Investments

INVESTMENTS IN ASSOCIATES

From a Group perspective, the associates Sinotruk (Hong Kong) Ltd., Hongkong, China (Sinotruk), Bertrandt AG, Ehningen (Bertrandt), There Holding B.V., Rijswijk, the Netherlands (There Holding), and Navistar International Corporation, Lisle, Illinois/USA (Navistar), 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, 2019, the quoted market price of the shares in Sinotruk amounted to €1,312 million (previous year: €908 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, 2019, the quoted market price of the shares in Bertrandt amounted to €165 million (previous year: €201 million).

There Holding

Together with the BMW Group, Daimler AG and other companies, Volkswagen holds an equity investment in There Holding B.V., Rijswijk (the Netherlands), an investment company. In turn, There Holding B.V. holds around 85 % of the shares of HERE International B.V., Eindhoven (the Netherlands). HERE International B.V. is one of the world’s largest producers of digital road maps for navigation systems. Since the interest held does not grant control in accordance with IFRS 10, HERE International B.V. is included in the financial statements of There Holding B.V. as an associate using the equity method.

Capital increases were implemented at There Holding B.V. in 2019, in which Volkswagen participated. As a result, the shares accounted for using the equity method increased by €69 million. The ownership interest in There Holding B.V. amounted to 29.7 % as of December 31, 2019.

In December 2019, it was announced that additional investors would acquire shares in HERE International B.V. Following the signing in December 2019, Mitsubishi Corporation (MC) and Nippon Telegraph and Telephone Corporation of Japan (NTT) are aiming to jointly acquire 30 % of the shares of HERE International B.V. in the first half of 2020, subject to antitrust approval. The interest held by There Holding B.V. in HERE International B.V. is expected to decline to around 60 % as a result.

Navistar

Navistar International Corporation (Navistar) is a US manufacturer of commercial vehicles; it is based in Lisle, Illinois/USA. Navistar and TRATON GROUP companies have entered into master agreements for strategic technology and supply cooperation as well as a procurement joint venture.

Since two members of TRATON SE’s Executive Board are represented on the Board of Directors of Navistar and because of the agreed cooperations, the investment in Navistar is reported as an equity-accounted investment in the consolidated financial statements.

As of December 31, 2019, the quoted market price of the shares in Navistar amounted to €429 million (December 31, 2018: €377 million).

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SUMMARIZED FINANCIAL INFORMATION ON MATERIAL ASSOCIATES ON A 100% BASIS

€ million

 

Sinotruk1

 

Bertrandt2

 

There Holding

 

Navistar3

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

Balance sheet amounts refer to the October 31 reporting date and income statement amounts refer to the period from November 1 to October 31.

4

Proportionate dividends are shown net of withholding tax.

 

 

 

 

 

 

 

 

 

2019

 

 

 

 

 

 

 

 

Equity interest in %

 

25

 

29

 

30

 

17

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

2,351

 

575

 

1,131

 

1,762

Current assets

 

6,127

 

468

 

467

 

4,441

Noncurrent liabilities

 

50

 

313

 

 

6,336

Current liabilities

 

4,669

 

153

 

0

 

3,206

Net assets

 

3,758

 

578

 

1,597

 

−3,339

 

 

 

 

 

 

 

 

 

Sales revenue

 

8,047

 

1,058

 

 

10,004

Earnings after tax from continuing operations

 

627

 

16

 

−390

 

216

Earnings after tax from discontinued operations

 

 

 

 

Other comprehensive income

 

0

 

−1

 

1

 

7

Total comprehensive income

 

627

 

15

 

−389

 

223

Dividends received⁴

 

47

 

6

 

 

2018

 

 

 

 

 

 

 

 

Equity interest in %

 

25

 

29

 

30

 

17

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

2,239

 

586

 

1,763

 

1,846

Current assets

 

6,461

 

469

 

2

 

4,528

Noncurrent liabilities

 

54

 

306

 

 

6,478

Current liabilities

 

5,250

 

167

 

1

 

3,356

Net assets

 

3,395

 

583

 

1,764

 

−3,461

 

 

 

 

 

 

 

 

 

Sales revenue

 

8,047

 

1,020

 

 

8,625

Earnings after tax from continuing operations

 

558

 

25

 

−351

 

310

Earnings after tax from discontinued operations

 

 

 

 

Other comprehensive income

 

0

 

0

 

−7

 

245

Total comprehensive income

 

558

 

25

 

−358

 

555

Dividends received⁴

 

50

 

7

 

 

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

€ million

 

Sinotruk

 

Bertrandt

 

There Holding

 

Navistar

1

Dividends are shown before withholding tax.

 

 

 

 

 

 

 

 

 

2019

 

 

 

 

 

 

 

 

Net assets at January 1

 

3,395

 

583

 

1,764

 

−3,461

Profit or loss

 

627

 

16

 

−390

 

216

Other comprehensive income

 

0

 

−1

 

1

 

7

Changes in reserves

 

1

 

 

222

 

−21

Foreign exchange differences

 

−46

 

 

 

−60

Dividends¹

 

−218

 

−20

 

 

−20

Net assets at December 31

 

3,758

 

578

 

1,597

 

−3,339

Proportionate equity

 

940

 

167

 

475

 

−560

Consolidation/Goodwill/Others

 

−388

 

80

 

 

1,007

Carrying amount of equity-accounted investments

 

552

 

247

 

475

 

447

2018

 

 

 

 

 

 

 

 

Net assets at January 1

 

3,060

 

583

 

2,209

 

−3,816

Profit or loss

 

558

 

25

 

−351

 

310

Other comprehensive income

 

0

 

0

 

−7

 

245

Changes in reserves

 

−3

 

 

−87

 

13

Foreign exchange differences

 

13

 

 

 

−191

Dividends¹

 

−232

 

−25

 

 

−22

Net assets at December 31

 

3,395

 

583

 

1,764

 

−3,461

Proportionate equity

 

849

 

168

 

522

 

−582

Consolidation/Goodwill/Others

 

−402

 

163

 

 

1,012

Carrying amount of equity-accounted investments

 

447

 

331

 

522

 

430

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

€ million

 

2019

 

2018

 

 

 

 

 

Earnings after tax from continuing operations

 

27

 

−20

Earnings after tax from discontinued operations

 

 

Other comprehensive income

 

12

 

1

Total comprehensive income

 

39

 

−20

Carrying amount of equity-accounted investments

 

597

 

332

There were unrecognized losses of €54 million (previous year: €– million) relating to investments in associates. Furthermore, there were no contingent liabilities or financial guarantees 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, and SAIC-Volkswagen Sales Company Ltd., Shanghai, China, were material at the 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.

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

€ million

 

FAW-Volkswagen Automotive Company

 

SAIC-Volkswagen Automotive Company1

 

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

Excluding trade liabilities.

3

Proportionate dividends are shown net of withholding tax.

 

 

 

 

 

 

 

2019

 

 

 

 

 

 

Equity interest in %

 

40

 

50

 

30

 

 

 

 

 

 

 

Noncurrent assets

 

12,069

 

9,355

 

896

Current assets

 

11,876

 

8,251

 

4,477

of which cash and cash equivalents

 

5,423

 

6,513

 

210

Noncurrent liabilities

 

1,221

 

1,130

 

160

of which financial liabilities²

 

 

 

Current liabilities

 

15,321

 

11,674

 

4,665

of which financial liabilities²

 

29

 

1

 

Net assets

 

7,403

 

4,802

 

548

 

 

 

 

 

 

 

Sales revenue

 

44,181

 

26,922

 

32,115

Depreciation and amortization

 

1,825

 

2,190

 

21

Interest income

 

125

 

53

 

5

Interest expenses

 

4

 

2

 

Earnings before tax from continuing operations

 

4,775

 

3,594

 

659

Income tax expense

 

1,251

 

845

 

166

Earnings after tax from continuing operations

 

3,524

 

2,749

 

493

Earnings after tax from discontinued operations

 

 

 

Other comprehensive income

 

−49

 

3

 

Total comprehensive income

 

3,475

 

2,752

 

493

Dividends received³

 

1,332

 

1,732

 

153

2018

 

 

 

 

 

 

Equity interest in %

 

40

 

50

 

30

 

 

 

 

 

 

 

Noncurrent assets

 

10,651

 

8,580

 

671

Current assets

 

10,903

 

6,689

 

3,680

of which cash and cash equivalents

 

3,764

 

4,412

 

206

Noncurrent liabilities

 

1,260

 

1,205

 

110

of which financial liabilities²

 

 

 

Current liabilities

 

12,936

 

8,526

 

3,692

of which financial liabilities²

 

 

4

 

Net assets

 

7,358

 

5,538

 

549

 

 

 

 

 

 

 

Sales revenue

 

41,607

 

28,863

 

33,212

Depreciation and amortization

 

1,335

 

1,479

 

8

Interest income

 

123

 

64

 

5

Interest expenses

 

 

1

 

Earnings before tax from continuing operations

 

4,851

 

4,588

 

665

Income tax expense

 

1,186

 

1,040

 

167

Earnings after tax from continuing operations

 

3,665

 

3,548

 

498

Earnings after tax from discontinued operations

 

 

 

Other comprehensive income

 

47

 

1

 

Total comprehensive income

 

3,712

 

3,549

 

498

Dividends received³

 

1,209

 

1,626

 

148

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

€ million

 

FAW-Volkswagen Automotive Company

 

SAIC-Volkswagen Automotive Company

 

SAIC-Volkswagen Sales Company

1

Dividends are shown before withholding tax.

 

 

 

 

 

 

 

2019

 

 

 

 

 

 

Net assets at January 1

 

7,358

 

5,538

 

549

Profit or loss

 

3,524

 

2,749

 

493

Other comprehensive income

 

−49

 

3

 

Changes in share capital

 

 

 

Changes in reserves

 

 

 

Foreign exchange differences

 

54

 

37

 

16

Dividends¹

 

−3,483

 

−3,524

 

−509

Net assets at December 31

 

7,403

 

4,802

 

548

Proportionate equity

 

2,961

 

2,401

 

164

Consolidation/Goodwill/Others

 

−760

 

−803

 

Carrying amount of equity-accounted investments

 

2,201

 

1,599

 

164

2018

 

 

 

 

 

 

Net assets at January 1

 

6,851

 

5,405

 

546

Profit or loss

 

3,665

 

3,548

 

498

Other comprehensive income

 

47

 

1

 

Changes in share capital

 

 

 

Changes in reserves

 

 

 

Foreign exchange differences

 

68

 

−23

 

−1

Dividends¹

 

−3,273

 

−3,393

 

−494

Net assets at December 31

 

7,358

 

5,538

 

549

Proportionate equity

 

2,943

 

2,769

 

165

Consolidation/Goodwill/Others

 

−593

 

−851

 

Carrying amount of equity-accounted investments

 

2,350

 

1,918

 

165

  (XLS:) Download

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

€ million

 

2019

 

2018

 

 

 

 

 

Earnings after tax from continuing operations

 

434

 

319

Earnings after tax from discontinued operations

 

 

Other comprehensive income

 

3

 

−2

Total comprehensive income

 

436

 

317

Carrying amount of equity-accounted investments

 

1,887

 

1,939

There were unrecognized losses of €29 million (previous year: €– million) relating to investments in joint ventures. Contingent liabilities to joint ventures amounted to €224 million (previous year: €183 million), while financial guarantees stood at €134 million (previous year: €146 million). Cash funds of €276 million (previous year: €268 million) are deposited as collateral for asset-backed securities transactions and are therefore not available to the Volkswagen Group.

IFRS 5 – NON-CURRENT ASSETS HELD FOR SALE

On July 12, 2019, Volkswagen announced that, together with Ford Motor Company (Ford), it would be investing in Argo AI, a company that is working on the development of a system for autonomous driving. The investment will firstly include the provision of financial resources totaling USD 1.0 billion, spread over several years, and secondly Volkswagen will contribute its consolidated subsidiary Autonomous Intelligent Driving (AID). Furthermore, Volkswagen will acquire existing Argo AI shares from Ford for a purchase price of USD 500 million, payable in three equal annual installments. The transaction, including the contribution of AID, is expected to be completed in the first half of 2020 – subject to the required regulatory approvals and other conditions precedent.

On January 30, 2020, the Board of Management and Supervisory Board of Volkswagen AG resolved to sell the Volkswagen Group’s 76% interest in RENK AG. RENK AG is a global provider of high-quality gear units and propulsion systems for various areas of application. It is part of the Power Engineering segment. The sale is expected to be completed in the second half of 2020 – subject to approval by the regulatory authorities.

In accordance with IFRS 5, the RENK AG subgroup and AID are reported as disposal groups held for sale and measured at their carrying amounts.

The assets and liabilities of the disposal groups are each reported in separate balance sheet accounts. The main categories of the assets and liabilities of the disposal groups are presented below:

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€ million

 

Dec. 31, 2019

 

 

 

Intangible assets

 

110

Property, plant and equipment

 

261

Inventories

 

230

Cash and securities

 

4

Tax assets

 

2

Other assets

 

190

Assets held for sale

 

795

 

 

 

Financial liabilities

 

9

Provisions

 

72

Other liabilities

 

289

Liabilities associated with assets held for sale

 

370

Accumulated income and expenses in connection with the disposal groups classified as held for sale and recognized in other comprehensive income amount to €4.6 million.