Treasury

Group Directive

1. Subject matter and purpose

The Treasury department of the Peri GmbH in close co-operation with its Group Companies is
responsible for all treasury activities in the PERI Group and all horizontally organized companies
(companies under joint ownership) to the PERI Group. For a successful co-operation between the group
members a clearly defined allocation of treasury tasks and competences is required. Treasury, as a
central organisational unit of the group, supports and coordinates the treasury functions and activities.

Main activities of treasury management are:

 Securing of liquidity
 Cash Management
 Optimisation of payment transaction processes
 Execution of payment transactions (currently in Germany only)
 Management of bank relations
 Management of the financing structure (equity (as defined by GGF) and liabilities)
 Financial risk management (foreign exchange, interest rate, liquidity and financial counterparty
risk)

2. Scope of application and entry into force

This Group Directive applies to the entire PERI Group 1. It enters into force on December 1st, 2016.

3. Summary
This Treasury Group Directive is derived from the Treasury Guidelines and comprises the allocation of
tasks and responsibilities between Treasury and the Subsidiaries.

In particular this Group Directive deals with:

 The Subsidiaries’ obligation to contract internally
 Cash Management
 Intercompany Netting
 Management of Payment Transactions
 Bank Administration
 Minimum Credit Rating of Banks
 Risk Management Responsibilities of Subsidiaries

The Subsidiaries’ Managing Directors and head of finance departments are responsible for the
implementation of these rules and regulations in their own respective areas of responsibility. The internal
and/or external audit is responsible to verify the compliance with these guidelines.

1PERI Group is the group of companies that consists of Peri Werk Artur Schwörer GmbH & Co. KG and the
companies in which the former participates directly or indirectly with more than 50% of the capital or over which the
former exerts decisive influence in another way.
Author: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de
GD Treasury 0008/202018 V 3.0
Process owner: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de
Date of approval: 25th November 2016
Date of revision: 4th April 2018
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Group Directive

4. Treasury Management Principles

4.1. Obligation to contract internally

Subsidiaries have to conduct Financial Transactions of all kinds (e.g. investments, borrowings,
spot deals and derivatives) directly with or via Treasury, acting as an internal bank. Therefore, they
have to inform Treasury about all probable and/or planned Financial Transactions.

In individual cases or for certain types of transactions, Treasury can decide that such transactions
may be entered directly with external partners by Subsidiaries, if this is appropriate and practical
(e.g. due to small size, high transaction costs for direct handling, tax-related reasons, regulations
governing capital movements etc.).

4.2. Approved Counterparties

All Core Banks of the group have to be approved with a limit assigned by the Managing Director
Finance and Organisation of the PERI Group upon recommendation of Treasury prior to entering
into any agreements and/or contracts with them.

Any other counterparties for Financial Transactions of any type are approved (new counterparties)
and monitored (existing counterparties) on a case-by-case basis by Treasury together with the
respective Subsidiaries.

It must be possible to identify all current transactions with any of these counterparties.

4.3. Approved Instruments

The PERI Group will only use pre-approved instruments. Only those instruments will be approved
that can be properly handled with the contracting unit’s own resources; i.e. the unit has the
appropriate quantity and quality of staff and systems. Handling means revaluation, reporting,
monitoring and professional use. Moreover, all accounting and balance sheet issues must be
clarified in advance.

4.4. Realistic Assumptions for Plans, Budgets and Calculations

Plans, budgets, product prices or investment calculations have to be based on realistic, actually
tradable financial market parameters (e.g. spot or forward currency or interest rates).

4.5. Information Transparency

All Financial Transactions must be reported with those parameters that are prerequisites to a
financially complete, correct assessment and evaluation.

Author: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de

GD Treasury 0008/202018 V 3.0
Process owner: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de
Date of approval: 25th November 2016
Date of revision: 4th April 2018
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Treasury
Group Directive

The risk and profit of all financial measures shall be reported with clear, consistent and professional
measures, determined in advance. The applied methods have to be regularly controlled by
Treasury with respect to their compliance with the best practices.

The profit of financial measures has to be clearly separated from the profit generated by the core
business. In this context, Treasury determines tradable respectively transparent parameters (e.g.
daily rates, end-of-month quotations, futures prices, forward interest rates) which are relevant and
therefore communicated to the Subsidiaries. These parameters are the basis for the planning,
budgeting, project and pre-investment analysis as well as similar managerial cost estimates.

4.6. Auditability

All processes involved in entry, tracking, evaluation and management of financial instruments or
financial risks must meet the criteria of transparency, traceability and auditability. Therefore the
tasks, processes and authorisations are defined and documented.

5. Tasks and Responsibilities

5.1. Organisational Units

Treasury

 Responsibility for all treasury functions in the PERI Group

 Support regarding treasury activities for all Subsidiaries
 Execution of all internal and external Financial Transactions
 Creation of group-wide treasury reports

Subsidiaries
 Implementation of the Treasury Guidelines at local level
 Execution of internal and local transactions as approved by Treasury
 Fulfilment of reporting requirements

5.2. Cash Management

The target is a daily clearing of all current accounts in the group to a zero value-dated balance and
an optimisation of payments with respect to costs, fees and float (value dating). A further focus is
on the optimisation of the intercompany liquidity netting, the supervision of daily liquidity and an
optimal utilisation of internal liquidity (avoidance of external deposits at Subsidiary level) taking into
account economic efficiency and country-specific rules.

Author: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de

GD Treasury 0008/202018 V 3.0
Process owner: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de
Date of approval: 25th November 2016
Date of revision: 4th April 2018
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Treasury
Group Directive

Treasury has the authority to issue binding guidelines to internal and external liquidity
management, payment processes and the purchase of banking services as well as bank ad-
ministration.

Treasury

 Structuring and implementation of intercompany clearing and netting procedures and

systems together with Accounting Germany.
 Approval for the establishment and termination of bank relations; participation in and
approval authority for all bank negotiations with respect to terms and conditions and legal
agreements

 Compilation, group-wide comparison and optimisation of banking terms and conditions

 Advice and support for Subsidiaries with respect to current account clearing, intercompany
liquidity clearing, payment processes and reporting requirements

Subsidiaries

 Value-dated clearing of own current accounts (target is a zero balance)

 Active participation in all initiatives intended to optimise intercompany liquidity clearing and
forecasting liquidity demand

 Execution and optimisation of payment processes

 Authorisation request to Treasury in case of establishment and termination of local bank

relations and bank accounts

5.3. Bank and Counterparty Risk Management

The term “bank“ as utilised below covers all financial counterparties including leasing and finance
companies.

The objective is to follow a coordinated approach to the financial markets as ‘one financial entity’,
while maintaining and enhancing the positive credit perception of the company. The cooperation
is focused on banks, especially the circle of core banks, with a defined minimum rating. Moreover,
the aim is to cap counterparty exposures by clearly specified limits.

An excellent cooperation with banks is achieved and supported by a consistent communication

strategy.

Treasury

 Implementation of the group-wide banking policy (definition of core banks) and systematic
business allocation

Author: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de

GD Treasury 0008/202018 V 3.0
Process owner: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de
Date of approval: 25th November 2016
Date of revision: 4th April 2018
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Treasury
Group Directive

 Central recording and control of bank limits; periodic review of counterparty creditworthiness
 Centralised relation, information and liaison responsibility for financial counterparties

Subsidiaries

 Administration of all bank data of approved local bank relations and on-going control of
compliance with agreed banking terms and conditions; reporting of all relevant information

 Execution of transactions within approved limits

 Disclosure of persons with signing authorisation for Subsidiaries to Treasury

5.4. Financing and Creditor Relation

The task is to ensure and manage the financial liquidity for the group within the general guideline
given by the shareholders and the Group Management.

The Subsidiaries ensure the Compliance with corporate finance requirements as set by Treasury.

5.5. Market Risk Management

The task is to capture and quantify all major financial risks (foreign exchange, interest rate),
develop suitable risk strategies to limit all risk exposures and implement these strategies using
specified (hedging) transactions. Furthermore, the risk strategy implementation has to be regularly
monitored and evaluated.
The Subsidiaries will participate in the capture, analysis and quantification of financial risks by
contributing financial reports and plans defined by Treasury as well as ad hoc information with
respect to new risk exposures

6. Functional Guidelines

6.1. Cash Management

6.1.1. Intercompany Accounts

Each Subsidiary maintains one or more intercompany accounts with PERI for Financial
Transactions. These intercompany accounts serve for intercompany investment or funding as well
as for intercompany netting and daily account clearing which could be introduced later.

Treasury defines the interest rates for these intercompany accounts and separately for internal
intercompany investment or funding (e.g. intercompany loans). The interest rates have to be in line

Author: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de

GD Treasury 0008/202018 V 3.0
Process owner: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de
Date of approval: 25th November 2016
Date of revision: 4th April 2018
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Group Directive

with market conditions (‘at arm’s length’) taking into account PERI GmbH’s current financing cost
and an internal credit margin.

In case of internal intercompany investment or funding an agreement must be concluded between

Treasury and the Subsidiary.

6.1.2. Account Clearing

Each Subsidiary is responsible for determining and calculating the value-dated closing balances
of their accounts on a daily basis. Daily bank account statement information must be considered
upon receipt and all planned and notified payment transactions (incoming and outgoing cash flows)
with the value date of the current day must be included.

The development of value-dated balances needs to be described over a period of at least one
week (clearing preview). For this purpose an overview of all planned incoming and outgoing
payments needs to be acquired and updated on a daily basis.

The calculated value-dated closing balances should be cleared locally to one main account.

In case of final credit balances (excess cash) or debit balances (cash shortages) on current
accounts after the local account clearing process, these balances shall be cleared by using
intercompany deals (see Treasury Framework, principle ‘Obligation to contract internally’) with
Treasury. Objective is a zero balance on the local account after clearing with Treasury.

6.1.3. Intercompany Investment or Borrowing

Treasury acts as a financial counterparty for all Subsidiaries. The aim is to provide services to
Subsidiaries at competitive prices compared to external bank services.

The Subsidiaries are required to borrow and invest funds within the Group by dealing with
Treasury. Other external borrowings or investments are not permitted. Exceptions due to legal or
regulatory restrictions might be necessary, but have to be discussed between Treasury and the
respective Subsidiary and are only possible after prior written approval by Head of Treasury.

Limits for intercompany and external borrowing may be defined by Treasury based on the approved
budget. Treasury is responsible to administrate and monitor these limits.

6.1.4. Intercompany Netting

In order to avoid external cash transfers all operational cash flows including accounts payable and
accounts receivable between PERI and Subsidiaries will be netted. Upon maturity of payables and
receivables due amounts will be cleared to the Subsidiaries’ Intercompany Account with PERI.

Author: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de

GD Treasury 0008/202018 V 3.0
Process owner: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de
Date of approval: 25th November 2016
Date of revision: 4th April 2018
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Group Directive

This Intercompany Account will be booked against the internal credit limit of each Subsidiary (see
3.1.3).

6.1.5. Management of Payment Transactions

All Subsidiaries are responsible for maintaining effective invoicing and collection processes.
Payment transactions will be executed with a high degree of automation (electronic payment
methods) wherever possible. Deviating payment methods may be applied due to country specific
circumstances, security issues (in regard to the credit rating of the respective counterparty) and/or
considerations concerning finance (improvement of the cash position of a corporation) – deviations
from electronic payment methods have to be approved by Head of Treasury and in addition a
cost/utility-calculation has to be executed.
The 4-eyes-principle has always to be secured when executing payments.

 Incoming payments
If feasible, short payment terms and paperless payments should be arranged. Payment
transactions by cheque should be avoided as far as possible. Otherwise cheques should be cashed
on the same day – at the latest on the following day – with the bank to effect the incoming payment
as soon as possible. Subsidiaries are required to urge real time accounting upon receipt of daily
accounts statements.

 Outgoing payments
As a basic principle payments with cash discount are to be executed on or prior to the due date
(depending on number of cash discount payment runs per week) in order to avoid cash discount
reclaims from PERI’s suppliers. Payments for goods and services without cash discount are
executed (value-dated) with a payment run on or directly after due date.
The approval process for incoming invoices has to be conducted in compliance with internal
regulations of each respective business unit. All invoices have to be captured within the accounting
system. The objective for Treasury and Subsidiaries is to execute net payments once a week only
in a single, automated payment run; an exception for a second regular payment run requires
approval by local MDs. Regular payments arising from non-trade payables with a fixed value date
(e.g. salaries, taxes) can be executed without prior approval.
The payment files are electronically sent to the banks. Manual or paper based payments should
be avoided.

6.1.6. Bank Administration

The objective of bank administration is the co-ordinated handling of bank relations and current
accounts as well as the creation of standard conditions, which support an efficient, accurate, cost-

Author: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de

GD Treasury 0008/202018 V 3.0
Process owner: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de
Date of approval: 25th November 2016
Date of revision: 4th April 2018
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Group Directive

effective and secure handling of daily bank transactions. This applies to all bank relations
necessary for the daily operating business.
The number of bank accounts should be kept to the necessary minimum.
Selection, opening and closing of bank accounts of Subsidiaries require prior approval from Head
of Treasury. Core banks are prioritised if their offer is competitive, otherwise local banks are
considered. All authorisation requests for opening of bank accounts should be addressed in written
form to Treasury, stating the following items:
 Business justification for the bank account

 Type of account which is required (e.g. current account)

 Bank name and location at which the account is to be opened
 Currency
 Signatories

6.1.7. Reporting

The purpose of reporting is to provide a basis for cash management decisions. Subsidiaries are
responsible to fulfil reporting requirements defined by Treasury, either regularly or by request.
Subsidiaries are responsible to report their account balances using ‘Web-Reporting / T.I.P.’ on a
weekly basis and every end of month.

6.2. Bank and Counterparty Risk Management

6.2.1. Bank Relations

The PERI Group pursues the objective of building long-lasting bank relations. The number of bank
relations is governed by the principle ‘as many as necessary, as few as possible’, but always with
the focus on financial independence. The selection of bank partners must be based on transparent
and all-embracing criteria and must be documented accordingly..

6.2.2. Minimum Credit Rating of Banks

Treasury is only allowed to contract with approved external counterparties (see Treasury
Framework). Such counterparties require a minimum rating of “A-“. Exceptions have to be
approved by Managing Director Finance and Organisation in writing. Local banks without an official
credit rating by a rating agency or a rating below “A-“ are authorised if the parent company complies
with the minimum rating and if the parent company guarantees the performance of the local bank.

Author: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de

GD Treasury 0008/202018 V 3.0
Process owner: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de
Date of approval: 25th November 2016
Date of revision: 4th April 2018
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Group Directive

Treasury applies the officially released ratings of external rating agencies (Standard & Poor’s,
Moody’s, Fitch) in order to assess the credit rating of a counterparty and therefore doesn’t develop
its own evaluation systems.
In the event of a lowering of the credit rating, the bank is removed from the list of approved
counterparties. In this case, all open positions with the counterparty have to be closed immediately.
Exceptions have to be approved by Managing Director Finance and Organisation in writing.

6.3. Risk Management Responsibilities of Subsidiaries

The group-wide market risk management covers mainly foreign exchange and interest rate risks.
Objective of market risk management is to reduce and to limit the P&L effects arising out of market
price changes (e.g. foreign exchange and interest rates) in order to make projections and budgets
more reliable and to reduce volatility.
Subsidiaries are responsible to provide accurate budgets and forecasts which are the basis for the
risk management activities of Treasury. Treasury is responsible for the analysis, quantification and
reporting of relevant market risks and combines therefore the single risks to a group-wide risk
position. Treasury monitors and manages this risk position based on the approved risk strategy by
the Risk Committee.
Subsidiaries are generally not allowed to conduct Financial Transactions (e.g. derivative forward
contracts) in order to limit financial risks, especially foreign exchange and interest rate risks, with
external partners. In individual cases or for certain types of transactions, Treasury can decide that
such transactions may be entered directly with external partners by Subsidiaries, if this is
appropriate and practical (e.g. due to small size, high transaction costs for direct handling, tax-
related reasons, regulations governing capital movements etc.).

Weißenhorn, 04.04.2018

Dr. Fabian Kracht Thomas Gundermann

Managing Director Finance & Organisation Leiter Treasury

Author: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de

GD Treasury 0008/202018 V 3.0
Process owner: Thomas Gundermann / Head of Treasury / +49 (0)7309.950-1060 / Thomas.gundermann@peri.de
Date of approval: 25th November 2016
Date of revision: 4th April 2018
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