-
ment”, “Outlook” and in the comments on the
individual segments under “The segments”.
Products As a provider of premium technology, RENK’s
mission is to develop high-quality technologi-
cally and economically advanced products and
launch them on the market, which opens up
opportunities for RENK in a wide range of mar-
ket segments. Abandoning such a mission
would constitute an irresponsible risk to the
Group’s market position. Still, introducing new
products entails design and market risks. RENK
counters these with meticulous strategic plan-
ning that analyzes developments in its market-
place and business environment. Ensuring that
RENK products are of a consistently high quali-
ty is an essential prerequisite for tapping fur-
ther global market potential.
Products that have already been introduced on
the market are subject to risks in terms of the
product quality expected by customers. Poor
quality can lead to warranty and guarantee
costs and, in the long term, to losses of market
share or lower profit margins. In extreme cases,
product liability claims and damages are possi-
ble. Suppliers and the components they pro-
vide must undergo a strict approval procedure
to ensure that high quality standards are main-
tained. Once production has begun, established
in-process quality assurance measures ensure
that manufacturing defects are identified and
fixed in good time. Later, when the products are
in use, any defects that arise are recorded, ana-
lyzed and fixed.
74
RENK’s international presence with a variety of
products and services leads to the diversifica-
tion of its economic base. This counteracts the
risks of dependence on major customers or on
individual products and markets. However, this
also entails risks of patent infringements and
the unauthorized disclosure of company-
specific expertise. We therefore monitor our
sales markets and protect our expertise with
legal action where necessary.
Long-term customer contracts harbor addition-
al risk potential: changes in the political or
business environment within a market can lead
to additional expenses in the handling of major
projects. Whenever agreements with customers
include warranties or guarantee obligations,
there is the risk of illegitimate claims. This risk
is managed by formulating contracts with the
utmost care.
Processes RENK sees the continuous optimization of
business processes in Development, Purchasing,
Production, Sales and Administration as an
ongoing challenge to increase the efficiency of
these processes and also to counteract the sig-
nificant cost risks in these areas. For example,
suppliers are monitored preventively and con-
tinuously to detect significant risks of delays in
delivery or loss of suppliers at an early stage
and thus to mitigate their impact. RENK also
decisively and systematically improves the
underlying processes with regard to the opti-
mized commitment of current assets.
Risks can arise in handling major projects that
may only be recognized in the course of the
project. These can include problems in contract
design, the miscalculation of orders, changes in
economic and technical conditions, flaws in
project management or inadequate perfor-
mance by subcontractors. The RENK Group
minimizes these risks with comprehensive
project management and order controlling.
Major projects are submitted to the Executive
Board of RENK AG for approval and, upwards of
a certain size, also sent to the Controlling and
Finance departments of MAN SE and the Execu-
tive Board of MAN SE for their appraisal. Orders
already approved and ongoing that deviate
significantly from their planned development
are logged as critical orders in a special report-
ing system and regularly presented to the Ex-
ecutive Board.
In connection with its global business activities
RENK can also be confronted with legal dis-
putes and proceedings. In such cases, RENK
examines the respective legal situation – possi-
bly with the assistance of outside counsel – to
avert unwarranted claims or to enforce its own
claims.
Business processes at RENK AG are closely sup-
ported and in some cases even made possible
by IT. This leads to efficiency gains but also
harbors risk. Parts of its infrastructure can mal-
function as a result of accidents, disasters,
technical disruption or Internet attacks, there-
by impairing or completely shutting down
business processes. Moreover, there are the
risks of unauthorized access, theft and the de-
struction or misuse of business data and in-
formation. The resulting financial damage and
loss of reputation can affect individual compa-
nies or even the Group as a whole. To safeguard
the availability, authenticity, integrity and con-
fidentiality of data and information, and to
minimize identified and potential risks, RENK
uses state-of-the-art hardware and software
technologies and effective IT organization and
security mechanisms. This is evidenced by the
use of contemporary standards such as ITIL (IT
Infrastructure Library), the operation of a con-
stantly evolving, IT-related, internal control
system, internationally recognized ISO 27001/2
certification by the German Federal Office for
Information Security (BSI) and other special
certificates for the operation of sensitive IT
infrastructures and business processes for
German and international customers.
RENK Group Annual Report 2015 75
The internal control system plays a key role in
all business processes, including the accounting
process, as it is designed to ensure day-to-day
compliance with the relevant regulations and
to reduce unavoidable risks. It makes a vital
contribution to protecting RENK’s assets.
Employees A significant factor in RENK’s success is the
highly qualified specialists and managers who
set new technological benchmarks with RENK
products and effectively and efficiently manage
its business. Opportunities lie in the skills,
international outlook and innovation of the
employees who develop continuously im-
proved and forward-looking products, services
and processes. Risks lie in being unable to staff
key positions in good time and in line with
future requirements. Thanks to a wide array of
HR marketing activities, RENK has succeeded in
ensuring loyalty to the company among excel-
lently qualified specialists and managers.
An intentional or grossly negligent violation of
the law or regulations by employees or manag-
ers would be a material risk to RENK. RENK
counters this risk with a variety of measures as
part of its compliance system. In particular,
these include the Code of Conduct, compliance
policies and training, the compliance help desk,
the Speak Up! whistleblower portal and regular
compliance risk assessments and audits. For
more information, please refer to the section
“Compliance system”.
Finance As an international player, the RENK Group is
exposed to significant market price, liquidity
and credit risks. RENK addresses these risks,
which can also represent opportunities due to
market fluctuations, as part of its Group-wide
financial risk management.
The term market price risk also covers currency,
interest rate and commodity price risks. RENK’s
international business transactions involve
cash flows in several different currencies. If
RENK companies conduct transactions in a
currency other than their functional currency,
they are exposed to a currency risk, which can
affect both the prices for goods and services
and profit margins. RENK therefore largely
hedges its currency risks from orders, receiva-
bles and liabilities and, in part, those from
planned sales. The inclusion of subsidiaries
from countries outside the euro area in the
consolidated financial statements gives rise to
risks affecting profit or loss due to currency
translation. RENK does not hedge these transla-
tion risks with derivative financial instruments.
The hedging activities of the RENK Group and
its operating companies are handled centrally
by MAN SE as a counterparty. Substantial quan-
tities of commodities are needed for the manu-
facture of products. Commodity market price
trends or escalator clauses in contracts with
suppliers expose RENK to commodity price
risks that cannot always be passed on to cus-
tomers and that therefore erode profit margins.
Such risks are counteracted with long-term
supply agreements and escalator clauses in
contracts with customers.
Liquidity risk describes the risk that the RENK
Group is unable to adequately meet its finan-
cial obligations. Inflows and outflows of cash
are monitored and managed at all times to
safeguard liquidity. Moreover, cash flow trends
are monitored in the context of detailed finan-
cial planning. The company’s inclusion in the
central cash management of the MAN Group
ensures the availability of the necessary funds.
The operating activities of the RENK Group
expose it to credit risk. This includes the risk
that a partner does not meet its contractual
obligations on account of its own economic
situation or the political environment, thereby
causing a financial loss to RENK. These sover-
eign and counterparty risks are reduced by the
careful selection of deals and partners, suitable
contract and payment terms and guarantees
and letters of credit.
If there are indications of impairment on an
equity investment carried at cost, RENK is ex-
posed to the risk of an impairment loss in net
profit or loss.
76
The derivative hedges for currency, interest rate
and commodity risks – to the extent that they
are used at RENK – are components of econom-
ic hedges whose effectiveness is regularly
checked. In currency risk management hedges
are accounted for as cash flow hedges or, in
exceptional cases, as fair value hedges. Further
information on the management of market
price, liquidity and credit risks can be found in
the notes to the consolidated financial state-
ments, note (29).
To reduce the inherent financial risks and, out-
side Germany, on account of legal regulations,
the defined benefit obligations of the RENK
Group are largely covered pension assets kept
separate from working capital. For details of
pensions please see the notes to the consolidat-
ed financial statements, note (21).
Assessment of the risk and opportunities situa-tion of the Group by the Executive Board As in previous years, the market risks continue
to outweigh the other risk areas, though the
aggregate risk position has not changed signifi-
cantly. The opportunities identified can only
partly counteract the risks. It should be noted
that the realization of market opportunities is
already included in sophisticated internal
planning. Based on the quantified individual
risks reported in the Risk and Compliance Board,
the Executive Board is satisfied that there are
no significant risks in the respective organiza-
tional units that, individually or collectively, are
not covered by the budgeted operating profit.
This also applies to risks for which a higher
gross loss was calculated, but for which risk-
mitigating measures were taken or a low prob-
ability of occurrence was assumed.
Regarding the individual risk areas, the Execu-
tive Board anticipates the most significant
short-term risks in the market risk area. In par-
ticular, this concerns the uncertainties and the
strong competitive pressure in many markets
relevant to RENK, i.e. in business areas of Spe-
cial Gear Units, Standard Gear Units and Slide
Bearings, and in test rigs. In the area of product-
related risks, the focus is on potential technical
risks and warranty claims based on customer-
specific use of RENK products. The quantified
short-term risks in the processes and employ-
ees risk areas are of lesser importance.
On the basis of the risk management system
established in the MAN Group and introduced
at RENK, the Executive Board has again found
that no risks are discernible at the current time
that could lead to a lasting and substantial
impairment of the net assets, financial position
and results of operations of the RENK Group.
The risk management system implemented and
the related organizational measures thus allow
the Executive Board to learn of risks in a timely
manner and to initiate adequate measures.
Given the partially uncertain development, the
focus of activities in 2016 will continue to be on
the management of market risks.
Compliance system In fiscal year 2015 RENK systematically imple-
mented and continued to develop the compli-
ance program covering the combating of cor-
ruption, antitrust law, data privacy and money
laundering.
RENK has established compliance as an integral
part of its corporate culture. The compliance
management system is coordinated, taught and
constantly refined by the compliance officer on
the basis of the MAN compliance program. He
reports directly to the RENK AG Executive
Board and functionally to the Audit Committee
of the Supervisory Board.
The compliance officer is assisted by a deputy
and one other employee in the area of review-
ing business partners. The Rheine and Hanover
plants also have “compliance champions”, i.e.
managers who are not full-time compliance
employees but who have assumed special re-
sponsibility for the issue of compliance.
Furthermore, the compliance officer can use
the resources of MAN’s corporate compliance
office. In particular, training and information
materials and e-learning courses are managed
RENK Group Annual Report 2015 77
from here. Policies are adapted to RENK’s struc-
ture and business model.
The compliance organization and the introduc-
tion of new compliance measures were closely
coordinated with the Executive Board and plant
management teams on the basis of identified
risks. The Risk and Compliance Board, which
meets quarterly, is informed of the progress in
measures and coordinates the next steps.
The global protection of personal data is en-
sured by an external data protection officer,
based on a data privacy policy that applies to
the entire RENK Group.
In implementing the findings of the compli-
ance risk assessment, a clear tone from the top
in terms of integrity, emanating from the Exec-
utive Board, managers and the compliance
officer, was ensured.
Ethical principles of conduct and compliance
requirements for RENK are established in the
Code of Conduct.
In addition to the Code of Conduct for Employ-
ees, RENK has issued a Code of Conduct for
Suppliers and Business Partners that defines
certain minimum ethical standards that RENK’s
suppliers and business partners must agree to
comply with.
The integrity of sales support business partners
is checked as a mandatory requirement and
they are subject to an approval process.
In the reporting period there was a review
workshop as part of a compliance certification
process by Ernst & Young. This examined the
design, adequacy and effectiveness of the RENK
compliance management system in the “anti-
corruption” area. This workshop was completed
without any objections.
The compliance officer gave presentations on
the compliance organization, compliance pro-
cesses and compliance tools at RENK and com-
municated the Executive Board’s expectations
of employees in terms of compliance at events
for various employee groups.
The compliance officer and the compliance
help desk, which can be used by all employees
for matters concerning compliance, received 31
inquiries in the reporting period. These were
answered by the compliance officer and docu-
mented.
78
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RENK Group Annual Report 2015 79
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80
Remuneration report for fiscal year 2015
Remuneration of members of the Executive Board In accordance with the statutory rules, the total
remuneration of individual Executive Board
members is set by the full Supervisory Board.
The subject matter is prepared by the Supervi-
sory Board’s Executive Personnel Committee. At
the proposal of the Committee, the structure of
the remuneration system for the Executive
Board is also discussed by the full Supervisory
Board and – in accordance with the recommen-
dation of the German Corporate Governance
Code (GCGC, item 4.2.2) – regularly reviewed
and revised as necessary.
The objective and purpose of this is to establish
appropriate remuneration. In particular, the
criteria for this are the duties of the respective
member of the Executive Board, his personal
performance, the economic situation, the suc-
cess and the future prospects of RENK and the
MAN Group and the question of what is usual
for remuneration, taking into account the peer
group and remuneration structure otherwise in
place at RENK.
The Supervisory Board resolved to continue the
long-term remuneration component as decided
in the previous year in fiscal year 2015. Fur-
thermore, it was resolved that the average of
the “delta to the cost of capital” ratio of the
current and the preceding fiscal year is com-
pared against the target corridor stipulated in
advance by the Supervisory Board.
Remuneration structure and components Remuneration for members of the Executive
Board consists of a salary and benefits in kind
not related to performance, pension contribu-
tions and performance-based components. The
performance-based, variable remuneration
consists of components linked to business suc-
cess and long-term incentive components.
(a) Fixed remuneration The fixed remuneration is paid as a monthly
salary. There are also benefits in kind, including
in particular the provision of a company car
and the payment of insurance premiums. The
fixed remuneration is regularly reviewed and
revised as appropriate to take into account the
general pay trend and the responsibilities of
the respective Executive Board member.
(b) Variable remuneration The variable remuneration geared towards
business success (bonus) is based on two equal-
ly weighted performance components:
Performance component 1 Performance component 1 is the MAN Group’s
delta to the cost of capital, defined as the dif-
ference between return on capital employed
(ROCE) and the weighted average cost of capital
(WACC).
The ROCE is operating profit as a ratio of annual
average capital employed. Capital employed
consists of the equity, pensions and similar
obligations and financial liabilities of the MAN
Group, less securities, cash and cash equiva-
lents and loans to Group companies. Operating
profit is still calculated based on the definition
used in the MAN Group in 2013 and 2014. The
ROCE for 2015 was 5.1% (previous year: 5.8%).
The weighted average cost of capital (WACC) is
the forecast minimum return for investors for
the capital provided and the investment risk
taken. The cost of capital is used as the basis for
determining requirements for the return on
capital employed. A cost of capital of 10.0 %
was again applied in fiscal year 2015.
The delta to the cost of capital for 2015 was
–4.9% (2014: –4.2%).
RENK Group Annual Report 2015 81
For fiscal year 2015, the average delta to the cost
of capital for the current year and preceding
fiscal year is compared against the target corri-
dor stipulated in advance by the Supervisory
Board. The current and subsequent fiscal year
were used to find an average delta to the cost of
capital for fiscal year 2014.
Failing to reach the lower edge of the target
corridor equates to 0% of the target met. Reach-
ing the upper edge of the target corridor means
200% of the target met, the highest level possi-
ble. The degree to which the target has been
met between the upper and lower edges of the
corridor is calculated on a straight-line basis.
At 100% target met, 0.5 annual fixed salaries
are paid; at 200% target met the maximum
possible bonus for this performance compo-
nent of 1.0 annual fixed salaries are paid.
The target corridor currently in place for the
delta to the cost of capital is from –5% to +5%.
The target met between these points runs on a
straight-line basis from 0% to 200%. According-
ly, a delta of 5.0% or more results in the pay-
ment of 1.0 annual fixed salaries and an ROCE
equal to the cost of capital gives rise to the
payment of 0.5 annual fixed salaries.
Performance component 2 As the second performance component, RENK
AG’s return on sales (ROS) for the respective
fiscal year is compared against the target de-
fined in advance. The target met is calculated as
described for performance component 1.
The current ROS target corridor ranges from 7%
to 11%. The target met between these points
runs on a straight-line basis from 0% to 200%.
Accordingly, a return on sales of 11% results in
the payment of 1.0 annual fixed salaries and a
return on sales of 9% gives rise to the payment
of 0.5 annual fixed salaries. If the target is met
by more than 200%, payment is extrapolated
on a straight-line basis, provided that the total
maximum bonus possible has not been
achieved.
The total bonus consisting of both components
is capped at double the annual fixed remunera-
tion and is only paid out if the MAN Group
achieves a return on sales (ROS) of more than
2%.
Additional information on the bonus for fiscal year 2014 Performance component 1 for fiscal year 2014
was based on an average for the fiscal year in
question and the respective subsequent fiscal
year. The calculation of this component using
the actual figures for 2014 and 2015 now availa-
ble did not give rise to any subsequent adjust-
ment of this component.
82
Results for fiscal year 2015
In 2015 the targets and targets met for the bonus were as follows:
Performance component 100% target 200% value Actual value2015
Target met Bonus
1* (ROCE-WACC) 0% 5% (4.90)% 9%
0.05 annual fixed salaries
2 Return on Sales 9.00% 11.00% 14.40% 370%
1.85 annualfixed salaries
* This component is based on an average for the fiscal year in question and the respective preceding fiscal year.
(c) Long-term remuneration component The long-term remuneration component is
based on the MAN Group’s delta to the cost of
capital (see also description of performance
component 1). The result of this component is
paid as a cash bonus.
The average delta to the cost of capital for the
current year and past two fiscal years is com-
pared against the target corridor stipulated by
the Supervisory Board in advance.
Failing to reach the lower edge of the target
corridor equates to 0% of the target met. Reach-
ing the upper edge of the target corridor means
a target attainment level of 200%. The degree
to which the target has been met between the
upper and lower edges of the corridor is calcu-
lated on a straight-line basis.
At 100% target met, 0.5 annual fixed salaries
are paid; at 200% target met the maximum
possible bonus for this performance compo-
nent of 1.0 annual fixed salaries are paid.
The target corridor currently in place for the
delta to the cost of capital is from 0% to +20%.
The target met between these points runs on a
straight-line basis from 0% to 200%. According-
ly, a delta of 20% or more results in the pay-
ment of 1.0 annual fixed salaries and a value of
10% gives rise to the payment of 0.5 annual
fixed salaries.
(d) Company pension plan Pension benefits for members of the Executive
Board comprise old age, disability and survivors’
benefits. Entitlements to such benefits are ac-
cumulated under a defined contribution, fund-
based system, the Capital Account Plan. Each
year RENK AG pays a contribution of 20% of
eligible pay, which is the total of the contractu-
ally agreed fixed and variable remuneration.
Additional contributions through gross de-
ferred compensation are possible. The contri-
butions paid and interest on them are accumu-
lated in individual capital accounts. The
performance of capital account is directly
linked to the capital market and defined by a
basket of indices and other suitable parameters.
Investment risks are gradually reduced with
increasing age (lifecycle concept). On retire-
ment, the credit in the capital account, or at
least the total contributions paid, can be paid
out in a lump sum, in installments or converted
into an annuity. In the event of disability or
death, the balance accumulated, or at least
capital in the amount of four times the fixed
annual remuneration, is paid out.
Special employment contract regulations In the event of a member of the Executive
Board’s appointment ending early without
cause and at the instigation of the company, on
the basis of a regulation in effect since 2010 the
member in question receives the fixed remu-
neration, the bonus, insurance premium allow-
ances and pension plan contributions until the
regular end of his term of office, or for a maxi-
mum of two years. Any income from other
RENK Group Annual Report 2015 83
activities will be offset; the reference base for
calculating the amount of contributions to the
pension system will then be reduced according-
ly. The calculation of the bonus paid to the
member of the Executive Board as a severance
payment after his departure is based on the
past fiscal year and the projected bonus for the
current fiscal year.
In the event of a member of the Executive
Board’s appointment ending at his own instiga-
tion – which is possible giving notice of 18
months without stating grounds – he will re-
ceive his pay only until the end of his notice
period. There are no special regulations for a
change of control.
Remuneration of members of the Executive Board in 2015 The total remuneration of active members of
the Executive Board for their activities in fiscal
year 2015 amounted to € 1,359 thousand plus
€ 175 thousand for pensions (previous year:
€ 1,323 thousand plus € 178 thousand for pen-
sions). Individual details broken down by fixed,
performance-based and long-term incentive
components can be found in the table shown
under note (30) of the notes to the consolidated
financial statements and the tables below.
The individual remuneration of members of
the Executive Board is reported in this remu-
neration report on the basis of the uniform
sample tables recommended in the GCGC as
published on September 30, 2014. A key feature
of these sample tables is the separate reporting
of benefits granted and amounts actually paid.
Under the benefits granted, the targets (pay-
ment on 100% target met) and the minimum
and maximum values possible are shown for
the variable remuneration components (per-
formance components 1 and 2 and long-term
remuneration component).
Benefits granted
€ thousand Florian Hofbauer
Chief Executive Officer
Sales and Technology
2015 2014 Minimum Maximum
Fixed remuneration 230 230 230 230
Additional benefits 25 27 25 25
Total 255 257 255 255
Short-term variable remuneration
(Performance component 2)1) 115 115 0 230
Long-term variable remuneration
Performance component 1 (2 years)1) 115 115 0 230
Long-term remuneration component (3 years) 115 115 0 230
Total 345 345 0 690
Pension cost 95 91 95 95
Total remuneration 695 693 350 1,040
84
€ thousand Christian Hammel
Production and Administration
since August 1, 2015
2015 2014 Minimum Maximum
Fixed remuneration 92 – 92 92
Additional benefits 16 – 16 16
Total 108 – 108 108
Short-term variable remuneration
(Performance component 2)1) 46 – 0 92
Long-term variable remuneration
Performance component 1 (2 years)1) 46 – 0 92
Long-term remuneration component (3 years) 46 – 0 92
Total 138 – 0 276
Pension cost 18 – 18 18
Total remuneration 264 – 126 402
€ thousand Ulrich Sauter
Production and Administration
to July 31, 2015
2015 2014 Minimum Maximum
Fixed remuneration 128 220 128 128
Additional benefits 15 26 15 15
Total 143 246 143 143
Short-term variable remuneration
(Performance component 2)1) 64 110 0 128
Long-term variable remuneration
Performance component 1 (2 years)1) 64 110 0 128
Long-term remuneration component (3 years) 64 110 0 128
Total 192 330 0 384
Pension cost 53 87 53 53
Total remuneration 388 663 196 580
1) If the maximum for performance component 1 or 2 is not met, this can be compensated for by higher achievement of the respective
other component. The overall maximum is the total of the two individual maximums shown.
RENK Group Annual Report 2015 85
Payment
€ thousand Florian Hofbauer
Chief Executive Officer
Sales and Technology
2015 2014
Fixed remuneration 230 230
Additional benefits 25 27
Total 255 257
Short-term variable remuneration
(Performance component 2) 426 443
Long-term variable remuneration
Performance component 1 (2 years) 10 17
Long-term remuneration component (3 years) 0 0
Other (subsequent adjustment for bonus, special agreements) 0 (42)
Total 436 418
Pension cost 95 91
Total remuneration 786 766
€ thousand Christian Hammel
Production and Administration
since August 1, 2015
2015 2014
Fixed remuneration 92 –
Additional benefits 16 –
Total 108 –
Short-term variable remuneration
(Performance component 2) 170 –
Long-term variable remuneration
Performance component 1 (2 years) 4 –
Long-term remuneration component (3 years) 0 –
Other (subsequent adjustment for bonus, special agreements) 0 –
Total 174 –
Pension cost 18 –
Total remuneration 300 –
86
€ thousand Ulrich Sauter
Production and Administration
to July 31, 2015
2015 2014
Fixed remuneration 128 220
Additional benefits 15 26
Total 143 246
Short-term variable remuneration
(Performance component 2) 237 424
Long-term variable remuneration
Performance component 1 (2 years) 6 16
Long-term remuneration component (3 years) 0 0
Other (subsequent adjustment for bonus, special agreements) 0 (40)
Total 243 400
Pension cost 53 87
Total remuneration 439 733
Remuneration of members of the Supervisory Board The structure and amount of the remuneration
of the Supervisory Board are determined by the
Annual General Meeting and regulated in Arti-
cle 12 of the Articles of Association. They take
into account the duties and responsibilities of
the members of the Supervisory Board.
The annual remuneration consists of the fol-
lowing components:
• Fixed remuneration of € 10,000.
• Additional remuneration for the chair and
deputy chair of the Supervisory Board, and
for the chair and members of a committee,
with the exception of the Mediation Commit-
tee. The chair of the Supervisory Board is
granted double the fixed remuneration, the
deputy chair and the chair of a committee
one and a half times this amount, a commit-
tee member 1.25 times the amount. If mem-
bers perform several functions, remuneration
is based on the function with the highest re-
muneration entitlement.
Supervisory Board members’ expenses are also
reimbursed.
Remuneration of members of the Supervisory Board in 2015 The total remuneration payable to members of
the Supervisory Board for 2015 amounts to
€ 100,000 (previous year: € 97,000). An indi-
vidual breakdown of the remuneration of the
members of the Supervisory Board who served
on the Supervisory Board in 2015 can be found
under note (31) in the notes to the consolidated
financial statements.
Events after the end of the reporting period There were no special events after Decem-
ber 31, 2015, with a material effect on the net
assets, financial position and results of opera-
tions.
87RENK Group Annual Report 2015
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88
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Gearwheel being set up for turning
89RENK Group Annual Report 2015
Forecast
The expected development of the RENK Group and the general conditions for its business activities are described below. Risks and oppor-tunities that could cause a departure from the projected developments are shown in the re-port on risks and opportunities. The assump-tions are based on the current assessments of external institutions, including economic re-search institutes, banks and multinational or-ganizations.
The global economy is set to grow slightly more than in the previous year in 2016. With the economy picking up, most industrialized coun-tries are expected to see somewhat moderate expansion rates overall. A number of emerging economies should also grow as they did in the previous year, albeit with muted momentum. The highest increases are expected in the emerging economies of Asia. RENK projects that global economic growth will continue in the years 2017 to 2020.
In Western Europe the economic recovery should persist in 2016 as well. Solving structur-al problems continues to be a major challenge in this context. Rising growth rates are assumed for Central Europe.
The robust economic development in the Unit-ed States is set to persist in 2016 with a higher year-on-year growth rate. Brazil will presuma-bly experience negative growth again in 2016, mainly on account of its low domestic demand.
Economic growth in China is expected to re-main at a high level in 2016, but to continue to lose momentum compared to previous years. The economic situation in Japan is likely to improve only slightly. Stable growth with rela-tively high increases is expected for India.
The German economy will presumably keep on growing in 2016 and achieve slightly higher rates than in the year under review. The stable situation on the labor market should persist.
According to the German Engineering Associa-tion (VDMA), global mechanical engineering will develop with only slow momentum again
in 2016. It is forecasting a real increase in sales revenue of just 1% The VDMA expects to see a stagnation of real production in German me-chanical and plant engineering, with growth in individual regions or industries offsetting de-clines in others. Demand from many develop-ing and emerging economies is set to progress only slowly. However, exports to India could be on the rise. Positive stimulus is expected from the US.
The management of the RENK Group is fore-
casting that order intake in fiscal year 2016 will be on par with 2015. As in the past, this assumes that anticipated major projects in Vehicle Transmissions and Special Gear Units are im-plemented and that the order situation for slide bearings remains roughly stable. RENK’s sales revenue should grow slightly in 2016 compared to the previous year.
The unfavorable developments in a number of key markets and the tense competitive situa-tion in various product areas will mean a slight decline in operating profit in 2016. The operat-ing return on sales will therefore again be in the double digits, but it will not match the figure for 2015.
Safeguarding RENK’s market position – despite increasing competitive pressure – requires efficient processes that, qualitatively and quan-titatively, meet market and customer require-ments, e.g. for shorter order lead times and extended testing and documentation. The nec-essary preconditions for this are sufficient capacity and corresponding expertise. In addi-tion to continuous employee training, system-atically maintaining the longer-term invest-ment program is therefore a key foundation for future success.
Equally important for ensuring ongoing com-petitive capability is ensuring technology lead-ership in gear units and slide bearings. Devel-opment activities at RENK are therefore an important strategic priority in order to pre-serve its technological advantage in the future.
90
The prospects for RENK’s individual divisions in the coming fiscal year are as follows.
As in the previous year, the order intake in Special Gear Units in 2016 will largely consist
of orders for sophisticated marine gear unit solutions. An increase is possible in stationary gear units despite the lingering market difficul-ties. Overall, RENK is forecasting a tangible rise in order intake in 2016 as against the previous year for Special Gear Units business, with corre-sponding increases in sales revenue and operat-ing profit. The operating return on sales will thus be around the same level as in the previ-ous year.
A slight decrease in orders compared to 2015 is expected in Vehicle Transmissions business in
2016. There are still opportunities for individu-al projects in new transmissions and after sales. The environmental conditions that arise from, among other things, the demand for local con-tent, the transfer of expertise and offset, etc., hinder precise planning in terms of the timing and scope of project implementation. Sales revenue in Vehicle Transmissions will also de-cline slightly in 2016 owing to several series projects coming to an end. The change in prod-
uct mix and the sales revenue downturn will lead to an appreciable reduction in operating profit and the operating return on sales.
The difficult general conditions on many target markets and the structural changes in the de-mand mean that a significant decline in orders is expected for Standard Gear Units business
in 2016. Based on the current order backlog, however, sales revenue should be slightly high-er than the previous year’s level. This is also true of operating profit and the operating re-turn on sales.
The development in the customer industries for standard electrical bearings and the market position achieved set Slide Bearings business
the difficult task of securing the level to date. The foundations for this are the long-term strategy of keeping delivery times as short as possible with corresponding scheduling and local presence, and expanding support and consulting competency. In total, Slide Bearings business is forecasting order intake and sales revenue similar to the previous year in fiscal year 2016. However, the operating profit and the operating return on sales will fall slightly short of the previous year’s figures.
91RENK Group Annual Report 2015
The forward-looking statements and infor-
mation described above are based on our cur-
rent expectations and assumptions, and they
therefore entail a series of risks and uncertain-
ties. A variety of factors, many of them outside
our control, can influence our business activi-
ties and their outcome. These factors can result
in the actual performance of RENK AG deviat-
ing significantly from the forward-looking
statements.
Augsburg, February 15, 2016
RENK Aktiengesellschaft
The Executive Board
Florian Hofbauer Christian Hammel
92
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93RENK Group Annual Report 2015
RENK AG, Augsburg RENK Consolidated Financial Statements for the Fiscal Year from January 1 to December 31, 2015
94 Consolidated Income Statement
94 Reconciliation to Total Comprehensive Income for the Period
95 Consolidated Statement of Financial Position
96 Consolidated Statement of Changes in Equity
97 Consolidated Statement of Cash Flows
99 Notes to the Consolidated Financial Statements
99 Principles of Financial Reporting
115 Notes to the Consolidated Income Statement
121 Notes to the Consolidated Financial Position
134 Other Disclosures
157 Events after end of the reporting period
158 Members of the Supervisory Board and the Management Board and their
mandates
163 Responsibility Statement
94
Consolidated Income Statement
€ thousand
Note 2015 2014
Sales revenue [6] 486,684 480,313
Cost of sales – 377,368 – 362,213
Gross profit 109,316 118,100
Other operating income [7] 18,310 12,873
Distribution expenses – 34,158 – 32,177
General administrative expenses – 19,688 – 17,732
Other operating expenses [8] – 5,769 – 8,783
Operating profit 68,011 72,281
Finance costs [9] – 1,206 – 467
Other financial result [9] – 3,063 313
Financial result – 4,269 – 154
Profit before taxes 63,742 72,127
Income tax expense [10] – 21,960 – 23,362
Profit after tax (share of RENK shareholders) 41,782 48,764
Earnings per share in € (basic and diluted) [11] 6.14 7.17
Reconciliation to Total Comprehensive Income for the Period
€ thousand
2015 2014
Profit after tax 41,782 48,764
Items not reclassified to profit or loss
Remeasurement of pension plans1) 4,680 – 13,666
Deferred taxes1) – 1,308 4,248
3,372 – 9,418
Items reclassified to profit or loss in the future
Currency translation differences1) 2) 2,755 1,325
Change in fair values of derivatives2) – 173 – 3,259
Deferred taxes 54 1,020
2,636 – 914
Other comprehensive income for the period 6,008 – 10,332
Total comprehensive income 47,790 38,432
Other comprehensive income for the period as of Dec. 31 – 15,900 – 21,908
1) No deferred taxes relate to currency translation differences. 2) Please see note (29) “Derivative financial instruments and hedging strategies” for information on the reclassification
of recognized gains and losses to the income statement.
95RENK Group Annual Report 2015
Consolidated Statement of Financial Position
Assets
€ thousand
Note Dec. 31, 2015 Dec. 31, 2014
Intangible assets [14] 1,479 3,429
Property, plant and equipment [15] 193,579 171,358
Other and financial investments 4,534 4,534
Deferred tax assets [10] 7,267 5,683
Other noncurrent assets and receivables [18] 33 12
Noncurrent assets 206,892 185,016
Inventories [16] 171,218 178,727
Trade receivables [17] 81,584 67,041
Current income tax receivables 3,143 1,747
Other current assets and receivables [18] 84,704 86,337
Cash and cash equivalents [19] 117,061 70,396
Current assets 457,710 404,247
664,602 589,263
Equity and liabilities
€ thousand
Note Dec. 31, 2015 Dec. 31, 2014
Subscribed capital 17,920 17,920
Capital reserves 10,669 10,669
Retained earnings 347,521 320,700
Accumulated other comprehensive income – 15,900 – 21,908
Equity [20] 360,210 327,381
Pension provisions [21] 16,042 24,831
Deferred tax liabilities [10] 1,730 1,469
Other noncurrent provisions [22] 6,288 6,050
Other noncurrent liabilities [25] 370 1,394
Noncurrent liabilities and provisions 24,430 33,743
Effective income tax provisions 4,290 4,790
Trade payables [23] 36,767 38,177
Prepayments received [24] 154,306 110,483
Current income tax payables 1,620 874
Other current provisions [22] 50,405 44,398
Other current liabilities [25] 32,574 29,416
Current liabilities and provisions 279,962 228,139
664,602 589,263
96
Consolidated Statement of Changes in Equity
€ thousand
Subscribed capital
Capital reserves
Retained earnings
Other comprehens
ive income for the period
Total
As of Dec. 31, 2013 17,920 10,669 285,492 – 11,590 302,491
Profit after tax – – 48,764 – 48,764
Other comprehensive income for the period – – – – 10,332 – 10,332
Total comprehensive income – – 48,764 – 10,332 38,432
Dividends paid – – – 13,600 – – 13,600
Other changes – – 44 14 58
As of Dec. 31, 2014 17,920 10,669 320,700 – 21,908 327,381
Profit after tax – – 41,782 – 41,782
Other comprehensive income for the period – – – 6,008 6,008
Total comprehensive income – – 41,782 6,008 47,790
Dividends paid – – – 14,960 – – 14,960
As of Dec. 31, 2015 17,920 10,669 347,522 – 15,900 360,211
For further information see note (20)
97RENK Group Annual Report 2015
Consolidated Statement of Cash Flows
€ thousand
Note 2015 2014
Cash and cash equivalents at beginning of period 70,396 166,573
Profit before taxes 63,742 72,127
Income taxes paid – 25,715 – 31,189
Depreciation, amortization and impairment losses on intangible assets and property, plant and equipment [14.15] 21,365 17,444
Change in pension obligations – 4,216 1,969
Gains/losses from asset disposals 182 236
Other non-cash expenses and income1) 401 6,229
Change in inventories 9,347 – 22,262
Change in receivables – 13,754 18,204
Change in liabilities and prepayments received 44,354 – 24,749
Change in other provisions 5,574 – 2,740
Cash flows from operating activities2) 101,280 35,269
Payments to acquire property, plant and equipment and intangible assets [14.15] – 41,241 – 38,296
Disposal of subsidiaries less cash and cash equivalents 0 – 8
Proceeds from asset disposals 375 85
Cash inflow from deposits 80,000 0
Cash outflow from deposits – 80,000 – 80,000
Cash flows from investing activities – 40,866 – 118,219
Dividends paid [20] – 14,960 – 13,600
Change in other financial liabilities 0 – 63
Cash flows from financing activities – 14,960 – 13,663
Effect of exchange rate changes on cash and cash equivalents 1,211 436
Change in cash and cash equivalents 46,665 – 96,177
Cash and cash equivalents at end of period [19] 117,061 70,396
1) The other non-cash expenses and income in the previous year essentially include expenses from deconsolidation of € 4,242 thousand from the sale of shares in ADMOS (see note (3) (o) on prior-year information).
2) The cash flows from operating activities include interest income of € 244 thousand (previous year: € 674 thousand), interest expenses of € 71 thousand (previous year: € 88 thousand) and income from other and financial investments of € 1,360 thousand (previous year: € 1,117 thousand).
99RENK Group Annual Report 2015
Notes to the Consolidated Financial Statements
Principles of Financial Reporting
(1) General principles
RENK Aktiengesellschaft (hereinafter: RENK AG) is a listed corporation domiciled at
Gögginger Strasse 73, Augsburg, Germany. The RENK Group develops, produces and
distributes high-quality drive technology worldwide. Its divisions are Vehicle Trans-
missions, Slide Bearings, Special Gear Units and Standard Gear Units. As a 76% subsid-
iary of MAN SE, Munich, RENK AG is included in the consolidated financial statements
of MAN SE. In turn, MAN SE is a subsidiary of Volkswagen Truck & Bus GmbH, Braun-
schweig (formerly Truck & Bus GmbH, Wolfsburg), a wholly owned, direct subsidiary of
Volkswagen Aktiengesellschaft, Wolfsburg. Volkswagen Truck & Bus GmbH holds
74.35% of the capital in MAN SE. MAN SE and thus RENK AG as well are included in the
consolidated financial statements of Volkswagen Aktiengesellschaft, which are pub-
lished in Bundesanzeiger (the Federal Gazette).
These consolidated financial statements of RENK AG for the fiscal year from January 1
to December 31, 2015 were prepared in line with section 315a(1) of the Handelsgesetz-
buch (HGB – German Commercial Code) in accordance with the International Financial
Reporting Standards (IFRS) of the International Accounting Standards Board (IASB), as
applicable in the European Union as per Regulation (EC) No. 1606/2002 of the Europe-
an Parliament and of the Council. They were prepared on February 15, 2016 and appro-
ved for submission to the Supervisory Board by way of resolution of the Executive
Board.
The consolidated financial statements have been prepared in euro, the reporting cur-
rency. Unless otherwise stated, all figures are in thousands of euro (EUR thousand).
Minor differences in totals or percentages can occur as a result of the commercial
rounding of amounts.
(2) Consolidation and measurement of equity investments
(a) Equity investments The equity investments of RENK AG include subsidiaries, other equity investments
and financial investments. All material domestic and foreign subsidiaries that RENK
AG controls directly or indirectly are included in the consolidated financial state-
ments. Control exists when RENK AG directly or indirectly has power over the poten-
tial subsidiary on the basis of voting or other rights, is exposed to positive and nega-
tive variable returns and can affect the amount of the variable returns.
Other equity investments include interests in non-consolidated affiliated companies
and financial investments.
100
(b) Basis of consolidation
Companies included In addition to RENK AG, the consolidated financial statements include the wholly
owned subsidiaries RENK France S.A.S., Saint-Ouen-l’Aumône, France, RENK Corpora-
tion, Duncan (SC), USA, RENK Test System GmbH, Augsburg, RENK-MAAG GmbH, Win-
terthur, Switzerland, and RENK Systems Corporation, Camby (IN), USA.
The subsidiaries and financial investments not included in the consolidated financial
statements are insignificant overall to the net assets, financial position and results of
operations of the RENK Group. These are recognized in the consolidated financial
statements at their respective cost, taking into account any impairment losses re-
quired.
Please see note (34) for a full list of shareholdings of the RENK Group.
Expenses, income, receivables and liabilities between consolidated companies, in-
tragroup profits from intragroup deliveries of inventories and noncurrent assets are
eliminated. Deferred taxes are recognized on temporary differences in profit or loss
arising on consolidation.
Business combinations Business combinations are accounted for using the acquisition method. On initial
consolidation, the identifiable assets, liabilities and contingent liabilities of the ac-
quiree are carried at their fair value. Any positive difference between the cost of the
acquiree and the pro rata remeasured equity that remains thereafter is assigned to the
respective division of the RENK Group as a cash-generating unit and recognized sepa-
rated as goodwill. The division, including its assigned goodwill, is tested for impair-
ment at least once a year, and is written down to its lower recoverable amount if nec-
essary. In the event of the disposal of a subsidiary, the attributable goodwill is taken
into account in determining the result of the disposal. The costs associated with the
acquisition (incidental costs of acquisition) that do not serve the procurement of equi-
ty are not added to the purchase price and are instead expensed immediately.
(c) Other equity investments Equity investments for which a quoted market price or a reliably determinable fair
value is available are measured at that value. Financial investments in equity instru-
ments that are allocated to the available-for-sale category, but for which there is no
quoted price on an active market and whose fair value cannot be reliably determined,
are excluded from measurement at fair value. These equity investments are measured
at cost. If there are indications of impairment on an equity investment carried at cost,
an impairment test is performed and any impairment loss is recognized in profit or
loss.
101RENK Group Annual Report 2015
(d) Currency translation Transactions in foreign currencies are translated using the relevant exchange rates at
the time of the transaction. In subsequent periods, monetary assets and liabilities are
measured at the middle rate at the end of the reporting period; exchange rate differ-
ences are recognized in profit or loss. Non-monetary items that are measured in terms
of historical cost in a foreign currency are translated using the exchange rate at the
date of the transaction.
The financial statements of companies from countries outside the euro area are trans-
lated using the functional currency concept. The functional currency is determined by
the primary economic environment, it is the respective local currency of the compa-
nies consolidated.
The financial statements are translated using the modified current rate method, ac-
cording to which items in the statement of financial position – except equity – are
translated using the rate at the end of the reporting period, while income statement
items are translated using weighted average exchange rates. Except for other compre-
hensive income, equity is translated at historic rates. The resulting translation differ-
ences are recognized in other comprehensive income until the disposal of the subsidi-
ary and reported as a separate item in equity.
Middle rate Average rate Dec. 31, 2015 Dec. 31, 2014 20151) 20141)
US dollar 1.08870 1.21410 1.08772 1.32884 Swiss franc 1.08350 1.20240 1.08268 1.21463 Pound sterling 0.73395 0.77890 0.72595 0.80643 Chinese yuan 7.06080 7.53580 7.01935 8.18825 Japanese yen 131.07000 145.23000 132.35773 140.377
1) Weighted average price.
(3) Accounting principles
With the exception of certain items such as financial instruments and provisions for
pensions and similar obligations, the consolidated financial statements are prepared
on the basis of cost. The consolidated financial statements are based on the financial
statements of RENK AG and its consolidated subsidiaries, which are prepared using the
same Group-wide accounting policies as the Volkswagen and MAN Groups.
(a) Revenue recognition Sales revenue is recognized at the date on which the products or goods are delivered or
services rendered and risk has been transferred to the customer. The amount of sales
revenue must be reliably determinable and the recoverability of receivable must be
assumed. Discounts, customer bonuses and rebates reduce sales revenue.
For customer-specific construction contracts, sales revenue is recognized in line with
the percentage of completion method, for details please see the information on con-
struction contracts in note (h).
102
(b) Operating expenses Operating expenses are recognized when the service is utilized; expenses for advertis-
ing and sales promotion and other sales-related expenses are recognized at the time
they are incurred. The cost of sales consists of costs of the products and merchandise
sold. In addition to the direct material and manufacturing costs, production costs also
comprise production-related overheads, including depreciation of production equip-
ment.
Warranty provisions are recognized when the products are sold. Expenses for research
are immediately recognized in profit or loss. Interest and other borrowing costs are
recognized as expenses in the period in which they arise, with the exception of bor-
rowing costs that are capitalized as part of the cost of qualifying assets. A qualifying
asset is an asset that necessarily takes a period of at least a year to get ready for its
intended use or sale.
(c) Intangible assets Individually acquired intangible assets are carried at cost. Intangible assets acquired in
a business combination are measured at fair value at the acquisition date.
If the intangible assets have a finite useful life they are amortized on a straight-line
basis over their period of use. The amortization period for software is predominantly
three years. Licenses and similar rights are amortized over their contractual terms of
use. If the useful life cannot be determined there is no amortization. Instead, the in-
tangible assets are tested for impairment at least once a year and impairment losses
are recognized if necessary. Neither goodwill nor other intangible assets with an indef-
inite useful life were capitalized as of December 31, 2015.
Expenses for the development of new products or series are capitalized when the new
products or series are technically and economically feasible, are scheduled for internal
use or for sale, the expenses can be measured reliably, and sufficient resources to
complete the development project are available. Development costs that do not meet
these criteria and all research costs are recognized immediately in profit or loss. The
capitalized development costs are amortized on a straight-line basis from the date of
launch, typically over five to seven years. While a development project is still in pro-
gress, the amounts capitalized to date are tested for impairment at least annually. No
such development costs were capitalized as of the end of the 2015 and 2014 reporting
periods.
(d) Property, plant and equipment Property, plant and equipment are basically measured at historic cost less deprecia-
tion and impairment losses. Investment grants are deducted from cost. The cost of
internally generated assets includes directly attributable production costs, pro rata
production overheads and borrowing costs attributable to the production period.
Where property, plant and equipment consist of material identifiable components
with different useful lives, these components are recognized and depreciated sepa-
rately. Borrowing costs are not included in cost for the 2015 and 2014 fiscal years.
Expenses for maintenance and repairs are recognized in profit or loss, unless they
must be capitalized.
103RENK Group Annual Report 2015
Property, plant and equipment are depreciated on a straight-line basis over their ex-
pected useful life. The useful lives of property, plant and equipment are reviewed at
the end of each reporting period and adjusted if necessary. Depreciation is essentially
based on the following useful lives:
In years
Buildings 10 to 50
Improvements 5 to 33
Technical equipment and machinery 3 to 33
Other equipment, operating and office equipment 3 to 25
(e) Leases Leases for property, plant and equipment (investment leases) must be classified as
either a finance lease or an operating lease. If companies of the RENK Group substan-
tially bear the risks and rewards of the use of the leased asset as the lessee, the lease is
treated as a finance lease. All other leases in which the companies of the RENK Group
are lessees are treated as operating leases; the lease payments are recognized as an
expense. There were no leases that would qualify as finance leases in the RENK Group
as of either December 31, 2014 or December 31, 2015.
(f) Impairment If there are indications that the carrying amounts of intangible assets, property, plant
and equipment or other equity investments carried at cost and financial investments
may be impaired, an impairment test is performed. For intangible assets with indefi-
nite useful lives, capitalized development costs and goodwill are tested for impair-
ment at least annually. In the RENK Group there were no such items in the statement
of financial position subject to an annual impairment test as of the end of the 2015
and 2014 reporting periods.
The recoverable amount of the asset in question is calculated to determine the extent
of a possible impairment loss. The recoverable amount is the higher of the fair value
less costs to sell and value in use. The value in use is the present value of the expected
cash flows. An interest rate before taxes that reflects the market conditions is used as
the discount rate. If a recoverable amount cannot be determined for an individual
asset, the recoverable amount of the smallest identifiable cash-generating unit to
which the asset in question can be assigned is determined. If the recoverable amount
of an asset is lower than its carrying amount, an impairment loss on the asset is im-
mediately recognized in profit or loss.
If an asset or cash-generating unit on which an impairment loss was recognized later
has a higher recoverable amount, an impairment loss is reversed up to no higher than
the amortized cost that would have resulted without the impairment. The impairment
loss is reversed in profit or loss and is recognized in other operating income. The re-
versal of impairment losses on goodwill is not permitted. There was no recognized
goodwill in the RENK Group as of the end of the 2015 or 2014 reporting periods.
104
(g) Inventories Inventories are measured at the lower of cost or net realizable value. Cost includes
directly attributable production costs and pro rata fixed and variable production
overheads. The allocated overheads are mostly determined on the basis of normal
capacity utilization. Distribution expenses, general and administrative expenses and
borrowing costs are not capitalized. Raw materials and merchandise are measured at
weighted average cost.
(h) Construction contracts Construction contracts are accounted for using the percentage of completion method.
Under this method pro rata sale revenue and the cost of sales are reported in accord-
ance with progress achieved by the end of the reporting period. This is based on the
contract sales revenue agreed with the customer and the expected contract costs. The
percentage of completion is calculated as the share of the costs incurred by the end of
the reporting period in the total forecast contract costs (cost to cost method). If the
result of a construction contract cannot be reliably determined, revenue is recognized
only in the amount of the order costs incurred (zero profit method). Under the per-
centage of completion method, the parts of the contract for which sales revenue has
been received are recognized net of prepayments received under trade receivables in
the statement of financial position.
Expected losses from construction contracts are immediately recognized in full as an
expense by writing down capitalized assets and recognizing provisions.
(i) Primary financial instruments Primary financial instruments include, in particular, customer receivables, loans, oth-
er equity investments, financial investments, securities, cash and cash equivalents,
financial liabilities and trade payables. Regular way purchases and sales of primary
financial instruments are recognized as of the settlement date. Primary financial in-
struments are carried at fair value on initial recognition. Fair value on initial meas-
urement is generally the transaction price, i.e. the consideration given or received.
After initial measurement primary financial instruments are measured at either fair
value or at amortized cost, depending on the category to which they belong.
The amortized cost of a financial asset or financial liability is the amount
• at which the financial asset or financial liability was measured on initial recognition,
• less any repayments and
• any write-downs for impairment or uncollectibility and
• plus or minus the cumulative distribution of any difference between the original
amount and the amount repayable on maturity (premium, discount), which is
amortized using the effective interest method over the term of the financial asset or
financial liability.
Loans and receivables that are not held for trading are recognized at amortized cost
less impairment losses. In the RENK Group this category mainly includes receivables
from customers, other receivables, loans and cash and cash equivalents. Non-interest-
bearing and low-interest-bearing receivables with a remaining term of more than
twelve months are discounted by discounting the future cash flows at the market rate.
105RENK Group Annual Report 2015
The risk of default of financial assets in the loans and receivables category is taken into
account by recognizing specific valuation allowances and portfolio-based allowances.
Specifically, significant individual receivables are checked for objective evidence of
individual impairment. A potential impairment is assumed if certain circumstances
exist, such as late payments over a certain period, the initiation of enforcement
measures, imminent insolvency or overindebtedness, application for or opening of
insolvency proceedings or failure of restructuring measures. If an individual impair-
ment is determined, specific valuation allowances are recognized in the amount of the
losses already incurred applying uniform Group standards.
To calculate portfolio-based allowances, insignificant loans and significant individual
receivables without evidence of impairment are grouped into homogeneous portfoli-
os. As long as there is still uncertainty as to which receivable is impaired, average his-
torical probabilities of default are used for the respective portfolio.
Bad debt allowances on receivables are usually recognized in a separate allowance
account. They are reversed at the same time as the corresponding impaired receivable.
Financial instruments that are held neither to maturity nor for speculative purposes
and that do not belong to any other category are classified as available-for-sale finan-
cial assets. Available-for-sale financial assets are measured at fair value. In the RENK
Group this category mainly includes securities, other equity investments and financial
investments. The difference between the cost and the fair value is recognized in accu-
mulated other comprehensive income after taking into account deferred taxes. Avail-
able-for-sale financial assets are impaired when there is objective evidence of perma-
nent impairment. If the fair value is, for example, permanently or significantly below
the carrying amount, the impairment loss is recognized in profit or loss.
For securities the fair value is usually a market price. Other equity investments and
financial investments are also classified as available-for-sale financial assets. If these
have no listed market price and the fair value cannot be reliably determined with rea-
sonable effort, they are measured at cost. Available-for-sale financial assets are written
down when there is objective evidence of permanent impairment. The impairment
loss is recognized in profit or loss.
Financial investments held to maturity are measured at amortized cost. However,
neither this category nor the fair value option is generally used at RENK.
Subsidiaries that are not consolidated for reasons of materiality do not fall within the
scope of IAS 39. Starting in fiscal year 2015, the corresponding values will therefore be
removed from the data in accordance with IFRS 7. Furthermore, a separate class for
hedge derivative financial instruments has been added to tables in accordance with
IFRS 7. The corresponding tables and figures for the previous year were adjusted ac-
cordingly.
With the exception of derivative financial instruments, financial liabilities are subse-
quently measured at amortized cost.
106
Financial assets and liabilities are reported at their gross value. They are offset only
when this is legally enforceable for the RENK Group at the current time and it actually
intends to offset them.
RENK uses the central financial management of the MAN Group. Under a cash pooling
process, the balances of the RENK accounts included are closed out by MAN SE, usually
daily, and thus transformed into receivables from/liabilities to MAN SE. As part of its
central financial management, MAN SE manages and guarantees the MAN Group’s
liquidity and credit supply with corresponding transactions on the international fi-
nancial markets. Given their cash-like nature, RENK reports the receivables from fi-
nancial transactions with MAN SE as cash and cash equivalents. They result essentially
from central cash pooling and from highly liquid investments of a temporary nature
at MAN SE. By contrast, deposits made with MAN SE of an investment nature are re-
ported as other assets. Analogously, liabilities resulting from the central financial
management of the MAN Group are reported as financial liabilities.
(j) Derivative financial instruments The MAN Group uses derivative financial instruments to hedge foreign currency, in-
terest rate and other price risks that can arise mainly from operating activities. The
most important derivative financial instruments for the RENK Group are currency
forwards and options.
Derivative financial instruments are measured at fair value on initial recognition and
at the end of each subsequent reporting period. Derivative financial instruments are
recognized on the trade date.
The fair value for listed derivatives is their positive or negative market value, possibly
taking the counterparty risk into account. If no quoted market prices are available, fair
values are calculated based on the conditions at the end of the reporting period, such
as interest rates or exchange rates, and using recognized models, such as discounted
cash flow models or option pricing models.
The recognition of gains and losses from measurement at fair value is dependent on
the derivative’s classification.
Derivative financial instruments that do not meet the criteria of IAS 39 with regard to
hedge accounting are assigned to assets or liabilities held for trading and are meas-
ured at fair value through profit or loss. If no market value is available, the fair value is
calculated using appropriate measurement methods, such as discounted cash flow
methods.
A requirement for the application of hedge accounting is that a clear relationship is
documented between the hedged item and the hedging instrument and that its effec-
tiveness has been demonstrated. If these criteria are met, the hedge is designated and
documented as either a cash flow or fair value hedge from this time.
In a fair value hedge, the recognized assets and liabilities or unrecognized firm com-
mitments are hedged against fluctuations in fair value. In a fair value hedge, the
changes in the fair value of the derivative financial instrument and its hedged item are
107RENK Group Annual Report 2015
recognized in profit or loss. In a perfect hedge, the changes in value recognized in
profit or loss of the derivative financial instrument and the hedged item offset each
other almost entirely.
In a cash flow hedge, the recognized assets and liabilities, unrecognized firm com-
mitments and highly probable forecast transactions are hedged against the risk of
fluctuating cash flows. The effective portion of the change in the fair value of the de-
rivative financial instrument in a cash flow hedge is recognized in accumulated other
comprehensive income after the deduction of deferred taxes. Once the hedged item is
recognized in profit or loss, the pro rata equity is reclassified to other operating in-
come or expenses. The ineffective portion of the change in fair value is immediately
recognized in profit or loss. When the hedging instrument expires or is sold, terminat-
ed, or exercised, or the hedge no longer exists but the proposed transaction is still
expected to occur, the unrealized gains/losses accrued from this hedging instrument
to date remain in equity and, in accordance with the above, are recognized in profit or
loss when the hedged item is recognized in the income statement. If the originally
hedged transaction is no longer expected to occur, the cumulative unrealized gains
and losses reported within equity until then are also recognized in profit or loss.
Please see note (29) for information on the hedging strategy of the RENK Group and
the volumes at the end of the reporting period.
(k) Income taxes Provisions for taxes include current income tax liabilities. Deferred taxes are reported
in separate items of the statement of financial position and the income statement.
Provisions for potential tax risks are recognized based on the best possible estimate.
The likely amount of the tax arrears payment is used as a basis for recognized income
tax items.
Deferred tax assets and liabilities are recognized for temporary differences between
the financial reporting and the tax basis, for temporary differences in profit or loss
arising on consolidation and for tax credits and tax loss carryforwards. Deferred taxes
are measured at the prevailing tax rate at the end of the reporting period or the tax
rate highly likely to be used.
Deferred tax assets are recognized only to the extent that taxable profit will be availa-
ble for the utilization of the deductible temporary differences. Valuation allowances
are recognized for deferred tax assets whose realization is not expected in the foresee-
able future. Deferred tax assets for tax loss carryforwards are usually measured based
on future taxable income for a planning period of five fiscal years.
Deferred tax assets are offset against deferred tax liabilities if they relate to the same
taxation authority and to the extent that their maturities match.
Changes in deferred taxes in the statement of financial position lead to deferred tax
expense or income. If the change in deferred taxes results from items recognized di-
rectly in equity, the change in deferred taxes is also recognized directly in equity.
108
(l) Pensions and similar obligations Pension obligations from defined benefit plans are calculated using the projected unit
credit method. The future benefit obligations are measured on the basis of the bene-
fits accrued pro rata by the end of the reporting period and discounted to present
value. Their measurement reflects assumptions about the future development of
certain parameters that affect the future level of benefits.
Pension provisions are reduced by the fair value of the plan assets held to cover the
pension obligations. Please see note (21) for details on measurement. If plan assets
exceed obligations, the excess is recognized in other assets only if it will result in a
refund from the plan or a reduction of future contributions.
The service cost, which represents the benefits of active employees accumulated in
accordance with the benefit plan in the fiscal year, is reported in functional expenses.
Net interest income and expenses are calculated by multiplying the net asset or net
liability by the discount rate and are included in finance costs.
Remeasurements of the net asset or net liability include actuarial gains and losses
arising from differences between the actuarial assumptions used and the actual
trends, changes in actuarial assumptions and the return on plan assets, not including
amounts included in net interest income or expenses. Remeasurements are recog-
nized net of deferred taxes in equity.
Payments for defined contribution plans are recognized in functional expenses.
(m) Other provisions Other provisions are recognized for all identifiable risks and uncertain obligations
resulting from past events that will probably lead to a future outflow of resources and
whose amount can be reliably estimated. They are measured at the best estimate of
the expenditure required to settle the obligation. The provision is carried at its net
present value where the time value of money is material. The discount rate is based on
market interest rates. A reimbursement of third parties anticipated in connection with
a provision is recognized as a separate asset if its realization is as good as certain. Pro-
visions are regularly reviewed and adjusted as further information develops or cir-
cumstances change. If a change in an estimate results in a reduction of the obligation,
the provision is reversed accordingly and the income is recognized in other operating
income.
Provisions for warranties are recognized at the time of sale of the products concerned
or the performance of the relevant service. Their measurement is based primarily on
historical experience. Individual provisions are also recognized for known losses. Pro-
visions for restructuring measures are recognized when the Group has produced a
detailed formal restructuring plan and has notified the parties concerned. Provisions
for outstanding costs and other commitments are measured on the basis of services
yet to be performed, usually in the amount of the production costs expected to be
incurred. Provisions for anticipated losses from onerous contracts are recognized
when the expected benefit resulting from the contract is less than the unavoidable
costs to fulfill the contract.
109RENK Group Annual Report 2015
(n) Presentation of the financial statements The presentation in the statement of financial position distinguishes between current
and noncurrent assets and liabilities. Assets and liabilities are classified as current if
they are due within one year or within a longer operating cycle. Deferred tax assets
and liabilities and assets and provisions from defined benefit pension plans are shown
as noncurrent items. The consolidated income statement has been prepared using the
cost of sales method.
(o) Prior-year information Subsidiaries that are not consolidated for reasons of materiality do not fall within the
scope of IAS 39. Starting in fiscal year 2015, the corresponding values will therefore be
removed from the data in accordance with IFRS 7. Furthermore, a separate class for
hedge derivative financial instruments has been added to tables in accordance with
IFRS 7. The corresponding tables and figures for the previous year were adjusted.
On May 21, 2014 RENK AG sold its entire equity investment in ADMOS-Gleitlager Pro-
duktions- und Vertriebsgesellschaft mbH, Berlin. This investment had been assigned
to the Slide Bearings segment. The transaction resulted in expenses from deconsolida-
tion of € 4,242 thousand in the previous year. The transaction result was reported in
other operating expenses. Material statement of financial position items disposed of
were intangible assets and property, plant and equipment (€ 2,398 thousand), invento-
ries (€ 1,818 thousand) and financial liabilities (€ 2,183 thousand). The cash and cash
equivalents of € 8 thousand disposed of as a result of the sale were reported under
cash flows from investing activities in the statement of cash flows.
(p) Estimates and judgments When preparing consolidated financial statements, to a certain extent assumptions
and estimates are made that affect the amount and reporting of the recognized assets
and liabilities, income and expenses and information on contingent assets and liabili-
ties in the reporting period. The estimates were made on the basis of past experience
and other relevant factors, including the assumption of going concern. All estimates
and assumptions are made to the best of knowledge and belief to provide a true and
fair view of the net assets, financial position and results of operations of the Group.
Any uncertainty is adequately reflected in valuations, though future events can still
differ from these estimates. Estimates and judgments are reviewed on an ongoing
basis.
The assumptions made regarding the following matters as of the end of the reporting
period are of particular significance:
The goodwill impairment test performed at least once a year requires, among other
things, a forecast of future cash flows and their discounting. Such cash flows are based
on forecasts that are in turn based on the business and financial planning approved by
the management. Other material assumptions relate to the weighted average cost of
capital and tax rates. There was no recognized goodwill in the RENK Group as of the
end of the 2015 or 2014 reporting periods. If intangible assets, property, plant and
equipment, other equity investments carried at cost and financial investments are
tested for impairment, the recoverable amount of the assets is also incorporated into
110
management estimates. Any reversals of impairment losses in subsequent periods
also require significant judgment and estimates by management.
Estimates of the useful life of depreciable assets are based on past experience. If, in the
context of the review of useful life, a change is made in estimates, the remaining use-
ful life is adjusted and any impairment loss is recognized.
Individual construction contracts are accounted for using the percentage of comple-
tion method. This method places considerable importance on accurate estimates of
the percentage of completion. Depending on which method is used to determine the
percentage of completion, significant estimates include contract revenue, total con-
tract costs, the remaining costs to completion, contract risks and other assessments.
The management of the operating units is continuously reviewing the estimates for
such construction contracts and adjusts them as necessary.
Determining impairment of financial assets requires estimates of the level and proba-
bility of occurrence of future events. As far as possible, estimates are derived from
past experience.
Pensions and similar obligations are measured using actuarial methods. These are
based mainly on assumptions relating to discount rates, salary and pension trends and
mortality. These actuarial assumptions can differ significantly from actual develop-
ments due to changes in market and economic conditions and therefore lead to a sub-
stantial change in pensions and similar obligations.
As the Group operates in several countries, it is subject to different tax laws. The ex-
pected current income taxes and the deferred tax assets and liabilities must be calcu-
lated for each taxable entity. This requires, among other things, assumptions about
the interpretation of complex tax regulations and the ability to generate sufficient
taxable income within the respective tax type and jurisdiction. If these assumptions
differ from the actual outcome of such tax uncertainties, this can affect tax expenses
and deferred taxes. The best estimate of the expected tax payment is used for recog-
nized uncertain income tax positions.
Depending on the matter at hand, the measurement of other provisions and similar
obligations is complex at times and entails estimates to a considerable extent. The
assumptions made by management with respect to the timing and amount of utiliza-
tion are based, among other things, on historical data, available technical data, esti-
mates of cost trends and potential warranty claims, discount rates and possible recov-
erable amounts. Litigation and other legal proceedings simultaneously give rise to
complex legal issues and are subject to many difficulties and uncertainties. A provi-
sion is recognized for this if it is likely that, in connection with these proceedings, a
liability has been incurred that will probably lead to an outflow of resources and its
amount can be reliably estimated. Assessing whether a present obligation as of the
end of the reporting period is as a result of a past event, whether a future outflow is
likely and whether the obligation can be estimated reliably requires considerable
judgment and significant estimates by management. Future events and developments
as well as changes in estimates and assumptions can lead to an amended assessment
at a future date. Additional expenses that may have a material effect on the net assets,
111RENK Group Annual Report 2015
financial position and results of operations of RENK thus cannot be completely ruled
out. Changes in contractual or actual circumstances are monitored and assessed as
regards the potential impact on the amount and reporting of the recognized assets
and liabilities, income and expenses and information on contingent assets and liabili-
ties in the reporting period. Developments in these general conditions that deviate
from assumptions and are beyond management control can cause amounts to differ
from the original estimates.
(4) Statement of cash flows
In the statement of cash flows, cash flows are divided into cash flows from operating
activities, cash flows from investing activities, and cash flows from financing activities.
The effects of changes in the basis of consolidation and exchange rates are eliminated
in the respective positions. The effect of exchange rate changes on cash and cash
equivalents is reported separately. Cash flows from operating activities are calculated
using the indirect method.
Non-cash operating expenses and gains/losses from asset disposals are eliminated in
cash flows from operating activities.
Besides additions to property, plant and equipment, cash flows from investing activi-
ties also include deposits of an investment nature in intangible assets and equity in-
vestments. Proceeds from these items are offset against each other. Proceeds from the
disposal of subsidiaries are shown net of their cash and cash equivalents as of the date
of disposal.
Cash flows from financing activities consist of the following cash transactions: divi-
dend payments, proceeds from and payments for securities, the borrowing and re-
payment of financial liabilities.
The cash and cash equivalents shown in the statement of cash flows correspond to the
“Cash and cash equivalents” item in the statement of financial position. Cash and cash
equivalents include bank balances, highly liquid investments of a temporary nature
that are subject to only minor risks of fluctuations in value and the receivables under
the MAN Group’s internal cash pooling.
(5) New and revised accounting pronouncements and methods
(a) Provisions adopted for the first time RENK has implemented all accounting standards endorsed by the EU and effective for
financial periods from January 1, 2015.
Various regulations have become effective since January 1, 2015 as part of the 2013
improvement of International Financial Reporting Standards (Annual Improvement
Project 2013). These include amendments to IFRS 1, IFRS 3, IFRS 13 and IAS 40 and have
no material impact on the net assets, financial position and results of operations of
the RENK Group.
112
Furthermore, IFRIC 21 has been effective since January 1, 2015. IFRIC 21 regulates ac-
counting for public levies not covered by IAS 12 “Income Taxes”. In particular, it clari-
fies the circumstances for the recognition of a duty to pay a levy in the financial
statements. This interpretation also has no material effect on the net assets, financial
position and results of operations of the RENK Group.
The other accounting standards effective for the first time in fiscal year 2015 have no
material effect on the presentation of the net assets, financial position and results of
operations in the RENK consolidated financial statements.
(b) New and revised IFRSs not adopted RENK did not adopt the following accounting standards that have been adopted by the
IASB but that are not yet effective for the fiscal year in the 2015 consolidated financial
statements.
113RENK Group Annual Report 2015
Standard/Interpretation Published by IASB
Effective date1) Endorsed by EU
Anticipated impact
IFRS 9 Financial Instruments July 24, 2014 Jan. 1, 2018 No Change in recognition of fair value changes previously classified as available-for-sale financial instruments. General increase in loan loss provisions due to expected loss model compared to incurred loss model. Extension of hedge accounting designation options. Simplified effectiveness testing and additional disclosures.
IFRS 10 and IAS 28
Consolidated Financial Statements and Investments in Associates and Joint Ventures: Sales or contributions of assets between an investor and its associate/joint venture
September 11, 2014
Postponed2) No None
IFRS 10,IFRS 12 and IAS 28
Consolidated Financial Statements and Investments in Associates and Joint Ventures: Consolidation exceptions for investment entities
December 18, 2014
Jan. 1, 2016 No None
IFRS 11 Joint Arrangements: Accounting for Acquisitions of interests in Other Entities
May 6, 2014 Jan. 1, 2016 Yes None
IFRS 14 Regulatory Deferral Accounts
January 30, 2014 Jan. 1, 20166) No None
IFRS 15 Sales revenue from customer contracts
May 28, 2014 Jan. 1, 20183) No No material impact on revenue recognition. Additional disclosures.
IFRS 16 Leases January 13, 2016 Jan. 1, 2019 No No classification as a finance or operating lease for lessees, instead the basic recognition of all leases in the form of a right of use and lease obligation on its statement of financial position. No material changes in lessor accounting compared to IAS 17. Additional disclosures.
114
Standard/Interpretation Published by IASB
Effective date1) Endorsed by EU
Anticipated impact
IAS 1 Presentation of Financial Statements
December 18, 2014
Jan. 1, 2016 Yes No material impact
IAS 7 Statements of Cash Flows: Disclosures in notes
January 29, 2016 Jan. 1, 2017 No Preparation of a reconciliation statement for liabilities from financing activities, disclosures on liquidity restrictions
IAS 12 Income Taxes: Recognition of deferred tax assets for unrealized losses
January 19, 2016 Jan. 1, 2017 No No material impact
IAS 16 and IAS 38
Clarification of acceptable methods of depreciation and amortization
May 12, 2014 Jan. 1, 2016 Yes No material impact
IAS 16 and IAS 41
Agriculture: Bearer Plants
June 30, 2014 Jan. 1, 2016 Yes None
IAS 19 Employee Benefits: Defined benefit plans: employee contributions
November 21, 2013
Jan. 1, 2016 Yes No material impact
IAS 27 Separate Financial Statements: Equity method
August 12, 2014 Jan. 1, 2016 Yes None
International Financial Reporting Standards improvements 20124)
December 12, 2013
Jan. 1, 2016 Yes No material impact
International Financial Reporting Standards improvements 20145)
September 25, 2014
Jan. 1, 2016 Yes No material impact
1) Initial adoption mandatory for the RENK Group. 2) The IASB resolved on December 15, 2015 to postpone the date of initial adoption indefinitely. 3) Postponed until January 1, 2018 (IASB resolution of September 11, 2015). 4) Minor amendments to a variety of IFRSs (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16/38, IAS 24). 5) Minor amendments to a variety of IFRSs (IFRS 5, IFRS 7, IAS 19, IAS 34). 6) The EU Commission resolved on October 30, 2015 not to endorse IFRS 14 in EU law. The RENK Group is therefore
under no obligation to adopt it.
115RENK Group Annual Report 2015
Notes to the Consolidated Income Statement
(6) Sales revenue
€ thousand
2015 2014
Germany 147,341 153,133
Other EU countries 102,296 95,819
Other European countries 21,786 13,743
Asia 156,726 156,937
Americas 53,259 53,388
Africa 2,729 4,213
Australia and Oceania 2,547 3,080
486,684 480,313
Sales revenue from construction contracts amounts to € 25,162 thousand (previous
year: € 23,999 thousand).
(7) Other operating income
€ thousand
2015 2014
Claims for damages 9,138 0
Income from reversal of provisions 3,955 9,472
Income from currency translation differences and derivatives 3,302 1,548
Income from the derecognition of liabilities 1,099 784
Income from reversal of bad debt allowances on receivables and receivables written off 146 426
Income from penalties 31 177
Income from asset disposals 201 75
Other income 438 391
18,310 12,873
The income from damages includes € 8,900 thousand from the payment of agreed
purchase commitments for wind turbine gear units from the reorganization of the
supplier relationship with a customer in the offshore wind power sector.
Gains from exchange rate changes between the origination and payment date of re-
ceivables and liabilities in foreign currency, and price gains from measurement at the
closing date, are essentially included in income from currency translation differences.
116
(8) Other operating expenses
€ thousand
2015 2014
Expenses from currency translation differences and derivatives 2,423 2,067
Surety and bank fees 809 927
Bad debt allowances on receivables and other assets and write-off of bad debts 464 367
Losses on asset disposals 383 311
Allocated costs 379 445
Addition to other provisions 355 217
Other deconsolidation expenses 0 4,242
Other expenses 956 207
5,769 8,783
Other operating expenses comprise the expenses not allocated to functional expens-
es, in particular the cost of sales.
The changes in the expense from derivatives essentially result from changes in US
dollar exchange rates between the transaction rate and the rate at the realization date.
Other expenses from deconsolidation in the previous year related entirely to the sale
of the 100% interest in ADMOS-Gleitlager Produktions- und Vertriebsgesellschaft
mbH, Berlin. Please see the comments in note ((2) (o) Prior-year information).
(9) Finance costs and other financial result
€ thousand
2015 2014
Interest cost on provisions and liabilities 576 322
Interest expense 630 145
Finance costs 1,206 467
The effect of changes in the discount rate for liabilities and other provisions resulted
in an expense of € 69 thousand in fiscal year 2015 (previous year: € 118 thousand) and
is also included in finance costs.
€ thousand
2015 2014
Income from equity investments 1,360 1,117
Other interest and similar income 292 674
Income and expenses from measurement effects and write-downs of financial instruments – 4,662 416
Expenses from the fair value measurement of derivatives – 53 – 1,894
Other financial result – 3,063 313
117RENK Group Annual Report 2015
€ 160 thousand (previous year: € 375 thousand) of interest income results from finan-
cial transactions with MAN SE. Exchange rate hedges invoiced in the reporting period
and the valuation of balances noted in foreign currencies resulted in expenses of
€ 5,035 thousand, which played a key role in the development of other financial result.
(10) Income taxes
€ thousand
2015 2014
Current taxes
Germany 22,723 20,910
Outside Germany 1,856 2,371
Deferred taxes
Germany – 1,649 483
Outside Germany – 970 – 402
21,960 23,362
The tax expense forecast for fiscal year 2015 results from applying the domestic tax
rate of 31.17% still in effect for the 2015 assessment period to the profit before tax. As
in the previous year, this tax rate takes into account German municipal trade tax of
15.34%, German corporate income tax of 15.0% and the solidarity surcharge of 5.5% of
corporate income tax.
Reconciliation of forecast to current income taxes:
€ thousand
2015 % 2014 %
Profit before taxes 63,742 100 72,127 100
Forecast tax expense 19,868 31.2 22,482 31.2
Difference due to changes in tax rates 359 0.6 71 0.1
Tax-exempt income – 681 – 1.1 – 446 – 0.6
Non-deductible expenses 313 0.5 1,699 2.4
Taxes for previous years and other 2,101 3.3 – 444 – 0.6
Current tax expense 21,960 34.5 23,362 32.4
The current tax expense includes a prior-period income tax expense of € 2,096 thou-
sand (previous year: € 152 thousand).
118
Deferred taxes are attributable to the following items:
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Deferred tax assets
Intangible assets 47 52
Property, plant and equipment – –
Other equity investments and financial investments 4 4
Inventories 4,605 8,702
Receivables and other assets 31 12
Pensions and similar obligations 22,014 12,053
Liabilities and other provisions 1,771 1,706
Loss carryforwards 66 344
Impairment losses on deferred tax assets – –
Gross amount 28,538 22,873
of which noncurrent 22,131 12,453
Offset – 22,424 – 18,222
Consolidation 1,153 1,032
Statement of financial position 7,267 5,683
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Deferred tax liabilities
Intangible assets 3 430
Property, plant and equipment 9,448 8,855
Inventories 40 336
Receivables and other assets 10,184 923
Pensions and similar obligations – –
Liabilities and other provisions 4,377 8,966
Gross amount 24,052 19,510
of which noncurrent 9,452 9,285
Offset – 22,424 – 18,222
Consolidation 102 181
Statement of financial position 1,730 1,469
In connection with investments in subsidiaries there are temporary differences for
which no deferred taxes were recognized in the amount of € 351 thousand (previous
year: € 231 thousand).
119RENK Group Annual Report 2015
(11) Earnings per share
2015 2014
Profit after tax in € thousand 41,782 48,764
Weighted average shares outstanding (in thousands) 6,800 6,800
Earnings per share in € 6.14 7.17
In accordance with IAS 33, earnings per share are calculated from the consolidated
profit after tax and the average number of shares outstanding in the year. There were
no financial instruments as of either December 31, 2015 or December 31, 2014 that
would dilute earnings per share.
(12) Other income statement disclosures
The cost of materials is as follows:
€ thousand
2015 2014
Cost of raw materials, consumables and supplies, and of purchased merchandise 159,070 143,112
Cost of purchased services 17,438 22,083
176,508 165,195
The cost of sales includes research and development costs of € 8,485 thousand (previ-
ous year: € 8,356 thousand).
Staff costs break down as follows:
€ thousand
2015 2014
Wages and salaries 139,659 130,674
Social security and post-employment expenses 29,806 27,557
169,465 158,231
RENK employed 2,087 people (previous year: 2,112) on average over the year. Of these,
1,232 (previous year: 1,262) worked directly and 856 (previous year: 850) indirectly in
production. There were 33 employees in the non-active phase of early retirement (pre-
vious year: 43). On average, 121 people (previous year: 129) were in vocational training.
120
Depreciation, amortization and impairment of noncurrent assets are as follows:
€ thousand
2015 2014
For intangible assets 3,051 2,397
For property plant and equipment 18,315 15,046
21,366 17,443
Lease expenses amount to:
€ thousand
2015 2014
Minimum lease payments from operating leases 1,168 168
1,168 168
(13) Total remuneration for work by the auditor
In the year under review the Supervisory Board proposed PricewaterhouseCoopers
Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Munich, (PwC) as the auditor; the
Annual General Meeting endorsed this proposal on June 18, 2015.
The table below shows the fees charged for the work of the auditor PwC and the com-
panies of the international PwC network in fiscal year 2015 and fiscal year 2014:
€ thousand
2015 2014
Audit Fee 195 193
Tax advisory services 2 2
Other services 62 11
Auditor remuneration 259 206
The fees charged for work by the auditor PwC and its affiliated German companies in
fiscal year 2015 totaled € 231 thousand (previous year: € 173 thousand). € 169 thousand
(previous year: € 162 thousand) of this related to the audit of the financial statements
and € 62 thousand (previous year: € 11 thousand) to other services.
121RENK Group Annual Report 2015
Notes to the Consolidated Statement of Financial Position
(14) Intangible assets
€ thousand
Licenses, software and similar rights
Other intangible
assets
Total
Gross carrying amount on Jan. 1, 2014 12,153 6,788 18,941
Cumulative depreciation/amortization and impairment losses – 9,288 – 3,609 – 12,897
As of Jan. 1, 2014 2,865 3,179 6,044
Additions 45 – 45
Change in consolidated group – 79 – 1,612 – 1,691
Reclassifications 82 – 82
Disposals – 37 – – 37
Depreciation/amortization – 959 – 523 – 1,482
Impairment losses – – 915 – 915
Cumulative depreciation/amortization on disposals 37 – 37
Change in consolidated group 79 628 707
Currency adjustment 30 40 70
As of Dec. 31, 2014 2,063 797 2,860
Gross carrying amount on Jan. 1, 2015 12,834 5,286 18,120
Cumulative depreciation/amortization and impairment losses – 10,202 – 4,489 – 14,691
As of Jan. 1, 2015 2,632 797 3,429
Additions 851 – 851
Reclassifications 15 – 15
Disposals – 23 – – 23
Depreciation/amortization – 1,132 – 384 – 1,516
Impairment losses – 1,030 – 505 – 1,535
Cumulative depreciation/amortization on disposals 23 0 23
Currency adjustment 143 92 235
As of Dec. 31, 2015 1,479 0 1,479
Gross carrying amount on Dec. 31, 2015 14,188 5,865 20,053
Cumulative depreciation/amortization and impairment losses – 12,709 – 5,865 – 18,574
Amortization of intangible assets is included in the functional expenses, in the cost of
sales in particular.
At RENK-MAAG impairment losses of € 1,030 thousand on brand names and
€ 505 thousand on the customer base were recognized in the year under review. This
was necessary as there was no longer a positive value in use on account of the lack of
future cash flows. Impairment losses of € 915 thousand were recognized at RENK-
MAAG in the previous year.
122
(15) Property, plant and equipment
€ thousand
Land and buildings
Technical equipment
and machinery
Other equipment,
operating and office
equipment
Prepayments and assets
under construction
Total
Gross carrying amount on Jan. 1, 2014 82,008 168,756 47,485 16,268 314,517
Cumulative depreciation/ amortization and impairment losses – 36,886 – 91,180 – 36,375 – – 164,441
As of Jan. 1, 2014 45,122 77,576 11,110 16,268 150,076
Additions 1,191 4,205 2,978 29,307 37,681
Change in consolidated group – 108 – 5,109 – 716 – – 5,933
Reclassifications 888 7,615 418 – 9,002 – 81
Disposals – 680 – 8,237 – 4,208 – – 13,125
Depreciation/amortization – 2,074 – 9,733 – 3,239 – – 15,046
Cumulative depreciation/amortization on disposals 483 8,265 4,055 0 12,803
Change in consolidated group 30 4,003 486 0 4,519
Currency adjustment 133 199 23 109 464
As of Dec. 31, 2014 44,985 78,784 10,907 36,682 171,358
Gross carrying amount on Jan. 1, 2015 83,542 172,169 46,521 36,682 338,914
Cumulative depreciation/ amortization and impairment losses – 38,557 – 93,385 – 35,614 - – 167,556
As of Jan. 1, 2015 44,985 78,784 10,907 36,682 171,358
Additions 6,322 12,002 2,935 19,130 40,389
Reclassifications 13,054 11,469 572 – 25,110 – 15
Disposals – 653 – 2,470 – 282 – 3 – 3,408
Depreciation/amortization – 2,064 – 9,957 – 2,852 – – 14,873
Impairment losses – – 3,440 – 2 – – 3,442
Cumulative depreciation/amortization on disposals 531 2,054 265 – 2,850
Currency adjustment 119 355 47 199 720
As of Dec. 31, 2015 62,294 88,797 11,590 30,898 193,579
Gross carrying amount on Dec. 31, 2015 102,471 194,356 49,868 30,898 377,593
Cumulative depreciation/ amortization and impairment losses – 40,177 – 105,559 – 38,278 – – 184,014
123RENK Group Annual Report 2015
Depreciation on property, plant and equipment is included in the functional expens-
es, in the cost of sales in particular.
In the year under review impairment losses of € 3,438 thousand were recognized on
technical equipment and machinery for the devaluation of a custom-built wind power
test rig as the result of the restructuring of supplier relationships with a major cus-
tomer in the offshore wind power sector (see also note (7) “Other operating income”).
The recoverable amount, which equals the value in use, amounted to € 1.,428 thousand
as of the date of the test for impairment. The impairment test was conducted by using
a market discount rate.
(16) Inventories
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Raw materials, consumables and supplies 27,027 28,113
Finished goods and work in progress 141,559 148,723
Prepayments for inventories 2,632 1,891
171,218 178,727
Consumption of inventories of € 307 million (previous year: € 295 million) was recog-
nized in the cost of sales in the reporting period.
Impairment losses on inventories of € 3,210 thousand (previous year: € 2,449 thou-
sand) were recognized in fiscal year 2015.
(17) Trade receivables
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Customer receivables 71,271 56,628
Receivables from affiliated companies 8,024 617
PoC receivables 2,289 1,796
81,584 67,041
In line with the operating cycle, all trade receivables are reported as current.
PoC receivables are calculated as follows:
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Production costs and pro rata receivables from costumer-specific construction contracts 120,503 104,778
Used prepayments received – 118,214 – 102,982
2,289 1,796
124
Specific valuation allowances on trade receivables developed as follows:
€ thousand
2015 2014
As of Jan. 1 262 192
Addition 64 73
Utilisation 0 – 1
Reversal – 130 – 5
Currency translation differences 13 3
As of Dec. 31 209 262
In fiscal year 2015 there were specific valuation allowances on receivables with a gross
carrying amount of € 208 thousand (previous year: € 260 thousand).
Portfolio-based allowances on trade receivables developed as follows:
€ thousand
2015 2014
As of Jan. 1 537 670
Addition 163 105
Utilisation 0 – 18
Reversal – 37 – 223
Change in consolidated group 0 – 1
Currency translation differences 6 4
As of Dec. 31 669 537
(18) Other noncurrent and current assets and receivables
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Receivables from deposits 80,000 80,000
Other tax assets 2,942 4,617
Prepaid expenses 347 523
Derivative financial instruments 115 206
Miscellaneous other assets 1,333 1,003
84,737 86,349
Receivables from deposits of € 80 million relate to liquid investments at MAN SE of an
investment character with a term of up to twelve months.
125RENK Group Annual Report 2015
Other assets break down as follows according to maturity:
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Other noncurrent assets and receivables 33 12
Other current assets and receivables 84,704 86,337
84,737 86,349
Derivative financial instruments are carried at fair value. They are used mostly to
hedge currency risks on customer orders and other foreign exchange positions.
(19) Cash and cash equivalents
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Bank balances, cheques, cash in hand 152 474
Receivables from financial transactions with MAN SE 116,909 69,922
117,061 70,396
Receivables from financial transactions with MAN SE result essentially from the cen-
tral cash pooling of the MAN Group and from highly liquid investments at MAN SE.
These investments are of a temporary nature and are subject to only insignificant risks
of fluctuations in value.
(20) Equity
The share capital of RENK AG of € 17,920,000 is divided into 7 million no-par value
shares with equal rights. All shares are fully paid up. In the fiscal year MAN SE, Mu-
nich, held 76% in the subscribed capital of RENK AG.
A total of 199,903 treasury shares or 2.86% of the share capital (share of capital:
€ 512 thousand) were held by the company on December 31, 2015. The capital reserves
relate exclusively to share premiums in the context of capital increases by RENK AG.
The accumulated other comprehensive income predominantly results from the meas-
urement of pension provisions at fair value.
In accordance with the provisions of the German Stock Corporation Act, the net re-
tained profits of the Group parent RENK AG are available for distributions. The net
retained profits of RENK AG amount to € 17,870 thousand as of December 31, 2015. The
Executive Board and the Supervisory Board propose to the Annual General Meeting on
April 29, 2016 the distribution of a dividend for fiscal year 2015 unchanged as against
the previous year of € 2.20 per share. With 7,000,000 no-par value shares less the
treasury shares without dividend rights in accordance with section 71b of the
Aktiengesetz (AktG – German Stock Corporation Act) (199,903 shares), this corresponds
to an amount of € 14,960,213.40. Shareholders’ entitlement to the dividend arises only
with the resolution by the Annual General Meeting.
126
The most important goals of capital management at RENK are sustainably increasing
enterprise value and safeguarding the liquidity and creditworthiness of the Group.
Factors contributing to this are the reduction of the cost of capital, the improvement
of cash flows from financing activities, the optimization of the capital structure and
effective risk management.
RENK AG is not subject to any capital requirements on the basis of its Articles of Asso-
ciation.
(21) Pensions and similar obligations
The RENK Group grants its employees retirement benefits in accordance with the
country-specific circumstances in the form of defined benefit or defined contribution
pension plans.
In defined contribution plans, contributions are paid to state or private pension funds
on the basis of legal or contractual regulations. There are no further payment obliga-
tions other than the payment of contributions.
The expenses for pensions amounted to € 16,256 thousand (previous year:
€ 14,518 thousand). These are included in the respective functional costs. The net in-
terest expense from additions to pension provisions is reported in finance costs.
Current contributions are recognized as an expense in the respective year; in 2015
they amounted to a total of € 10,806 thousand (previous year: € 10,436 thousand) in
the RENK Group. € 10,334 thousand (previous year: € 10,004 thousand) of this was
paid in Germany for the statutory pension system.
The following amounts were recognized in the statement of financial position for
defined benefit pension plans:
€ thousand
2015 2014
Present value of externally financed obligations 142,930 140,055
Plan assets at fair value – 127,274 – 115,553
Funding status on December 31 15,656 24,502
Present value of unfunded obligations 386 329
Carrying amount 16,042 24,831
of which pension provisions 16,042 24,831
127RENK Group Annual Report 2015
(a) Pension plans in Germany As one of the essential elements of its remuneration policy, the RENK Group provides
its domestic employees with benefits under a modern and attractive occupational
pension system for the time after their active working life. This provides reliable addi-
tional income on retirement and risk protection for disability and death.
Under the current pension plans, the active employees receive employer contributions
linked to their remuneration and, in addition, also have the option of personal provi-
sion through deferred compensation (paid for by the employer for employees subject
to collective bargaining agreements). When actively working, employees accrue pen-
sion capital from employer- and employee-financed contributions and returns from
investment on the capital market. On retirement this pension capital is paid out as a
lump sum or in installments, or in certain cases can be converted into an annuity.
Employees’ investment risks are gradually reduced with increasing age (lifecycle con-
cept). The performance of the pension capital is directly linked to the capital market
and is determined by a basket of indices and other suitable parameters. As required by
law, at least the total contributions paid for the employee will be paid out on retire-
ment.
Former employees, pensioners or employees who have left the plan with vested bene-
fits have pension commitments from closed pension funds, which are predominantly
geared towards providing lifetime annuity payments. These commitments entail the
usual longevity and inflation risks, which are regularly monitored and evaluated.
The domestic pension assets of the RENK Group are managed by the MAN Pension
Trust e.V. and MAN Pensionsfonds AG. These assets are irrevocably unavailable to the
Group companies and may be used exclusively to fund current pension payments or
for employee claims in the event of insolvency. The proper management and use of
trust assets is monitored by independent trustees. MAN Pensionsfonds AG is also
subject to the supervision of the Bundesanstalt für Finanzdienstleistungsaufsicht
(BaFin - Federal Financial Supervisory Authority).
The pension assets are invested by professional investment managers according to
investment guidelines set by an Investment Committee. The strategic allocation of
plan assets is based on asset liability management studies conducted at regular inter-
vals. The assets attributable to the current pension schemes are invested with the
objective of covering the performance risk resulting from the return parameters of
the lifecycle concept.
(b) Pension plans outside Germany In Switzerland, the defined benefit pension claims and the actuarial reserves are man-
aged in an industry-wide company pension institution. Employees accrue pension
capital with this institution, which is then converted into a lifelong pension under the
conditions prevailing at the time. The pension institution is managed conservatively
based on government regulations. If the claims are no longer covered by capital due to
negative market developments, restructuring contributions can be levied from the
affiliated employers and their employees.
Obligatory post-employment benefits are paid in France.
128
(c) Funding status The calculation of the present value of defined benefit pension obligations is based on
the following assumptions:
in %
Germany Outside Germany1)
2015 2014 2015 2014
Discount rate as of Dec. 31 2.70 2.30 0.95 1.70
Salary trend 3.40 3.30 0.52 1.20
Pension increase 1.70 1.80 0.00 0.00
Fluctuation rate 4.44 4.55 6.60 6.92
1) Weighted average rates
The Heubeck 2005 G mortality tables adapted to empirical MAN-specific data were
used as the biometric data in Germany; the BVG 2010 GT mortality tables were used in
Switzerland.
Discount rates are based on the yields on corporate bonds with high credit ratings,
with a maturity and currency matching the respective obligations. Pension and pay
trends either correspond to contractual adjustments or are based on those found in
the general regulations applicable. Pay trends comprise expected wage and salary
increases that also take into account increases resulting from career development.
The present value of defined benefit obligations developed as follows:
€ thousand
2015 2014
Defined benefit obligation on January 1 140,384 119,479
Current service cost1) 4,801 3,468
Interest expense 3,083 4,032
Actuarial gains (-)/losses (+) due to changes in demographic assumptions – 1,174 0
Actuarial gains (-)/losses (+) due to changes in financial assumptions – 2,333 16,182
Actuarial gains (-)/losses (+) due to experience adjustments – 165 33
Employee contributions to funds 1,405 1,245
Pension payments from company assets – 1,848 – 1,590
Pension payments from fund – 3,731 – 2,918
Other changes 163 – 19
Currency differences from plans abroad 2,731 472
Defined benefit obligation on December 31 143,316 140,384
1) Of which past service cost of € 0 thousand (previous year: € –678 thousand).
129RENK Group Annual Report 2015
Changes in the main actuarial assumptions would have had the following effects on
defined benefit obligations:
Dec. 31, 2015 Dec. 31, 2014
Defined benefit obligation if € thousand % € thousand %
Discount rate +0.5 percentage points 135,998 – 5.1 132,752 – 5.4
– 0.5 percentage points 151,550 5.7 148,990 6.1
Salary trend +0.5 percentage points 143,683 0.3 140,738 0.3
– 0.5 percentage points 142,994 – 0.2 140,070 – 0.2
Pension increase +0.5 percentage points 149,392 4.2 146,293 4.2
– 0.5 percentage points 137,760 – 3.9 135,474 – 3.5
Longevity + 1 year 146,163 2.0 143,239 2.0
The sensitivity analyses shown each take into account the change in one assumption
with the other assumptions unchanged from the original calculation, i.e. possible
correlation effects between the individual assumptions are not taken into account.
To analyze the sensitivity of the defined benefit obligation to a change in the assumed
life expectancy the age of beneficiaries was reduced by one year as part of a compara-
tive calculation.
The weighted average term to maturity (Macaulay duration) of the defined benefit
pension obligations is 11 years (previous year: 11 years).
The defined benefit obligation is divided among the members of the plan as follows:
€ thousand
2015 2014
Active members 80,542 77,459
Former members 4,576 5,090
Beneficiaries 58,198 57,835
Defined benefit obligation 143,316 140,384
The maturity profile of the payments for the defined benefit obligation is shown be-
low by breaking down the present value of the obligation by the maturity of the un-
derlying payments:
€ thousand
2015 2014
Payment due
Within one year 6,025 6,224
Between one and five years 24,312 24,312
More than five years 112,979 109,848
Defined benefit obligation 143,316 140,384
130
The development of plan assets is shown by the table below:
€ thousand
2015 2014
Plan assets on January 1 115,553 110,286
Interest income from plan assets – in amount of interest rate 2,576 3,828
Return on plan assets not recognized in interest income 1,117 2,540
Employer contributions to funds 8,456 801
Employee contributions to funds 625 550
Pension payments from fund – 3,731 – 2,918
Other changes 163 13
Currency differences from plans abroad 2,515 453
Plan assets on December 31 127,274 115,553
The investment of plan assets resulted in income of € 3,693 thousand (previous year:
€ 6,368 thousand), € 3,970 thousand (previous year: € 5,728 thousand) of which related
to Germany and € –277 thousand (previous year: € 640 thousand) of which to other
countries.
In the next fiscal year, employer contributions to plan assets are expected to amount
to € 3,892 thousand (amount stated in previous year: € 3,165 thousand).
The increase in employer contributions to the fund as against the previous year is
essentially due to a further allocation to pension assets of € 7 million.
131RENK Group Annual Report 2015
The plan assets are invested in the following categories:
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Quoted price on an
active market
No quoted price on an
active market
Total Quoted price on an
active market
No quoted price on an
active market
Total
Cash and cash equivalents 5,079 – 5,079 4,307 – 4,307
Equity instruments 5,814 – 5,814 3,813 – 3,813
Debt instruments 10,730 – 10,730 10,010 – 10,010
Direct investments in real estate – 5,719 5,719 – 5,147 5,147
Equity funds 24,309 – 24,309 24,181 – 24,181
Pension funds 42,224 – 42,224 36,494 – 36,494
Real estate funds 2,339 – 2,339 1,466 – 1,466
Other funds – 1,457 1,457 – 1,860 1,860
Other 1,184 28,419 29,603 919 27,356 28,275
Plan assets at fair value 91,679 35,595 127,274 81,190 34,363 115,553
The plan assets are 30% (previous year: 34%) invested in domestic assets, 56% (previ-
ous year: 52%) in other European assets and 14% (previous year: 14%) in assets from
other regions.
(d) Expenses for pension obligations The following amounts were recognized in the income statement:
€ thousand
2015 2014
Current service cost1) 4,801 3,468
Net interest expense (+)/income (-) 507 204
5,308 3,672
1) Of which past service cost of € 0 thousand (previous year: € –678 thousand).
132
(22) Other noncurrent and current provisions
€ thousand
As of Jan. 1, 2015
Utilization Addition Reversal Interest cost
Currency translation difference
Other
As of Dec. 31,
2015
Warranties 34,634 – 2,922 8,257 – 2,511 – 91 37,549
Outstanding costs 5,127 – 1,310 4,299 – 1,210 – 6 6,912
Obligations to employees 4,938 – 1,602 1,635 – 6 61 33 5,059
Miscellaneous other provisions 5,749 – 700 2,043 – 228 – 309 7,173
50,448 – 6,534 16,234 – 3,955 61 439 56,693
Other provisions break down as follows according to maturity:
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Noncurrent current Noncurrent current
Warranties 1,488 36,061 1,614 33,020
Outstanding costs – 6,912 – 5,127
Obligations to employees 3,877 1,182 3,752 1,186
Miscellaneous other provisions 923 6,250 684 5,065
6,288 50,405 6,050 44,398
Provisions for warranties relate to legal and contractual warranty obligations and to
goodwill towards customers. The timing of the utilization of provisions for warranties
is dependent on the occurrence of the warranty claim and can extend over the entire
warranty and goodwill period. Provisions for outstanding costs were recognized for
outstanding services for invoiced customer contracts, contract components and obli-
gations under maintenance and service agreements.
Obligations to employees relate in particular to partial retirement and anniversaries.
Miscellaneous other provisions relate essentially to provisions for anticipated losses
from onerous contracts and penalties.
(23) Trade payables
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Trade payables 36,767 38,177
Trade payables are reported under current liabilities and provisions. There are trade
payables to affiliated companies of € 720 thousand (previous year: € 326 thousand).
133RENK Group Annual Report 2015
(24) Prepayments received
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Prepayments received 154,306 110,483
Prepayments received are reported under current liabilities and provisions. This in-
cludes € 1,480 thousand (previous year: € 357 thousand) from affiliated companies.
Prepayments received but not yet used of € 10,833 thousand (previous year:
€ 2,743 thousand) relate to construction contracts.
(25) Other noncurrent and current liabilities
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Employee-related liabilities 27,980 23,933
Derivative financial instruments 3,008 3,753
Social security liabilities 940 1,153
Liabilities from other taxes 340 638
Deferred income 1 569
Miscellaneous other liabilities 676 764
32,945 30,810
Employee-related liabilities include essentially wages, salaries and social security con-
tributions not yet paid at the end of the reporting period, deferred vacation not yet
taken, and annual bonuses.
The liability derivative financial instruments included in other liabilities were mostly
used to hedge currency risks in customer contracts. They were thus offset by opposing
effects in the statement of financial position items for the hedged items.
Other liabilities break down as follows according to maturity:
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Other noncurrent liabilities 370 1,394
Other current liabilities 32,575 29,416
32,945 30,810
134
Other Disclosures
(26) Contingent liabilities
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Obligations from guarantees – 274
– 274
With regard to the liabilities of RENK subsidiaries from their business relationship
with MAN SE, RENK AG has issued MAN SE a perpetual payment guarantee.
Contingent liabilities are usually measured in the amount of the maximum claims on
RENK. Any rights of recourse are not deducted.
(27) Other financial obligations
Other financial obligations comprise rental and lease agreements. These are essential-
ly vehicle leases. The maturities of future rental and lease payments under operating
leases until the end of their minimum term are as follows:
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Operating lease
Due within one year 924 159
Due between one and five years 6,024 75
6,948 234
The purchase commitment for the acquisition of property, plant and equipment was
€ 6,092 thousand (previous year: € 7,409 thousand) as of the end of the reporting
period. The financial obligations to third parties under investment projects initiated
were within normal limits.
135RENK Group Annual Report 2015
(28) Additional information on financial instruments
This section contains additional information on the significance of financial instru-
ments and on individual items of the statement of financial position and the income
statement that relate to financial instruments.
Financial instruments are classified as follows:
• financial instruments at fair value,
• financial instruments at amortized cost,
• hedging derivative financial instruments and
• financial instruments not covered by IFRS 7.
In particular, financial instruments not covered by IFRS 7 include investments ac-
counted for using the equity method. Furthermore, subsidiaries, associates and joint
ventures not consolidated for reasons of materiality do not constitute financial in-
struments in accordance with IAS 39. From fiscal year 2015 the corresponding values
are classified as “not covered by IFRS 7”. The corresponding tables and figures for the
previous year were adjusted accordingly.
Under IFRS 7 hedge derivative financial instruments are classified separately. The cor-
responding tables and figures for the previous year were adjusted accordingly.
The following table shows the reconciliation of statement of financial position items
to the classes of financial instruments, broken down by carrying amounts and fair
values of financial instruments, and the allocation of statement of financial position
items to the measurement categories.
136
€ thousand
At fair value
in Other Comprehen-
sive Income1)
in profit or loss2)
At amortized cost3) Hedging derivative financial
instruments
Not covered by IFRS
7
Statement of financial
position item as of
Dec. 31, 2015
Carrying amount
Carrying amount
Carrying amount
Fair value
Carrying amount
Carrying amount
Noncurrent assets
Other and financial investments 774 – – – – 3,760 4,534
Other financial assets – – 8 8 22 – 30
Current assets
Trade receivables – 81,584 81,584 – – 81,584
Current assets 69 81,048 81,048 24 – 81,141
Cash and cash equivalents – – 117,061 117,061 117,061
Noncurrent liabilities
Other financial liabilities – 120 – – 124 – 244
Current liabilities
Trade payables – – 36,767 36,767 – – 36,767
Other financial liabilities – 1,450 429 429 1,314 – 3,193
1) Corresponds to the measurement category “Available for sale financial assets” under IAS 39. 2) Corresponds to the measurement category “Financial instruments measured at fair value through profit or loss”
under IAS 39. 3) Comprises other and financial investments classified as available for sale for which the fair value cannot be reliably
determined due to the lack of an active market and that are measured at cost, and the measurement categories “loans and receivables” and “financial liabilities at amortized cost”.
137RENK Group Annual Report 2015
The following table shows the carrying amounts, the measurement categories by class,
the fair values and the fair value hierarchy under IFRS 7 as of December 31, 2014 1):
€ thousand
At fair value
in Other Comprehen-
sive Income1)
in profit or loss2)
At amortized cost3) Hedging derivative financial
instruments
Not covered
by IFRS 7
Statement of financial
position item as ofDec. 31,
2014
Carrying amount
Carrying amount
Carrying amount
Fair value
Carrying amount
Carrying amount
Noncurrent assets
Other and financial investments4) 774 – – – – 3,760 4,534
Other financial assets5) – – 9 9 – – 9
Current assets
Trade receivables – – 67,041 67,041 – – 67,041
Current assets – 206 80,868 80,868 – – 81,074
Cash and cash equivalents – – 70,396 70,396 – – 70,396
Noncurrent liabilities
Other financial liabilities – 42 – – 1,200 – 1,242
Current liabilities
Trade payables – – 38,177 38,177 – – 38,177
Other financial liabilities5) – 1,225 249 249 1,286 – 2,760
1) Corresponds to the measurement category “Available for sale financial assets” under IAS 39. 2) Corresponds to the measurement category “Financial instruments measured at fair value through profit or loss”
under IAS 39. 3) Comprises other and financial investments classified as available for sale for which the fair value cannot be reliably
determined due to the lack of an active market and that are measured at cost, and the measurement categories “loans and receivables” and “financial liabilities at amortized cost”.
4) The figures for the previous year were adjusted Subsidiaries that are not consolidated for reasons of materiality are classified as “not covered by IFRS 7”, see also “Accounting principles”.
5) The figures for the previous year were adjusted Hedge derivative financial instruments are reported in a separate category, see also “Accounting principles”
138
The cumulative carrying amounts of financial instruments, broken down by IAS 39
measurement category are as follows:
€ thousand
Dec. 31, 2015 Dec. 31, 2014
Measurement category in accordance with IAS 39
Assets Equity and
liabilities
Assets Equity and
liabilities
Available-for-sale financial assets1) 774 – 774 –
Financial instruments measured at fair value through profit or loss 91 1,570 206 1,267
Loans and receivables 279,701 – 218,314 –
Financial liabilities at amortized cost – 37,196 – 38,426
1) The figures for the previous year were adjusted. Subsidiaries that are not consolidated for reasons of materiality do not fall within the scope of IAS 39, see also “Accounting principles”.
The fair values were calculated based on the market conditions at the end of the re-
porting period and the measurement methods described below. They are the prices at
which one party would assume the rights or obligations from these financial instru-
ments from an independent third party. There were no significant changes since the
previous year in the measurement methods applied.
Cash and cash equivalents, trade receivables, other financial assets, trade payables and
other financial liabilities predominantly have a short remaining term. Their carrying
amounts as of the end of the reporting period therefore approximately match their
fair value. Furthermore, appropriate impairment losses are recognized on trade re-
ceivables when there is objective evidence.
Available-for-sale financial assets include equity shares of € 774 thousand (previous
year: € 774 thousand), which are measured at cost. These are securities and shares in
unlisted companies for which the measurement by discounting of forecast cash flows
has been dispensed with given the lack of reliably determinable cash flows. The shares
of unlisted companies relate to companies for which there are no quoted market val-
ues as there is no active market for these shares. There is currently no intention to sell
these shares.
The future cash flows for derivative financial instruments without option compo-
nents, particularly currency forwards, are calculated using forward curves. The fair
value of these instruments is the total of the discounted cash flows. The options on
currency pairs are measured on the basis of standard option pricing models, i.e. gen-
eralized Black-Scholes formulas.
139RENK Group Annual Report 2015
The following table shows the financial assets and liabilities at fair value by level, as
described in the following subsection:
€ thousand
Dec. 31, 2015 Level 1 Level 2 Level 3
Noncurrent assets
Other and investments 774 – 774
Other financial assets 22 – 22 –
Current assets
Other financial assets 69 – 69 –
Noncurrent liabilities
Other financial liabilities 120 – 120 –
Current liabilities
Other financial liabilities 1,450 – 1,450 –
€ thousand
Dec. 31, 20141) Level 1 Level 2 Level 3
Noncurrent assets
Other and investments 774 – – 774
Current assets
Other financial assets 206 – 206 –
Noncurrent liabilities
Other financial liabilities 42 – 42 –
Current liabilities
Other financial liabilities 1,225 – 1,225 –
1) The figures for the previous year were adjusted. Derivative financial instruments form a separate class, and their fair values, by level, are shown in the table below, see also “Accounting principles”.
140
The following table provides an overview of the derivative financial instruments in
hedge accounting by level, as described in the following subsection:
€ thousand
Dec. 31, 2015 Level 1 Level 2 Level 3
Noncurrent assets
Other financial assets 22 – 22 –
Current assets
Other financial assets 24 – 24 –
Noncurrent liabilities
Other financial liabilities 124 – 124 –
Current liabilities
Other financial liabilities 1,314 – 1,314 –
€ thousand
Dec. 31, 20141) Level 1 Level 2 Level 3
Noncurrent liabilities
Other financial liabilities 1,200 – 1,200 –
Current liabilities
Other financial liabilities 1,286 – 1,286 –
1) The prior-year figures were adjusted in line with the provisions of IFRS 7 to improve comparability.
The following table provides an overview of the fair value of the financial assets and
liabilities at amortized cost by level:
€ thousand
Dec. 31, 2015 Level 1 Level 2 Level 3
Noncurrent assets
Other financial assets 8 – 8 –
Current assets
Trade receivables 81,584 – 81,584 –
Other financial assets 81,048 – 81,048 –
Cash and cash equivalents 117,061 117,061 – –
Current liabilities
Trade payables 36,767 – 36,767 –
Other financial liabilities 429 – 429 –
141RENK Group Annual Report 2015
€ thousand
Dec. 31, 20141) Level 1 Level 2 Level 3
Noncurrent assets
Other financial assets 9 – 9 –
Current assets
Trade receivables 67,041 – 67,041 –
Other financial assets 80,868 – 80,868 –
Cash and cash equivalents 70,396 70,396 – –
Current liabilities
Trade payables 38,177 – 38,177 –
Other financial liabilities 249 – 249 –
1) The prior-year figures were adjusted in line with the provisions of IFRS 7 to improve comparability.
Fair value hierarchy: The classification and reporting of the fair values of financial instruments are based
on a fair value hierarchy that reflects the significance of the inputs used for measure-
ment and breaks down as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Input factors other than quoted prices included within level 1 that are observ-
able for an asset or liability either directly (as a price) or indirectly (derived
from prices). The fair values of level 2 financial instruments are calculated
based on the conditions at the end of the reporting period, such as interest
rates or exchange rates, and using recognized models, such as discounted
cash flow models or option pricing models.
Level 3: Input data used for the measurement of the asset or liability not based on
observable market data (unobservable inputs). For level 3 receivables the fair
value is determined taking into account individual loss expectations that are
based mainly on assumptions by the company regarding the counterparty’s
credit.
In the fiscal years 2015 and 2014 there were no reclassifications between levels 1 and 2
and no reclassifications into or out of level 3.
The interest income and expenses generated in connection with financial assets and
financial liabilities are as follows:
€ thousand
2015 2014
Interest income 244 674
Interest expense – 80 – 112
Interest income on impaired financial assets is of secondary importance due to the
usually short time before the expected payment.
The following tables contain information on the offsetting effects on the consolidated
statement of financial position and the financial impact of offsetting in the case of
142
instruments which are subject to a legally enforceable master offsetting agreement or
similar agreement.
Amounts not offset in the statement of financial position
€ thousand Gross amount of recognized
financial assets
Gross amount of recognized
financial liabilities offset
in the statement of
financial position
Net amount of financial
assets reported in the
statement of financial position
Financial Instruments
Collateral received
Net amount on Dec. 31, 2015
Derivative financial instruments 115 – 115 – 115 0 0
Amounts not offset in the statement of financial position
€ thousand Gross amount of recognized
financial assets
Gross amount of recognized
financial liabilities offset
in the statement of
financial position
Net amount of financial
assets reported in the
statement of financial position
Financial Instruments
Collateral received
Net amount on Dec. 31, 2014
Derivative financial instruments 206 – 206 – 206 0 0
Amounts not offset in the statement of financial position
€ thousand Gross amount of recognized
financial liabilities
Gross amount of recognized
financial assets offset in the
statement of financial position
Net amount of financial liabilities
reported in the statement of
financial position
Financial Instruments
Collateral provided
Net amount on Dec. 31, 2015
Derivative financial instruments 3,008 – 3,008 – 115 0 2,893
143RENK Group Annual Report 2015
Amounts not offset in the statement of financial position
€ thousand Gross amount of recognized
financial liabilities
Gross amount of recognized
financial assets offset in the
statement of financial position
Net amount of financial liabilities
reported in the statement of
financial position
Financial Instruments
Collateral provided
Net amount on Dec. 31, 2014
Derivative financial instruments 3,753 – 3,753 – 206 0 3,547
The “Financial instruments” column shows the amounts that are the subject of a mas-
ter offsetting agreement, but that cannot be offset because the conditions have not
been met. Offsetting can occur only in the case of certain future events, such as the
insolvency of one of the parties. The columns “Collateral received” and “Collateral pro-
vided” show the amounts of cash collateral or collateral in the form of financial in-
struments received/pledged in relation to the total amount of assets and liabilities.
The net gains and losses from financial instruments are shown in the table below:
€ thousand
2015 2014
Loans and receivables – 3,528 1,116
Available-for-sale financial assets1) 736 571
Financial assets and liabilities at fair value through profit or loss – 53 – 1,894
Financial liabilities at cost – 1,320 – 876
Net gain (+)/net loss (–) – 4,165 – 1,083
1) The previous year was adjusted.
Net gains and losses from loans and receivables essentially contain changes in valua-
tion allowances, income from incoming payments, currency translation and reversal
of impairment losses.
The net gains or losses from available-for-sale financial assets comprise the net in-
come from other and financial investments.
The net gains or losses from financial assets and liabilities measured at fair value
through profit or loss includes changes in the fair value of derivative financial instru-
ments not used in hedge accounting.
The net gains or losses from financial liabilities at cost result mainly from currency
translation.
144
(29) Derivative financial instruments and hedging strategies
On account of its business activities and international orientation, the assets, liabili-
ties and planned transactions of the MAN Group are subject to market, credit, and
liquidity risks. There is a Group-wide risk management system to identify, quantify,
and mitigate these risks. RENK is integrated into this risk management system and
uses the instruments thus available.
(a) Risk management of the MAN Group The companies of the MAN Group hedge their currency and interest risks at market
conditions via the central Group Treasury of MAN SE. This uses primary and predomi-
nantly derivative financial instruments. In countries where exchange control regula-
tions or regulatory provisions do not allow MAN SE to hedge its risks, foreign currency
interest and money market transactions are entered into by MAN SE in the name and
on behalf of the respective Group company. Derivative financial instruments are re-
cognized on the trade date.
The risk positions of the Group are hedged externally with banks within predeter-
mined risk limits by Group Treasury. Hedging is carried out with due regard for banks’
risk management requirements and is subject to stringent monitoring, which is guar-
anteed in particular by the strict separation of functions in trading, settlement and
control.
Liquidity management and investment in the MAN Group is centralized under Group-
wide cash management. When investing cash and cash equivalents, financial institu-
tions and investment vehicles are carefully selected and diversified with a limit sys-
tem. The limits and their utilization are reviewed regularly. The majority of cash and
cash equivalents are held in cash deposits at banks with an investment grade rating.
The Executive Board and the Supervisory Board of MAN SE are regularly informed
about the market price risks of the MAN Group. Compliance with policies is monitored
by the internal audit function.
(b) Currency risk at RENK For each RENK company there is a currency risk if it performs transactions and incurs
future cash flows in a currency other than its functional currency. To reduce the effect
of exchange rate fluctuations, the RENK companies continuously quantify the ex-
change risk and hedge all material risks by using currency forwards and options.
In the RENK Group all firm customer contracts, its own orders, receivables and liabili-
ties in foreign currency are hedged. Currencies with a high correlation to the euro,
such as the Danish krone, and equity investments or equity-type loans in foreign cur-
rencies are hedged only in individual cases. In addition, there is hedging for planned
sales revenue in foreign currency from series production business within defined
hedging ranges and, occasionally, for customer projects whose materialization is high-
ly probable. The Executive Board of RENK is regularly informed of the currency posi-
tions of the RENK Group.
145RENK Group Annual Report 2015
As of the end of the reporting period, RENK’s foreign exchange exposure is primarily
from transactions in USD, CHF, JPY, and CNY. Thanks to the hedges in place for these
currencies, RENK was not exposed to any significant risks.
These hedges are accounted for as cash flow hedges.
In connection with cash flow hedges, total unrealized gains and losses of
€ 707 thousand (previous year: € –3,504 thousand) were recognized in equity for the
measurement of derivatives (before tax). Over the course of the fiscal year realized
gains and losses of € –881 thousand (previous year: € 245 thousand) were taken from
equity to profit or loss for the period.
The maximum remaining term of cash flow hedges for future transactions is 30
months as of the end of fiscal year 2015 The occurrence of and therefore recognition in
profit or loss for the period are expected for 17.4% of hedged future transactions in the
first quarter of 2016. A further 47.1% of the planned transactions are expected to go
ahead by the end of 2016.
In a sensitivity analysis, the primary and derivative financial instruments in place at
the end of the reporting period were measured in a hypothetical scenario. The effects
of a 10% appreciation/depreciation of a currency per currency pair as of December 31,
2015 and December 31, 2014 are as follows:
€ thousand
Dec. 31, 2015
Equity Net profit/loss for the period
Currency pair +10% – 10% +10% – 10%
Euro/US dollar 2,734 – 2,734 516 – 516
Euro/Swiss franc – – 1,048 – 1,048
Euro/Chinese yuan – – 213 – 213
Euro/Pound sterling – – – 98 98
Euro/Japanese yen – – 233 – 233
Swiss franc/US dollar – – 19 – 19
€ thousand
Dec. 31, 2014
Equity Net profit/loss for the period
Currency pair +10% – 10% +10% – 10%
Euro/US dollar 3,541 – 3,541 2,213 – 2,213
Euro/Swiss franc – – 664 – 664
Euro/Chinese yuan – – 161 – 161
Euro/Pound sterling – – – 101 101
Euro/Japanese yen – – 319 – 319
Swiss franc/US dollar – – 45 – 45
146
(c) Commodity price risk at RENK RENK is exposed to the risk of changes in commodity prices and their availability, i.e.
commodity procurement risk, both in connection with the procurement of the means
of production but also in the procurement of energy (electricity, gas, oil, etc.).
As far as possible, this risk is countered by fixed price agreements with suppliers. Ow-
ing to the variety of commodities used and the resulting quantities, each compara-
tively small, the hedging of prices using corresponding instruments on the financial
markets is not a substantial alternative for RENK. RENK had no commodity derivatives
in fiscal year 2015.
There were no significant risk clusters in the past fiscal year.
(d) Credit risk at RENK On account of its operating activities, RENK is exposed to credit risk, i.e. the risk that a
counterparty does not meet its contractual obligations and thus causes a financial
loss. Credit risks include direct counterparty risk and the risk of a deterioration in
credit quality.
The maximum credit risk is reflected by the carrying amounts of financial assets re-
ported in the statement of financial position, see note (29). Credit risks are minimized,
and risk provisions calculated, mainly with the following measures:
Sovereign and counterparty risks arising from business operations are continuously
assessed locally. Security levels and forms are determined based on this. Outstanding
debts are also continuously monitored locally. If default risks arise, allowances are
recognized. Credit risk is limited by various, sometimes country-specific, forms of
security. Letters of credit, credit insurance, guarantees, warranties, retention of title
and customer prepayments are used. In project business, the risk of default is mini-
mized by prepayments and by obtaining collateral.
RENK recognizes appropriate risk provisions for credit risks in connection with its
business operations. This entails the ongoing monitoring of all receivables. Allowances
are recognized if there is objective evidence of default or other contractual anomalies.
Significant individual receivables and receivables whose collectibility are in doubt are
assessed on an individual basis. Taking into account country-specific risks and any
collateral received, other receivables are placed into groups of similar contracts and
impairment requirements are subsequently determined.
There were no significant clusters in terms of credit risk in the RENK Group in the past
fiscal year.
147RENK Group Annual Report 2015
Maturities of financial assets not impaired:
€ thousand
2015 2014
Up to 30 days past due 14,411 5,647
31– 90 days 3,561 6,184
90– 180 days 2,912 1,469
181– 360 days 2,758 615
> 1 year 523 1,316
Assets, past due, not impaired 24,165 15,231
Assets, not past due, not impaired 139,145 135,110
Carrying amounts of financial assets not impaired 163,310 150,341
To cover the credit risk of these receivables and of receivables not past due, impair-
ment losses are recognized at group level based on historical experience.
Regarding the receivables and other financial assets that are neither impaired nor past
due, there are no indications of a default in payment as of the end of the reporting
period.
In line with the nature of RENK’s inclusion in the central financial management of the
MAN Group agreed with MAN SE, a significant portion of RENK’s financial assets is
concentrated on a single partner, MAN SE. This portion is therefore subject in princi-
ple to the same risks that MAN SE as a whole is exposed. These risks are limited by the
risk management mechanisms installed at MAN SE.
(e) Liquidity risk at RENK Liquidity risk describes the risk that the RENK Group is unable to adequately meet its
payment obligations or can raise liquidity only at a higher price.
RENK is included in the liquidity management system of the MAN Group. To limit this
risk, inflows and outflows of cash and maturities are monitored and managed at all
times. Financing requirements are covered by both operating cash flow and external
financing. There were therefore no significant risk clusters in the past fiscal year.
Cash management for the operating units is essentially central as part of cash pooling.
The cash and cash equivalents of the Group companies and MAN SE are merged daily.
Thus, liquidity surpluses and requirements can be managed as necessary. For external
financing, the opportunities on the financial markets are tracked continuously to
ensure financial flexibility and to limit refinancing risks.
In certain countries (such as Brazil and China), the Group can control local cash and
cash equivalents internationally only in compliance with the applicable foreign ex-
change. Other than this there are no significant restrictions.
Cash and cash equivalents are essentially used to finance working capital and short-
term obligations. Management is informed regularly about cash inflows and outflows.
148
The cash flows at RENK are dominated by the maturities arising from business opera-
tions. These are predominantly of a short-term nature. Cash clearing takes place
through the inclusion in the central financial management of the MAN Group.
The following table shows how the cash flows of liabilities, derivative financial instru-
ments and contingent liabilities affect RENK’s liquidity situation:
Maturities1)
€ thousand
Dec. 31, 2015 Dec. 31, 2014
2016 2017 to 2020
> 2020 2015 2016 to 2019
> 2019
Cash outflows from primary financial liabilities 37,196 0 0 38,426 0 0
of which trade payables 36,767 0 0 38,177 0 0
of which other financial liabilities 429 0 0 249 0 0
Cash outflows from liability derivative financial instruments and gross fulfillment2) – 25,416 – 7,943 0 – 28,184 – 12,570 0
Associated cash inflows 22,507 2,181 0 25,610 11,193 0
Potential cash outflows from contingent liabilities3) 0 0 0 274 0 0
of which for guarantee obligations 0 0 0 274 0 0
1) The procedure for calculating the amounts was as follows: - If the maturity date is not fixed, the liability is assigned to the earliest maturity date. - Interest payments for floating rate interest are taken into account in line with the conditions as of the end of the
reporting period. - It is assumed that the cash outflows will not occur earlier than shown.
2) In accordance with the requirements of IFRS 7, only undiscounted cash flows of the contractual interest and principal payments are shown.
3) There are guarantee obligations for guarantees under trade obligations. The maximum possible cash outflows are shown. The amounts are assumed to be due in the first year.
(f) Breakdown of hedging instruments by type of hedge The table below shows the fair values of hedging instruments. These essentially relate
to currency forwards.
€ thousand
Dec. 31, 2015 Dec. 31, 2014
with a positive market value
with a negative market value
with a positive market value
with a negative market value
Cash Flow Hedge 46 1,438 – 2,486
46 1,438 0 2,486
149RENK Group Annual Report 2015
(30) Remuneration of the Executive Board
The remuneration of the members of the Executive Board of RENK Aktiengesellschaft
consists of fixed remuneration and variable remuneration (see remuneration report).
Furthermore, members of the Executive Board receive a pension commitment.
The tables below show the individual remuneration for the active members of the
Executive Board for 2015 (2014).
€ thousand Florian Hofbauer Ulrich Sauter Christian Hammel
until July 31, 2015 from August 1, 2015
2015 2014 2015 2014 2015 2014
Fixed remuneration1) 255 257 143 246 108 –
Variable remuneration 436 418 243 400 174 –
Pension cost 95 91 53 87 27 –
Total 786 766 439 733 309 0
Present value of pension obligation 1,865 1,680 2,171 2,018 112 –
1) Including additional benefits.
€ thousand Total Executive Board
2015 2014
Fixed remuneration1) 506 503
Variable remuneration 853 818
Pension cost 175 178
Total 1,534 1,499
Present value of pension obligation 4,148 3,698
1) Including additional benefits.
In fiscal year 2015 there was no subsequent adjustment of the bonus in variable remu-
neration. The variable remuneration in fiscal year 2014 includes a subsequent adjust-
ment of € –82 thousand on the bonus for fiscal year 2013 based on the figures for 2014.
The reported pension cost exclusively comprises the service cost incurred in the re-
spective fiscal year.
The pension benefits for former members of the Executive Board of the company and
their surviving dependents amounted to € 259 thousand (€ 316 thousand). Total pro-
visions of € 5,854 thousand were recognized for pension obligations to former mem-
bers of the Executive Board and their surviving dependents (previous year:
€ 3,437 thousand).
After resigning from the Executive Board Mr. Sauter winded up several affairs until his
contract of employment terminated as of December 31, 2015 for what he received his
so far remuneration. For these services the following amounts were proportionately
remunerated: Fixed remuneration including additional benefits € 102 thousand, vari-
able remuneration € 177 thousand and pension cost € 38 thousand.
150
Information on the members of the Executive Board, including their memberships of
other statutory supervisory boards and similar executive bodies, can be found under
note (38).
(31) The Supervisory Board
The remuneration of the members of the Supervisory Board is regulated in the Arti-
cles of Association. They provide for fixed remuneration of € 10,000. The chair of the
Supervisory Board receives double the fixed remuneration, the deputy chair and the
chair of a committee one and a half times this amount, a committee member 1.25
times the amount. There is no separate remuneration for the chair or members of the
Mediation Committee. If members perform several functions, remuneration is based
on the function with the highest remuneration entitlement.
Any expenses arising are also reimbursed.
Remuneration of the Supervisory Board in 2015 in €
Name Membership period Total 2015
Dr. Ingrun-Ulla Bartölke Full year –
Roberto Armellini* Full year 15,000
Michael Behrendt Full year 15,000
Rainer Handschuh* Full year 12,500
Frank Hoffmann Full year –
Dr.-Ing. Hans O. Jeske Full year 10,000
Prof. Dr.-Ing. Werner Neubauer Full year –
Prof. Dr. rer. pol. Horst Neumann Until Nov. 30 –
Dr. Georg Pachta-Reyhofen Full year 12,500
Herbert Surmann* Full year 12,500
Walter Vogt* Full year 12,500
Ingo Weidner* Full year 10,000
Total 2015 100,000
Total 2014 97,000
* These employee representatives have declared that they pay their Supervisory Board remuneration to the Hans Böckler Foundation in accordance with German Trade Union Confederation policy.
The employee representatives on the Supervisory Board also employed at RENK addi-
tionally receive their standard pay as employees. Information on the members of the
Supervisory Board, including their memberships of other statutory supervisory
boards and similar executive bodies, can be found under note (38).
151RENK Group Annual Report 2015
(32) German Corporate Governance Code
On December 11, 2015 the Executive Board and the Supervisory Board issued the decla-
ration of compliance reproduced below in accordance with section 161 of the Aktien-
gesetz (AktG – German Stock Corporation Act):
„The Executive Board and Supervisory Board of RENK Aktiengesellschaft declare
that effective immediately, the company complies with the recommendations of
the Government Commission on the German Corporate Governance Code in the
version of May 5, 2015 (as published by the Federal Ministry of Justice in the offi-
cial section of the Bundesanzeiger (German Federal Gazette) of June 12, 2015) with
the exception of Section 5.4.1, Paras. 5 – 7 (disclosure of election recommendations).
With regard to the recommendation in Section 5.4.1, Paras. 5 – 7 in the Code on the
disclosure of certain circumstances in election recommendations of the Superviso-
ry Board to the Annual General Meeting, the requirements of the Code are inde-
terminate and not clearly distinguished. Therefore, by way of precaution, depar-
ture from the Code is declared. Nonetheless, the Supervisory Board will attempt to
meet the requirements of Section 5.4.1 Paras. 5 – 7 of the Code.
The Executive Board and Supervisory Board of RENK Aktiengesellschaft further de-
clare that the company complied with the recommendations of the Government
Commission on the German Corporate Governance Code in the version of June 24,
2014 (as published by the Federal Ministry of Justice in the official section of the
Bundesanzeiger of September 30, 2014) during the period of December 2014 to
June 12, 2015 with the execution of Section 5.4.1, Paras 4 – 6 (disclosure of election
recommendations, in the version of the Code dated May 5, 2015; Section 5.4.1 Paras.
5 – 7). The reasons for the exceptions are stated above.
From June 12, 2015 until the submission of this Declaration of Conformity, the
company complied with the recommendations of the Government Commission on
the German Corporate Governance Code in the version of May 5, 2015 (as published
by the Federal Ministry of Justice in the official section of the Bundesanzeiger of
June 12, 2015) with the exception of Section 5.4.1, Para. 2 (length of membership in
the Supervisory Board) and Section 5.4.1, Paras 5 – 7 (disclosure of election recom-
mendation). The reasons for the departures from Section 5.4.1 Paras. 5 – 7 are stated
above. The new recommendation in Section 5.4.1, Para. 2, which took effect from
June 12, 2015, regarding the goal of the Supervisory Board to define and observe a
limit on the length of membership in the Supervisory Board, has been complied
with on y since a relevant discussion and resolution by the Supervisory Board on
December 11, 2015.“
152
(33) Segment reporting
The activities of the RENK Group are still divided into the reportable segments Special
Gear Units, Vehicle Transmissions, Standard Gear Units and Slide Bearings. The man-
agement of each of these segments reports directly to the Executive Board of RENK AG
in its function as the responsible chief operating decision maker.
The Special Gear Units segment comprises large-gear production at RENK AG’s Augs-
burg site and RENK-MAAG GmbH, Winterthur, Switzerland. The product range extends
from stationary gear units for a variety of industrial applications, to turbo gear units,
to complex gear units for fast craft and naval applications.
The Vehicle Transmissions segment is a leading manufacturer of fully automatic
transmissions for medium-weight and heavy tracked vehicles, and also offer a broad
range of powerful test rigs for a variety of industries. It comprises the corresponding
activities at RENK AG’s Augsburg site, the French subsidiary RENK France S.A.S., Saint
Ouen l’Aumône, RENK Test System GmbH (RTS) in Augsburg and its US sales company
RENK Systems Corporation, Camby (IN), USA.
Segment information by segment
€ thousand
Special Gear Units
2015 2014
Order intake from third parties 178,275 142,439
Order intake from other segments 8,203 1,384
Total order intake 186,478 143,823
Sales revenue with third parties 153,593 177,175
Sales revenue with other segments 3,286 1,335
Total sales revenue 156,879 178,510
Orderbacklog Dec. 31 207,315 180,139
Operating profit 15,485 26,545
Capital expenditures 19,173 22,247
Depreciation and amortization1)2) 8,012 6,014
Operating return on sales 9.9% 14.9%
1) Depreciation and amortization includes impairment losses of € 915 thousand in the Special Gear Units segment in 2014.
2) Depreciation and amortization includes impairment losses of € 1,538 thousand in the Special Gear Units segment, € 4,390 thousand in the Standard Gear Units segment and € 122 thousand in the Slide Bearings segment in 2015.
.
153RENK Group Annual Report 2015
The Standard Gear Units segment includes large-gear production at RENK AG’s Rheine
site. It specializes in marine gear units for merchant shipping, offshore wind turbine
gear units, LNG/LPG tankers and special ships. It also manufactures gear units for
turbine plants and couplings for industrial applications.
The Slide Bearings segment at RENK AG’s Hanover site and the American sales com-
pany RENK Corporation, Duncan (SC), USA, supply hydrodynamic, lubricated slide
bearings. These are used for electric motors, generators, pumps, blowers, water tur-
bines, conveyors and marine applications.
The financial performance indicators for segments are sales revenue, operating profit
and operating return on sales. The operating return on sales is the ratio of the operat-
ing profit generated to sales revenue. The non-financial performance indicator is order
intake. Segment information is determined applying the same accounting policies as
those used in the preparation of the consolidated financial statements. Transactions
between segments are performed on an arm’s length basis.
Vehicle Transmissions Standard Gear Units Slide Bearings Consolidation/change Group
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
110,854 329,896 96,065 94,839 97,713 98,443 – – 482,907 665,617
111 192 3,291 3,059 3,878 1,100 – 15,483 – 5,735 – –
110,965 330,088 99,356 97,898 101,591 99,543 – 15,483 – 5,735 482,907 665,617
149,988 114,551 90,038 88,563 93,062 100,024 – – 486,681 480,313
111 192 2,015 2,421 1,103 1,900 – 6,516 – 5,848 – –
150,099 114,743 92,053 90,984 94,165 101,924 – 6,516 – 5,848 486,681 480,313
481,808 531,389 96,133 90,628 37,298 29,455 – 11,010 – 4,404 811,544 827,207
23,628 15,698 9,698 13,323 18,044 16,880 1,156 – 165 68,011 72,281
18,587 11,523 1,854 1,256 1,627 3,270 – – 41,241 38,296
3,685 4,559 8,311 4,237 2,492 2,492 – 1,135 142 21,365 17,444
15.7% 13.7% 10.5% 14.6% 19.2% 16.6% – – 14.0% 15.0%
154
Segment information by region
€ thousand
Germany Rest of Europe
Other regions
Total
2015
Sales revenue 147,341 124,081 215,261 486,683
Payments to acquire property, plant and equipment and intangible assets 37,323 3,635 283 41,241
2014
Sales revenue 153,133 109,562 217,618 480,313
Payments to acquire property, plant and equipment and intangible assets 35,967 655 1,674 38,296
(34) List of shareholdings of RENK AG as of December 31, 2015
Name and registered office of the company Share of capital in %
National currency
(NC)
Exchange rate
(EUR/NC)
Equity (1,000 NC)
Net result (1,000 NC)
RENK France S.A.S., Saint-Ouen-l’Aumône, France 100 EUR 1 18,072 1,809
RENK Corporation, Duncan, South Carolina, USA 100 USD 1.0877 11,323 1,623
RENK Test System GmbH, Augsburg 100 EUR 1 7,300 2,252
RENK Systems Corporation, Camby, Indiana, USA 100 USD 1.0887 835 – 87
RENK Transmisyon Sanayi A.S., Istanbul, Turkey1) 55 TRY 2.8320 3,261 401
RENK UAE LLC, Abu Dhabi, United Arab Emirates1) 49 AED 4.4573 21,690 6,849
COFICAL RENK MANCAIS DO BRASIL LTDA, Guaramirim, Brazil 98 BRL 3.2207 21,254 3,969
RENK-MAAG GmbH, Winterthur, Switzerland 100 CHF 1.0835 15,690 1,787
RENK Shanghai Service and Commercial Co., Ltd. Shanghai, China1) 100 CNY 7.5358 2,801 – 1,838
RENK (UK) Ltd., London, UK (inactive) 100 n/a n/a n/a n/a
1) As of December 31, 2014
155RENK Group Annual Report 2015
(35) Equity investments in RENK AG
The share of the voting rights held by MAN SE in RENK AG is 76%.
In accordance with section 21(1) of the Wertpapierhandelsgesetz (WpHG – German
Securities Trading Act), Volkswagen Truck & Bus GmbH, Braunschweig, formerly Truck
& Bus GmbH, Wolfsburg, informed RENK AG on April 18, 2013 that its share of the
voting rights exceeded the threshold of 75% on April 16, 2013 and amounted to 78.86%
(5,519,903 of 7,000,000 total voting rights in RENK AG) on that day. All of the above
5,519,903 voting rights were attributed to Volkswagen Truck & Bus GmbH in accord-
ance with section 22(1) sentence 1 no. 1 WpHG through MAN SE. In accordance with
section 1(1) sentence 1 WpHG, Volkswagen Aktiengesellschaft, informed RENK AG on
November 14, 2011 that Volkswagen Aktiengesellschaft’s share of the voting rights
exceeded the threshold of 75% on November 9, 2011 and amounted to 78.86%
(5,519,903 of 7,000,000 total voting rights in RENK AG) on that day. All of the above
5,519,903 voting rights were attributed to Volkswagen Aktiengesellschaft in accordance
with section 22(1) sentence 1 no. 1 WpHG through MAN SE and – since the transfer of
the shares held by Volkswagen Aktiengesellschaft in MAN SE to Volkswagen Truck &
Bus GmbH on April 16, 2013 – also through Volkswagen Truck & Bus GmbH. Further-
more, Porsche Automobil Holding SE and its controlling shareholders informed
RENK AG in accordance with section 21(1) WpHG that the equity investment of
Volkswagen AG and Truck & Bus GmbH are also attributed to Porsche Automobil
Holding SE and its controlling shareholders.
The difference between the above equity holding of MAN SE of 76% and the above
equity holdings of Volkswagen Truck & Bus GmbH and Volkswagen Aktiengesellschaft
of 78.86% is due to the fact that the latter include 199,903 (2.86%) voting rights that
are held directly by RENK AG as treasury shares.
RENK AG was not advised of, nor is it aware of, any other direct or indirect sharehold-
ings in the capital of the company exceeding 10% of the voting rights or the relevant
reporting thresholds of the German Securities Trading Act.
(36) Related party disclosures
Related parties as defined by IAS 24 are natural persons and companies that can be
influenced by RENK AG, that can significantly influence RENK AG or that are influ-
enced by another related party of RENK AG.
Given its shareholding of 76% in RENK AG, MAN SE is its parent company and there-
fore a related party of RENK. This also applies to the subsidiaries of MAN SE and the
related parties of MAN SE itself. In particular, these include Volkswagen Truck & Bus
GmbH, Volkswagen Aktiengesellschaft and Porsche Automobil Holding SE with all its
affiliated companies.
Exchanges of goods and services between RENK and its related parties are conducted
as at arm’s length.
156
Essentially the following types of transactions are performed with companies of the
MAN Group:
• Deliveries of goods to MAN companies, in particular gear units and bearings for
ships and turbines, plus test rigs and related services.
• Sourcing from MAN companies, mainly primary materials for gear unit production
such as cast components.
• Other services and reciprocal services, such as debit and credit interest from inter-
company payment transactions with MAN SE, and cost reimbursements for other
services.
The exchange of services with companies of the Volkswagen and Porsche Groups relate
to individual projects to supply test rigs and related services. RENK purchases services,
e.g. in the context of vehicle leases.
The table below shows the extent of relationships between RENK and MAN SE:
€ thousand
2015 2014
Services rendered (income) 157 373
Services received (expense) 530 1,196
Receivables (Dec. 31) 197,151 150,158
Liabilities (Dec. 31) 3,252 3,537
MAN SE provided RENK companies with direct and indirect guarantees of € 1,833
thousand and derivative hedges with a nominal value of € 44,089 thousand as of De-
cember 31, 2015. There are receivables of € 196,737 thousand (previous year: € 149,952
thousand) from cash management with MAN SE and other MAN companies as of
December 31, 2015.
The table below shows the extent of relationships with other companies of the MAN
Group, Volkswagen and the Porsche Group:
€ thousand
2015 2014
Services rendered (income) 21,544 25,993
Services received (expense) 4,106 2,646
Receivables (Dec. 31) 6,451 5,828
Liabilities (Dec. 31) 2,094 562
Other related parties are the subsidiaries and other equity investments of the
RENK Group that are not included in the consolidated financial statements. The ex-
change of services essentially comprises the supply of parts and the performance of
services at market rates.
157RENK Group Annual Report 2015
The following table shows the extent of services:
€ thousand
2015 2014
Services rendered (income) 6,042 7,146
Services received (expense) 1,011 648
Receivables (Dec. 31) 1,573 2,788
Liabilities (Dec. 31) 107 115
Trade receivables from and trade payables to affiliated companies are reported under
notes (17) and (23). There are financial obligations to affiliated companies under oper-
ating leases of € 172 thousand (previous year: € 188 thousand).
Outstanding items in connection with related parties are not collateralized, nor had
valuation allowances been recognized as of the end of the reporting period.
Related parties of RENK also include persons who can influence or be influenced by
RENK AG, such as the members of the Executive Board and Supervisory Board of
RENK AG, the members of the Executive Board and Supervisory Board of MAN SE, the
members of management and the Supervisory Board of Volkswagen Truck & Bus
GmbH and the members of the Executive Board and Supervisory Board of
Volkswagen AG.
Please see notes (30) and (31) for disclosures required in accordance with IAS 24 on
management remuneration for key positions.
(37) Events after the end of the reporting period
There were no special events after December 31, 2015 with a material effect on the net
assets, financial position and results of operations.
158
Members of the Supervisory Board and the Management Board and their mandates
(38) Supervisory Board
Dr. Ingrun-Ulla Bartölke Wolfsburg
Chairwoman of the Supervisory Board
Head of Group Accounting and External Reporting at Volkswagen Aktiengesellschaft
Audit Committee Skoda Auto a.s., Czech Republic4)
Roberto Armellini*) Augsburg
Deputy Chairman of the Supervisory Board
Secretary of the Trade Union Confederation
VALEO Schalter und Sensoren GmbH (Deputy Chairman)1)
VALEO Wischersysteme GmbH1)
AGCO Fendt GmbH1)
Michael Behrendt Hamburg
Chairman of the Supervisory Board of Hapag-Lloyd AG
Barmenia Allgemeine Versicherungs-AG (Deputy Chairman)1)
Barmenia Krankenversicherung a. G. (Deputy Chairman)1)
Barmenia Lebensversicherung a. G. (Deputy Chairman)1)
Esso Deutschland GmbH1)
ExxonMobil C. E. Holding GmbH1)
Hamburgische Staatsoper GmbH1)
Hapag-Lloyd AG (Chairman)1)
MAN Diesel & Turbo SE1)
MAN SE1)
MAN Truck & Bus AG1)
159RENK Group Annual Report 2015
Dipl.-Ing. (FH) Rainer Handschuh*)
Augsburg
Chairman of the Group Works Council of RENK AG
Chairman of the Works Council of RENK AG, Augsburg plant and
RENK Test System GmbH
Dipl.-Ing. (FH) Frank Hoffmann*) Augsburg
Head of Vehicle Transmissions at RENK AG, Augsburg
Dr.-Ing. Hans-O. Jeske Wesel
Member of the Executive Board of MAN Diesel & Turbo SE
RWTÜV GmbH3)
MAN Diesel Shanghai Co., Ltd., China4)
MAN Diesel & Turbo Middle East LLC, Dubai, UAE4)
Prof. Dr.-Ing. Werner Neubauer**) Wolfsburg
Former Chief Executive Officer of MAN SE
Wolfsburg AG1)
Volkswagen Sachsen GmbH2)
SITECH Sp. z o.o, Poland4)
Volkswagen Automatic Transmission (Tianjin) Company Ltd., China4)
Prof. Dr. rer. pol. Horst Neumann Wolfsburg
Member of the Supervisory Board until November 30, 2015
Former Member of the Management Board at Volkswagen Aktiengesellschaft
AUDI AG2)
Dr. Ing. h.c. F. Porsche AG2)
Volkswagen Financial Services AG (Deputy Chairman)2)
Porsche Holding Stuttgart GmbH4)
Volkswagen (China) Investment Company Ltd., China4)
Volkswagen Group of America, Inc., USA4)
Volkswagen Immobilien GmbH (Chairman)4)
160
Dr. Georg Pachta-Reyhofen Niederpöcking
Former Chief Executive Officer of MAN SE
MAN Diesel & Turbo SE (Chairman)2)
Herbert Surmann*) Rheine
Chairman of the Works Council RENK AG, Rheine plant
Walter Vogt*) Eltville
Labor union secretary at IG Metall Executive Board, Frankfurt/Main
IBM Deutschland GmbH1)
Baugenossenschaft Darmstadt eG1)
Ingo Weidner*) Hannover
Mechanical engineer
As of December 31, 2015 or, if earlier, date of resignation.
*) Elected by employees **) Resigned from his Supervisory Board office taking of effect on February 15, 2016. 1) Membership of statutory Supervisory Boards in Germany. 2) Membership of statutory Supervisory Boards in Germany (Group Mandates). 3) Comparable appointments in domestic or foreign countries supervisory board committees. 4) Comparable appointments in domestic or foreign countries supervisory board committees
(Group Mandates).
161RENK Group Annual Report 2015
(39) Vorstand
Dipl.-Ing. (FH) Florian Hofbauer Landsberg
Spokesperson
Engineering and Sales
Ulrich Sauter Wertingen
Administration and Production
Until July 31, 2015
Dipl.-Kfm. (Univ.) Christian Hammel Munich
Administration and Production
Since August 1, 2015
162
(40) Committees of the Supervisory Board
Members of the Committee for Management Board Personnel Dr. Ingrun-Ulla Bartölke (Chairwoman)
Roberto Armellini (Deputy Chairman)
Dipl.-Ing. (FH) Rainer Handschuh
Dr. Georg Pachta-Reyhofen
Members of the Nomination Committee Dr. Ingrun-Ulla Bartölke
Dr. Georg Pachta-Reyhofen
Members of the Mediation Committee Dr. Ingrun-Ulla Bartölke (Chairwoman)
Roberto Armellini (Deputy Chairman)
Dipl.-Ing. (FH) Rainer Handschuh
Dr. Georg Pachta-Reyhofen
Members of the Audit Committee Michael Behrendt (Chairman)
Walter Vogt (Deputy Chairman)
Dr. Ingrun-Ulla Bartölke
Herbert Surmann
Augsburg, February 15, 2016
Renk Aktiengesellschaft
Management Board
Florian Hofbauer Christian Hammel
163RENK Group Annual Report 2015
Responsibility Statement
To the best of our knowledge and in accordance with the applicable accounting princi-
ples, the consolidated financial statements give a true and fair view of the net assets,
financial position and results of operations of the Group, and the management report
of the Group includes a fair review of the development and performance of the busi-
ness and the position of the Group, together with a description of the principal oppor-
tunities and risks associated with the expected development of the Group.
Augsburg, February 15, 2016
RENK Aktiengesellschaft
Florian Hofbauer Christian Hammel
164
Audit Report for the consolidated financial statements of RENK AG
Auditor’s Report We have audited the consolidated financial statements prepared by the Renk Aktien-
gesellschaft, comprising the consolidated income statement, the reconciliation to
total comprehensive income for the period, the consolidated statement of financial
position, consolidated statement of changes in equity, consolidated statement of cash
flow and the notes to the consolidated financial statements, together with the group
management report for the business year from January 1 to December 31, 2015. The
preparation of the consolidated financial statements and the group management
report in accordance with the IFRSs, as adopted by the EU, and the additional require-
ments of German commercial law pursuant to § (Article) 315a Abs. (paragraph) 1 HGB
("Handelsgesetzbuch": German Commercial Code) and supplementary provisions of
the articles of incorporation is the responsibility of the parent Company's Board of
Managing Directors. Our responsibility is to express an opinion on the consolidated
financial statements and on the group management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with
§ 317 HGB and German generally accepted standards for the audit of financial state-
ments promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors
in Germany) (IDW). Those standards require that we plan and perform the audit such
that misstatements materially affecting the presentation of the net assets, financial
position and results of operations in the consolidated financial statements in accord-
ance with the applicable financial reporting framework and in the group management
report are detected with reasonable assurance. Knowledge of the business activities
and the economic and legal environment of the Group and expectations as to possible
misstatements are taken into account in the determination of audit procedures. The
effectiveness of the accounting-related internal control system and the evidence sup-
porting the disclosures in the consolidated financial statements and the group man-
agement report are examined primarily on a test basis within the framework of the
audit. The audit includes assessing the annual financial statements of those entities
included in consolidation, the determination of the entities to be included in consoli-
dation, the accounting and consolidation principles used and significant estimates
made by the Company´s Board of Managing Directors as well as evaluating the overall
presentation of the consolidated financial statements and the group management
report. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
165RENK Group Annual Report 2015
In our opinion based on the findings of our audit the consolidated financial state-
ments comply with the IFRSs as adopted by the EU and the additional requirements of
German commercial law pursuant to § 315a Abs. 1 HGB and supplementary provisions
of the articles of incorporation and give a true and fair view of the net assets, financial
position and results of operations of the Group in accordance with these require-
ments. The group management report is consistent with the consolidated financial
statements and as a whole provides a suitable view of the Group's position and suita-
bly presents the opportunities and risks of future development.
Munich, February 15, 2016
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Petra Justenhoven ppa. Holger Graßnick
Wirtschaftsprüferin Wirtschaftsprüfer
(German Public Auditor) (German Public Auditor)
166
LEERSEITE EINFÜGEN
167RENK Group Annual Report 2015
Six-years Overview € million
2010 2011 20121) 20132) 2014 2015
Order intake 525 456 525 504 666 483
Germany 262 150 176 196 137 181
Outside Germany 263 306 349 308 529 301
Sales revenue 403 389 476 485 480 487
Germany 120 146 165 168 153 147
Outside Germany 283 243 311 317 327 339
Orderbacklog Dec. 31 522 586 634 648 827 812
Germany 282 284 296 323 295 297
Outside Germany 240 302 338 325 532 515
Employees Dec. 31
Headcount - – – 2,306 2,196 2,198
Core workforce employees3) on Dec. 31 1,814 1,944 2,167 2,186 2,072 2,094
Subcontracted employees 68 69 78 42 48 39
Average number of core workforce employees 1,823 1,883 2,098 2,199 2,112 2,087
Capital expenditures and financing
Payments to acquire property, plant and equipment and intangible assets 23 24 28 27 38 41
Depreciation of property, plant and equipment, amortization of intangible assets and impairment 13 13 14 16 17 21
Cash flows from operating activities 81 40 66 85 35 101
Net cash flow (free cash flow until 2013) 58 16 35 56 – 3 60
Key performance indicators (%)
Operating return on sales – – – 13.5 15.0 14.0
Equity ratio 51.7 48.6 48.1 52.1 55.6 54.2
Key performance indicators for RENK shares
Earnings per share as per IAS 33 (in €) 5.54 5.58 6.74 6.39 7.17 6.14
Dividend per share (in €) 1.80 1.80 2.00 2.00 2.20 2.20
Price-earnings ratio 12.63 10.95 10.80 13.07 11.66 17.05
Balance Sheet
Noncurrent assets 150 156 184 163 185 207
Inventories 110 145 164 157 179 171
Other current assets 74 89 81 94 155 170
Cash and cash equivalents 85 96 125 167 70 117
Equity 217 236 266 303 327 360
Pensions 14 23 30 9 25 16
Other noncurrent liabilities and provisions 35 26 31 10 9 8
Prepayments received 46 83 100 133 110 154
Other current liabilities and provisions 107 118 127 126 118 127
Total assets/total capital 419 486 554 581 589 665
Income Statement
Sales revenue 403 389 476 485 480 487
Cost of sales – 303 – 286 – 356 – 377 – 362 – 377
Gross profit 100 103 120 108 118 109
Other expenses and income – 48 – 50 – 54 – 43 – 46 – 42
Operating profit (EBIT) 52 53 66 66 72 68
Net interest income 0 1 0 0 0 – 4
Profit before taxes 52 54 66 66 72 64
Income tax expense – 14 – 16 – 20 – 23 – 23 – 22
Profit after tax 38 38 46 43 49 42
1) Adjusted in 2013 due to the retroactive amendment to IAS 19 (2011). 2) Adjusted of individual prior-year figures due to transition to the financial reporting of the Volkswagen Group. 3) The core workforce comprises employees who directly or indirectly work in production.
169RENK Group Annual Report 2015
FAHNE EINFÜGEN
171RENK Group Annual Report 2015
Products and Services
Vehicle transmissions Fully automatic shift, reverse and steering transmissions with brake systems and final
drives for tracked vehicles of medium and large weight classes.
Industrial gears Gear units for cement plants, spur and planetary gear units for turbomachinery, in
particular for the petrochemical industry and for power plants, high-performance 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 drive and electric drive, marine reversing gear units, reduction and
control gear units for ship generator systems.
Slide bearings Standard and special horizontal and vertical slide bearings for electrical machinery,
blowers, compressors, pumps, turbines and general mechanical engineering, slide
bearings for transmissions, marine shaft bearings and thrust bearings.
Couplings Curved-tooth couplings for industrial applications of all kinds, for ship and marine
engineering, for rail vehicles, steel multi-disc clutches for slow- and high-speed indus-
trial systems, diaphragm couplings for high-speed machinery, safety couplings, tor-
sionally flexible couplings.
Test systems Test rigs for development and quality assurance for the automotive industry, the avia-
tion industry and railway engineering.
171RENK Group Annual Report 2015
Products and Services
Vehicle transmissions Fully automatic shift, reverse and steering transmissions with brake systems and final
drives for tracked vehicles of medium and large weight classes.
Industrial gears Gear units for cement plants, spur and planetary gear units for turbomachinery, in
particular for the petrochemical industry and for power plants, high-performance 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 drive and electric drive, marine reversing gear units, reduction and
control gear units for ship generator systems.
Slide bearings Standard and special horizontal and vertical slide bearings for electrical machinery,
blowers, compressors, pumps, turbines and general mechanical engineering, slide
bearings for transmissions, marine shaft bearings and thrust bearings.
Couplings Curved-tooth couplings for industrial applications of all kinds, for ship and marine
engineering, for rail vehicles, steel multi-disc clutches for slow- and high-speed indus-
trial systems, diaphragm couplings for high-speed machinery, safety couplings, tor-
sionally flexible couplings.
Test systems Test rigs for development and quality assurance for the automotive industry, the avia-
tion industry and railway engineering.
172
Created with FIRE.sys
www.firesys.de
Produced with FIRE.sys
www.firesys.de
RENK Aktiengesellschaft
Gögginger Str. 7386159 Augsburg, GermanyPhone +49 821 5700-0Fax +49 821 5700-460
www.renk.eu
A company of the MAN Group