Annual Report 2014 - Volkswagen Financial Services

Transkript

Volkswagen
Groupskupiny
Financial
Services –Group
Credit- Úvěr
| Leasing
| Insurance
| Mobility
Finanční služby
Volkswagen
| Leasing
| Pojištění
| Mobilita
Annual Report
2014
Introduction
2
Dear ladies and gentlemen
The automotive industry fared extraordinarily well on the Czech market in 2014 as evidenced by a 16.5% increase in new vehicle
registrations. Volkswagen Group brands even recorded growth of 18.9%. It was an extremely successful year for ŠkoFIN. The
number of newly concluded contracts rose by 14% in comparison to 2013, and ŠkoFIN’s market share in financing passenger and
commercial vehicles has expanded by almost 3 percentage points over the past 2 years.
We are pleased by the great work efforts, dedication and enthusiasm which our employees bring to new tasks and changes in our
company. The clear proof of which can be seen in our excellent sales and financial results.
Last year was once again a year of product innovations. At the beginning of 2014, ŠkoFIN became the first Volkswagen
Financial Services company in the world to implement financing and ŠKODA Insurance within ŠKODA Car Configurator. This change
enables customers to select from the comfort of their own homes not only their preferred car but also financing and comprehensive
insurance tailored to their present needs. In June 2014, ŠkoFIN introduced to the market operational leasing for retail customers, first
with ŠKODA AUTO under the fitting name ŠKODA Without Worries and subsequently also with other Volkswagen Group brands. We
were very pleased by the great interest in this product. It indicates a clear shift from vehicle ownership to automobile use as a service.
We have introduced professional product management, which includes not only development of new products but also regular
review of existing products. We periodically evaluate whether the existing product portfolio reflects customers’ current needs.
Operational and Project Excellence is how we earn our living every day. Market needs are constantly changing, and we want to offer
new products, innovate existing products, and understand our customers’ desires. We are a performance-driven company, with each
employee motivated by key indicators and thereby participating in ŠkoFIN’s business and financial success. We are a long-standing
reliable employer with a good reputation in the market, and recruitment confirms that people want to work for us.
ŠkoFIN is part of Volkswagen Group, which last year sold more than 10 million new vehicles across the world. Its strength provides us
with security as well as great responsibility. Close co-operation with the brands, Volkswagen Group’s dealer network and key business
partners is very important for us.
We are looking to 2015 with optimism, and we are confident that it will be just as successful as last year.
Jiřina Tapšíková, ŠkoFIN Statutory Representative
Joachim Ewald, ŠkoFIN Statutory Representative
3
Contents
Company Profile
6
Client Care
The Group’s Structure
8
Process and Project Excellence
Compliance
9
Human Resources
22
23
11
Central Purchasing
Company Values
12
IT Concept and Development
Structure of the Governing Body
13
Financial Situation in 2014
Company Organisational Structure
14
Outlook for 2015
27
Long-term Strategy
15
Shareholder's Meeting Report
28
Major Events in 2014
17
Independent Auditor’s Report
on the Annual Report
Sponsorship and Charity Activities 18
29
Products and Services
19
on the Financial Statements
31
20
Balance Sheet 33
24
Regulatory Measures
Volkswagen Dealer Network
4
21
25
26
Contents
Income Statement 35
Statement of Changes in Shareholder 's Equity 36
Bank Loans and other Borrowings
54
Income Tax
56
Cash Flow Statement
37
Revenue Analysis
57
General Information
39
Employees
58
Accounting Policies
40
Related Party Transactions
59
Intangible Fixed Assets
45
Tangible Fixed Assets
46
Fees Paid and Payable
to the Audit Company
61
Receivables
49
Commitments 61
Equity
50
Contingent Assets 61
Provisions
51
Contingent Liabilities
62
Accruals and Deferrals
52
Cash Flow Statement
62
Liabilities
53
Subsequent Events
62
Report on Relations 63
5
Company Profile
Right from the time of its establishment in 1992, ŠkoFIN has been a leader on the Czech automotive credit
and lease financing market. The Company strengthened its position, too, during the successful year 2014.
According to a comparison of companies belonging to the Czech Leasing and Financing Association (CLFA),
ŠkoFIN’s market share is 23.4% in the Financing Passenger and Commercial Vehicles category. Relative
to 2013, its market share increased by 1.3%.
ŠkoFIN offers top products in vehicle financing to individuals as well as companies. Its main product is credit
financing for new and used vehicles. ŠkoFIN views fleet financing by means of operational leasing to be a segment with
great potential, and it is one in which it also ranks first on the market. The Company directs its attention not only to
large firms, but also to small and medium-sized enterprises. Here especially there are great opportunities for growth.
Operational leasing for retail customers was introduced in 2014 and interest in this product has exceeded our
expectations. Financing environmentally friendly vehicles is becoming more and more important every year.
An indispensable element in the Company’s successful operation is its close co-operation with its business partners
within the Volkswagen Group dealer network. Another key area consists in its strong collaboration with the Group’s
ŠKODA, Volkswagen, Audi, SEAT and Porsche brands.
ŠkoFIN’s Portfolio Includes the Following Standard Products:
»
Credit is purchase with loan repayment according to a payment schedule. In taking a loan, the client need not spend
all the cash at his or her disposal. By paying part of the acquisition price in gradual instalments, he or she can keep
more cash for unexpected expenditures or even invest it for a gain. We also offer advantageous integrated
insurance along with this product.
Credit also may be used by Volkswagen Group car dealers for financing their operating and investment needs.
» Investment loans are used to finance auto showrooms and service centres.
» O perational loans cover the actual funding needs of car dealers and provide financing for technologies connected
with their selling and service activities.
»
Financial Leasing is leasing with subsequent purchase of the vehicle. The advantage of leasing is that the client
need not spend all the cash at his or her disposal but can spread the instalments over a longer period. We also offer
advantageous integrated insurance as part of this product.
»
Operational Leasing encompasses car lease inclusive of a wide range of additional services and with the possibility
of choosing the lease period. Thus, the client need not worry about its car or car fleet as its expenses are spread out
in the form of individual monthly instalments. This service is offered also in the Full Service Leasing and Fleet
Management variants. Fleet services also include, of course, comprehensive analysis and advisory so that the fleet
is as efficient as possible for the client.
6
Company Profile From June 2014, operational leasing also has been offered to retail customers. They may select the specific model and
range of financing services they desire.
»
Factoring is a modern and flexible method of operational financing based on the assignment of accounts receivable.
In assigning receivables, the car dealer becomes entitled to financing for up to 100% of their value. ŠkoFIN also uses
this product to reinforce the financial stability of Volkswagen Group car dealers.
»
ŠKODA Insurance is a unique brand motor vehicle insurance which includes third party motor insurance, accident
insurance and other supplemental car insurance. Customers can arrange this insurance in either Standard or Plus
variants according to the extent of insurance coverage they desire.
»
Extended warrantees for used vehicles can be obtained within the ŠKODA Plus and Das WeltAuto programmes as Das
WeltAuto Warrantee or ŠKODA Plus Warrantee. These programmes offer drivers protection even after the expiration
of classic or extended factory warrantees.
»
Supplementary Products. The client centre offers current customers such additional products as complementary
accident insurance and third party motor insurance, credit insurance (ŠkoFIN PPP), administrative legal protection
insurance (ŠkoFIN Assistant) and other customer care services.
ŠkoFIN is a responsible provider of financing. It is a founding member of the Czech Non-Banking Credit Bureau, and, as
a member of the CLFA, it endorses this association’s code of ethics. It responsibly assesses each leasing or loan
applicant’s financial situation. ŠkoFIN offers its products with no additional fees, such as for closing and administering
a contract.
More information is available at www.skofin.cz
The character of Company's business in the financial services area does not influence the environment.
7
The Group’s Structure
Volkswagen Financial Services make up a business division of the Volkswagen AG group of companies and
comprise Volkswagen Financial Services AG along with its subsidiaries and financial service companies in the
US, Canada, Argentina and Spain that belong directly or indirectly to Volkswagen AG with the exception of the
financial services of the Scania and Porsche brands and Porsche Holding Salzburg.
Volkswagen Financial Services is currently represented in 50 countries, has a portfolio of around 10,2 million contracts,
and employs almost 11,300 people all over the world.
Automotive
Automotive division
Division
Utility
vehicles
Financial Services
Volkswagen Financial Services
VOLKSWAGEN FINANCIAL SERVICES
Asia
FINANCIAL SERVICES
USA / Canada / Spain / Argentina
Scania Financial Services
MAN Financial Services
Porsche Holding Financial Services
8
Porsche Financial Services
Compliance As a part of Volkswagen Group, ŠkoFIN complies in its sales and operating activities with applicable legal
regulations, internal company and Volkswagen Group rules, and its own ethical regulations which together form
the integrated whole of Compliance regulations.
All Employees of ŠkoFIN are Expected as Part of Compliance to:
»
adhere while fulfilling their work responsibilities to the laws and regulations of the Czech Republic and European
Union as well as international legal regulations,
»
act responsibly and in accordance with the Company’s internal regulations and the defined internal Volkswagen
Group regulations,
» adhere to the Company’s Code of Ethics, which, among other matters, defines such basic principles for activities
of companies belonging to Volkswagen Group as customer-orientation, excellent performance, value creation,
responsibility, renewability, sustainability and respect.
ŠkoFIN is aware that only by strictly adhering to legal regulations, internal norms and codes of conduct can the success
and long-term sustainability of its activities be ensured.
In addition to establishing and ensuring adherence to the fundamental values of ŠkoFIN’s corporate culture, Compliance
is directed also to preventing, identifying and minimising risks ensuing from the possible failure to uphold the relevant
laws as well as ŠkoFIN’s internal regulations and ethics rules.
To achieve higher efficiency in Compliance, a new structure of so-called “Compliance Functions” was established
in ŠkoFIN during 2014 with an emphasis on decentralising the role of Compliance and connecting Compliance functions
more closely to individual processes within ŠkoFIN.
Key Areas for Compliance in ŠkoFIN are Defined in Particular as:
»
»
»
»
»
»
personal data protection,
protection from possible corrupt practices,
protection from money laundering and the financing of terrorism,
protection against violating rules to avoid anti-competitive behaviour,
protection against violating consumer protection rules,
the Company’s code of ethics and other areas of discharging the Compliance function.
9
Compliance
Last but not least, ŠkoFIN appreciates the importance of Compliance in IT security from the perspective of legal,
information and information system security. In its activities, the Company must – and does – comply with the
strictest security criteria, identical to those for banks and insurance companies. Some projects implemented in 2014
focused, among other matters, on protecting data against misuse and on securing information and systems to sustain
the Company’s smooth operations.
In order to obtain adequate knowledge and experience in adhering to the defined requirements in all Compliance areas,
ŠkoFIN employees regularly participate in Compliance training programmes.
10
Regulatory Measures
ŠkoFIN is a part of the Volkswagen Financial Services Holding Group, which also includes Volkswagen Bank
GmbH. The Group must comply with requirements in accordance with the German banking act and other national
and international rules. As a member of the Group, ŠkoFIN is required to provide financial information for the
needs of regulatory reporting.
For Group consolidation purposes and based on the decision of the parent company to implement the Basel III accords,
ŠkoFIN previously had launched its Basel III project. Its objective was to prepare systems and processes for providing
information to the parent company within the required time and structure.
In 2014, the project met its target and the Company began to report according to Basel III. In distinction from the
earlier Basel II, which had emphasised maintaining the required capital adequacy in terms of risk-weighted assets, Basel
III stresses financial preparedness to withstand crisis scenarios also from a liquidity perspective.
At the same time, Volkswagen Financial Services Holding Group demonstrated its financial stability on a consolidated
level and successfully passed stress tests.
11
Company Values
Responsibility
It is up to every one of us what kind of company ŠkoFIN will be. Every day, our work requires that we make dozens
of decisions for which we take responsibility. We stand by our word and we fulfil our promises. We view deadlines and the
quality of work we perform as equally strong commitments.
Courage
We actively seek ways to complete the tasks and fulfil the wishes of our customers. We do not make excuses about
obstacles, and we do not pass our responsibilities off onto others. We can admit a mistake, make it right and learn from
it so as to prevent it from happening next time. We stand up for our ideas if we are convinced they are right for the
Company.
Trust
Trust is born from transparency. It requires the time and personal bravery to say things straight. On the other hand,
it is necessary to accept feedback with appropriate humility. We always discuss controversial topics straightforwardly
and fairly. We know it is normal to help one another.
Customer Orientation
We are constantly improving based on feedback from our customers, because their satisfaction is the basis for our
success. This relates not only to talking about our customers, but especially speaking with them. Customers always come
first, and all our efforts are directed to them.
Enthusiasm
We take a positive approach in providing services, and our customers can see that. We focus on success with a smile.
We want to be number one on the market, and we make our plans and objectives become reality.
12
Structure of the Governing Body
ŠkoFIN s.r.o. was entered into the Commercial Register on 10 August 1992, having its registered office
at Pekařská 6, Prague 5. The Company’s primary business activities are purchase of goods for the purpose of their
resale, sale (leasing) of automobiles, and provision of consumer credit inclusive of additional services.
The structure of the statutory body as at 31 December 2014 was as follows:
Statutory Representatives:
Jiřina Tapšíková, Statutory Representative
Joachim Ewald, Statutory Representative
Authorised Signatories
Jana Gregorová
Radek Cizner
Radek Milštain
Mrs Jiřina Tapšíková joined the Company in 1993. As a senior manager, she was responsible for ŠkoFIN Group’s
accounting department until 2003 and at the same time she was ŠkoFIN’s authorised signatory. From 2003 until
2005, she was a director at the Volkswagen Financial Services AG Group’s Turkish subsidiary in Istanbul. She has held
the position of statutory representative of ŠkoFIN since 1 January 2006 and is responsible for managing the Company’s
financial and administrative operations. This area includes the Credit and Risk Management Department, the Finance
Department, the IT Department, the Legal Department, Human Resources and Internal Audit.
Mr Joachim Ewald became ŠkoFIN’s statutory representative on 1 March 2014 and is responsible for sales, marketing,
project management and lean management. Before joining the Company, he was statutory representative of MAN
Finance International GmbH (2011–2013). During 2001 to 2011, he served as statutory representative of IBM
Deutschland Kreditbank GmbH. He spent seven years at Ford Bank AG in Germany (1993–2000). In 1997, he established
the Czech branch of that bank and then spent three years managing it.
13
Company Organisational Structure
As at 31 December 2014, the Company’s organisational structure was as follows:
ŠkoFIN s.r.o. (“the Company”) was incorporated on 10 August 1992 and has its registered office at Pekařská 6, Prague
5, postal code 155 00. The Company’s primary business activities are the purchase of assets for resale, sale (leasing of
cars) and the provision of consumer credit.
The Company updated its Articles of Association so that they are now fully governed by the new Corporations Act.
The Statutory Representatives as at 31 December 2014:
Jiřina Tapšíková
Joachim Ewald (appointed on 1 March 2014)
Authorised Signatories as at 31 December 2014:
Jana Gregorová
Radek Cizner
Radek Milštain
The Company is organised as follows:
Joachim Ewald
Statutory Representative
Secretary
Assistant Manager
Internal Auditor
Sales Steering Co-ordinator
Legal Department
Project Management / Lean Management
Finance Department
Marketing and Sales
Credit & Risk Management
Administration
Human Resources
During 2014, a new position of Sales Steering Co-ordinator was
established and the Strategic development Department was renamed
Project Management / Lean Management.
14
Information Technologies
Long-term Strategy
In 2008, Volkswagen Financial Services presented its WIR 2018 Strategy, which is a part of the Volkswagen
Group’s global strategy.
The vision for this long-term strategy is to become the best provider of financial services in the world.
Volkswagen had aspired to sell more than 10 million vehicles annually by 2018 and become the world leader. This
objective was fulfilled already in 2014, however, with the sale of 10.14 million Volkswagen Group vehicles. The strategy
emphasises four chief pillars: employees, customers, sales volume and profitability.
ŠkoFIN’s employees were presented with the long-term objectives of the WIR 2018 Strategy for the first time in March
2009, and they are regularly informed on current strategic priorities and their achievement.
In connection with the Group’s strategy, ŠkoFIN has defined long-term business and IT strategies. The two
are interconnected so that the IT strategy fully supports the requirements of the business. The remaining ŠkoFIN
departments have also presented their strategies. The strategies are subject to regular review, and the strategic
activities upon which the Company focuses are defined for each year.
Business Activities
ŠkoFIN’s key product is credit financing for new and used vehicles.
The Company sees opportunity for further growth in operational leasing and fleet management with a focus on small
and medium-sized enterprises.
In the second half of 2014, the Company recorded great success with operational leasing for retail customers, presented
first in co-operation with ŠKODA AUTO under the fitting name ŠKODA Without Worries and later with other Volkswagen
Group brands. ŠkoFIN sees significant potential for further growth in this area.
With offers both to customers with vehicle financing and customers making cash vehicle purchases, ŠKODA
Insurance found a solid place on the market and sales results exceeded expectations. This brand insurance will be gradually
expanded to include other Volkswagen Group brands.
In January 2015, the product ŠKODA Prepaid Services was introduced to the market in close co-operation with ŠKODA
AUTO. This product, too, will be gradually introduced for other Volkswagen Group brands.
15
Long-term Strategy
The Company is further orienting itself to work actively with existing customers and enhance the quality of their care.
In the coming year, it will direct intensive efforts to the CRM concept.
IT and Operations Area
ŠkoFIN continued preparations during 2014 for building a new information system to serve contract administration
in retail and fleet areas. This is a strategic task. Its objective is to ensure the Company is able to respond quickly to market
changes, be flexible and become even more customer friendly.
16
Major Events in 2014
ŠKODA AUTO 3D Car Configurator
Those interested in a new ŠKODA vehicle and who use the innovative 3D Car Configurator for visualisation have
available a unique tool enabling them to see not only the total vehicle price but also monthly payments for the configured
vehicle at each selection step. This tool includes a ground-breaking innovation that displays the total monthly payment
for financing plus insurance with each added accessory.
New Website and Social Networking
The new design of the ŠkoFIN website retains its original functionality and fully respects the preferences
and requirements of new and existing customers. Analysis of usage data showed that customers were most interested in
brand financing options through special offers as well as in used vehicle programmes. The website is fully connected to
the ŠKODA, Volkswagen, Audi and SEAT brands as well as to the Das WeltAuto and ŠKODA Plus used vehicle programmes.
Social networks today constitute an essential communication tool enabling ŠkoFIN to communicate efficiently with
a younger target group. In particular, Facebook has become an entertaining and educational platform for fans of
our brand to find product news and much more. We endeavour to give fans a glimpse behind the scenes and at the
major events within ŠkoFIN and the world of the Group’s brands, introduce interesting facts and news, and provide
guidance and recommendations. By the end of 2014, we had obtained nearly 15,000 fans. In December 2014, based on its
analytical research, Socialbakers declared us one of the five Czech companies on Facebook with the highest post
engagement rates.
Smart Financing from ŠkoFIN. It Stands to Reason!
ŠkoFIN launched the new communication concept “It stands to reason!” People could see the comic actor Milan Šteindler,
the face of the entire concept, on their television screens in December 2014 during the so-called “teaser phase”. Based
upon the character of a brilliant scientist, the Company intends to educate the public on key vehicle financing topics. You
can find more at the ŠkoFIN website.
Awards That Please Us
ŠkoFIN won several awards in 2014. The ŠkoFIN Menu communications campaign from autumn 2013 won a gold medal
in the EFFIE 2014 advertisement effectiveness competition. ŠkoFIN also placed first in the Czech TOP 100 Association’s
survey of the 100 most admired companies in the Czech Republic in the category Financial Brokers and Other Financial
Institutions.
17
Sponsorship and Charity Activities
ŠkoFIN is convinced that it should be commonplace to help those in need. Those who can help should do so. That
is why ŠkoFIN, as a large company, supports several interesting activities each year in such areas as sport and
culture, and it also engages in charity projects.
Paraple Centre
In 2014, ŠkoFIN was again the main partner of the Paraple Centre, which has been operating in the Czech Republic since
1994. For its entire 20 years, the Centre has endeavoured to help people with paralysis caused by accident or illness and
their families. Through this help, people with this disability are able to overcome difficult life situations.
Sue Ryder
ŠkoFIN sponsors the Sue Ryder Charity Cup football tournament, the proceeds from which help operate the Sue Ryder
retirement home.
Nativity Scenes
Cars are important in life, but even today there are places pleasant to reach by foot and to take in their spiritual
dimension, such as Prague’s churches during Christmas. Again in 2014, ŠkoFIN supported the Archdiocese of Prague
and specifically the creation of a brochure called Nativity Scenes which is used as a guide during Christmas visits
to nativity scenes installed in Prague’s churches.
Mladá Boleslav Football Club
ŠkoFIN believes that sport has an important place in society, helping to develop not only the body but also the spirit.
For this reason, it extended its sponsoring activities to include a partnership and co-operation with Mladá Boleslav’s
first-league football club.
18
Products and Services
All Volkswagen Group brands are key partners for ŠkoFIN in the creation of products and campaigns.
The campaigns were based on jointly prepared sales offers. Co-operation was more interconnected,
and in addition to sales offers it consisted in creating new brand products, jointly reaching out to
customers, and mutual marketing support. During 2014, these facts were reflected in growing individual brand
penetration (ŠkoFIN’s financing share in the sales of the individual brands).
Retail Products
The Company endeavours to bring to clients not just vehicle financing but also added value. ŠkoFIN continuously
adjusts its sales offers so that the customer obtains not only a vehicle at a fair price but something more. The year 2014
brought the appealing spring campaign “One thing you can agree on. Financing with the guaranteed best offer” and the
year-end campaign “It stands to reason” with the unforgettable Milan Šteindler. Online communication was one of the
important instruments for reaching young clients in 2014. This also utilised special microsites created for each campaign
and gradually deepened contact with clients, enhanced education, and increased financial awareness.
Again in 2014, ŠkoFIN brought appealing innovations to the market.
ŠKODA 3D Car Configurator
ŠkoFIN was the first company within Volkswagen Financial Services AG to expand the ŠKODA AUTO Car Configurator to
include ŠKODA Financing and ŠKODA Insurance. This change enables customers to select from the comfort of their own
homes not only their preferred car but also financing and integrated insurance tailored to their resources and desires. The
financing offer also includes an option for credit pre-approval online. Even customers making cash vehicle purchases may
decide to use ŠKODA Insurance.
Operational Leasing for Individuals
In mid-2014, ŠkoFIN introduced to the market ŠKODA Without Worries operational leasing for retail customers
in co-operation with ŠKODA AUTO. Other Volkswagen Group brands followed. This product is sought mainly by customers
who prefer flexibility and comfort. Customers choose their desired model and financing variant according to the selected
range of services.
Operational Leasing and Fleet Services
ŠkoFIN’s fleet business fared well in 2014, as new business increased by 26.5% in comparison to 2013. ŠkoFIN has been
the leader in operational leasing on the Czech market for several years.
19
Volkswagen Dealer Network
With more than 250 points of sale across the Czech Republic, Volkswagen Group’s dealer network is ŠkoFIN’s
exclusive distribution channel.
Training
In February 2014, ŠkoFIN held a training day for selected Volkswagen Group dealers. It combined theoretical information
and practical model situations – all with a focus upon selling financial products. Based on suggestions from and in close
co-operation with Group brands, ŠkoFIN developed a training programme dedicated to point-of-sale management and
employee development. A pilot programme with Volkswagen brand passenger car dealers was successfully implemented.
In 2015, this programme will be expanded to include other Volkswagen Group brands.
Support for Changes in CI Standards
A new concept for Volkswagen Group dealerships has been defined within new Corporate Identity standards.
In connection with this, it is necessary to renovate individual dealerships. Just as last year, ŠkoFIN will support its business
partners with attractive financing offers that will allow them to implement the required changes.
Satisfaction Questionnaire
The satisfaction of its business partners is important for ŠkoFIN. The Company verifies satisfaction using the
regularly updated Dealer Satisfaction Questionnaire. Suggestions and positive reactions from our business partners have
been very beneficial. ŠkoFIN received 157 responses from 126 dealerships in 2014, and it continues to work with that
information. Constructive feedback can advance us even further.
20
Client Care
ŠkoFIN realises that a satisfied client is a return client, and therefore during 2014 we focused on
streamlining our services for our customers. We give priority to client suggestions we have received from
satisfaction questionnaires about our services. We are happy to be receiving feedback from an ever-increasing
number of clients whose satisfaction has been at a high level over the long term.
Social Networks
Social networks are omnipresent, and the young, upcoming generation in particular cannot imagine communicating
without them. ŠkoFIN is a modern dynamic company, and so Facebook, Twitter and Instagram have become channels
for everyday communication with our customers. We were very pleased with the rapid influx of fans and interesting
suggestions.
Simplifying and Accelerating Communication with Customers
In 2014, we focused on accelerating receipt and handling of client requests through such methods as replacing written
applications with telephone recordings and accelerating online handling of contract transfers, payment profile changes,
contract recalculations and insurance claim settlements.
For our main partner, the Volkswagen Group dealer network, we shortened the processes of request approval and service
invoice payment by increasing system support.
A necessary condition for further growth is automatic calculation of vehicles’ residual values and service and tyre service
prices, which are inputs for calculating offers to clients in operational leasing.
Regular Updating of Client Contacts
Existing customers are like family heirlooms at ŠkoFIN. As part of our regular communication, we focus in our annual letter
on updating the client contact database.
Efficient Client Centres Bring Us Even Closer to Our Customers
We participated during 2014 in a study comparing 23 client centres across sectors with the objective of focusing on new
market trends and comparing ourselves with others. The study’s findings gave us interesting proposals for improving
client services, and we are concentrating intensively upon those.
21
Process and Project Excellence
A ŠkoFIN objective is to continuously improve customer services. This can be achieved only by steadily
increasing productivity and efficiency of all processes within the Company. We therefore continued during 2014
in introducing Project and Operational Excellence.
Project Excellence
Project Excellence is focused on improving efficiency and performance of the project portfolio, which is mainly composed
of the Company’s strategic projects. Its objective is to deliver the projects within a defined term, quality and time using
the planned capacities.
In 2014, we connected project management with the new business analysis team’s activities and we set up the process,
including responsibilities. Rules for dividing strategic initiatives between small developments and projects are defined
unambiguously. Critical resources management, establishing quarterly objectives for individual project-team members,
and rewards for achieving these objectives are integral parts of this activity.
During 2014, we completed six strategic projects. The most important of these was the webCALC project,
the outputs from which were implementation of the ŠKODA Insurance product and of financing in ŠKODA AUTO’s online Car
Configurator. We continued during 2014 the NOIS project, the objective of which is to prepare for replacing the Company’s
main business information system.
Operational Excellence
Operational Excellence focuses on improving the efficiency of processes within the Company, the objective being
to standardise and automate processes while optimally utilising employee capacities, and especially in the Company’s key
processes.
The mapping of the Company’s main processes was completed in early 2014. A process map of the Company was created
containing individual process areas, processes and activities and those inputs, outputs, applications and responsible and
executing people connected to the activities. This map is used in projects and small developments, as well as in process
optimisation (LEAN).
In the second half of 2014, the process for insured damage events was optimised. This yielded 19% time savings after
introduction of the process changes. Once system changes will be introduced, savings of an additional 17% are expected.
The process of operational excellence never ends. It requires continuous activity and daily effort to improve
the Company’s operations.
22
Human Resources
ŠkoFIN’s human resources policy is substantially joined to Volkswagen Group’s strategy and to values affecting
its processes.
The Company aims to be among the best employers on the Czech market. In 2014, it participated in AON Hewitt’s Best
Employers survey. ŠkoFIN placed second in the Financial Institutions category, thus recording a significant improvement
in the motivation index since the previous survey.
ŠkoFIN will continue to develop programmes helping to strengthen employee motivation. Volkswagen Group conducts an
annual global assessment of the corporate atmosphere at its branches with a so-called mood barometer in the form of
standardised questionnaires. In this area, too, ŠkoFIN has seen significant improvement.
Recruitment
In 2014, ŠkoFIN intensified its work with students from the University of Economics, Prague. After completing their
studies, students who have worked at ŠkoFIN during their studies in various part-time administrative positions are
successfully being moved into open positions. During 2014, eight such graduates joined ŠkoFIN as full-time employees.
Assessment Centres have gradually and successfully been introduced to almost all positions through various efforts. This
has helped to improve the selection process and decrease potential turnover.
Remuneration
All ŠkoFIN employees receive performance-based remuneration. Each employee now has defined performance indicators
which are founded upon the planned objectives of the Company as a whole. Employees are paid quarterly bonuses based
on achieving these indicators. Company-wide business indicators are also reflected in the bonus amount. An additional
annual motivational component is Ambition, which comprises ŠkoFIN’s specific demanding objective for the given year.
If the defined objective is achieved, all employees are entitled to remuneration in excess of their quarterly bonuses.
Training and Career Growth
Another important area of HR policy is training, which is based both on the Company’s strategic needs and annual staff
dialogue with individual employees. For example, the IT department was reorganised in 2014 and the need for a specific
business analysis development programme was determined.
Supporting Co-operation and Improving Communication
In 2014, Human Resources undertook two extensive activities with the objective of improving interpersonal relations
in an entertaining and educational manner as well as resolving communication problems which are difficult for everyone.
23
Central Purchasing
The Central Purchasing Department has been attending to the acquisition of strategic goods and services
at ŠkoFIN since 2012. The team’s primary objective is to satisfy the purchasing requirements of all departments
in the required quality, quantity and time. The department aims to resolve problems with suppliers and
decrease costs and purchase risk even as it increases purchase quality, transparency and flexibility.
Central Purchasing employed in 2014 the new tool of electronic auctions, which enable even more efficient
competition for tenders among suppliers.
In 2014, Central Purchasing conducted approximately 80 tenders valued at almost CZK 91 million and realised savings of 18%.
Building Management was transferred to Central Purchasing at the end of 2014.
The activities of the Central Purchasing team and co-operation with specialised departments in submitting their
purchase requirements and during tenders are governed by internal rules and methodologies and are in accordance with
the principles of the Volkswagen Financial Services AG parent company.
24
IT Concept and Development Optimisation of IT Processes
In 2014, the Company’s development process was completely reworked to make changes carried out with IT even more
transparent for the Company’s management and also to ensure that this process is as integrated as possible with
business departments’ needs. Together with this change, the business analysis team was formed, representing
an interface between business and the development of required applications in accordance with the Company’s
strategy. This new process has already managed in its first year to bring about the first positive changes in the dynamics
of implementing small IT developments, and the increased capacity has successfully supported the implementation of
key projects.
New Business Information System
In 2014, ŠkoFIN took its first concrete steps towards selecting a new modern platform for supporting the Company’s key
processes. From the wide range of potential suppliers with verified references in the area of supporting credit and lease
contract administration, the selection was narrowed to just three candidates. The final supplier will be selected from
among these at the beginning of 2015.
In addition to being an efficient next-generation solution, this new business information system should bring greater
variety for further developing the product portfolio, accelerating the new product development cycle, reducing the
number of IT solution suppliers, simplifying IT architecture and increasing IT security.
Information Security
As part of our co-operation with parent company Volkswagen Financial Services AG, we initiated extensive activities
in 2014 to strengthen the Company’s security standards. We focused mainly on securing existing systems and
ensuring their continuous monitoring and rapid recovery from such unexpected problems as natural disasters. Our task
is to conform to strict security requirements pursuant to Czech and German banking legislation. Safety for of our clients
and their data is our highest priority.
25
Financial Situation in 2014
ŠkoFIN strengthened its leading position in financing new and used vehicles on the non-banking financing
market as it boosted its market share by 1.3 % in comparison to 2013. It remains the case that every third
Volkswagen Group brand vehicle sold in 2014 was financed through ŠkoFIN.
In a year-on-year comparison, the number of newly concluded contracts for financing new and used vehicles
at ŠkoFIN grew by 14% (39,756 cars in 2014 compared to 34,861 cars in 2013). The number of newly concluded contracts
exceeded the Company’s plan by more than a quarter.
New business in 2014 was dominated by credit financing and operational leasing. The proportion of credit financing
of new business reached 60%, operational leasing 39 % and financial leasing 1%.
In the refinancing area, ŠkoFIN continued in issuing short-term, CZK-denominated bonds on the local market through the
Commercial Papers programme of Volkswagen Group. These bonds present an attractive investment opportunity. They
are not publicly traded and are guaranteed by Volkswagen Financial Services AG. The funds thus obtained are used for
short-term refinancing with maturity up to 1 year. During 2014, ŠkoFIN issued bonds totalling CZK 5.3 billion. The volume
of the bonds in issue as at 31 December 2014 was CZK 3.1 billion.
Key 2014 Figures:
Number of new financing contracts: 39,756 (2013: 34,861)
Total business volume: CZK 12,307 million (2013: CZK 10,606 million)
Sales: CZK 5,594 million (2013: CZK 5,422 million)
Profit after tax: CZK 343 million (2013: CZK 366 million)
Total equity: CZK 4,753 million. (2013: CZK 4,411 million)
Average number of employees: 195 (2013: 198)
26
Outlook for 2015
Again in 2015, ŠkoFIN will continue to do everything it can to remain number one on the market while not only
achieving its own business and financial objectives but also meeting the expectations of its business partners
and end customers.
In co-operation with ŠKODA AUTO, ŠkoFIN launched a new service in January 2015 under the name ŠKODA Prepaid
Service. Customers using the service have regular service covered for up to 5 years and 150,000 kilometres driven.
ŠkoFIN plans to expand this service to include other Volkswagen Group brands.
ŠkoFIN plans in the coming year to offer brand insurance similar to ŠKODA Insurance also for other Volkswagen Group
brands. ŠkoFIN sees selling brand insurance as the correct course to follow. It is part of an integrated offer of financial
products and services which will make customers’ lives much easier. Along with additional insurance products, it offers
comprehensive vehicle protection.
In March 2015, ŠkoFIN will launch the first brand financing of motorcycles – Ducati Finance. Those interested will thus
have the opportunity to purchase Ducati brand motorcycles through credit or financial leasing.
Once again, 2015 will be characterised by Operational and Project Excellence. This is a necessary condition for managing
our wide-ranging business and related processes.
The Company is preparing to replace the business information system. In 2014, work was completed on analysing and
describing current business and administrative processes, and requirements beyond what is currently possible which the
new system must meet were defined. In the second half of 2014, a tender process was initiated to choose the supplier of
the new business information system.
ŠkoFIN will continue to focus on working with existing customers. It will again reach out to a selected customer
portfolio with an attractive financing offer. The Company is planning to expand this area even further using a complete
CRM concept.
The Company sees great sales potential in the small and medium-sized enterprise segment. It intends actively to enter
individual regions and extend co-operation with the Group’s dealers. Vehicle dealers are immensely important for ŠkoFIN,
owing to their knowledge of the regions, and ŠkoFIN puts great hope for them in the area of joint acquisitions.
27
The Board of Management regularly informed the shareholder about the company's situation,
business development and business policy over the reporting period. Based on written records and
oral information, the Board of Management was supervised by the shareholder.
The shareholder's meeting had the financial statements of ŠkoFIN s.r.o., Prague, as at 31 December
2014 at its disposal. Considering the accounting records, the auditors, PricewaterhouseCoopers
Audit, s.r.o., have audited the financial statements and given their unqualified opinion.
The shareholder's meeting agrees to the audited result and approves the financial statements
showing a CZK 342.9 million net profit.
Braunschweig, 31 March 2015
VOLKSWAGEN FINANCIAL SERVICES AG
28
Lars-Henner Santelmann
Norbert Dorn
Member of the Board of Management
Head of Region Europe East
to the shareholder of ŠkoFIN s.r.o.
We have audited the financial statements of ŠkoFIN s.r.o., identification number 458 05 369, with registered office at
Pekařská 6, Prague 5 (“the Company”) for the year ended 31 December 2014 disclosed in the annual report and issued the opinion
dated 27 January 2015.
Report on the Annual Report
We have verified that the other information included in the annual report of the Company for the year ended 31 December 2014 is
consistent with the financial statements which are included in this annual report. The Statutory Body is responsible for the accuracy
of the annual report. Our responsibility is to express an opinion on the consistency of the annual report with the financial statements
based on our verification procedures.
Auditor’s Responsibility
We conducted our verification procedures in accordance with the International Standards on Auditing and the related application
guidance of the Chamber of Auditors of the Czech Republic. Those standards require that we plan and perform the verification
procedures to obtain reasonable assurance about whether the other information included in the annual report which describes
matters that are also presented in the financial statements is, in all material respects, consistent with the relevant financial
statements. We believe that the verification procedures performed provide a reasonable basis for our opinion.
Opinion
In our opinion, the other information included in the annual report of the Company for the year ended 31 December 2014 is consistent,
in all material respects, with the financial statements.
The maintenance and integrity of the Company’s website is the responsibility of its Statutory Body; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may
have occurred to the annual report since it was initially presented on the website.
29
Report on Review of the Report on Relations
In addition we have also reviewed the accompanying report on relations between the Company and its controlling party and
between the Company and the other persons controlled by the same controlling party for the year ended 31 December 2014
(“the Report”). The completeness and accuracy of the Report is the responsibility of the Statutory Body of the Company.
Our responsibility is to express our conclusion on the Report based on performed review.
Scope of Review
We conducted our review in accordance with Audit standard 56 of the Chamber of Auditors of the Czech Republic. This standard
requires that we plan and perform the review to obtain limited assurance as to whether the Report is free of material factual
misstatement. A review is limited primarily to inquiries of Company personnel, analytical procedures and examination, on a test
basis, of factual accuracy of data. A review therefore provides less assurance than an audit. We have not performed an audit and,
accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying Report has not been properly
prepared, in all material respects, in accordance with the requirements of Article 82 of the Corporations Act.
31 March 2015
represented by partner
Ing. Petr Kříž FCCA
Statutory Auditor, Licence No. 1140
Note
Our report has been prepared in the Czech language and in English. In all matters of interpretation of information, views or opinions, the Czech version of our report takes precedence over
the English version.
PricewaterhouseCoopers Audit, s.r.o., Hvězdova 1734/2c, 140 00 Prague 4, Czech Republic
T: +420 251 151 111, F: +420 252 156 111, www.pwc.com/cz
PricewaterhouseCoopers Audit, s.r.o., registered seat Hvězdova 1734/2c, 140 00 Prague 4, Czech Republic, Identification Number: 40765521, registered with the Commercial Register
kept by the Municipal Court in Prague, Section C, Insert 3637, and in the Register of Audit Companies with the Chamber of Auditors of the Czech Republic under Licence No 021.
30
to the shareholder of ŠkoFIN s.r.o.
We have audited the accompanying financial statements of ŠkoFIN s.r.o., identification number 458 05 369, with registered office
at Pekařská 6, Prague 5 (“the Company”), which comprise the balance sheet as at 31 December 2014, the income statement,
statement of changes in equity and cash flow statement for the year then ended and notes, including a summary of significant accounting
policies and other explanatory information (“the financial statements”).
Statutory Body's Responsibility for the Financial Statements
The Statutory Body is responsible for the preparation of the financial statements that give a true and fair view in accordance with
Czech accounting legislation, and for such internal control as the Statutory Body determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with the Act on Auditors of the Czech Republic, International Standards on Auditing and the related application guidance of the
Chamber of Auditors of the Czech Republic. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
31
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31 December 2014, its
financial performance and its cash flows for the year then ended in accordance with Czech accounting legislation.
27 January 2015
represented by partner
Ing. Petr Kříž FCCA
Statutory Auditor, Licence No. 1140
Note
Our report has been prepared in the Czech language and in English. In all matters of interpretation of information, views or opinions, the Czech version of our report takes precedence over
the English version.
PricewaterhouseCoopers Audit, s.r.o., Hvězdova 1734/2c, 140 00 Prague 4, Czech Republic
T: +420 251 151 111, F: +420 252 156 111, www.pwc.com/cz
PricewaterhouseCoopers Audit, s.r.o., registered seat Hvězdova 1734/2c, 140 00 Prague 4, Czech Republic, Identification Number: 40765521, registered with the Commercial Register
kept by the Municipal Court in Prague, Section C, Insert 3637, and in the Register of Audit Companies with the Chamber of Auditors of the Czech Republic under Licence No 021.
32
Balance Sheet as at 31 December 2014
ASSETS
(CZK mil.)
Note
B.
Fixed assets
B.I.
Intangible fixed assets
5,489
4,428
475
(420)
55
66
50
4.
Royalties
38
(38)
0
0
7.
Intangible fixed assets in the course of construction
4
0
4
16
7,824
(2,390)
5,434
4,362
27
0
27
27
241
(226)
15
52
7,458
(2,164)
5,294
4,165
98
0
98
118
21,835
(905)
20,930
18,441
7,474
(272)
7,202
7,036
Tangible fixed assets
1.
Land
2.
Constructions
3.
Equipment
7.
Tangible fixed assets in the course of construction
4
5
1.
Trade receivables
5,714
(250)
5,464
5,100
7.
Other receivables
1,760
(22)
1,738
1,936
14,356
(633)
13,723
11,397
12,891
(617)
12,274
10,200
175
0
175
96
12
0
12
20
234
0
234
205
1,044
(16)
1,028
867
Short-term financial assets
5
0
5
8
1.
Cash in hand
3
0
3
6
2.
Cash at bank
2
0
2
2
93
0
93
88
C.III.
Short-term receivables
1.
Trade receivables
6.
Taxes-receivables from the state
7.
Short-term advances paid
8.
Estimated receivables
9.
Other receivables
C.IV.
D.I.
Prepayments and accrued income
5
8
1.
Prepaid expenses
57
0
57
53
3.
Accrued income
36
0
36
35
30,227
(3,715)
26,512
22,957
Total assets
33
(2,810)
51
Long-term receivables
D.I.
8,299
(382)
C.II.
C.IV.
Net amount
433
Current assets
C.III.
Net amount
Software
C.
C.II.
Provision
2013
3.
B.II.
B.II.
3
Gross amount
2014
Balance Sheet as at 31 December 2014
LIABILITIES AND OWNER'S EQUITY
(CZK mil.)
Note
A.
Equity
A.I.
A.III.
A.III.
865
865
Reserve fund and other reserves
257
257
1.
Legal reserve fund
110
110
2.
Statutory and other reserves
147
147
3,288
2,922
343
336
20,945
17,898
Profit for the current period
B.
Liabilities
4.
B.II.
7
106
96
Long-term liabilities
9
974
118
820
0
6
5
148
113
9,545
7,262
793
671
5,015
2,909
Liabilities – subsidiaries / controlling parties
5.
Long –term advances received
10.
Deferred tax liability
Short-term liabilities
9
1.
Trade payables
2.
Liabilities-subsidiaries / controlling parties
5.
Liabilities to employees
8
7
6.
Liabilities for social security and health insurance
4
4
7.
Taxes and state subsidies payable
2
2
8.
Received Short-term advances received
0
10
9.
Debentures and bonds issued
3,094
2,992
10.
Estimated payables
626
655
11.
Other payables
3
12
10,320
10,422
B.IV.
Bank loans & overdrafts
10
1.
Long-term bank loans
1,950
1,650
2.
Short-term bank loans
8,370
8,772
814
649
2
0
812
649
26,512
22,957
C.I.
C.I.
Other provisions
2.
B.III.
B.IV.
Net amount
Share capital
A.V.
B.III.
Net amount
4,410
Retained earnings
B.I.
2013
4,753
A.IV.
6
2014
Accruals and deferred income
1.
Accrued expenses
2.
Deferred income
Total liabilities and equity
8
34
Income Statement 1.0
for the year ended 31 December 2014
(CZK mil.)
Note
I.
Sales of goods
A.
Cost of goods sold
+
Gross profit
II.
1.
B.
B.
Sales of own products and services
12
12
Cost of sales
2014
2013
Net amount
Net amount
63
78
149
138
(86)
(60)
2,411
2,609
1,171
983
82
74
1.
Raw materials and consumables used
2.
Services
1,089
909
+
Added value
1,154
1,566
C.
Staff costs
201
146
150
108
48
34
C.
13
1.
Wages and salaries
3.
Social security and health insurance costs
4.
Other social costs
3
4
D.
Taxes and charges
33
36
E.
Depreciation and amortisation expense
1,368
1,528
III.
1.
Sales of fixed assets
1,942
1,622
F.
1.
Net book value of fixed assets sold
1,915
1,645
G.
Changes in operating provisions and complex prepaid expenses
(53)
83
IV.
Other operating income
320
261
H.
Other operating expenses
252
247
*
Operating result
(300)
(236)
X.
Interest income
858
851
N.
Interest expense
102
133
XI.
Other financial income
1
1
O.
Other financial expenses
9
10
*
Financial result
748
709
Q.
Tax on profit or loss on ordinary activities
105
107
Q.
11
1.
- current
70
183
2.
- deferred
35
(76)
**
Profit on ordinary activities after taxation
343
366
***
Net profit for the financial period
343
366
****
Net profit before taxation
448
473
35
Statement of Changes in Shareholder's Equity1.0
(CZK mil.)
Note
Share capital
As at 1 January 2013
Net profit for the current period
6
As at 31 December 2013
Net profit for the current period
As at 31 December 2014
6
Reserve fund
Other funds
Retained earnings
Total
865
110
147
2,922
4,044
0
0
0
366
366
865
110
147
3,288
4,410
0
0
0
343
343
865
110
147
3,631
4,753
36
Cash Flow Statement
1.0
(CZK mil.)
Cash flows from operating activities
Net profit on ordinary activities before tax
2014
2013
448
473
1,368
1,528
A.1
Adjustments for non-cash movements:
A.1.1
Depreciation of fixed assets
A.1.2
Changes in provisions
(53)
83
A.1.3
(Profit) / loss from disposal of fixed assets
(27)
23
A.1.5
Net interest (income)
(756)
(719)
A.1.6
Other non-cash movements
41
49
A*
Net cash flow from operating activities before tax and changes in working capital
1,021
1,437
A.2
Working capital changes:
A.2.1
Changes in receivables and prepayments and accrued income
(2,384)
(899)
A.2.2
Changes in short-term payables, accrued expenses and deferred income
248
(81)
A**
Net cash flow from operating activities before tax
(1,115)
457
A.3
Interest paid
(105)
(148)
A.4
Interest received
858
851
A.5
Income tax on ordinary activities paid
(136)
(362)
A***
Net cash flow from operating activities
(498)
798
(4,367)
(3,424)
1,942
1,622
(2,425)
(1,802)
Cash flows from investing activities
B.1
Acquisition of fixed assets
B.2
Proceeds from the sale of fixed assets
B***
Net cash flow from investing activities
Cash flows from financing activities
C.1
Changes in long- and short-term liabilities
C.1.1
Changes in bank loans
(315)
170
C.1.2
Changes in loans provided by related parties
2,926
(1,472)
C.1.3
Income from issued debentures and bonds
97
2,390
C***
Net cash flow from financing activities
2,708
1,088
Net decrease (-) in cash and cash equivalents
(215)
84
Cash and cash equivalents as at the beginning of the year
(415)
(499)
Cash and cash equivalents as at the end of the year
(630)
(415)
37
38
1. General Information
1.1 Introductory Information about the Company
ŠkoFIN s.r.o. (“the Company”) was incorporated on 10 August 1992 and has its registered office at Pekařská 6, Prague
5, postal code 155 00. The Company’s primary business activities are the purchase of assets for resale, sale (leasing of
cars) and the provision of consumer credit.
The Company updated its Articles of Association so that they are now fully governed by the new Corporations Act.
The Statutory Representatives as at 31 December 2014:
Joachim Ewald (appointed on 1 March 2014)
Authorised Signatories as at 31 December 2014:
Jana Gregorová
Radek Cizner
Radek Milštain
The Company is organised as follows:
Joachim Ewald
Secretary
Assistant Manager
Internal Auditor
Sales Steering Co-ordinator
Legal Department
Project Management / Lean Management
Finance Department
Marketing and Sales
Credit & Risk Management
Administration
Human Resources
During 2014, a new position of Sales Steering Co-ordinator was
established and the Strategic development Department was renamed
Project Management / Lean Management.
39
Information Technologies
2. Accounting Policies
2.1 Basis of Preparation
The financial statements have been prepared in accordance with generally accepted accounting principles in the Czech
Republic and have been prepared under the historical cost convention. Amounts are stated in CZK mil.
2.2 Intangible Fixed Assets
All intangible assets with a useful life longer than one year and a unit cost of more than CZK 40,000 are treated
as intangible fixed assets.
Purchased intangible fixed assets are initially recorded at cost, which includes all costs related with their acquisition.
The cost of intangible fixed assets includes technical improvements.
Intangible fixed assets are amortised by applying the straight-line method over their estimated useful lives.
A provision for impairment is created when the carrying value of an asset is greater than its estimated recoverable
amount. The estimated recoverable amount is determined based on expected future cash flows generated by the given
asset.
2.3 Tangible Fixed Assets
Acquired tangible fixed assets are initially recorded at cost, which includes all costs related with their acquisition.
For the purpose of depreciation, the tangible fixed assets are divided into two groups – fixed assets for which a lease
agreement was concluded with a customer (further divided into financial lease, operating lease and operating lease with
services) and fixed assets which are not the subject of the leasing business.
Tangible fixed assets are depreciated using the following methods:
» Accounting depreciation of tangible fixed assets subject to finance lease contracts is calculated on a daily straight line
basis from the date of contract commencement to the date of termination of the leasing contract;
» Accounting depreciation of tangible fixed assets subject to an operating lease contract is calculated so as to reduce the
cost of the fixed asset down to its estimated residual value on a straight-line basis from the first day of the month the
asset is delivered to the client over the lease term;
» Accounting depreciation of tangible fixed assets subject to an operating lease contract with services is calculated on
a straight-line, daily basis from the day the asset is delivered to the client over the lease term;
» Accounting depreciation of tangible fixed assets not subject to the lease business is calculated using the straight-line
method over the fixed asset’s estimated useful life.
The Company applies an annual depreciation charge of 11% – 50% (depending on the class of assets).
40
Land is not depreciated.
A provision for impairment is established when the carrying value of an asset is greater than its estimated recoverable
amount. The estimated recoverable amount is determined based on expected future cash flows generated by the given
asset. A provision for an operating lease is determined based on the estimated recoverable amount and on the expected
date of termination of the leasing contract.
Repairs and maintenance expenditures of tangible fixed assets are expensed as incurred.
Technical improvements of tangible fixed assets exceeding CZK 40,000 per item per year are capitalised.
Tangible fixed assets with a unit cost less than CZK 40,000 are treated as inventory and are expensed upon
consumption.
2.4 Receivables
Receivables are stated at nominal value less a provision for doubtful amounts. Irrecoverable receivables are written off
on the basis of a court decision or completion of bankruptcy proceedings against the customer. A provision for doubtful
amounts is created on the basis of an ageing analysis and individual evaluation of the credit worthiness of the customers.
Receivables from related parties have not been provided for.
2.5 Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, stamps and vouchers and cash in banks, including bank overdrafts.
Cash equivalents are short-term highly liquid investments that can be exchanged for a predictable amount of cash and no
significant changes of value over time are expected. Cash equivalents are, for example, deposits with a maturity of less
than 3 months from the date of acquisition and liquid debt securities traded in public markets.
2.6 Foreign Currency Translation
Transactions denominated in a foreign currency are translated and recorded at the rate of exchange ruling as at the
transaction date.
Cash, receivables and liabilities balances denominated in foreign currencies have been translated at the exchange rate
published by the Czech National Bank as at the balance sheet date. All foreign exchange gains and losses on cash,
receivables and liabilities balances are recorded in the income statement.
41
2.7 Revenue Analysis
Sales represent revenues from leasing services provided by the Company. Leasing revenues are accounted for
on a straight-line basis over the lease term from the date of commencement of the lease contract to the normal
or early termination of the lease contract. Contractual fees and penalties are recognised when enforced.
Revenues from provided consumer credits are recognised as interest income using the effective interest rate method
over the term of the contract depending on the total amount outstanding on the consumer credit provided.
Revenues from financing the dealer network are recognised in revenues using the effective interest rate method over
the finance period depending on the outstanding total amount of finance provided.
Factoring commission is accrued in revenues using the straight-line method on a daily basis.
2.8 Leases of Assets Used by the Company
The costs of assets held under operating leases are not capitalised as fixed assets. Lease payments are expensed evenly
over the life of the lease. Future lease payments not yet due are disclosed in the notes but not recognised.
2.9 Provisions
Provisions are recognised when the Company has a present obligation, it is probable that an outflow of resources will be
required to settle the obligation, and a reliable estimate of the amount can be made. All possible predictable risks and losses are
taken into consideration by the Company.
The Company recognises a provision for its future income tax payable which is presented net of advances paid for the
income tax. If advances paid are higher than the estimated income tax payable, the difference is recognised as a short-term
receivable.
The Company recognises a provision for employee bonuses, payoffs, court charges and penetration bonuses
for business partners.
42
2.10 Operating and Financial Results Disclosure
The operating result and the result from financing activities in the income statement are affected by the fact that
based on current accounting rules for entrepreneurs, interest income and expense are included in the result from
financing activities, even though they represent the Company’s main activities.
2.11 Deferred Tax
Deferred tax is recognised on all temporary differences between the carrying amount of an asset or liability in the balance
sheet and its tax base. A deferred tax asset is recognised if it is probable that sufficient future taxable profit will be available
against which the asset can be utilised.
2.12 Related Parties
The Company’s related parties are considered to be the following:
»
»
»
»
group companies;
parties, which directly or indirectly control the Company, their subsidiaries and associates;
parties, which have directly or indirectly significant influence on the Company;
members of the Company’s or parent company’s statutory and supervisory boards and management and parties close
to such members, including entities in which they have a controlling or significant influence.
Material transactions and outstanding balances with related parties are disclosed in Notes 13 and 14.
2.13 Cash Flow Statement
The Company has prepared a cash flow statement using the indirect method.
2.14 Changes of Accounting Policies and Corrections of Prior Period
Changes of accounting policies (inclusive of deferred tax impact) and corrections of errors arising from incorrect accounting
or unrecorded expenses and income in the prior periods are reflected in the balance sheet line "Restatements of retained
earnings", if these changes and corrections are material.
43
2.15 Subsequent Events
The effects of events, which occurred between the balance sheet date and the date of preparation of the
financial statements, are recognised in the financial statements in the case that these events provide further evidence
of conditions that existed as at the balance sheet date.
If significant events occur subsequent to the balance sheet date but prior to preparation of the financial statements
which are indicative of conditions that arose subsequent to the balance sheet date, the effects of these events are
disclosed but are not themselves recognised in the financial statements.
44
3. Intangible Fixed Assets
(CZK mil.)
1 January 2014
Additions / transfers
Disposals
31 December 2014
Cost
Software
407
26
0
433
Royalties
38
0
0
38
Intangible assets in the course of construction
16
0
12
4
461
26
12
475
Software
357
25
0
382
Royalties
38
0
0
38
395
25
0
420
Total
Accumulated amortisation
Total
Net book value
(CZK mil.)
66
1 January 2013
55
Disposals
31 December 2013
Cost
Software
394
13
0
407
Royalties
38
0
0
38
Intangible assets in the course of construction
12
4
0
16
444
17
0
461
Software
340
17
0
357
Royalties
38
0
0
38
378
17
0
395
Total
Accumulated amortisation
Total
Net book value
66
Additions to the cost of intangible fixed assets consist represented mainly of acquisitions.
Additions to accumulated amortisation of intangible fixed assets consist of represented by amortisation charges.
45
66
4. Tangible Fixed Assets
(CZK mil.)
1 January 2014
Disposals
31 December 2014
Cost
Land
27
0
0
27
291
1
51
241
6,778
4,414
3,734
7,458
118
0
20
98
7,214
4,415
3,805
7,824
238
28
49
217
Equipment
2,530
0
423
2,107
Total
2,768
28
472
2,324
Net book value before impairment provision
4,446
Buildings and other constructions
Equipment
Total
Accumulated depreciation
Impairment provision against fixed assets
Net book value
(CZK mil.)
5,500
84
42
60
66
4,362
1 January 2013
5,434
Disposals
31 December 20143
Cost
Land
27
0
0
27
373
0
82
291
8,154
3,465
4,841
6,778
143
1,300
1,325
118
8,697
4,765
6,248
7,214
272
35
69
238
Equipment
4,179
1,476
3,125
2,530
Total
4,451
1,511
3,194
2,768
Net book value before impairment provision
4,246
Equipment
Total
Accumulated depreciation
Impairment provision against fixed assets
Net book value
104
4,142
4,446
24
44
84
4,362
46
4. Tangible Fixed Assets
The net book value of tangible fixed assets subject to lease contracts amounted to CZK 5,396 mil. as at 31 December
2014 (2013: CZK 4,310 mil.).
The impairment provision against tangible fixed assets can be analysed as follows:
(CZK mil.)
31 December 2014
Impairment provisions against buildings
31 December 2013
9
2
Impairment provision against residual values on operating lease assets
11
19
Impairment provisions against equipment
46
63
Total amount of impairment provision against tangible fixed assets recognised
in the balance sheet in the column “Provision”
66
84
Repair and maintenance expenses are recognised in the period when they are incurred. During 2014, these expenses
amounted to CZK 193 mil. (2013: CZK 179 mil.).
Tangible fixed assets include also vehicles stemming from terminated operating lease contracts with a net book value
of CZK 20 mil. as at 31 December 2014 (2013: CZK 32 mil.). The Company created an impairment provision of CZK nil
(2013: CZK 1 mil.) against these assets. This provision is recorded in provisions against residual value risk.
Additions to the cost of tangible fixed assets consist mainly of acquisitions. Additions to accumulated
depreciation of tangible fixed assets are consist mainly of depreciation. Disposals of cost of tangible fixed assets are
consist mainly of disposals through sale. In 2014, the cost of disposal through sale amounted to CZK 3,674 mil. (2013:
CZK 4,798 mil.). The other reasons for disposals (mainly stolen and damaged cars) of tangible fixed assets in 2013 had an
acquisition cost of the fixed assets of CZK 71 mil. (2013: CZK 97 mil.).
The total amount of tangible fixed assets not included in the balance sheet and recognised directly as an expense
in the income statement (fixed assets whose unit cost is up to CZK 40,000) as at 31 December 2014 amounted to CZK
9 mil. (2013: CZK 10 mil.).
The Company does not use any assets held under finance lease contracts.
Fixed assets are not encumbered by any conditional transfer of ownership rights or collateral.
47
5. Receivables
(CZK mil.)
Trade receivables
31 December 2014
- current
31 December 2013
12,020
10,044
871
821
12,891
10,865
1,136
921
95
89
1,231
1,010
234
205
14,356
12,080
(633)
(683)
13,723
11,397
Long-term trade receivables
5,714
5,340
Long-term other receivable
1,760
1,963
Total long-term receivables
7,474
7,303
(272)
(267)
7,202
7,036
20,925
18,433
- overdue
Total trade receivables
Other receivables
- current
- overdue
Total other receivables
Estimated receivables
Total short–term receivables
Provision for doubtful receivables
Net book value of short-term receivables
Provision for long-term receivables
Net book value of long-term receivables
Total net book value of receivables
Receivables with maturity over 5 years as at 31 December 2014 amounted to CZK 587 mil. (2013: CZK 781 mil.).
Receivables from consumer credits are secured by the conditional transfer of ownership rights, the guarantor and pledged
collateral, respectively. Factoring receivables are secured by the related car.
Short-term trade receivables include mainly factoring receivables and the short-term portion of consumer credits
provided to customers. The Company provides a significant part of the financial services for new and used car
financing (receivables factoring) of the Škoda brand for the distribution network of ŠKODA AUTO a.s. in the Czech
Republic and financial services for the distribution network of Porsche Česká republika s.r.o. in the Czech Republic.
The total amount of receivables resulting from these services as at 31 December 2014 for ŠKODA AUTO a.s. amounts
to CZK 4,006 mil. (2013: CZK 3,088 mil.). The total amount of receivables resulting from these services provided as at
31 December 2014 for Porsche Česká republika s.r.o. amounts to CZK 2,853 mil. (2013: CZK 2,049 mil.).
48
5. Receivables
Tax receivables include advances for income tax amounting to CZK 127 mil. (2013: CZK 61 mil.) and VAT receivable
amounting to CZK 48 mil. (2013: CZK 36 mil.).
Other short-term receivables include mainly short-term loans provided to dealers as at 31 December 2014 of CZK 947 mil.
(2013: CZK 926 mil.). Penalties related to trade receivables as at 31 December 2014 amounting to CZK 13 mil. (2013: CZK
15 mil.) are also recognised in the balance sheet in short-term receivables.
Estimated receivables include mainly estimated revenues from insurance and sale support from the Group’s car brands.
Long-term trade receivables include mainly the long-term portion of consumer credit provided to customers as at
31 December 2014 amounting to CZK 5,713 mil. (2013: CZK 5,339 mil.). Other long-term receivables include mainly
long-term loans provided to dealers as at 31 December 2014 amounting to CZK 1,759 mil. (2013: CZK 1,962 mil.).
Interest income from short-term and long-term consumer credit and commissions from the factoring of receivables are
disclosed in Note 12.
Receivables are secured by promissory notes amounting to CZK 2,553 mil. as at 31 December 2014 (2013: CZK 3,152 mil.),
by the pledge of collateral of CZK 82 mil. as at 31 December 2014 (2013: CZK 98 mil.) and by ownership rights of CZK
7,661 mil. as at 31 December 2014 (2013: CZK 8,369 mil.).
Analysis of change in the provision for doubtful receivables:
(CZK mil.)
2014
2013
Opening balance as at 1 January
949
941
Charge for the year
771
300
Released during the year
(715)
(200)
Written off during the year
(100)
(92)
905
949
Closing balance as at 31 December
49
6. Equity
The Company is fully owned by VOLKSWAGEN FINANCIAL SERVICES AKTIENGESELLSCHAFT, incorporated in Braunschweig,
Germany, and the ultimate holding company is VOLKSWAGEN AG, incorporated in Wolfsburg, Germany.
The share capital of the Company of CZK 865 mil. was fully paid as at 31 December 2014 and 2013.
The reserve fund was created from the profit of the Company according to law.
At the date of preparation of the financial statements there was no resolution of the General Meeting to pay any dividend.
On 3 February 2014, the General Meeting approved the financial statements for 2013 and decided about the allocation of
profit earned in 2013 of CZK 366 mil. to retained earnings.
50
7. Provisions
(CZK mil.)
Opening balance as at 1 January 2013
Income tax
provision net
of advances
Provision for
employee bonuses
and payoffs
Penetration
bonuses
provision
Court cases
provision
Total
119
0
0
1
120
0
52
47
0
99
(119)
(4)
0
0
(123)
Closing balance as at 31 December 2013
0
48
47
1
96
Charge for the year
0
59
65
0
124
Used in the year
0
(65)
(48)
(1)
(114)
Closing balance as at 31 December 2014
0
42
64
0
106
Charge for the year
Used in the year
For an analysis of the current and deferred income tax, see Note 11 – Income tax.
Advances for income tax of CZK 186 mil. paid by the Company as at 31 December 2014 (as at 31 December 2013:
CZK 242 mil.) are netted off with the provision for income tax of CZK 59 mil. as at 31 December 2014 (as at 31 December
2013: CZK 181 mil.). The resulting receivable of CZK 127 mil. is as at 31 December 2014 (as at 31 December 2013: CZK 61 mil.)
presented within short-term receivables (see Note 5).
51
8. Accruals and Deferrals (CZK mil.)
31 December 2014
31 December 2013
Prepaid expenses
57
53
Accrued income
36
35
Total assets
93
88
2
0
Deferred income
812
649
Total liability
814
649
Accrued expenses
Accruals and deferrals relate mainly to individual leasing and credit contracts. As a result, these costs and revenues are
continually recognised in the Company’s income statement over the length of these contracts.
Prepaid expenses include mainly costs related to insurance of CZK 55 mil. as at 31 December 2014 (2013: CZK 49 mil.).
Deferred income includes the unamortised part of the leasing down payment of CZK 110 mil. as at 31 December 2014
(2013: CZK 166 mil.).
52
9. Liabilities
(CZK mil.)
Trade payables - current
31 December 2014
31 December 2013
793
671
5,015
2,909
17
35
3,094
2,992
626
655
9,545
7,262
Long-term borrowings (Notes 10 and 14)
820
0
Deferred tax liability (Note 11)
148
113
6
5
974
118
10,519
7,380
Short-term borrowings (Notes 10 and 14)
Other payables
Debentures and bonds issued
Estimated liabilities
Total short-term liabilities
Other long-term payables
Total long-term liabilities
Total short-term and long-term liabilities
The Company has no overdue liabilities as at 31 December 2014. Trade and other payables have not been secured by
any assets of the Company and do not have maturities longer than 5 years.
Trade liabilities include advances received for financial lease contracts amounting to CZK 6 mil. as at 31 December
2014 (2013: CZK 5 mil.) and related party liabilities due to factoring of receivables of CZK 459 mil. (2013: CZK 387 mil.)
(see Note 14).
As at 31 December 2014, the social security and health insurance liabilities amounted to CZK 4 mil. (2013: CZK 4 mil.).
The Company has no overdue tax liabilities.
Issued short-term bonds amounting to CZK 3,094 mil. as at 31 December 2014 (2013: CZK 2,992 mil.) are guaranteed by
Volkswagen Financial Services AG and are not publicly traded. Financial resources from issued bonds are used for short-term
refinancing with maturity within 1 year.
Estimated liabilities include estimated payables for services and supplies not yet invoiced and insurance relating to leasing
contracts not yet invoiced and unpaid interest.
53
10. Bank Loans and Other Borrowings
(CZK mil.)
31 December 2014
Bank overdrafts
31 December 2013
635
422
Other bank loans due within 1 year (incl. current portion of long-term loans)
7,735
8,350
Long-term loans due between 1 – 5 years
1,950
1,650
10,320
10,422
Other short-term borrowings (Notes 9 and 14)
5,015
2,909
Other long-term borrowings (Notes 9 and 14)
820
0
Total loans and borrowings
16,155
13,331
of which-short-term
13,385
11,681
of which-long-term
2,770
1,650
Total bank loans and overdrafts
None of the Company's loans or other borrowings have maturities longer than 5 years.
Interest rates charged on long-term loans newly drawn by the Company in 2014 did not exceed 1.37% p.a. (2013:
between 0.25% p.a. and 1.78% p.a.).
54
11. Income Tax
Analysis of the income tax expense:
(CZK mil.)
2014
2013
Current tax expense
59
181
Deferred tax expense
35
(76)
Tax charge from different periods
11
2
105
107
Total income tax expense
Current tax can be analysed as follows:
(CZK mil.)
2014
Net profit before taxation
2013
448
473
(658)
(94)
- non-tax deductible costs
478
573
- non-taxable income
(87)
(88)
- additional taxable income
129
89
Net taxable profit
310
953
59
181
0
0
59
181
Adjustments to tax base:
- additional tax deductible costs
Corporate income tax at 19%
Tax bonification according to § 35 article 1
Corporate income tax at 19% after tax bonification
Additional tax deductible costs relate mainly to accounting and tax depreciation differences of CZK 503 mil. (2013: CZK 66 mil.)
The deferred tax was calculated at 19% (the rate enacted for 2013 and subsequent years).
55
11. Income Tax
Analysis of deferred tax asset (+) / liability (-):
(CZK mil.)
31 December 2014
31 December 2013
Deferred tax liability arising from:
Accelerated tax depreciation of tangible fixed assets subject to lease
(225)
(194)
Total deferred tax liability
(225)
(194)
Other provisions
52
52
Other temporary differences
25
29
Total deferred tax asset
77
81
(148)
(113)
Deferred tax asset arising from:
Net deferred tax liability (-)
56
12. Revenue Analysis
Revenue from operating activities can be analysed as follows:
(CZK mil.)
Leasing revenues - domestic
Factoring commission income
Revenues from sale of cars - domestic
Other operating income
Total sales of products and services
Revenues from credit financing (interest income)
Other interest and financial income
Total
57
2014
2013
2,316
2,526
95
82
2,005
1,701
320
261
4,736
4,570
832
820
26
31
5,594
5,421
13. Employees
2014
2013
Average number of members of management
22
23
Average number of other staff
173
175
Total number of employees
195
198
The Company’s management includes the statutory representatives, the authorised signatories, the heads of the
Company’s departments and the heads of the Company’s sections.
(CZK mil.)
Management
Other staff
Total
2014
Wages and salaries
44
106
150
Social security costs
11
37
48
Other social costs
1
2
3
Total staff costs
56
145
201
25
83
108
4
31
35
2013
Wages and salaries
Social security costs
Other social costs
0
3
3
Total staff costs
29
117
146
Wages and salaries for 2014 include paid bonuses amounting to CZK 16 mil. Provision for these bonuses of CZK 27 mil.
was created as at 31 December 2013 (see Note 7).
Other transactions with the Company’s management are described in Note 14 – Related party transactions.
58
14. Related Party Transactions
(CZK mil.)
2014
2013
Revenues
Sales of services
- foreign
2
0
of which, parent company
0
0
- domestic
948
771
- domestic
63
66
1,013
837
- foreign
27
21
of which, parent company
25
20
- domestic
1,235
1,225
Purchase of goods
- domestic
2,132
1,783
Interest costs
- foreign
14
15
0
0
3,408
3,044
Sales of goods
Total
Costs
Purchase of services:
- domestic
Total
59
14. Related Party Transactions
The following related party balances were outstanding as at:
(CZK mil.)
31 December 2014
31 December 2013
Receivables
Porsche Česká republika s.r.o.
47
40
ŠKODA AUTO a.s.
81
49
AUTO Heller s.r.o.
86
0
719
615
0
1
933
705
109
115
ŠKODA AUTO a.s.
564
374
14
55
6
5
Volkswagen Bank GmbH (Notes 9 and 10)
2,650
2,651
Volkswagen Financial Services N.V. (Notes 9 and 10)
3,187
259
2
0
Total
6,532
3,459
Other (CZK mil.)
2014
2013
46,543
36,382
6 ,454
5,509
Porsche Inter Auto CZ spol. s r.o.
SCANIA CZECH REPUBLIC s.r.o.
Total
Payables
AUTO Heller s.r.o.
- purchases - domestic
- sales - domestic
The loans and borrowings payable bear interest at market interest rates. Trade receivables and payables from these
transactions arose under the same terms and conditions as with unrelated parties.
Cars under the Company's ownership with an acquisition cost of CZK 32 mil. are made available for the business and
private use of the statutory representatives, the authorised signatories, and the heads of the Company’s departments as
at 31 December 2014 (2013: CZK 28 mil.).
In addition to the aforementioned remuneration and benefits, there was benefit in the form of financial contribution for
fuel provided to the Company’s statutory representatives, the authorised signatories and the heads of the Company’s
departments in 2014. To a statutory representative of the Company there was benefit in the form of financial contribution
for housing and flight tickets. Except for the aforementioned remuneration and benefits, there was no other consideration
provided to the Company’s statutory representatives, the authorised signatories and management in 2014 and 2013.
60
15. Fees Paid and Payable to the Audit Company
The total fees paid and payable for services performed by the audit company PricewaterhouseCoopers Audit, s.r.o. and
its related parties:
(CZK mil.)
2014
2013
Statutory audit of financial statements and audit of VW Group reporting
(PricewaterhouseCoopers Audit, s.r.o.)
2
3
Legal services (PricewaterhouseCoopers Legal s.r.o.)
0
1
Total fees paid and payable to the audit company and its related parties
2
4
16. Commitments
The Company has the following contractual rental commitments:
(CZK mil.)
2014
2013
Current within one year
17
14
Due after one year but within five years
13
29
Total commitments in respect of operational leases
30
43
Due to a credit product for dealers, the Company has a commitment which corresponds to the undrawn part of a credit
limit amounting to CZK 104 mil. as at 31 December 2014 (2013: CZK 129 mil.).
17. Contingent Assets
In 2014, the Company received a bank guarantee of CZK 7 mil. (2013: CZK 5 mil.). The Company does not expect
to utilise this guarantee.
61
18. Contingent Liabilities
The management of the Company is not aware of any significant unrecorded contingent liabilities as at 31 December 2014
and 2013.
19. Cash Flow Statement
Analysis of cash and cash equivalents disclosed in the cash flow statement:
(CZK mil.)
31 December 2014
31 December 2013
Cash on hand and in transit
3
6
Cash at bank
2
2
- less blocked accounts in banks (excluded from cash equivalents)
0
(1)
Overdraft of current accounts included in Short-term bank loans
(635)
(422)
Cash and cash equivalents
(630)
(415)
20. Subsequent Events
No events have occurred subsequent to year-end that would have a material impact on the financial statements as at
31 December 2014.
27 January 2015
Dipl. Kauf. Joachim Ewald
Ing. Jiřina Tapšíková, MBA
62
Report on Relations
The Statutory Representatives of ŠkoFIN s.r.o., with its registered office at Pekařská 6, 155 00, Prague 5,
identification number: 45805369, registered in the Commercial Register maintained by the Municipal Court in
Prague, Section C, File 11881 (in this Report also the “controlled company” or the “Company”), have
prepared the following Report on Relations pursuant to Section 82 of Act No. 90/2012 Coll., the Corporations Act
(the "Corporations Act”), for the accounting period of the calendar year 2014 (the “Relevant Period”).
1. Structure of Relations
1.1
According to the information available to the Statutory Representatives of the Company acting with due managerial care,
for the whole of the Relevant Period, the Company formed a part of a concern in which the controlling party is VOLKSWAGEN
AG (the “Concern”). Information on the entities forming part of the Concern is stated as at 31 December 2014 according to
the information available to the statutory body of the Company acting with due managerial care. The structure of relations
within the Concern is graphically illustrated in Annex No. 1.
1.1.1 Controlling Party
VOLKSWAGEN AG, with its registered office at Wolfsburg, Germany, (in this Report also the “Controlling Party“) indirectly
controls the Company through the company VOLKSWAGEN FINANCIAL SERVICES AG which was the sole shareholder of the
Company in the Relevant Period.
2. Role of the Company in the Concern
The Company provides financial services connected in particular with the financing and support of the Concern‘s
vehicles.
3. Methods and Means of Control
The Controlling Party indirectly controls the Company through the company VOLKSWAGEN FINANCIAL SERVICES AG which
was the sole shareholder in the Relevant Period. The control of the Company occurs in particular through the decisions
at the General Meeting.
63
Report on Relations
4. Mutual Contracts within the Concern
4.1
Contracts entered into between the Company and the Controlling Party that were effective and valid in the Relevant period:
In the Relevant Period, a Contract on business co-operation with the Controlling Party was valid and effective.
4.2
Contracts entered into between the Company and the other parties controlled by the Controlling Party that were effective
and valid in the Relevant Period:
In the Relevant Period, the following contracts entered into with the other parties controlled by the Controlling Party were
valid and effective:
Contractual counterparty
Contracts
Contracts on business co-operation
Contracts on providing services
Factoring contract
Agreement on providing target commissions
ŠKODA AUTO a.s.
Contracts on business co-operation
Car leasing
Subleasing contract
Factoring contract
AUTO Heller, s.r.o.
Real estate leasing contract
SCANIA CZECH REPUBLIC s.r.o.
Car leasing
Scania Finance Czech Republic, spol. s r.o.
Car leasing
Porsche Central and Eastern Europe s.r.o.
Car leasing
MAN Truck & Bus Czech Republic s.r.o.
Car leasing
Porsche Engineering Services, s.r.o.
Car leasing
Volkswagen Bank GmbH
Credit facility agreement
Volkswagen Financial Services N.V.
Credit facility agreement
Loan agreement
64
Report on Relations
5. Legal Acts Made at the Instigation of or in the Interest of the Controlling Party or Other
Parties Controlled by the Controlling Party
During the Relevant Period, the Company did not enter into legal acts or other measures in the interest, or at the instigation
of, the Controlling Party or other parties controlled by the Controlling Party, which would involve assets exceeding in value
10% of the Company‘s equity reported in the latest financial statements.
6. Assessment of a Detriment and Its Compensation
No detriment occurred to the Company on the basis of the agreements entered into in the Relevant Period between the
Company and other entities from the Concern, other acts or measures which were implemented in the interest, or at the
instigation of, of such entities by the Company in the Relevant Period.
7. Evaluation of Relations and Risks within the Concern
7.1 Evaluation of Advantages and Disadvantages of Relations within the Concern
In particular, the following advantages arise from the participation within the Concern to the Company: The Concern is
a world-leading producer possessing a strong brand, strong financial background and access to the financing from which
the Company benefits in particular when during the entering into the transactions with its suppliers, customers and during
negotiations with banks and other providers of credit facilities.
No disadvantages have arisen to the Company from the participation within the Concern.
7.2 No Risks have Arisen to the Company from the Relations within the Concern.
65
31 March 2015
31 March 2015
Dipl. Kauf. Joachim Ewald
Ing. Jiřina Tapšíková, MBA
Report on Relations
Annex No. 1: The Ownership Structure of ŠkoFIN s.r.o.
Volkswagen AG
100%
VOLKSWAGEN FINANCIAL
SERVICES AG
100%
ŠkoFIN s.r.o.
100%
controlling influence
Volkswagen Finance
Luxemburg S.A.
Porsche Holding
100%
controlling influence
ŠKODA AUTO a.s.
Porsche Česká republika s.r.o..
Porsche Inter
Auto CZ spol. s r.o.
66

Annual Report 2014 - Volkswagen Financial Services

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