Investments

INVESTMENTS IN ASSOCIATES

From a Group perspective, the associates Sinotruk (Hong Kong) Ltd., Hongkong, China (Sinotruk), Bertrandt AG, Ehningen (Bertrandt) and There Holding B.V., Rijswijk, the Netherlands (There Holding) were material at the reporting date.

Sinotruk

Sinotruk is one of the largest truck manufacturers in the Chinese market. There is an agreement in place between Group companies and Sinotruk regarding a long-term strategic partnership, under which the Group participates in the local market. In addition to the partnership with Sinotruk in the volume segment, exports of MAN vehicles to China are also helping to expand access to the small, but fast-growing premium truck market. Sinotruk’s principal place of business is in Hongkong, China.

As of December 31, 2016, the quoted market price of the shares in Sinotruk amounted to €466  million (previous year: €251 million).

Bertrandt

Bertrandt is an engineering partner to companies in the automotive and aviation industry. Its portfolio of services ranges from developing individual components through complex modules to end-to-end solutions. Bertrandt’s principal place of business is in Ehningen.

As of December 31, 2016, the quoted market price of the shares in Bertrandt amounted to €284 million (previous year: €327 million).

There Holding

The Audi Group, the BMW Group and Daimler AG each hold a 33.3% interest in There Holding B.V., Rijswijk, the Netherlands, which was formed in 2015. Effective December 4, 2015, There Holding B.V. acquired all shares in the HERE Group through a wholly owned subsidiary, There Acquisition B.V., Rijswijk, the Netherlands, for a purchase price of €2,593 million. HERE develops and sells high-resolution maps with real-time location information. The purchase price was financed largely by way of capital contributions at There Holding B.V. Audi’s share of it amounts to €668 million. The remainder of the purchase price was financed through bank loans at There Acquisition B.V. There Acquisition B.V. was renamed HERE International B.V. on January 29, 2016.

There Holding B.V. is an associate that is accounted for using the equity method. The identification of hidden reserves and liabilities was completed in the first quarter of 2016. In view of the timing of this, and also for reasons of materiality, There Holding was not included as of December 31, 2015 on the basis of the Group’s share of profit or loss.

In December 2016, There Holding B.V. signed contracts to sell a total of 25% of its shares in HERE International B.V. A 15% share was acquired by Intel Holdings B.V. The sale of 15% of these shares to Intel Holdings B.V. was completed in January 2017. The remaining 10% was sold to a Chinese consortium consisting of NavInfo Co. Ltd., Tencent Holdings Ltd. and GIC Private Ltd. It is expected that this transaction will be completed in the first half of 2017, after it has been approved by the competent authorities.

Navistar

Volkswagen Truck & Bus GmbH, a wholly owned subsidiary of Volkswagen AG, and US-based commercial vehicles manufacturer Navistar International Corporation, Lisle, USA, announced on September 6, 2016 that they had entered into a far-reaching alliance. This includes framework agreements for a strategic technology and supply cooperation, as well as a procurement joint venture. Additionally, Volkswagen Truck & Bus will acquire a 16.6% equity interest in Navistar by subscribing for a capital increase. The share price amounts to USD 15.76 and the total purchase price comes to USD 0.3 billion. The closing of the transaction and hence the implementation of the strategic alliance is subject to certain regulatory approvals and other customary closing conditions. The closing of the share acquisition by Volkswagen Truck & Bus is further subject to the finalization of the agreement governing the procurement joint venture and of the first contract under the technology and supply cooperation. The transaction is expected to close in the first quarter of 2017.

  (XLS:) Download

SUMMARIZED FINANCIAL INFORMATION ON MATERIAL ASSOCIATES ON A 100% BASIS:

€ million

 

Sinotruk1

 

Bertrandt2

 

There Holding3

1

Balance sheet amounts refer to the June 30 reporting date and income statement amounts refer to the period from July 1 to June 30.

2

Balance sheet amounts refer to the September 30 reporting date and income statement amounts refer to the period from October 1 to September 30.

3

Due to the first-time inclusion of the HERE Group in December 2015, the income statement disclosures for the current fiscal year relate to the eriod from December 5, 2015 to December 31, 2016. The information relating to the balance sheet in the previous year is based on the financial tatement information available at the acquisition date of the HERE Group in December 2015.

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Equity interest (%)

 

25

 

29

 

33

 

 

 

 

 

 

 

Noncurrent assets

 

2,075

 

603

 

2,802

Current assets

 

4,034

 

492

 

592

Noncurrent liabilities

 

123

 

340

 

1,044

Current liabilities

 

3,029

 

168

 

518

Net assets

 

2,956

 

587

 

1,832

 

 

 

 

 

 

 

Sales revenue

 

4,116

 

992

 

1,240

Post-tax profit or loss from continuing operations

 

46

 

28

 

−167

Post-tax profit or loss from discontinued operations

 

 

 

Other comprehensive income

 

11

 

−1

 

−4

Total comprehensive income

 

57

 

27

 

−171

Dividends received

 

2

 

7

 

2015

 

 

 

 

 

 

Equity interest (%)

 

25

 

29

 

33

 

 

 

 

 

 

 

Noncurrent assets

 

2,299

 

604

 

3,115

Current assets

 

4,472

 

341

 

365

Noncurrent liabilities

 

484

 

155

 

1,093

Current liabilities

 

3,204

 

205

 

384

Net assets

 

3,083

 

585

 

2,003

 

 

 

 

 

 

 

Sales revenue

 

4,079

 

935

 

Post-tax profit or loss from continuing operations

 

64

 

15

 

Post-tax profit or loss from discontinued operations

 

 

 

Other comprehensive income

 

−2

 

0

 

Total comprehensive income

 

62

 

15

 

Dividends received

 

5

 

7

 

  (XLS:) Download

RECONCILIATION OF THE FINANCIAL INFORMATION TO THE CARRYING AMOUNT OF THE EQUITY-ACCOUNTED INVESTMENTS:

€ million

 

Sinotruk

 

Bertrandt

 

There Holding1

1

Due to the first-time inclusion of the HERE Group in December 2015, the the reconciliation of the net assets for the current fiscal year relates to the period from December 5, 2015 to December 31, 2016. In the case of the comparative amount presented for There Holding, the net carrying amount of the HERE Group at the acquisition date in the previous year is shown.

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Net assets at January 1

 

3,083

 

585

 

2,003

Profit or loss

 

46

 

28

 

−167

Other comprehensive income

 

11

 

−1

 

−4

Changes in reserves

 

30

 

 

Foreign exchange differences

 

−198

 

 

Dividends

 

−17

 

−25

 

Net assets at December 31

 

2,956

 

587

 

1,832

Proportionate equity

 

739

 

170

 

611

Consolidation/Goodwill/Others

 

−411

 

163

 

Carrying amount of equity-accounted investments

 

328

 

333

 

611

2015

 

 

 

 

 

 

Net assets at January 1

 

2,490

 

592

 

2,003

Profit or loss

 

64

 

15

 

Other comprehensive income

 

−2

 

0

 

Changes in reserves

 

5

 

2

 

Foreign exchange differences

 

555

 

 

Dividends

 

−28

 

−24

 

Net assets at December 31

 

3,083

 

585

 

2,003

Proportionate equity

 

771

 

169

 

668

Consolidation/Goodwill/Others

 

−452

 

163

 

Carrying amount of equity-accounted investments

 

319

 

332

 

668

  (XLS:) Download

SUMMARIZED FINANCIAL INFORMATION ON INDIVIDUALLY IMMATERIAL ASSOCIATES ON THE BASIS OF THE VOLKSWAGEN GROUP’S PROPORTIONATE INTEREST:

€ million

 

2016

 

2015

 

 

 

 

 

Post-tax profit or loss from continuing operations

 

2

 

−1

Post-tax profit or loss from discontinued operations

 

 

Other comprehensive income

 

−1

 

1

Total comprehensive income

 

0

 

0

Carrying amount of equity-accounted investments

 

277

 

40

Unrecognized losses relating to investments in associates totaled €5 million (previous year: €3 million). There were no contingent liabilities relating to associates.

INTERESTS IN JOINT VENTURES

From a Group perspective, the joint ventures FAW-Volkswagen Automotive Company Ltd., Changchun, China, SAIC-Volkswagen Automotive Company Ltd., Shanghai, China (formerly: Shanghai-Volkswagen Automotive Company Ltd., Shanghai, China), SAIC-Volkswagen Sales Company Ltd., Shanghai, China (SAIC-Volkswagen Sales Company) and Global Mobility Holding B.V., Amsterdam, the Netherlands (Global Mobility Holding) were material at the reporting date and the prior-year reporting date due to their size.

FAW-Volkswagen Automotive Company

FAW-Volkswagen Automotive Company develops, produces and sells passenger cars. There is an agreement in place between Group companies and the joint venture partner China FAW Corporation Limited regarding a long-term strategic partnership. The principal place of business is in Changchun, China.

SAIC-Volkswagen Automotive Company

SAIC-Volkswagen Automotive Company develops and produces passenger cars. There is an agreement in place between Group companies and the joint venture partner Shanghai Automotive Industry Corporation regarding a long-term strategic partnership. The principal place of business is in Shanghai, China.

SAIC-Volkswagen Sales Company

SAIC-Volkswagen Sales Company sells passenger cars for SAIC-Volkswagen Automotive Company. There is an agreement in place between Group companies and the joint venture partner Shanghai Automotive Industry Corporation regarding a long-term strategic partnership. The principal place of business is in Shanghai, China.

Global Mobility Holding

Through its 50% interest in the joint venture Global Mobility Holding B.V., Amsterdam, the Netherlands (GMH), the Volkswagen Group held a 50% indirect stake in the joint venture’s subsidiary, LeasePlan Corporation N.V., Amsterdam, the Netherlands (LeasePlan). GMH’s business activity consisted of holding the interest in LeasePlan. LeasePlan is a Dutch financial services group whose core business is leasing and fleet management.

On July 23, 2015, GMH sold its 100% interest in LeasePlan to a consortium of international investors. The final approvals for the sale of LeasePlan to the consortium of investors were issued by the competent authorities in January 2016. Legal transfer of the LeasePlan shares was completed on March 21, 2016.

The total value of the transaction was approximately €3.7 billion plus interest in the amount of €31.5 million. In 2016, this had a positive effect of €2.2 billion on investing activities attributable to operating activities and net liquidity and, taking into account the disposal of equity-accounted investment in GMH, resulted in an income amount of €0.2 billion for the Volkswagen Group, which is reported in the financial result. On completion of the transaction, the existing credit line of €1.3 billion provided by the Volkswagen Group was canceled.

  (XLS:) Download

SUMMARIZED FINANCIAL INFORMATION ON THE MATERIAL JOINT VENTURES ON A 100% BASIS:

€ million

 

FAW-Volkswagen Automotive Company

 

SAIC-Volkswagen Automotive Company1

 

Global Mobility Holding2

 

SAIC-Volkswagen Sales Company

1

SAIC-Volkswagen Sales Company sells passenger cars for SAIC-Volkswagen Automotive Company. Therefore, the sales revenue reported for SAIC-Volkswagen Automotive Company was mostly generated from its business with SAIC-Volkswagen Sales Company.

2

GMH transferred the LeasePlan shares to third parties on March 21, 2016 (see further disclosures in this section).

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

 

Equity interest (%)

 

40.0

 

50.0

 

 

 

30.0

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

9,341

 

7,254

 

 

 

517

Current assets

 

12,962

 

8,521

 

 

 

3,739

of which: cash, cash equivalents and time deposits

 

7,073

 

5,265

 

 

 

212

Noncurrent liabilities

 

1,774

 

1,437

 

 

 

22

of which: financial liabilities

 

 

 

 

 

Current liabilities

 

13,063

 

8,759

 

 

 

3,713

of which: financial liabilities

 

1

 

0

 

 

 

Net assets

 

7,466

 

5,579

 

 

 

520

 

 

 

 

 

 

 

 

 

Sales revenue

 

40,875

 

26,064

 

1,879

 

30,707

Depreciation and amortization

 

1,120

 

1,091

 

12

 

4

Interest income

 

82

 

40

 

168

 

Interest expenses

 

 

4

 

70

 

Pre-tax profit or loss from continuing operations

 

5,546

 

4,589

 

142

 

614

Income tax income/expense

 

1,576

 

1,127

 

38

 

154

Post-tax profit or loss from continuing operations

 

3,970

 

3,462

 

105

 

460

Post-tax profit or loss from discontinued operations

 

 

 

 

Other comprehensive income

 

37

 

21

 

−20

 

Total comprehensive income

 

4,007

 

3,483

 

85

 

460

Dividends received

 

1,634

 

1,661

 

 

127

2015

 

 

 

 

 

 

 

 

Equity interest (%)

 

40.0

 

50.0

 

50.0

 

30.0

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

7,997

 

6,345

 

12,404

 

486

Current assets

 

12,674

 

8,187

 

9,913

 

3,341

of which: cash, cash equivalents and time deposits

 

5,954

 

4,761

 

1,722

 

231

Noncurrent liabilities

 

1,424

 

1,471

 

9,855

 

10

of which: financial liabilities

 

 

 

8,757

 

Current liabilities

 

11,422

 

7,444

 

8,535

 

3,311

of which: financial liabilities

 

100

 

27

 

6,546

 

Net assets

 

7,825

 

5,618

 

3,927

 

506

 

 

 

 

 

 

 

 

 

Sales revenue

 

40,462

 

26,018

 

8,298

 

30,035

Depreciation and amortization

 

1,033

 

907

 

56

 

4

Interest income

 

64

 

79

 

780

 

14

Interest expenses

 

 

 

330

 

Pre-tax profit or loss from continuing operations

 

6,169

 

4,408

 

608

 

600

Income tax income/expense

 

1,464

 

850

 

165

 

151

Post-tax profit or loss from continuing operations

 

4,705

 

3,558

 

442

 

449

Post-tax profit or loss from discontinued operations

 

 

 

 

Other comprehensive income

 

−5

 

5

 

16

 

Total comprehensive income

 

4,700

 

3,563

 

458

 

449

Dividends received

 

2,170

 

2,048

 

114

 

143

  (XLS:) Download

RECONCILIATION OF THE FINANCIAL INFORMATION TO THE CARRYING AMOUNT OF THE EQUITY-ACCOUNTED INVESTMENTS:

€ million

 

FAW-
Volkswagen Automotive Company

 

SAIC-
Volkswagen Automotive Company

 

Global Mobility Holding

 

SAIC-
Volkswagen Sales Company

*

As of March 31, 2016

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

 

Net assets at January 1

 

7,825

 

5,618

 

3,927

 

506

Profit or loss

 

3,970

 

3,462

 

105

 

460

Other comprehensive income

 

37

 

21

 

−20

 

Changes in share capital

 

 

 

 

Changes in reserves

 

 

 

 

Foreign exchange differences

 

−281

 

−200

 

−20

 

−21

Dividends

 

−4,085

 

−3,321

 

 

−425

Net assets at December 31

 

7,466

 

5,579

 

3,991*

 

520

Proportionate equity

 

2,987

 

2,790

 

1,996

 

156

Consolidation/Goodwill/Others

 

−339

 

−415

 

−1,996

 

Carrying amount of equity-accounted investments

 

2,647

 

2,375

 

 

156

2015

 

 

 

 

 

 

 

 

Net assets at January 1

 

7,956

 

5,603

 

3,697

 

497

Profit or loss

 

4,705

 

3,558

 

442

 

449

Other comprehensive income

 

−5

 

5

 

16

 

Changes in share capital

 

377

 

 

 

Changes in reserves

 

−377

 

 

 

Foreign exchange differences

 

594

 

548

 

 

38

Dividends

 

−5,425

 

−4,096

 

−228

 

−478

Net assets at December 31

 

7,825

 

5,618

 

3,927

 

506

Proportionate equity

 

3,130

 

2,809

 

1,964

 

152

Consolidation/Goodwill/Others

 

−212

 

−55

 

−13

 

Carrying amount of equity-accounted investments

 

2,918

 

2,754

 

1,950

 

152

  (XLS:) Download

SUMMARIZED FINANCIAL INFORMATION ON INDIVIDUALLY IMMATERIAL JOINT VENTURES ON THE BASIS OF THE VOLKSWAGEN GROUP’S PROPORTIONATE INTEREST:

€ million

 

2016

 

2015

 

 

 

 

 

Post-tax profit or loss from continuing operations

 

304

 

292

Post-tax profit or loss from discontinued operations

 

 

Other comprehensive income

 

3

 

10

Total comprehensive income

 

307

 

301

Carrying amount of equity-accounted investments

 

1,890

 

1,772

There were no unrecognized losses relating to interests in joint ventures. Contingent liabilities relating to joint ventures amounted to €183 million (previous year: €121 million). Cash funds of €173 million (previous year: €72 million) were deposited as collateral for asset-backed securities transactions and are therefore not available to the Volkswagen Group.

OTHER EQUITY INVESTMENTS

On August 29, 2015, an arbitration ruling was delivered to the parties in the proceedings between Suzuki Motor Corporation and Volkswagen AG. It found that Volkswagen had acted in accordance with the agreement. The arbitration court also confirmed that Suzuki was in breach of contract and, on the merits of this case, acknowledged that Volkswagen had a claim to damages. In addition, the arbitration court established that the parties had the right to give regular notice to terminate the cooperation agreement. It said that Suzuki had exercised this right, ending the partnership. According to the court, the agreements had to be interpreted in such a way that Volkswagen had to sell its equity investment in Suzuki on termination of the partnership. Volkswagen consequently sold its 19.9% equity investment in Suzuki to Suzuki on September 17, 2015 at the quoted market price of €3.1 billion. The sale of the shares generated income in the amount of €1.5 billion in the third quarter of the previous year.

In February 2016, Volkswagen and Suzuki agreed a settlement regarding the claims for damages brought by Volkswagen.