MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD

ABN 73 074 134 517

Year Ended 31 December 2025

Page

Statements of Financial Position

Statements of Comprehensive Income

Statements of Changes in Equity

Statements of Cash Flows

Note 1

Reporting Entity

Note 2

Basis of Preparation

Note 3

Statement of material accounting policies

Note 4

Accounting estimates and judgements

Note 5

Revenue

Note 6

Segment information

Note 7

Employee expenses

Note 8

Expenses

Note 9

Auditor's remuneration

Note 10

Net finance costs

Note 11

Income tax (expense)/benefit

Note 12

Cash and cash equivalents

Note 13

Trade and other receivables

Note 14

Receivables from financial services

Note 15

Derivative financial instruments

Note 16

Other assets

Note 17

Property and equipment including right-of-use asset

Note 18

Intangible assets

Note 19

Current tax assets and liabilities

Note 20

Deferred tax assets and liabilities

Note 21

Trade and other payables

Note 22

Interest bearing liabilities

Note 23

Financial instruments

Note 24

Employee benefits

Note 25

Notes to the statement of cash flows

Note 26

Parent entity

Note 27

Key management personnel

Note 28

Related party disclosures

Note 29

Events subsequent to balance date

Note 30

Contingencies

Note 31

Capital and reserves

The directors present their report together with the consolidated financial statements of the Group comprising

Mercedes-Benz Financial Services Australia Pty Ltd (“the Company”) and its controlled entities, for the year

ended 31 December 2025 and the auditor's report thereon.

The following persons were directors of the Company during the whole of the financial year and up to the date

of this report, unless otherwise stated.

Ilka Fuerstenberger (ex-CEO)

Resigned 31 December 2025

Rafael Pasquet (CFO)

Ashley Mahoney (COO & Managing Director) Appointed Director 1 January 2026

Bianca Voegele

Appointed Director 1 January 2026

Homero Gonzalez

Appointed Non-executive Director 1 January 2026

Sarah-Jane E. Mills was appointed to the position of Company Secretary on 9 August 2024. Ms Mills has been

with the Company since 2011 and currently holds the position of General Counsel of the Company.

There were no officers of the Company during the financial year who were previously partners of the current

audit firm, PwC, at a time when PwC undertook an audit of the Group.

The principal activities of the Group during the year ended 31 December 2025 have been the provision of retail

and wholesale financing and insurance services for passenger motor vehicles and light commercial vehicles.

There were no significant changes in the nature of the activities of the Group during the year.

The Group made a profit after income tax from continuing operations totalling $32.6 million (2024: profit after

income tax from continuing operations: $27.2 million) over the reporting period.

The Group’s presence in the Australian market continued to assist Mercedes-Benz Australia/Pacific Pty Ltd in

achieving higher automotive sales. The automobile finance sector remained highly competitive throughout

2025.

The Group provides leases and consumer finance primarily in relation to motor vehicles. In addition, the Group

provides wholesale bailment facilities to motor vehicle dealers and acts as an insurance broker, principally in

relation to motor vehicle insurance.

The year 2025 was characterised by uncertain macroeconomic and political conditions for the global economy

and the automotive industry. The Group also faces the challenges by subdued consumer climate in Australia.

The Group had a contract volume of $3,650 million at the end of 2025 (2024: $3,930 million), which is the total

monetary amount of all leasing and financing contracts on the reporting date. Impacted by the developments on

the sales side and the continued high competition in the financial services sector in Australia, new business was

12.8% below the previous year’s level at $1,202 million. Gross revenue has increased by 1.9% from continuing

operations over the reporting period. This was driven by a pricing change from the brand partner,

Mercedes-Benz Australia/Pacific Pty Ltd, steady customer demands and high-interest rate environment in

Australia. The Profit after tax has increased by $5.3 million, mainly due to a higher portfolio margin and cost

improvement. Significant uncertainties regarding the current geopolitical conditions, as well as potential

unexpected macroeconomic developments, will also persist in 2026.

The automotive industry continued to undergo a period of radical change in 2025. The business model has

been challenged by technological transformation, shifting market structures, regulatory frameworks, trade

conflicts, and geopolitical tensions. The Mercedes-Benz Group responds to these challenges with maximum

flexibility, resilience, and operational consistency. To strengthen competitiveness, reduce costs and secure the

long -term success, the Mercedes-Benz Group launched the Next Level Performance (“NLP”) programme in

2024. It covers production flexibility (often referred to as “Next Level Production”), significant product offensive,

resource optimisation, and cost structure. As part of the NLP programme, the Group has adopted various

measures to reduce costs, including selling expenses and general administrative expenses. The increased

costs associated with optimisation programs were offset by lower expenses resulting from efficiency measures.

The Group’s operations are not subject to significant environmental regulation under either Commonwealth or

State legislation.

Dividends paid or declared by the Company to members since the end of the previous financial year were:

27 November

Interim 2025 ordinary dividend

22.61

$26,000

Unfranked

2025

There have been no significant changes in the state of affairs of the Group during the period.

In March 2025, the Board of Directors of the Company approved the establishment of a Euro Medium-Term

Note ("EMTN") Programme for the purpose of issuing notes to be listed on the Euro Multilateral Trading Facility

("Euro MTF") market segment of the Luxembourg Stock Exchange ("LuxSE"). The initial issuance of notes

under the Programme is expected to take place in 2026, subject to prevailing market conditions and the receipt

of all necessary regulatory approvals. A new base prospectus will be prepared and approved in connection with

such issuance. The proceeds from the issuance are intended to be used for the Group's general funding

purposes.

In March 2026, the Company’s board approved the renewal of the asset-backed securities ("ABS") warehouse,

SAAT 2024-1, effective April 2026, with a reduced facility limit of $0.8 billion (down from $1.2 billion).

Management anticipates that the agreement will be executed by the end of April.

Other than what is noted above, there has not arisen in the interval between the end of the financial year and

the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the

directors of the Company, to affect significantly the operations of the Group, the results of those operations, or

the state of affairs of the Group, in future financial years.

Information as to likely developments in the operations of the Group and the expected results of those

operations in future financial years has not been included in this report because disclosure of the information

would be likely to result in unreasonable prejudice to the Group.

Since the end of the previous financial year, the Company has not indemnified or made a relevant agreement

for indemnifying against a liability any person who is or has been an auditor of the Company. The Company has

purchased a professional indemnity insurance policy to cover the Company and its officers for legal liability for

acts, errors and omissions committed by the insured in their professional capacity.

On behalf of the Company, the Company’s ultimate parent entity, Mercedes-Benz Group AG, incurs the

expense arising in respect of the directors’ and officers’ liability and legal insurance contract, for current and

former directors and officers, including executive officers of the Company. The insurance policy outlined does

not contain details of the premiums paid in respect of individual officers of the Company. No amounts are

payable by the Company in respect of this insurance.

No director of the Company has received or become entitled to receive a benefit (other than a benefit included

in the aggregate amount of emoluments received or due and receivable by Directors shown in the financial

statements or the fixed salary of a full time employee of the Company or a related corporation) by reason of a

contract made by a related corporation with the Director or with a firm of which he is a member, or with an entity

in which he has a substantial financial interest.

No person has applied to the Court under section 237 of the

for leave to bring

proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the

purpose of taking responsibility on behalf of the Company or the Group for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company or the Group with leave of the

Court under section 237 of the

The lead auditor’s independence declaration is set out on page 50 and forms part of the directors’ report for the

financial year ended 31 December 2025.

The Company and its controlled entities are of a kind referred to in

and in accordance with that, amounts in the financial report and

directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Signed in accordance with a resolution of the directors:

Rafael Pasquet

Bianca Voegele

Director

Melbourne, Australia

15 April 2026

In the opinion of the directors of Mercedes-Benz Financial Services Australia Pty Ltd (“the Company”):

(a) the financial statements and notes set out on pages 5 to 49 are in accordance with the

, including:

(i) giving a true and fair view of the Group and Company’s financial position as at 31

December 2025 and of their performance for the financial year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting

Interpretations) and the

; and

(iii) complying with International Financial Reporting Standards as described in Note 2(a);

and

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and

when they become due and payable.

Signed in accordance with a resolution of the directors:

Rafael Pasquet

Bianca Voegele

Director

Melbourne, Australia

15 April 2026

Consolidated

and

Company

2024

$'000

Note

Cash and cash equivalents

685

Trade receivables

52,892

Receivables from financial services

1,533,502

Inventory

8,723

Derivative financial instruments

6,744

Other assets

19,760

2,755

Current tax assets

1,625,061

Trade and other receivables

3,637

Receivables from financial services

2,396,670

Property and equipment including right-of-use assets

10,229

Intangible assets

11,928

Derivative financial instruments

12,352

15,526

Deferred tax assets (net)

2,450,342

4,075,403

Trade and other payables

40,357

Interest payable

33,080

Interest-bearing liabilities

1,031,962

Employee benefits

7,223

Derivative financial instruments

1,112,622

Interest-bearing liabilities

2,684,009

Derivative financial instruments

10,767

440

Employee benefits

2,695,216

3,807,838

267,565

Contributed equity

115,000

Retained earnings

203,800

Hedge revaluation reserve

2,572

Merger reserve

(53,807)

267,565

Consolidated

and

Company

2024

Note

$'000

Interest revenue

279,087

Other income

25,248

5,911

Other revenue

310,246

(175,480)

Employee expenses

(21,260)

Depreciation and amortisation expense

(3,574)

Lease expense

(4,975)

Net impairment losses on financial assets

(23,302)

Commission expense

(936)

Other expenses

(41,956)

(271,483)

38,763

Income tax expense

(11,519)

27,244

Effective portion of changes in fair value of cash flow hedges

(5,266)

Net change in fair value of cash flow hedges transferred to profit

or loss, net of tax

2,990

Income tax on other comprehensive income

683

(1,593)

Blank

25,651

Test

27,244

Owners of the parent

27,244

Total comprehensive income attributable to:

25,651

Owners of the parent

25,651

115,000

208,056

4,165

(53,807)

273,414

Profit for the period

27,244

Net change in fair value of cash flow hedges transferred to profit or loss,

net of tax

(1,593)

Dividends to owners of the Company

(31,500)

115,000

203,800

2,572

(53,807)

267,565

Profit for the period

32,588

Net change in fair value of cash flow hedges transferred to profit or

loss, net of tax

2,272

(26,000)

Dividends to owners of the Company

Consolidated

and

Company

2024

Note

$'000

Net cash inflow from lending and other operating activities

92,660

Payments made to related parties for prepayment of leases

and guaranteed residual value

(48,875)

Receipts from related parties for the guaranteed residual

value

49,365

Interest received

321,679

Interest paid

(164,651)

Income taxes paid

(16,075)

234,103

Payments for plant and equipment

(2,030)

Proceeds from sale of plant and equipment

516

(1,514)

Proceeds from borrowings

6,971,126

Repayment of borrowings

(7,171,385)

Payments for lease liabilities

(194)

(31,500)

Dividends paid to company’s shareholders

(231,953)

636

Cash and cash equivalents at beginning of the period

685

Cash and cash equivalents at end of period

Mercedes-Benz Financial Services Australia Pty Ltd (the “Company”) is a company domiciled in Australia. The

address of the Company’s registered office is 44 Lexia Place, Mulgrave, Victoria. The Company is a for-profit

entity and is primarily involved in the wholesale and retail financing of motor vehicles and insurance broking

services.

The consolidated and Company financial statements of Mercedes-Benz Financial Services Australia Pty Ltd as

at the year ended 31 December 2025 comprise the Company, and its controlled entities (together referred to as

the “Group”).

The financial reports are general purpose financial reports which have been prepared in accordance with

Australian Accounting Standards ("AAS") (including Australian interpretations), adopted by the Australian

Accounting Standards Board (“AASB”) and the

The financial reports of the Group comply with International Financial Reporting Standards (“IFRSs”) and

interpretations adopted by the International Accounting Standards Board ("IASB").

The consolidated and Company financial statements were approved by the Board of Directors on 15 April 2026.

The Company and its controlled entities are of a kind referred to in

and in accordance with that Instrument, amounts in the financial report

have been rounded off to the nearest thousand dollars, unless otherwise stated.

The disclosure in the financial report applies to both the Group and Company, unless otherwise stated.

The financial reports are prepared on the historical cost basis except for derivative financial instruments,

interest bearing liabilities which are subject to fair value hedging, and share-based payments, which are

measured at fair value.

The financial reports of the Group have been prepared on a going concern basis which contemplates continuity

of normal business activities, funding of operating activities and the realisation of assets and settlement of

liabilities in the ordinary course of business.

The net current deficiency at 31 December 2025 is mainly due to the more short-term borrowings during 2025.

Based on the forecast cash flows, the Group believes it can pay all its debts as and when they fall due for at

least a minimum period of 12 months from the date of these accounts. The Group has headroom in its

unutilised bank facility of $1,568 million as at 31 December 2025.

On this basis, the Directors have formed the opinion that the Group’s financial report should be prepared on a

going concern basis.

The financial reports are presented in Australian dollars which is the Group’s functional currency.

(continued)

The preparation of the financial statements in conformity with AAS requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and reported amounts of assets

and liabilities, income and expenses. The estimates and associated assumptions are based on historical

experience and various other factors that are believed to be reasonable under the circumstances, the results of

which form the basis of making the judgements about carrying values of assets and liabilities that are not readily

apparent from other sources. Actual results may differ from these estimates. These accounting policies have

been consistently applied by the Group.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised prospectively.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting

policies that have the most significant effect on the amounts recognised in the financial statements are

described in Note 4.

Subsidiaries are structured entities controlled by the Company (Mercedes-Benz Financial Services Australia Pty

Ltd). Control exists when the Company has the power, directly or indirectly, to govern the financial and

operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting

rights that presently are exercisable or convertible are taken into account. The financial statements of

subsidiaries are included in the consolidated and Company financial statements from the date that control

commences until the date that control ceases.

During 2019, Silver Arrow Australia Trust 2019-1 ("SAAT 2019-1") was created for investment purposes as

outlined above. SAAT 2019-1 remains active as at 31 December 2025. During 2024, Silver Arrow Australia

Trust 2024-1 ("SAAT 2024-1") was created for investment purposes as outlined above and remains active as at

31 December 2025. The controlled entities under the Company as at 31 December 2025 are SAAT 2019-1 and

SAAT 2024-1. In the normal course of business, the Company enters into transactions by which it transfers the

eligible financial assets to the securitisation trusts. These transfers do not give rise to derecognition of those

financial assets for the Group. The Company is entitled to any residual income of the securitisation program

after all payments due to investors have been met.

The financial statements of the Company and its subsidiaries included in the consolidated and Company

financial statements are prepared using uniform recognition and measurement principles. All intercompany

assets and liabilities, equity, income and expenses as well as cash flows from transactions between

consolidated entities are eliminated in the course of the consolidation process.

Certain new accounting standards and amendments to accounting standards have been published that are not

mandatory for 31 December 2025 reporting periods and have not been early adopted by the Group. The

Group’s assessment of the impact of these new standards and interpretations is set out below.

(continued)

On 29 July 2024, the AASB issued targeted amendments to AASB 9 and AASB 7 to respond to recent

questions arising in practice, and to include new requirements not only for financial institutions but also for

corporate entities. These amendments:

• clarify the date of recognition and derecognition of some financial assets and liabilities, with a new exception

for some financial liabilities settled through an electronic cash transfer system;

• clarify and add further guidance for assessing whether a financial asset meets the solely payments of principal

and interest (SPPI) criterion;

• add new disclosures for certain instruments with contractual terms that can change cash flows (such as some

financial instruments with features linked to the achievement of environment, social and governance targets);

and

• update the disclosures for equity instruments designated at fair value through other comprehensive income

(FVOCI).

The Group does not expect these amendments to have a material impact on its operations or financial

statements.

AASB 18 will replace

, introducing new requirements that will

help to achieve comparability of the financial performance of similar entities and provide more relevant

information and transparency to users. Even though AASB 18 will not impact the recognition or measurement of

items in the financial statements, its impacts on presentation and disclosure are expected to be pervasive, in

particular those related to the statement of financial performance and providing management-defined

performance measures within the financial statements.

Management is currently assessing the detailed implications of applying the new standard on the Group’s

financial statements. The Group will apply the new standard from its mandatory effective date of 1 January

2027. Earlier application is permitted but not planned by the Group. The Group will analyse, in particular, the

effects of AASB 18 on the structure of the Consolidated Income Statement and the Consolidated Statement of

Cash Flows, as well as the necessity and scope of the additionally required disclosures and the need for

amended aggregation or disaggregation of items. Retrospective application is required, and so the comparative

information for the financial year ending 31 December 2026 will be restated in accordance with AASB 18.

The accounting policies set out below have been applied consistently to all periods presented in these financial

statements.

(continued)

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the

transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are

translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange differences

arising on translation are recognised in the income statement. Non-monetary assets and liabilities 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 Group's ultimate parent entity, Mercedes-Benz Group AG, uses derivative financial instruments to hedge

the Group's exposure to changes in interest rate risks arising from the funding of operational and financing

activities. In accordance with Mercedes-Benz Group treasury policy, the Group does not hold or issue derivative

financial instruments for trading or speculative purposes.

If the requirements for hedge accounting set out in AASB 9 are met, Mercedes-Benz Group AG designates and

documents the hedge relationship from the date a derivative contract is entered into as a fair value hedge, a

cash flow hedge or a hedge of a net investment in a foreign business operation. The documentation of the

hedging relationship includes the objectives and strategy of risk management, the type of hedging relationship,

the nature of the risk being hedged, the identification of the eligible hedging instrument and the eligible hedged

item, as well as an assessment of the effectiveness requirements comprising the risk mitigating economic

relationship, the absence of deteriorating effects from credit risk and the appropriate hedge ratio.

Under AASB 9, amounts recognised in other comprehensive income as effective hedging gains or losses from

hedging instruments are removed from the reserves for derivative financial instruments and directly included in

the initial cost or carrying amount of the hedged item at initial recognition if a hedged forecast transaction

results in the recognition of a non-financial asset or non-financial liability.

For other cash flow hedges, the accumulated hedging gains or losses from hedging instruments are reclassified

from the reserves for derivative financial instruments to the Consolidated Statement of Income when the

hedged item affects profit or loss. The ineffective portions of fair value changes are recognised directly in profit

or loss.

For derivative instruments designated in a hedge relationship, certain components can be excluded from

designation and the changes in these components’ fair value are then deferred in other comprehensive income

under AASB 9. This applies for example to the fair value of options or cross currency basis spread.

The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate

the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of

the swap counterparties.

Non-derivative financial instruments comprise debt securities, trade and other receivables, cash and cash

equivalents, loans and borrowings, and trade and other payables.

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future

principal and interest cash flows, discounted at the market rate of interest at the reporting date.

(continued)

Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised

asset or liability, or a highly probable forecasted transaction, the effective part of any gain or loss on the

derivative financial instrument is recognised directly in equity. When the forecasted transaction subsequently

results in the recognition of a non-financial asset or non-financial liability, or the forecast transaction for a

non-financial asset or non-financial liability, the associated cumulative gain or loss is removed from equity and

included in the initial cost or other carrying amount of the non-financial asset or liability. If a hedge of a

forecasted transaction subsequently results in the recognition of a financial asset or a financial liability, the

associated gains and losses that were recognised directly in equity are reclassified into profit or loss in the

same period or periods during which the asset acquired or liability assumed affects profit or loss (i.e., when

interest income or expense is recognised).

For cash flow hedges, other than those covered above, the associated cumulative gain or loss is removed from

equity and recognised in the income statement in the same period or periods during which the hedged forecast

transaction affects profit or loss. The ineffective part of any gain or loss is recognised immediately in the income

statement.

Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognised in

the profit or loss. The hedged item is adjusted to reflect changes in its fair value in respect of the risk being

hedged; the gain or loss attributable to the hedged risk is recognised in profit or loss with an adjustment to the

carrying amount of the hedged item.

Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation (see

below) and impairment losses (refer Note 3(j)).

Since January 1, 2019 the Group as a lessee has recognised right-of-use assets and the lease liabilities for the

payment obligations entered into for generally all leases in the statement of financial position at present value.

The lease liabilities include the following lease payments:

- fixed payments including defacto fixed payments, less lease incentives receivables from the lessor;

- variable lease payments linked to an index or interest rate;

- the exercise price of purchase options, when exercise is estimated to be reasonably certain; and

- contractual penalties for the termination of a lease if the lease term reflects the exercise of a termination

option.

Lease payments are discounted at the rate implicit in the lease if that rate can readily be determined.

Otherwise, discounting is at the incremental borrowing rate. The incremental borrowing rate, which is mainly

applied at the Group, is based on risk adjusted interest rates and determined for the respective lease terms and

currencies.

The Group generally also applies the option for contracts comprising lease components as well as non-lease

components not to split these components.

(continued)

Extension and termination options are part of a number of leases particularly of real estate. Such contract terms

offer the Group the greatest possible flexibility. In determining the lease term, all facts and circumstances

offering economic incentives for exercising extension options or not exercising termination options are taken

into account. In determining the lease term, those options are only considered if they are reasonably certain.

The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing

part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within

the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised

in the income statement as an expense as incurred.

The depreciation/amortisation is booked using the straight line method. The rates used for each class of asset

are as follows:

Motor vehicles

10% - 25%

Leased building

Office equipment

5% - 20%

Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets

such as software, from the time the program is completed and first put into use. Depreciation is recognised in

profit and loss statement on a straight-line basis. All costs associated with the development of the asset are

capitalised and amortised as per the table above.

Depreciation and amortisation rates and methods are reviewed annually for appropriateness. When changes

are made, adjustments are reflected prospectively in current and future periods only.

Costs associated with maintaining software programmes are recognised as an expense as incurred.

Development costs that are directly attributable to the design and testing of identifiable and unique software

products controlled by the Group are recognised as intangible assets where the following criteria are met:

•

it is technically feasible to complete the software so that it will be available for use

•

management intends to complete the software and use or sell it

•

there is an ability to use or sell the software

•

it can be demonstrated how the software will generate probable future economic benefits

•

adequate technical, financial and other resources to complete the development and to use or sell the

software are available, and

•

the expenditure attributable to the software during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software include employee costs and an appropriate

portion of relevant overheads.

Capitalised development costs are recorded as intangible assets and amortised from the point at which the

asset is ready for use as follows:

(continued)

2024

IT software and licences

20%

Receivables from financial services consist of receivables from sales financing with retail customers,

receivables from sales financing with dealers, and finance lease contracts receivables.

Receivables from financial services are stated at amortised cost using the effective interest rate method less

any impairment (refer Note 3(j)). The fair value of receivables from financial services is estimated as the present

value of future cash flows, discounted at the market rate of interest at the reporting date.

Receivables from financial services are recognised on transaction settlement date, which is the date the

Company becomes party to an irrevocable financing arrangement. Receivables from financial services are

derecognised when the rights to receive cash flows from the financial assets have expired or have been

transferred, and the Company has transferred substantially all the risks and rewards of ownership.

Receivables from financial services include a portion of receivables under securitisation within the ABS trusts.

In the normal course of business, the Company enters into transactions by which it transfers financial assets to

securitisation trusts. These transfers do not give rise to derecognition of those financial assets for the Company

or the Group. The terms of the transfer of these loans do not meet the criteria for derecognition under

and are therefore recognised on the Group’s statements of financial position.

defines control when an investor is exposed or has rights to variable returns

from its involvement with the investee and has the ability to affect those returns through its power over the

investee. The Company bears control over the securitisation trusts requiring consolidation in the financial

statements. The Company has no financial guarantee in relation to the securitisation of loans and receivables.

All assets acquired, including property, plant and equipment, are initially recorded at their cost of acquisition at

the date of acquisition, being the fair value of the consideration provided plus incidental costs directly

attributable to the acquisition.

Where settlement of any cash consideration is deferred, the amounts payable are recorded at their present

value, discounted at the rate applicable to the Group if a similar borrowing was obtained from an independent

financier under comparable terms and conditions.

Expenditure is only recognised as an asset when the entity controls future economic benefits as a result of the

costs incurred, it is probable that those future economic benefits will eventuate, and the costs can be measured

reliably.

Costs incurred on assets subsequent to initial acquisition are capitalised when it is probable that future

economic benefits in excess of the originally assessed performance of the asset will flow to the Group in future

years.

Cash and cash equivalents comprise cash balances and call deposits which are carried at the face value of the

amounts deposited or drawn. The carrying amounts of cash, short-term deposits and bank overdrafts

approximate fair value. Interest revenue is accrued at the market or contracted rates, using the effective interest

method.

(continued)

At each reporting date, a loss allowance is recognised for financial assets, loan commitments and financial

guarantees other than those to be measured at fair value through profit or loss reflecting expected losses for

these instruments. The expected credit loss approach uses three stages for allocating impairment losses:

Stage 1: expected credit losses within the next twelve months

Stage 1 includes all contracts with no significant increase in credit risk since initial recognition and usually

includes new acquisitions and contracts with fewer than 31 days past due date. The portion of the lifetime

expected credit losses resulting from default events possible within the next 12 months is recognised.

Stage 2: expected credit losses over the lifetime - not credit impaired

If a financial asset has a significant increase in credit risk since initial recognition but is not yet credit impaired, it

is moved to stage 2 and measured at lifetime expected credit loss, which is defined as the expected credit loss

that results from all possible default events over the expected life of a financial instrument.

Stage 3: expected credit losses over the lifetime - credit impaired

If a financial asset is defined as credit-impaired or in default, it is transferred to stage 3 and measured at lifetime

expected credit loss. Objective evidence for a credit-impaired financial asset includes 91 days past due date

and other information about significant financial difficulties of the borrower.

The determination of whether a financial asset has experienced a significant increase in credit risk is based on

an assessment of the probability of default, which is made at least quarterly, incorporating external credit rating

information as well as internal information on the credit quality of the financial asset. For debt instruments that

are not receivables from financial services, a significant increase in credit risk is assessed mainly based on

past-due information or the probability of default.

A financial asset is migrated to stage 2 if the asset’s credit risk has increased significantly compared to its credit

risk at initial recognition. The credit risk is assessed based on the probability of default. For trade receivables,

the simplified approach is applied whereby expected credit losses for all trade receivables are allocated to

stage 2 initially. Hence, no determination of significant increases in credit risk is necessary.

The Group applies the low credit risk exception to the stage allocation to quoted debt instruments with

investment-grade ratings. These debt instruments are always allocated to stage 1.

In stage 1 and 2, the effective interest revenue is calculated based on gross carrying amounts. If a financial

asset becomes credit impaired in stage 3, the effective interest revenue is calculated based on its net carrying

amount (gross carrying amount adjusted for any loss allowance).

Expected credit losses are measured in a way that reflects:

i) the unbiased and probability-weighted amount;

ii) the time value of money; and

iii) reasonable and supportable information (if available without undue cost or effort) at the reporting date about

past events, current conditions and forecasts of future economic conditions.

Expected credit losses are measured as the probability-weighted present value of all cash shortfalls over the

expected life of each financial asset. For receivables from financial services, expected credit losses are mainly

calculated with a statistical model using three major risk parameters: probability of default, loss given default

and exposure at default.

(continued)

The estimation of these risk parameters incorporates all available relevant information, not only historical and

current loss data, but also reasonable and supportable forward-looking information reflected by the future

expectation factors. This information includes macroeconomic factors (e.g., gross domestic product growth,

unemployment rate) and forecasts of future economic conditions. For receivables from financial services, these

forecasts are performed using a scenario analysis (basic scenario, optimistic scenario and pessimistic

scenario). The impairment amount for trade receivables is predominantly determined on a collective basis.

A financial instrument is written off when there is no reasonable expectation of recovery, for example, at the end

of insolvency proceedings or after a court decision of uncollectibility.

Significant modification of financial assets (e.g., with a change in the present value of the contractual cash flows

of 10%) also leads to derecognition of the financial assets with a simultaneous recognition of new financial

assets. This is estimated to be rare and immaterial for receivables from financial services. If the terms of a

contract are renegotiated or modified and this does not result in derecognition of the contract, then the gross

carrying amount of the contract has to be recalculated and a modification gain or loss has to be recognised in

profit or loss.

Interest-bearing borrowings are recognised initially at fair value less directly attributable transaction costs.

Subsequent to initial recognition, these financial liabilities are stated at amortised cost using the effective

interest method.

The Company’s net obligation in respect of long-term service benefits is the amount of future benefit that

employees have earned in return for their service in the current and prior periods. The obligation is calculated

using expected future increases in wage and salary rates including related on-costs and expected settlement

dates, and is discounted using the wage inflation and discount rates published by the Department of Treasury

and Finance Victoria at the balance sheet date which have maturity dates approximating to the terms of the

Company’s obligations. Related on-costs have also been included in the liability (refer Note 24).

Liabilities for employee benefits for wages, salaries, annual leave and sick leave that are expected to be settled

within 12 months of the reporting date represent present obligations resulting from employees’ services

provided to reporting date, are calculated at undiscounted amounts based on remuneration wage and salary

rates that the Company expects to pay as at reporting date including related on-costs, such as workers

compensation insurance and payroll tax.

Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods

and services, are expensed based on the net marginal cost to the Company as the benefits are taken by the

employees.

The Company operates an employee bonus plan which is linked to both employee and Company performance.

The provision for bonuses is calculated at nominal amounts based on expected bonus payments.

Employees are entitled to purchase financial products similar to those offered by the Company to the public at

lower interest rates where the lower interest rates can be offered to the members of the public. The rates

offered to employees exceed the cost of funds to the Company.

(continued)

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income

statement as incurred (refer Note 24).

In 2005 Mercedes-Benz Group AG adopted the “Performance Phantom Share Plan” under which virtual shares

(phantom shares) are granted to eligible employees entitling them to receive cash paid out after four years of

service. The Company recognises the value of phantom shares issued in accrued liabilities. The quoted price

represents the fair value of each phantom share because the payment per vested share depends on the quoted

price of one ordinary share. The proportionate compensation expense for 2025 is determined based on the

quoted price of Mercedes-Benz Group AG ordinary shares as well as the estimated target achievement grades

as of 31 December 2025 (refer Notes 7 and 24).

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial

year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due

within 12 months after the reporting period. They are recognised initially at their fair value and subsequently

measured at amortised cost using the effective interest method.

Deferred income is recognised in the statement of financial position when income is received in earlier periods

than that in which it is earned. Principally, the Group recognised deferred income in the consolidated statement

of financial position in relation to interest rate subsidies received from related parties in connection with various

finance campaigns. Deferred income is recognised in the income statement according to the effective interest

method.

Interest income arising from finance leases and hire purchase contracts is accounted for over the term of the

contract using an effective interest method in accordance with

. Unearned income is that

portion of charges written into hire purchase agreements, chattel mortgage agreements and lease agreements,

which will be earned in the future. Initial direct costs arising from finance contracts have reduced the unearned

income remaining to be recognised in future years and will be amortised over the lease term.

Rental revenue arising from operating lease contracts is brought to account in the period in which it is earned

on a straight line basis over the lease term. Motor vehicles subject to operating leases where the Company acts

as lessor have been accounted for as non-current assets depreciated over the contract term on a straight-line

basis.

When the Company acts in the capacity of an agent rather than as the principal in a transaction, the revenue

recognised is the net amount of commission received by the Company.

(continued)

Net financing costs comprise interest payable on borrowings calculated using the effective interest method,

interest receivable on funds invested and gains and losses on hedging instruments that are recognised in the

consolidated statement of comprehensive income (refer Note 10).

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the

income statement except to the extent that it relates to items recognised directly in equity, in which case it is

recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or

substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the

carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation

purposes. The following temporary differences are not provided for: the initial recognition of assets or liabilities

that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the

extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is

based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using

tax rates enacted or substantively enacted at the balance date. Deferred tax assets and deferred tax liabilities

are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to

income taxes linked to the same tax authority on the same taxable entity.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available

against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer

probable that the related tax benefit will be realised.

The Company and its controlled entities are in a multiple entry consolidated (MEC) group, whereby the group of

Australian entities (being Mercedes-Benz Group Australia/Pacific Pty Ltd, Mercedes-Benz Australia/Pacific Pty

Ltd, Mercedes-Benz Vans Australia/Pacific Pty Ltd, Mercedes-Benz Mobility Australia Pty Ltd, and

Mercedes-Benz Financial Services Australia Pty Ltd) were all wholly foreign-owned by a common non-resident

company, but did not have a common Australian resident head company. As a result, these entities formed part

of MEC group that were consolidated and taxed as a single entity for Australian tax purposes. The provisional

head entity of the Australian tax-consolidated group is Mercedes-Benz Group Australia/Pacific Pty Ltd. The

implementation date of the tax consolidation system for the tax-consolidated group was 1 January 2003.

Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences

of the members of the tax-consolidated group are recognised in the separate financial statements of the

members of the tax-consolidated group using the ‘separate taxpayer within group’ approach. Deferred tax

assets and deferred tax liabilities are measured by reference to the carrying amounts of the assets and liabilities

in the Group’s balance sheet and their tax values applying under tax consolidation.

Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the Group are

assumed by the head entity of the tax-consolidated group and are recognised as amounts payable (receivable)

to other entities in the tax-consolidated group in conjunction with any tax funding arrangement amounts (refer

below). Any difference between these amounts is recognised by the Group as an equity contribution or

distribution.

(continued)

The Group recognises deferred tax assets arising from unused tax losses to the extent that it is probable that

future taxable profits of the tax-consolidated group will be available against which the asset can be utilised. The

Group assesses the recovery of its unused tax losses and tax credits only in the period in which they arise and

before assumption by the head entity, in accordance with AASB 112 applied in the context of the

tax-consolidated group.

Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised

assessments of the probability of recoverability is recognised by the head entity only.

The Group, in conjunction with other members of the tax-consolidated group, has entered into a tax funding

arrangement which sets out the funding obligations of members of the tax consolidated group in respect of tax

amounts. The tax funding arrangements require payments to / from the head entity equal to the current tax

liability (asset) assumed by the head entity and any tax-loss deferred tax asset assumed by the head entity,

resulting in the Group recognising an inter-entity payable (receivable) equal in amount to the tax liability (asset)

assumed. The inter-entity payable (receivable) is at call.

Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the

timing of the head entity’s obligation to make payments for tax liabilities to the relevant tax authorities.

The Group, in conjunction with other members of the tax-consolidated group, has also entered into a tax

sharing agreement. The tax sharing agreement provides for the determination of the allocation of income tax

liabilities between the entities should the head entity default on its tax payment obligations. No amounts have

been recognised in the financial statements in respect of this agreement as payment of any amounts under the

tax sharing agreement is considered remote.

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except

where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the

GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and

payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to,

the ATO is included as a current asset or liability in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows

arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified

as operating cash flows.

Repossessed assets are those assets acquired through actual foreclosure or in full or partial satisfaction of

leases or loans. When such assets are acquired, income on the loan or lease ceases to be recognised in the

income statement as reasonable doubt exists as to the collectability of interest and principal. The carrying

amount of repossessed assets approximates net realisable value. Repossessed assets are included as

inventory in the consolidated statement of financial position.

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares

are recognised as a deduction from equity, net of any tax effects.

(continued)

An operating segment is a component of the Group that engages in business activities from which it may earn

revenues and incur expenses, including revenues and expenses that relate to transactions with any of the

Group’s other components. All operating segments’ operating results are regularly reviewed by the Group’s

senior management to make decisions about resources to be allocated to the segment and assess its

performance, and for which discrete financial information is available.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and

equipment, and intangible assets other than goodwill.

In the consolidated and Company financial statements, to a certain degree, estimates and management

judgements have to be made which can affect the amounts and reporting of assets and liabilities, the reporting

of contingent assets and liabilities on the balance sheet date, and the amounts of income and expense reported

for the period.

The doubtful debts provision as detailed above in Note 3(j) involves a level of management judgement. Many

factors are taken into consideration in this context including historical loss experience, the size and composition

of certain portfolios, the current fair values and adequacy of collaterals, current economic events,

macroeconomic factors, and forecasts of future economic conditions and conditions. These forecasts are

performed using a scenario analysis (basic scenario, optimistic scenario and pessimistic scenario).

The doubtful debts provision is calculated for the retail portfolio using current delinquencies, historical

delinquency migration ratios ("HDMR") as well as historical loss data. Corporate Fleet and Dealer pool

provisions are calculated based on customer ratings and associated default probabilities as well as potential

loss severities. Specific provisions for impaired corporate accounts are determined using remarketing estimates

of current assets, expert and management judgement on the likelihood of recovery and liquidation of assets as

at 31 December 2025.

Further external information is included in the assessment through subsequent adjustments. Changes to the

estimation and assessment of these factors influence the allowance for credit losses with a resulting impact on

the Group's net profit.

Other factors that have the most significant effect on the amount recognised in the financial statements are also

described in the following notes:

•

Note 15 Derivative financial instruments, Note 21 Trade and other payables, Note 22 Interest bearing

liabilities and Note 23 Financial instruments - the best evidence of fair value is a quoted price from an

actively traded market. In the event that the market for a financial instrument is not active, a valuation

technique is used. The majority of valuation techniques employ only observable market data and so the

reliability of the fair value measurement is high. However, certain financial instruments are valued on the

basis of valuation techniques that feature one or more significant market inputs that are unobservable.

Valuation techniques that rely to a greater extent on unobservable inputs require a higher level of

management judgement to calculate a fair value than those based wholly on observable inputs. Key

judgements include:

the likelihood and expected timing of future cash flows on the instrument.

selecting an appropriate discount rate for the instrument.

judgement to determine what model to use to calculate fair value in areas where the choice of

valuation model is particularly subjective.

(continued)

When applying a model with unobservable inputs, estimates are made to reflect uncertainties in fair values

resulting from a lack of market data inputs, for example, as a result of illiquidity in the market. For these

instruments, the fair value measurement is less reliable. Inputs into valuations based on unobservable data

are inherently uncertain because there is little or no current market data available from which to determine

the level at which an arm’s length transaction would occur under normal business conditions. However, in

most cases there is some market data available on which to base a determination of fair value, for example

historical data, and the fair values of most financial instruments are based on some market observable

inputs even when unobservable inputs are significant.

2024

$'000

- Related parties

- Other parties

312,783

(42,592)

Fee expense (effective interest method)

270,222

- Related parties

4,451

- Other parties

4,414

279,087

Insurance brokerage income

13,218

12,030

Other contract and fee income

25,248

- Other parties

4,114

- Related parties

1,247

- Other parties

550

5,911

310,246

(continued)

Operating segments are identified on the basis of whether the allocation of resources and/or the assessment of

performance of a particular component of the Group’s activities are regularly reviewed by the Group’s chief

operating decision makers as a separate operating segment. The Group supports the sales of the

Mercedes-Benz automotive brands in Australia. By these criteria, the activities of the Group are considered to

be one segment being the financial products provider in the automobile finance sector, and the segmental

analysis is the same as the analysis for the Group as a whole. The chief operating decision makers (Chief

Executive Officer, Chief Operations Officer and Chief Financial Officer) review the consolidated income

statement and consolidated balance sheet regularly to make decisions about the Group’s resources and to

assess overall performance.

2024

$'000

Wages and salaries

17,550

Compulsory superannuation contributions

1,759

Cash settled share-based payments transactions

152

Increase in liability for annual leave

1,170

Increase in liability for long service leave

338

Other employee expenses

291

21,260

2024

$'000

Depreciation of plant and equipment

3,574

Lease expense

- Related parties

3,518

- Other parties

1,457

Net impairment losses on financial assets

- Net expense / (reversal) for movements to provision for bad debts

2,590

- Bad debts written off

20,712

Commission expense

936

Other expenses

- Net loss on assets disposed

327

- General administration costs

24,112

17,517

- Other

74,743

(continued)

2024

Auditors of the Group - PwC Australia

Audit of financial statements

255,000

Other regulatory audit service - Australian Financial Services License

35,000

and APRA

290,000

Auditors of the Group - PwC Australia

Other assurance services

60,000

Audit services relate to the audit of the consolidated and Company financial statements. Other services in 2024

relate to agreed upon procedures performed in connection with internal control system review.

2024

$'000

- Related parties

(34,456)

- Other parties

(145,133)

4,109

Net fair value gain/(loss) on derivative financial instruments

(175,480)

2024

Note

$'000

Effective portion of changes in fair value of cash flow hedges

(5,266)

Net change in fair value of cash flow hedges transferred to

profit or loss, net of tax

2,990

Income tax on other comprehensive income

683

(1,593)

(continued)

2024

$'000

Current year

(13,813)

Adjustments for prior years

(13,804)

Origination and reversal of temporary differences

2,285

(11,519)

38,763

Profit before tax

Profit from continuing operations before income tax

38,763

Income tax expense using the Group's domestic tax rate of 30%

(2024 - 30%)

(11,629)

Increase in income tax expense due to:

- Non-deductible expenses

(4)

- Prior year income tax expense adjustment

Decrease in income tax expense due to:

105

- Prior year deferred tax adjustment

(11,519)

Income tax (expense) on pre-tax net profit

(50,282)

Relating to change in fair value of derivatives

683

2024

Note

$'000

685

Cash and cash equivalents

685

2024

Note

$'000

Receivables due from related entities

42,100

10,792

Trade and other receivables

52,892

Total current trade and other receivables

(continued)

Receivables due from related entities

3,637

Total non-current trade and other receivables

3,637

Trade receivables primarily consist of customer premiums due from the activities of the insurance brokerage

business, and lease receivables due from customers on operating lease contracts, net of provision for

repossessed vehicles, and residual value guarantees receivable from Mercedes-Benz Australia/Pacific Pty Ltd.

The total residual value guaranteed by Mercedes-Benz Australia/Pacific Pty Ltd is amounting to $57,172,945

(2024: $42,732,805).

2024

Note

$'000

Receivables from financial services - Retail

1,180,489

Unearned income

(137,612)

Gross carrying amount

1,042,877

Allowance for doubtful debts

(11,581)

Net carrying amount

1,031,296

Receivables from financial services - Wholesale

502,679

- Other parties

Gross carrying amount

502,679

Allowance for doubtful debts

(473)

502,206

Net carrying amount

1,533,502

Total current receivables from financial services

Receivables from financial services - Retail

2,731,656

(313,486)

Unearned income

Gross carrying amount

2,418,170

Allowance for doubtful debts

(21,500)

Net carrying amount

2,396,670

3,930,172

Retail receivables include loans and finance leases to end users of the financed asset. The consolidated

weighted average effective interest rate on retail receivables at 31 December 2025 is 7.19% (2024: 6.58%).

Wholesale receivables primarily represent vehicles on floor plan arrangements. Included also are direct loans to

dealerships for other assets such as dealer showroom refurbishments.

(continued)

Loans and receivables include a portion of the Group's term loans and term purchases under securitisation

within securitisation trusts. The terms of the transfer of these loans do not meet the criteria for derecognition

under

and are therefore recognised on the Group's and the Company’s

statements of financial position.

defines control when an investor

is exposed or has rights to variable returns from its involvement with the investee and has the ability to affect

those returns through its power over the investee. The Company bears control over the securitisation trusts

requiring consolidation in the financial statements.

The Company has no financial guarantee in relation to the securitisation of loans and receivables.

As at the end of the reporting period, the carrying amount of transferred assets held by the securitisation trusts

was $1,928,102,000 (2024: $1,928,101,000).

The development of loss allowances for receivables from financial services due to expected credit losses at 31

December 2025 under AASB 9 is shown in the table below.

Balance at beginning of the reporting period

Additions

Change in remeasurement

Utilisation

Reversals

Transfer to Stage 1

Transfer to Stage 2

Transfer to Stage 3

Balance as 31 December according to

AASB 9

Changes in the allowance for doubtful debts for receivables from financial services at 31 December 2024 under

AASB 9 are shown as follows.

Balance at beginning of the reporting period

(13,394)

(6,521)

(10,447)

(30,362)

Additions

(1,515)

(5,450)

(2,074)

(9,039)

Change in remeasurement

2,950

(2,354)

(8,979)

(8,383)

Utilisation

163

828

3,856

4,847

Reversals

4,984

1,694

2,705

9,383

Transfer to Stage 1

(2,328)

1,457

871

Transfer to Stage 2

1,568

(2,316)

748

Transfer to Stage 3

138

738

(876)

Balance as 31 December according to

(7,434)

(11,924)

(14,196)

(33,554)

AASB 9

(continued)

The Group’s exposure to credit risk is disclosed in Note 23.

Maturities of the future contractual lease payments and the development of lease payments to the carrying

amounts of receivables from finance lease contracts at reporting date, comprise the following:

2024

$'000

Contractual future lease payment

67,755

- Within one year

44,186

- Between one and two years

15,730

- Between two and three years

5,523

- Between three and four years

1,002

- Between four and five years

725

589

- Later than five years

67,755

Gross investment

67,755

(7,059)

Unearned finance lease

Gross carrying amount

60,696

Gross carrying amount

60,696

(267)

Loss allowance

60,429

2024

$'000

Interest rate swaps - cash flow hedge

6,744

Interest rate swaps - cash flow hedge

3,610

Interest rate swaps contracts - no hedge accounting

8,742

12,352

Interest rate swap contracts - fair value hedges

(continued)

2024

$'000

Interest rate swap contracts - cash flow hedges

1,566

Interest rate swap contracts - no hedge accounting

9,201

10,767

2024

$'000

Related parties

6,744

Total current assets

6,744

Related parties

12,352

Other parties

Total non-current assets

12,352

Related parties

Total current liabilities

Related parties

1,566

9,201

Other parties

10,767

Total non-current liabilities

The Group’s exposure to credit, liquidity and market risks and a sensitivity analysis for financial assets and

liabilities is disclosed in Note 23.

2024

$'000

General Reserve

17,166

Prepayments

2,594

19,760

General Reserve consists primarily of funds held in compliance of the SAAT 2019-1 Trust Supplement and

SAAT 2024-1 Trust Supplement as at 31 December 2025.

(continued)

Property and equipment including right-of-use asset as shown in the Consolidated Statement of Financial

Position with a carrying amount of $9.4 million (2024: $10.2 million) is made up of $0.1 million (2024: $0.3

million) of property, plant and equipment and $9.3 million of right-of-use assets (2024: $9.9m) that the Group

received as lessee. The right-of-use asset is shown below.

2024

$'000

Balance at beginning of year

10,816

Balance at end of year

10,816

Balance at beginning of year

(351)

(601)

Depreciation expense

Balance at end of year

(952)

10,465

Carrying amount at beginning of year

9,864

Carrying amount at end of year

2024

$'000

Balance at beginning of year

24,553

Additions

6,632

Disposals

(736)

Balance at end of year

30,449

Balance at beginning of year

(17,295)

Depreciation expense

(2,839)

696

Disposals

Balance at end of year

(19,438)

Software - Projects in Progress balance at beginning of year

5,483

(4,609)

Software - Projects in Progress movement

Balance at end of year

874

Other intangible assets balance at beginning of year

Other intangible assets movement

Balance at end of year

Carrying amount at beginning of year

12,784

Carrying amount at end of year

11,928

(continued)

The Group had intangible assets subject to amortisation which comprise software developed or obtained to

facilitate certain transactions between the Group and its dealer network.

The current tax assets (or liabilities) are recognised as amounts receivable (or payable to) from the head entity

in the tax-consolidated group in conjunction with any tax funding arrangement amounts.

2024

$'000

Related party

13,813

(16,568)

Less instalments paid

(2,755)

Net current tax (assets)/liabilities

Deferred tax assets of the Group are attributable to the following:

2024

$'000

Allowance for bad debts

10,066

Derivatives

7,221

Employee benefits

2,299

Other / Accruals

2,651

22,237

Deferred tax liabilities of the Group are attributable to the following:

2024

$'000

Derivatives

(5,756)

Property, Plant & Equipment

(14)

(941)

Capitalised Commissions

(6,711)

In accordance with the tax consolidation legislation, Mercedes-Benz Group Australia/Pacific Pty Ltd (the head

entity) has assumed the current tax liability or asset initially recognised by the Group which is a member of the

tax consolidated group.

Under the tax funding arrangement the Group and the head entity recognise an inter-entity payable or

receivable equal in amount to the current tax liability or asset assumed.

(continued)

Balance at 1

Balance at 31

January Recognised Recognised

December

2024

in income

in equity

2024

$'000

Allowance for bad debts

9,109

957

10,066

Other Provisions

(81)

Derivatives

(2,194)

2,976

683

1,465

Employee Benefit Provisions

2,681

(382)

2,299

Other / Accruals

4,052

(1,401)

2,651

Property, Plant & Equipment

(543)

529

(14)

(518)

(423)

(941)

Capitalised Commissions

12,668

2,175

683

15,526

Balance at 1

Balance at 31

January Recognised Recognised

December

2025

in income

in equity

2025

$'000

Allowance for bad debts

10,066

(1,600)

8,466

Derivatives

1,465

1,181

(974)

1,672

Employee Benefit Provisions

2,299

(339)

1,960

Other / Accruals

2,651

(746)

1,905

Property, Plant & Equipment

(14)

(3)

(941)

106

(835)

Capitalised Commissions

15,526

(1,387)

(974)

13,165

2024

Note

$'000

Trade creditors

6,305

Other creditors & accruals

3,215

- Purchase of vehicles used in wholesale financing

30,837

40,357

- Related parties

25,551

7,529

- Other parties

33,080

(continued)

The table below discloses the financial liabilities of the Group and Company:

Consolidated

Company

2024

Note

$'000

Loans from external parties

618,293

Loans from related parties

413,442

Lease liabilities

227

1,031,962

Loans from external parties

1,890,638

190,638

Loans from related parties

783,076

2,483,076

10,295

Lease liabilities

2,684,009

This note provides information about the contractual terms of the Group's and the Company’s interest-bearing

loans and borrowings. For more information about the Group’s exposure to liquidity and interest rate risk, and

sensitivity analysis, please refer to Note 23.

This note also includes the adjustment to the carrying value on the hedged item designated as a fair value

hedge.

The Group and the Company have access to the following lines of credit:

Consolidated

Company

2024

Note

$'000

Loans from external parties

3,758,671

2,058,671

Loans from related parties

1,207,040

2,907,040

4,965,711

Consolidated

Company

2024

$'000

Loans from external parties

2,508,931

808,931

1,207,040

2,907,040

Loans from related parties

3,715,971

(continued)

Consolidated

Company

2024

$'000

Loans from external parties

1,249,740

Loans from related parties

1,249,740

For the purposes of the financial statements, overdrawn individual bank balances are separately disclosed

within interest bearing liabilities. The Group did not have this overdraft facility as at the end of the financial year

2025 and 2024.

Mercedes-Benz Australia/Pacific Pty Ltd, Mercedes-Benz Capital Investments B.V. ("MBCI"), and

Mercedes-Benz International Finance B.V. ("MBIF"), which are related parties, facilitate borrowings for the

Group. MBCI and MBIF are incorporated in Netherlands, which are wholly owned by Mercedes-Benz Group

AG. The related parties contract with the relevant lenders or investors, and on lend requisite funding to the

Company via arms-length transactions. Funding sources include bank loans, commercial paper, unsecured

notes, secured notes and loans from the ultimate parent entity.

Loans from external parties includes securitised debt representing the value of term loans held by external

parties in the securitisation trusts. The securitisation trusts have issued interest-bearing notes to third parties

amounted to $1,700 million (nominal value) (2024: $1,700 million). The Company holds the notes balance of

the securitisation trusts of $245 million (2024: $245 million). Receivables from financial services amounting to

$1,928 million as at 31 December 2025 (2024: $1,928 million) are pledged as collateral for the senior notes

under securitisation. The Group did not have any covenants to comply with during the reporting period. As

referenced in Note 29, in March 2026, the Company's board approved the renewal of the ABS warehouse

SAAT 2024-1, effective April 2026, with a reduced facility limit of $0.8 billion (from $1.2 billion).

In May 2025, the Company has become a listed issuer of Euro Medium-Term Note ("EMTN") in Euro

Multilateral Trading Facility (“MTF”) market segment on the Luxembourg Stock Exchange (“LuxSE”). The

Company did not issue any EMTN as at 31 December 2025.

In the current and previous reporting years, the total facilities available include uncommitted external facilities,

loans from the ultimate parent entity which are currently outstanding at balance date, and those secured and

unsecured notes, which are currently on issue. Facilities not utilised at balance date represent the unused

uncommitted funding facilities. These unused bank loan facilities are accessible by either Mercedes-Benz

Australia/Pacific Pty Ltd, Mercedes-Benz Group Australia/Pacific Pty Ltd or Mercedes-Benz Financial Services

Australia Pty Ltd, , where these entities and the Company are the joint borrowers.

(continued)

Carrying

amount

$'000

Secured notes issued

AUD

BBSW + 0.64% to 0.94% 2033-2034

1,700,000

Unsecured bank loan

AUD

2.81 - 5.84

2025

578,931

Unsecured bank loan

AUD

5.34 - 5.98

2026

230,000

Loans from affiliate

AUD

4.70 - 5.81

2025

312,816

Loans from affiliate

AUD

4.00 - 5.81

2026

583,813

Loans from affiliate

AUD

4.29 - 4.95

2027

199,263

Loans from affiliate

AUD

4.75

2028

Loans from affiliate

EUR

0.12

2025

100,626

10,522

Lease liabilities

AUD

4.94

2041

Total interest bearing liabilities

3,715,971

Exposure to credit, liquidity and market risks arise in the normal course of the Group’s business.

Interest rate risk for the Group refers to the occurrence of a mismatch in the characteristics of assets and their

respective liability funding.

An asset-liability committee at Mercedes-Benz Group AG, the ultimate parent entity, which consists of members

of the business segment, the Corporate Treasury department and the Corporate Controlling department,

actively manage the risk by quarterly setting interest rate exposure targets for the local companies. As a

separate function, the Global Portfolio Management department at Mercedes-Benz Mobility AG monitors on a

monthly basis whether the interest rate risk position at month end is in line with the targets to be achieved.

Interest rate exposure is assessed by comparing assets and liabilities for corresponding maturities based on

interest rate characteristics, including the impact of derivative financial instruments. In order to achieve the

interest rate exposure targets, the Group uses derivative financial instruments. The only derivative financial

instrument currently in use is interest rate swaps.

Interest rate swaps allow the Group to swap floating rate borrowings into fixed rate as well as fixed rate

borrowings into floating rates and match differing interest rate characteristics of assets and liabilities where

required. Maturities of swap contracts do not exceed five years.

Each contract involves quarterly payment or receipt of a net amount of interest. At 31 December 2025 the fixed

rates varied between 3.27% and 5.25% (2024: 0.10% and 5.25%). Floating rates were at bank bill swap rates

("BBSW") plus the Group’s credit margin. The weighted average effective floating interest rate at 31 December

2025 was 4.31% (2024: 5.07%).

(continued)

The effects of the interest rate swaps on the Group's financial position and performance are as follows:

2024

$'000

Notional amount (current and non-current assets)

1,359,200

Maturity date

2025-2028

Hedge ratio

1:1

Weighted average hedged rate for the year

5.07%

As part of its risk management control systems, Mercedes-Benz Group AG (the ultimate parent entity) employs

value-at-risk analyses as recommended by the Bank for International Settlements. In performing these analyses

the market risk exposure to changes in foreign currency exchange rates, interest rates and equity prices is

quantified on a continuous basis by predicting the maximum loss over a target time horizon (holding period) and

confidence level.

The value-at-risk calculation is performed by Mercedes-Benz Group AG for the Group. The only material market

risk concerning the Group is interest rate risk.

When the value-at-risk of the Group’s portfolio of financial instruments is calculated, first the current fair value of

these financial instruments is computed. Then the sensitivity of the Group’s portfolio value to changes in

relevant market risk factors is quantified. Based on expected volatilities and correlations of these market risk

factors which are obtained from the RiskMetrics™ dataset, potential changes of the portfolio value are computed

by applying the variance-covariance approach. The variance-covariance approach is a statistical method used

to quantify the total impact of all relevant major risk factors on the portfolio’s present value. Through these

calculations and by assuming a 99% confidence level and a holding period of five days, the Group’s

value-at-risk is obtained. The 99% confidence level and the five day holding period indicate that there is only a

1% statistical probability that the value-at-risk will be exceeded by losses at the end of the five day holding

period.

The following table shows the period-end, high, low and average value-at-risk figures for the 2025 and 2024

portfolio of interest rate sensitive financial instruments. The average exposure has been computed on an end of

quarter basis:

Period-end

High

Low

Average

$'000

2024

77,228

18,235

48,640

The following table provides details of the (gain) / loss on hedge accounting relationships recognised in finance

costs:

2024

$'000

Loss / (gain) on fair value hedges (i)

Ineffective portion of cash flow hedges (ii)

(2,990)

(continued)

(i)

The re-measurement of the borrowings in the fair values resulted in nil gain or loss before tax in

reporting period (2024: nil). The change in fair value of the associated derivative financial instruments

resulted in nil gain or loss before tax in reporting period (2024: nil).

(ii)

The ineffective portion in cash flow hedges has been disclosed in profit or loss for gain of $2,376,365

(2024: gain of $2,990,376).

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

2024

$'000

Note

Financial assets

- Receivables from financial services - Retail

3,427,966

Financial liabilities

(1,768,702)

1,659,264

Financial assets

- Cash and cash equivalents

685

- Receivables from financial services - Wholesale

502,206

Financial liabilities

(1,936,748)

(1,433,857)

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. In

addition, Mercedes-Benz Mobility AG has implemented global guidelines and rules as a basis for efficient risk

management. In particular, these guidelines deal with concentration risks, requests for collateral as well as the

treatment of unsecured credits and non-performing loans. The risk management principles contain standards

for identifying, measuring, analysing and monitoring the credit risks and are accompanied by a set of limits for

operating entities and product types.

Credit risk is mitigated by assessing individually each customer’s credit standing and constructing the terms of

the financial arrangement on the basis of the customer’s risk profile; higher risk customers requiring greater

cash deposits for example. The Group takes collateral over each transaction, with the exception of shortfall

agreements. Principally the collateral is the financed vehicle. Concentrations of credit risk is minimised by

undertaking transactions with a large number of customers. Transactions are undertaken with Australian

domiciled customers only.

The maximum exposure to credit risk at the reporting date is the carrying amount, net of any provision of

doubtful debts.

The Group’s most significant external retail customer accounts for $37.4 million of the receivables from financial

services before allowance for doubtful debts (2024: $48.1 million).

The Group’s most significant external wholesale customer accounts for $170.7 million of the receivables from

financial services carrying amount before allowance for doubtful debts (2024: $161.8 million).

(continued)

Trade receivables primarily consist of operating lease payments due and residual value guaranteed by

Mercedes-Benz Australia/Pacific Pty Ltd. The credit risk encompasses the default risk of customers. The Group

minimises the credit risk of trade receivables by limiting the payment terms of the agreements making trade

receivables either due immediately, or within thirty days.

The Company holds legal title over vehicles on operating lease. Additionally, based on historical credit losses in

relation to the operating lease product, the Company believes credit risk to be immaterial and does not provide

an allowance.

The maximum exposure to credit risk at the reporting date is the carrying amount.

In 2025 other financial assets include the positive fair value of interest rate swap derivatives used for hedging.

The maximum exposure to credit risk at the reporting date is the carrying amount.

Cash and cash equivalents consists only of cash at bank. Where the Group expects to hold a surplus of funds

over and above working capital and operating cash requirements, an investment is made in an overnight related

party facility. Credit risk relates to the risk that the bank fails to fulfil its obligation. In line with the MB Group

AG's risk policy, liquid assets are not subject to a material credit risk and are allocate to Stage 1 of the

impairment model, which in based on expected credit risk. Credit risk is managed on a group basis. For banks

and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted as

counterparties.

The maximum exposure to credit risk at the reporting date is the carrying amount.

The Group, in accordance with its treasury policy, use derivatives only for the purpose of risk management, and

not for speculation. Credit risk is managed through diversification of counterparties (principally large banks) by a

limit system. The limit is based on the review of the counterparty’s financial strength and concurrently manages

concentration risks.

In 2008, the Group began entering interest rate swaps with a related party. The related party has a mirror match

of the swap (back-to-back trade) with an external counterparty in their balance sheets. Starting in 2017, the

Group began entering interest rate swaps with external bank, to achieve the desired interest-rate maturities and

asset/liability structures (asset and liability management). The MB Group AG manages its credit risk exposure

in connection with derivative financial instruments through a limit system, which is based on the review of each

counterparty's financial strength. Accordingly, only the external positions are considered in the limit system.

The hedging strategy is specified at the MB Group AG level. The decision-making body is the Treasury Risk

Management Committee, which meets regularly. Cross-currency interest swaps and interest rate swaps

contracts are subject to credit risk in relation to the relevant counterparties. The Group’s ultimate parent

Mercedes-Benz Group AG determines which counterparties are contracted with. Typically this will only be with

A rated external counterparties.

The maximum exposure to credit risk is the carrying amount of those derivatives classified as financial assets.

(continued)

The Group’s maximum exposure to credit risk at the reporting date is set out below:

2024

$'000

Receivables from financial services

3,930,172

Trade receivables

56,529

Cash and cash equivalents

685

Interest rate swaps

19,096

4,006,482

The Group’s maximum exposure to credit risk for trade receivables and receivables from financial services at

the reporting date by customer segment is set out below:

2024

$'000

Wholesale

502,206

Retail

3,484,495

3,986,701

The ageing and corresponding impairment of the Group's trade receivables and receivables from financial

services at the reporting date under AASB 9 is set out below:

2024

Gross Impairment

$'000

Not past due

3,113,747

(20,240)

Individually impaired

752,640

(1,395)

Past due 0-30 days

62,935

(1,511)

Past due 31-60 days

56,119

(2,442)

Past due 61-90 days

14,087

(2,238)

Past due 91 - 180 days

12,219

(3,113)

8,508

(2,615)

Past due > 180 days

4,020,255

(33,554)

The Group assesses individually each customer with capital outstanding at end of reporting period of greater

than one million dollars. Impairment is assessed on the basis of the customer credit rating, which for such

customers, is assessed at either the inception of additional lending, or annually, whichever comes sooner. From

the credit rating, the probability of default is determined. This is multiplied by a conservative expected loss on

the contract, and then multiplied by the loss given default rate to ascertain the impairment amount.

(continued)

An individual impairment on receivables from financial services is raised also where no collateral is held. These

unsecured loans represent a documented finance contract with customers whose debts have previously been

written off and thus the collateral already realised. The capital value at inception of an unsecured loan

accordingly amounts to the capital outstanding at time of repossession, less collateral sale proceeds, plus any

additional charges recoverable from the client. The individual impairment raised equals the unsecured loan

portfolio and is adjusted in line with customer repayments and new additions.

The vast majority of receivables from financial services related to retail business are grouped in homogeneous

pools and collectively assessed for impairment (refer Note 3(j)). The impairment model is based on historical

experience and takes into account the current economic conditions. Particular consideration is given to the

earlier disclosed aged debtors. The aim of the model is to determine an appropriate level of impairment

allowances to reflect losses which have been incurred on the loans in the pool, but have not yet been identified.

The movement in the allowance for doubtful debts is shown in Note 14.

A security interest is held over the vehicle financed until such time as the finance contract is paid in full. In case

of default, and in accordance with relevant company guidelines, the vehicle may be repossessed and sold to

suffice the debt outstanding, being the total future cash flows discounted by the effective customer rate (refer

Note 3(j)). Where this amount is not sufficient to cover the debt outstanding, legal proceedings may be ensued

to recover the remaining portion, as well as costs incurred upon the termination of the financing contract in

accordance with the Company’s Terms and Conditions.

As at the reporting date, the following collateral had been repossessed by the Company:

2024

$'000

Repossessed vehicles

6,597

Repossessed assets are redeemable by the customer within 28 days of actual repossession providing that

certain payment criteria are met. This period may be shortened, or extended, at the Company’s discretion.

Where the vehicle is not redeemed, the sale is subsequently conducted through a vehicle auction house where

a reserve is set. Alternatively the vehicle can be remarketed directly through the Mercedes-Benz dealer

network.

Repossessed vehicles are reported as finished goods in inventory in the balance sheet.

Liquidity risk represents the risk that a company will face difficulty in meeting future obligations associated with

its financial liabilities.

The Group’s main sources of liquidity are its operations and borrowings sourced through related parties. The

related parties’ main sources of funds come from bank loans, commercial paper, notes issuances (secured and

unsecured) and loans from the ultimate parent entity. Funds are sourced from both the domestic and

international markets.

The borrowings are primarily used to fund wholesale and retail customers in the course of the leasing and

financing business, and to meet working capital needs.

(continued)

Immediate cash management is handled through daily requirement analyses. The Group seeks to hold

sufficient liquid funds to meet daily needs, primarily in the form of cash and cash equivalents. Where additional

funds are required, the Group utilises a related party overnight borrowing facility. Conversely, where surplus

funds are held, the Group is able to invest in a related party overnight facility. This is consistent with the

Mercedes-Benz AG cash concentration method which is used as the basis for cash and asset management

throughout the group. The overriding principle of cash management is to concentrate cash at the highest

possible level to maximise investment returns and to minimise borrowing costs.

Additionally, the Group monitors liquidity exposure in the short and medium term by comparing financial assets

and financial liabilities for their corresponding maturities, including the estimated cash inflows from the

operating business. Liquidity exposure is actively managed out to three years from the reporting date and is

kept within targeted exposure limits as defined by Mercedes-Benz Group AG.

The ability of the Group to draw on excess liquidity via Mercedes-Benz Australia/Pacific Pty Ltd within the

worldwide group by the related parties obtaining loans from the ultimate parent entity, and the available

committed credit lines already in place, give the Group adequate flexibility to cover refinancing requirements

and to match the characteristics of assets by obtaining sufficient funds of requisite tenor and interest rate terms.

The following is a maturity analysis of the Group’s financial liabilities, excluding estimated interest payments

and excluding the impact of netting arrangements.

Cash flows associated with derivatives that are cash flow hedges are predominantly expected to impact profit or

loss within the same reporting period as in which the cash flow occurs. That is, consistent with the table below.

Any differences are not expected to be material.

Loans from related parties

Loans from external parties

Trade and other payables

Interest payable

Lease liabilities

Interest rate swaps - cash flow

hedges

Interest rate swap – cash flow

hedges

Interest rate swap – no hedge

accounting

(continued)

Contractual

expected 1 year or

More than

2024

cash flows

less 1 to 2 years 2-3 years

3 years

$'000

$'000 $'000 $'000

$'000

Non derivative financial liabilities

Loans from related parties

(1,196,519) (413,442) (583,814) (199,263)

Loans from external parties

(2,505,000) (614,362) (818,264) (599,385) (472,989)

Trade and other payables

(40,357)

Interest payable

(33,080)

Lease liabilities

(10,522)

(747)

(772)

(800)

(8,202)

(3,785,478) (1,101,988) (1,402,850) (799,448) (481,191)

Derivative financial assets

Interest rate swaps - cash flow

hedges

8,742

Interest rate swap - no hedge

accounting

10,354

6,744

499

708

2,403

19,096

6,744

499

708

11,145

Derivative financial liabilities

Interest rate swap – cash flow

hedges

(1,566)

(264)

(572)

(730)

Interest rate swap – no hedge

accounting

(9,201)

(10,767)

(264)

(572)

(9,931)

Net fair values of financial assets and liabilities are determined by the Group on the following bases:

Other monetary financial assets and financial liabilities not readily traded in an organised financial market are

determined by valuing them at the present value of contractual cash flows on amounts due from customers

(reduced for expected credit losses) or due to suppliers. Cash flows are discounted by using standard valuation

techniques at the applicable market yield having regard to the timing of cash flows.

The Group has not disclosed fair value of each class of financial assets and financial liabilities not measured at

fair value because their carrying amounts are a reasonable approximation of fair value. The fair value of

receivables from financial services with variable interest rates are estimated to be equal to the respective

carrying amounts, because the agreed upon interest rates and those available in the market do not significantly

differ. The fair value of receivables from financial services with fixed interest rates are determined on the basis

of discounted expected future cash flows. Discounting is based on the current interest rates at which similar

loans with identical terms could have been obtained at 31 December 2025 and 31 December 2024. For

interest-bearing loans and receivables from financial services this assessment was done by discounting the

expected future principal and interest cash flows.

As at 31 December 2025, derivative financial liabilities of $14,359,648 (2024: $10,645,217) and derivative

financial assets of $20,994,978 (2024: $19,095,949) are carried at fair value based on a Level 2 valuation

methodology which requires inputs, other than quoted prices in an active markets for identical assets and

liabilities, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from

prices).

(continued)

Fair value is calculated based on discounted expected future principal and interest cash flows.

The Group uses the government borrowing yield curve as of 31 December 2025 plus an adequate constant

credit spread to discount financial instruments. The interest rates used are as follows:

Derivatives

3.27% - 5.25%

0.10% - 5.25%

Loans and borrowings

3.54% - 4.86%

3.79% - 4.42%

Receivables from financial services

7.19 %

6.58%

Net assets and value added represent the basis for capital management. The Group's policy is to maintain a

strong capital base so as to maintain investor, creditor and market confidence and to sustain future

development of the business. The Company is required to comply with certain capital and liquidity requirements

as a holder of an Australian Financial Services License.

There was no change in the Group's approach to capital management requirements during the year.

2024

$'000

Share-based payment transactions

250

Provision for employee benefits

6,973

7,223

Share-based payment transactions

264

176

Provision for employee benefits

440

The present value of employee entitlements not expected to be settled within twelve months has been

calculated using the following weighted averages:

2024

Assumed rate of increase in wage and salary rates

3.80 %

2.80%

Discount rate

4.38 %

4.07%

During the year the Company contributed to the Mercedes-Benz Superannuation Plan, a related party plan to

which it is an associated member, being part of the Mercer Super Trust in respect of all its permanent

employees.

The obligation of the Company to make contributions to the Mercedes-Benz Superannuation Plan is legally

enforceable up to the date on which the Company gives notice to suspend or terminate contributions as

provided in the trust deed.

(continued)

In 2005 Mercedes-Benz Group AG adopted the “Performance Phantom Share Plan” under which virtual shares

(phantom shares) are granted to eligible employees entitling them to receive cash paid out after four years. The

amount of cash paid to eligible employees is based on the number of phantom shares that vest (determined

over a three year performance period) times the quoted price of Ordinary Shares of Mercedes-Benz Group AG

(determined as an average price over a specified period at the end of the four-year service). The number of

phantom shares that vest will depend on the achievement of Mercedes-Benz Group AG performance goals as

compared with competitive and internal benchmarks (return on net assets and return on sales). Mercedes-Benz

Group AG will not issue any common shares in connection with the Performance Phantom Share Plan.

In 2024 the Company recognised an addition to the employee entitlement for Performance Phantom Share

Plans in the income statement of $152,088 (refer Note 7). In 2025 the Company recognised an addition to the

employee entitlement for Performance Phantom Share Plans in the income statement of $262,003 (refer Note

7). As the payment per vested phantom share depends on the quoted price of one Mercedes-Benz Group AG

Ordinary Share, the average quoted price represents the fair value of each phantom share. The proportionate

entitlement release and compensation expense for share plans granted in 2024 and 2025 respectively, is

determined based on the quoted price of Mercedes-Benz Group AG Ordinary Shares as well as the estimated

target achievement. The carrying amount of the entitlements granted has been recognised as a provision.

The number of phantom shares granted by Mercedes-Benz Group AG to key management personnel of the

Company at 31 December 2025 was 11,579 (2024: 14,448).

2024

$'000

27,244

Adjustments for

Depreciation and amortisation expense

3,574

Loss on sale of property, plant and equipment

327

Bad debts written off

20,712

Net expense for movements to provision for doubtful debts

2,590

4,975

Lease payment

59,422

(Increase) / decrease in receivables from financial services

170,986

(Increase) / decrease in trade receivables

19,249

(Increase) / decrease in inventory

(4,219)

(Increase) / decrease in other assets

(5,267)

(Increase) / decrease in derivative financial instruments

7,264

(Increase) / decrease in deferred tax assets (net)

(2,858)

Increase / (decrease) in employee entitlements

(1,276)

Increase / (decrease) in trade and other payables

(11,170)

Increase / (decrease) in interest payables

3,565

(1,593)

Unrealised gain / (loss) on derivatives

234,103

(continued)

Cash provided by financing activities includes cash flows from hedging the currency risks of financial liabilities.

In 2025, cash provided by financing activities included payments for the reduction of outstanding leasing

liabilities of $0.1 million (2024: $0.5 million). The below table includes changes in liabilities arising from

financing activities.

Proceeds from borrowings

Repayment for borrowings

Repayment for lease liabilities

Settlement of derivatives

Interest bearing

liabilities Derivatives

Change in liabilities arising from financing activities 2024

$'000

Proceeds from borrowings

6,852,507

Repayment for borrowings

(7,041,130)

Payment for lease liabilities

(194)

Settlement of derivatives

(7,264)

(188,817)

(7,264)

The immediate parent entity of the Company is Mercedes-Benz Mobility Australia Pty Ltd ("MBMAu") , which is

incorporated in Australia. The ultimate parent entity of the Company is Mercedes-Benz Group AG, a company

incorporated in Germany.

In addition to their salaries, the Company provides non-cash benefits to key management personnel and

contributes to a superannuation fund on their behalf (refer Note 24 for details on the superannuation plan).

The key management personnel compensation included in “employee expenses” (refer Note 7) is as follows:

2024

$'000

Short-term employee benefits

3,544

Other long-term benefits

Termination benefits

Post-employment benefits

193

639

Share-based payments*

4,391

(continued)

In accordance with

, key management personnel of the Group are those

persons having the authority and responsibility for planning, directing and controlling the activities of the Group,

directly or indirectly. For purposes of AASB 124, the below personnel are considered key management

personnel of the Group:

- Managing Director

- Chief Financial Officer

- Director of Credit and Credit Operations

- Director of Sales & Marketing

*Share-based payments are paid by the ultimate parent entity to key management personnel.

The names of each person holding the position of director of the Company during the year ended 31 December

2025 are Ilka Fuerstenberger and Rafael Pasquet.

Details of directors' remuneration payments are included in Note 27.

On the inception of the SAAT 2019-1 in January 2019, the Company invested in Class B notes issued by the

SAAT 2019-1, totalling $112,070,852. The Company holds Class B notes of $71,102,000 as at 31 December

2025 (2024: $71,102,000).

On the inception of the SAAT 2024-1 in April 2024, the Company invested in Class B notes issued by the SAAT

2024-1, totalling $157,000,000. The Company holds Class B notes of $157,000,000 as at 31 December 2025

(2024: $157,000,000).

The trusts used the funds received to purchase receivables from financing activities from the Company.

SAAT 2019-1 and SAAT 2024-1 balances have been consolidated in the financial statements.

All transactions within the ultimate parent's wholly owned group during the year were made under normal

commercial terms and conditions.

In the course of providing wholesale finance to dealers, the Company made payments under normal trading

terms to Mercedes-Benz Australia/Pacific Pty Ltd, for the purchase of motor vehicles on behalf of dealers.

Daimler Truck Australia Pacific Pty Ltd is a related party of the Group, which parent company is an associated

company of the Company's ultimate parent company, Mercedes-Benz AG. Daimler Truck Australia Pacific Pty

Ltd has entered into operating leases with the Company. The revenues from these leases have been disclosed

in Note 5.

The Company has interest bearing debts to its related parties. The interest expense is disclosed in Note 10.

The carrying amount is disclosed in Note 22.

The Company enters into interest rate swaps and foreign currency option contracts with Mercedes-Benz Group

AG. The interest expense, and interest income, is disclosed in Note 10. The carrying amount for the financial

liabilities is disclosed in Note 21. The carrying amount for the financial assets is disclosed in Note 15.

(continued)

The Company paid commissions to Mercedes-Benz Australia/Pacific Pty Ltd totalling $1,984,936 (2024:

$1,230,514) under normal terms and conditions.

Mercedes-Benz Australia/Pacific Pty Ltd has agreed to provide residual value guarantees to the Company, for

the operating leases entered into between the Company and the external customers. Upon expiry of the

operating lease arrangement, the vehicles are transferred back to Mercedes-Benz Australia/Pacific Pty Ltd. The

total residual value guaranteed by Mercedes-Benz Australia/Pacific Pty Ltd is amounting to $57,172,945 (2024:

$42,732,805). The balance is disclosed as part of Trade and other receivables in Note 13.

The aggregate amounts payable and receivable to entities within the Mercedes-Benz Group AG by the Group at

balance date:

2024

Note

$'000

Trade receivables

42,100

Derivative financial instruments

6,744

2,755

Current tax assets

51,599

Trade receivables

3,637

Derivative financial instruments

12,352

15,989

Trade and other payables

30,837

Interest payables

25,551

Interest bearing liabilities

413,442

Lease liabilities

227

Derivative financial instruments

470,057

Interest bearing liabilities

783,076

Lease liabilities

10,295

1,566

Derivative financial instruments

794,937

(continued)

In March 2025, the Board of Directors of the Company approved the establishment of a Euro Medium-Term

Note ("EMTN") Programme for the purpose of issuing notes to be listed on the Euro Multilateral Trading Facility

("Euro MTF") market segment of the Luxembourg Stock Exchange ("LuxSE"). The initial issuance of notes

under the Programme is expected to take place in 2026, subject to prevailing market conditions and the receipt

of all necessary regulatory approvals. A new base prospectus will be prepared and approved in connection with

such issuance. The proceeds from the issuance are intended to be used for the Company's general funding

purposes.

In March 2026, the Company’s board approved the renewal of the asset-backed securities ("ABS") warehouse,

SAAT 2024-1, effective April 2026, with a reduced facility limit of $0.8 billion (down from $1.2 billion).

Management anticipates that the agreement will be executed by the end of April.

Other than what is noted above, there has not arisen in the interval between the end of the financial year and

the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the

directors of the Company, to affect significantly the operations of the Company, the results of those operations,

or the state of affairs of the Group, in future financial years.

On 15 May 2025, the Australian Transaction Reports and Analysis Centre ("AUSTRAC") issued a direction to

the Company pursuant to the

(AML/CTF Act), requiring the Company to appoint an external auditor to assess the Company's compliance with

its obligations under the

. Based on management’s assessment as at the reporting date, the Company is not

aware of any matters arising in connection with this direction that would be material to the financial statements

or that would require the recognition or the disclosure of a provision of a contingent liability according to the

applicable accounting standards. The Company continues to cooperate with AUSTRAC as we progress the

matter.

Other than above, the Directors are not aware of any contingent assets or liabilities requiring disclosure.

In 2025 no ordinary shares were issued (2024: nil).

The Company does not have authorised capital or par value in respect of its issued shares. All issued shares

are fully paid.

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow

hedging instruments, net of tax.

Merger reserve relates to the difference between the consideration received and net assets of the disposed

business when the Company applied book value accounting for common control transactions (refer to note 30).

(continued)

Dividends totalling $26,000,000 were declared and paid in the year ended 31 December 2025 (2024:

$31,500,000). Of the total dividend disclosed, $26,000,000 was a cash distribution to its immediate parent on

27 November 2025.

Auditor’s Independence Declaration

As lead auditor of Mercedes-Benz Financial Services Australia Pty Ltd's financial report for the year

ended 31 December 2025, I declare that, to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation

to the audit of the financial report; and

b) no contraventions of any applicable code of professional conduct in relation to the audit of the

financial report.

Jonathan Gerace

Melbourne

Partner

15 April 2026

PricewaterhouseCoopers

PricewaterhouseCoopers, ABN 52 780 433 757

2 Riverside Quay, SOUTHBANK VIC 3006,

GPO Box 1331 MELBOURNE VIC 3001

T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au

pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Independent auditor’s report

To the members of Mercedes-Benz Financial Services Australia Pty Ltd

Our opinion

In our opinion:

The accompanying financial report of Mercedes-Benz Financial Services Australia Pty Ltd (the Company)

and its controlled entities (together the Group) is in accordance with the Corporations Act 2001,

including:

a) giving a true and fair view of the Company’s and Group’s financial positions as at

31 December 2025 and of their financial performance for the year then ended;

b) complying with Australian Accounting Standards and the Corporations Regulations 2001.

What we have audited

The financial report comprises:

• the Consolidated and Company statements of financial position as at 31 December 2025;

• the Consolidated and Company statements of comprehensive income for the year then ended;

• the Consolidated and Company statements of changes in equity for the year then ended;

• the Consolidated and Company statements of cash flows for the year then ended;

• the notes to the financial statements, including material accounting policy information and other

explanatory information;

• the declaration of the directors.

PricewaterhouseCoopers, ABN 52 780 433 757

2 Riverside Quay, SOUTHBANK VIC 3006,

GPO Box 1331 MELBOURNE VIC 3001

T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au

pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under

those standards are further described in the Auditor’s responsibilities for the audit of the financial report

section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our opinion.

Independence

We are independent of the Company and the Group in accordance with the auditor independence

requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional

& Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including

Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia.

We have also fulfilled our other ethical responsibilities in accordance with the Code.

Other information

The directors are responsible for the other information. The other information comprises the information

included in the annual report for the year ended 31 December 2025, but does not include the financial

report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not

express any form of assurance conclusion thereon through our opinion on the financial report.

In connection with our audit of the financial report, our responsibility is to read the other information

and, in doing so, consider whether the other information is materially inconsistent with the financial

report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of

this auditor’s report, we conclude that there is a material misstatement of this other information, we are

required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial report

The directors are responsible for the preparation of the financial report in accordance with Australian

Accounting Standards and the Corporations Act 2001, including giving a true and fair view, and for such

internal control as the directors determine is necessary to enable the preparation of the financial report

that is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Company

and the Group to continue as a going concern, disclosing, as applicable, matters related to going concern

and using the going concern basis of accounting unless the directors either intend to liquidate the

Company or the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free

from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes

our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with the Australian Auditing Standards will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be expected to influence the economic decisions of

users taken on the basis of the financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing

and Assurance Standards Board website at: https://auasb.gov.au/media/apzlwn0y/ar3_2024.pdf. This

description forms part of our auditor’s report.

PricewaterhouseCoopers

Jonathan Gerace

Melbourne

Partner

15 April 2026

Report on compliance with relevant requirements set out in the

Delegated Regulation 2019/815 on European Single Electronic Format

Our opinion

We have checked the compliance of the accompanying financial statements of the Company as at 31

December 2025 with the relevant requirements set out in the Delegated Regulation 2019/815 on

European Single Electronic Format (“ESEF Regulation”) that are applicable to the accompanying

financial statements of the Company. For the Company, it relates to the requirement that:

• the accompanying Company financial statements are prepared in a valid XHTML format.

In our opinion, the accompanying Company financial statements of Mercedes-Benz Financial Services

Australia Pty Ltd as at 31 December 2025, identified as MBFSAu_ESEF-2025-12-31-0-en.xhtml, have

been prepared, in all material respects, in compliance with the requirements laid down in the ESEF

Regulation.

Responsibilities of the directors

In addition to the responsibilities described above in the Responsibilities of the directors for the

financial report section to our Report on the audit of the financial report, the directors are responsible

for presenting the Company financial statements in compliance with the requirements set out in the

ESEF Regulation.

PricewaterhouseCoopers, ABN 52 780 433 757

2 Riverside Quay, SOUTHBANK VIC 3006,

GPO Box 1331 MELBOURNE VIC 3001

T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au

pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Auditor’s responsibilities

In conjunction with our responsibilities described above in the Auditor’s responsibilities for the audit of

the financial report section to our Report on the audit of the financial report, our responsibility is to

assess whether the accompanying Company financial statements have been prepared, in all material

respects, in compliance with the requirements laid down in the ESEF Regulation.

PricewaterhouseCoopers

Jonathan Gerace

Melbourne

Partner

21 April 2026