ANNUAL REPORT 2009
CONTENTS
04 Company Profile 06 Group Structure 07 Chief Global Company Guidelines 08 Top Management 09 Company Organizational Structure 10 Awards in 2009 12 Events in 2009 14 Products and Services 20 Fleet Services 22 Customer Care 23 Collaboration with the Dealer Network 24 Human Resources Policy 25 Sponsorship and Charitable Activities 26 Financial Situation 27 Long-term Strategy 28 Shareholder’s Meeting Report 29 Financial Part 30 Independent Auditors’ Report on the Annual Report 32 Independent Auditors’ Report on Financial Statements 34 Balance Sheet 35 Income Statement 36 Statement of Changes in Shareholder’s Equity 37 Cash Flow Statement 38 Notes to Financial Statements 64 Report on Relationships between Related Parties
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COMPANY PROFILE
Since its establishment, ŠkoFIN has maintained continuous growth and successful performance on the Czech leasing and finance markets. Despite the setback in the market as a whole in 2009, ŠkoFIN reinforced its leading position in financing passenger and commercial vehicles and also led the category of business credits from nonbanking institutions for the first time. The 700000th contract was concluded in early November 2009, evidencing a well-chosen strategy, consistent positive results and a growing number of satisfied customers.
Lease and credit financing play an essential role in vehicle purchases. Fleet financing using operational leasing is also growing in importance. ŠkoFIN, a member of the VW Group, is a major force in this segment, supporting the sale of new and used VW vehicles and increasing customer loyalty and satisfaction. A key to this success is close cooperation with the brands (VW, Škoda, SEAT and Audi), as well as with the VW dealer network.
One of the most important factors in ŠkoFIN’s success is its well-prepared product portfolio: 1. Lease financing, in which “just a bit of money is enough for the customer to lease an expensive car”. Often used to finance new vehicle purchases using a simple, quick procedure, variable residual value and a range of attractive discounts on things like insurance. 2. Credit financing, allowing customers to purchase a car for just a portion of the sticker price, with the customer becoming the car’s owner upon signing the contract. In credit financing, too, ŠkoFIN offers a selection of attractive discounts, as testified to by its First Prize in the 2009 Zlatý Měšec competition (as Best Financial Institution 2009) in the Credit Company category. 3. Operational leasing, with the option of choosing the lease term. This service is also offered in Full Service Lease and Fleet Management variants. In 2009, the ŠkoFIN Operational Leasing Online product won first place in the Automotive Fleet Awards (Corporate Car of the Year) in the Fleet Financing category. 4. Factoring is a modern and flexible method of financing based upon the assignment of accounts receivable. By selling its accounts receivable, the customer/seller of the vehicles becomes entitled to finance up to 100% of their value. ŠkoFIN strengthens the financial stability of VW dealers using this product, as well. 5. Supplementary products form a no less important part of ŠkoFIN’s product portfolio. The client centre offers current customers products such as consequential loss insurance, general loans and other customer care services.
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ŠkoFIN’s ambition is satisfied, worry-free customers who value mobility and services tailored to their financial means. That’s why our products are offered in service packages which combine financing, insurance services and servicing. Both the market and our customers appreciate the quality of our product offering, something attested to by the number of awards we won in 2009 (Online Operational Leasing, Audi 0% A3 and A4, Škoda Octavia 0% VAT and others). Under the ŠkoFIN Fleet Services brand, ŠkoFIN offers services designed for fleet customers and bulk purchasers: lease financing, credit, operational leasing, full service leasing and car fleet management. In addition to these services, ŠkoFIN Fleet Services offers comprehensive analysis and consultation to help clients better orient themselves in matters to do with financing, especially as concerns optimizing car fleet costs.
Our well-prepared strategy, product portfolio and the pro-customer approach of ŠkoFIN employees has contributed to the growth of the company as well as its dealers, strengthening the loyalty and satisfaction of our customers along the way. Research on the position and perception of ŠkoFIN (done by GfK Czech, s.r.o. during the second half of 2009) has proven the correctness of ŠkoFIN’s marketing and business goals, the attractiveness of its offering and pro-customer approach, as well as demonstrating its widespread brand perception and knowledge compared to competitors. More information is available at www.skofin.cz.
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GROUP STRUCTURE
ŠkoFIN, s.r.o. (a leading player in the Czech lease and financial markets since its establishment in 1992) is a 100%-owned subsidiary of Volkswagen Financial Services AG, which was already doing business and making history in 1948, as the predecessor company to today’s gigantic “Volkswagen Versicherungsdienst GmbH” (VVD). The company, headquartered in Wolfsburg, provided motor vehicle insurance and customer care in the event of loss. In 1966 “Volkswagen Leasing GmbH” was established, as the first German leasing company to specialize in financing motor vehicles. In 1973, the company was renamed “VW Kredit Bank GmbH” and expanded its customer and dealer portfolio in a 1975 merger with Audi. Since November 1990, V.A.G Bank GmbH has been issuing Volkswagen/Audi credit cards and was the first “Autobank” in
Germany to issue EUROCARD and VISA credit cards. In 1994, the product line was extended further to offer general-purpose loans and introduce the Autokredit product, offering vehicle financing with low monthly instalments. Volkswagen Financial Services is gradually expanding into foreign markets, keeping step with Volkswagen’s international presence and becoming a joint stock company. In 1995, VW Bank GmbH became a subsidiary of Volkswagen Financial Services AG which, at that time, was a 100%-owned subsidiary of Volkswagen AG. Currently, Volkswagen Financial Services AG has more than EUR 57.3 billion in assets and more than 6600 employees, making it the largest financial services provider tied to automobile sales in the world.
VOLKSWAGEN Automotive Division
Financial Servises Division
Škoda Volkswagen Volkswagen Commercial Vehicles SEAT Audi Bentley Bugatti Lamborghini Scania
Volkswagen Financial Services AG Europe, North and South America Asia/Pacific Region (ŠkoFIN s.r.o., a 100%-owned subsidiary of VW FS AG) Financial Services USA, Canada and Spain Scania Financial Services
Remaining Companies
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CHIEF GLOBAL COMPANY GUIDELINES
CUSTOMER NEARNESS
RESPECT
We offer convincing financial services that suit the individual needs, possibilities and opportunities of our customers. Our goal is to take care of our customers’ needs comprehensively, quickly and efficiently. To do so, we work hand-in-hand with our external partners.
Buying a new automobile is an important event in the lives of our customers. We help make it possible for them by preparing custom-made mobility solutions. Key for us is a friendly approach and effective communication within ŠkoFIN and especially with our customers themselves.
MAXIMUM PERFORMANCE RENEWABILITY Our intelligent services provide financial flexibility for our customers. Winning results only come when we demand the most of ourselves. That’s why our emphasis on employee qualifications is key. It allows us to make sure that our company and our dealers are providing customers with the best professional financial counselling. RESPONSIBILITY The low exposure and loss ratio in our customer receivables show the care and attention we devote to devising financial plans in lending money to our customers. When unexpected events occur which might prevent customers from fulfilling their obligations under the financial plan, we work together with the customer to find an appropriate solution.
Our customers can rely on our products and services, reflecting our extensive experience. Our know-how will continue to provide innovative mobility solutions, flexible financing and attractive prices for the future. ADDED VALUE The value we provide our customers centres on mobility, including financing and vehicle operation. In many cases, this mobility comes as the result of our financial services products. We at ŠkoFIN also get value in return from our customers, in terms of their satisfaction. SUSTAINABILITY We try to create long-term partnerships with our customers. Their satisfaction and our long-term success depend upon fair dealing and being able to look the customer in the eye. Customer satisfaction and company success are values that guide us in everything we do!
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TOP MANAGEMENT
ŠkoFIN, s.r.o. was incorporated on 10 August 1992, with headquarters in Prague 5, at 6 Pekařská Street. Its business focus is the purchase of goods for resale, the sale (automobile leasing) and provision of consumer loans. As of 31 December 2009, the company’s statutory body was composed as follows: Jiřina Tapšíková
Stefan Rasche
Statutory representative
Statutory representative
JIŘINA TAPŠÍKOVÁ
STEFAN RASCHE
Jiřina Tapšíková joined the company in 1993 and, until 2003, was in charge of the Economic Department and served as legal counsel for ŠkoFIN. Since 2003 until 2005, she directed the Turkish subsidiary of VW FS AG in Istanbul. On 1/1/2006, Ms. Tapšíková assumed the function of statutory representative of ŠkoFIN, s.r.o., responsible for the company’s financial and administrative operations. Her charge includes the Controlling/ Credit and Risk Management departments, the Economic Department/Treasury, IT department, the Legal Department and Human Resources Department. She also serves as Compliance Officer.
Stefan Rasche became a statutory representative of ŠkoFIN on 1/8/2008. Before joining the company, he was responsible for economic/administrative matters at Volkswagen Bank Polska S.A. Between 1986–90, he worked for Deutsche Bank, where he was responsible for commercial finance. Beginning in 1990, Mr. Rasche occupied various positions within Volkswagen AG. In 1999-2000, he was head of the Treasury Department at Škoda Auto in Mladá Boleslav in the Czech Republic. Currently, Mr. Rasche is responsible for sales and marketing at ŠkoFIN, including the Marketing Department, the Sales Department, the Administration Department, the Corporate Finance Department and the Contract Approvals Section.
AUTHORISED SIGNATORY Martin Kofroň Jana Gregorová Dušan Fornůsek
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COMPANY ORGANIZATIONAL STRUCTURE
As of 31 December 2009, the company is divided as follows: Jiřina Tapšíková – Statutory representative
Stefan Rasche – Statutory representative
Secretary Compliance Officer Economic Department Controlling/Credit & Risk Management Legal Department Human Resources Department Information technologies
Assistant Manager of the company Marketing Corporate Finance Department Sales Contract Approvals Administration
As of 31 December 2009, the company had the following departments and managers: Jiřina Tapšíková – Statutory representative Compliance Officer Economic Department/Treasury Controlling/Credit & Risk Management Information Technology Human Resources Department Legal Department
Václav Barbořák Jana Gregorová Yvonne Schröder Pavel Švec Eva Znamenáčková Martin Kofroň
Stefan Rasche – Statutory representative Marketing Department Corporate Finance Department Sales Administration Contract Approvals
Roman Vavroň Dušan Fornůsek Ondřej Kozák Roman Bukač Martin Kofroň
Changes in organizational structure in 2009: On 30/6/2009, Oliver Schmitt, who served as statutory representative and spokesman for ŠkoFIN management and Regional Manager of VW FS AG for Eastern Europe (Czech Republic, Poland, Russia, Slovak Republic), terminated his engagement in the Czech Republic. Mr. Schmitt accepted a new offer within VW FS AG. His responsibilities at ŠkoFIN were divided as of 1/7/2009 between Mr. Rasche and Ms. Tapšíková. Effective 1/10/2009, the Strategic Marketing Department was incorporated into the Marketing Department. Effective 1/12/2009, the Credit Management Department was incorporated into the Controlling/Risk Management Department.
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AWARDS IN 2009
Awards in 2009:
1st place in the Credit Institution category – Best Financial Institution in 2009
1st place in the Best Internet Design category for the Škoda Plus project
1st place in the Fleet Financing category for the Online Operational Leasing product
2nd place – Stříbrná Koruna in the Lease category for the Audi 0% A3 and A4 product
1st place in the Credit Institution category – Best Financial Institution in 2009. 10
3rd place – Bronzová Koruna in the Corporate Lease category for Škoda Octavia 0% VAT
3rd place in the Financing and Auxiliary Financing Institutions category
4th place in the Best Financial Institution 2009 category
3rd place in the Financing and Auxiliary Financing Institutions category. 11
PRODUCTS AND SERVICES
As the main player in the automotive leasing and finance markets, ŠkoFIN offers its customers products and services targeted at the purchase of new and used automobiles of group brands and others. Our clients, whether they be private individuals, businesses or corporations, are able to choose the financial products that best suit their needs, including packages combining financing, insurance and servicing.
In 2009, ŠkoFIN brought a number of attractive products to market. These are some of the most significant:
ŠKODA FINANCE DEALS In 2009, we put together an attractive discount aimed at private customers entitled Škoda Octavia for CZK 4,990 a month. The offer was part of the the Škoda Finance program and featured advantageous financing using credit or instalment leasing at a guaranteed amount and low interest rates for the entire payment term. The monthly instalment payment also included a good deal on liability insurance, comprehensive coverage and windscreen insurance from Česká pojišťovna. The offer also included the ŠkoFIN Asistent service: administrative and legal assistance free of charge. Another offer was Škoda Octavia – 0% VAT, targeting businesses and corporations reacting flexibly to changes in tax law. This credit offer allowed customers to obtain a new Škoda automobile with an interest rate of only 4.55%, a government rebate of the 19% VAT paid on the purchase price and the option for a two-year
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accelerated write-off from the tax base. Payments were fixed throughout the period of financing. The monthly instalment payment also included a good deal on liability insurance, comprehensive coverage and windscreen insurance from Česká pojišťovna. ŠkoFIN Asistent, offering administrative and legal assistance free of charge, was also part of the offer. Especially for private customers, ŠkoFIN prepared the Škoda Fabia and Roomster – Free Air-Conditioning product. Private and corporate customers were able to drive away with a new Fabia, Fabia Combi or Roomster in 2009 at a price discount (e.g., a Škoda Fabia financed using the discount cost CZK 219,900 with free air conditioning included). Packages varied according to the model chosen and level of equipment. The discount once again included comprehensive insurance coverage from Česká pojišťovna and administrative and legal assistance free of charge under the ŠkoFIN Asistent program.
VW FINANCE OFFERS In 2009, the VW “Give 19% – Get 19%” credit product was custom designed primarily for small businesses and VAT payers needing a commercial or passenger vehicle for business purposes. After putting 19% down on the car price, the customer immediately became owner of the vehicle. VAT of 19% on the price of the car was rebated by the government (starting 4/2009, on personal vehicles, as well), with businesses even being able to figure depreciation and accrued interest into their costs. The flexible contract conditions included liability insurance and comprehensive coverage at a good price. ŠkoFIN Asistent, offering administrative and legal assistance free of charge, was also part of the offer.
Another highlight was a 0% INCREASE offer on Golf, Polo and Touran passenger cars and Crafter commercial vehicles. The offer included an option for three – or four-year leases with zero interest and a two – or three-year loan for businesses, also featuring zero interest. The down payment was set at a minimum 35% but the customer paid nothing extra for the entire term, just the price of the vehicle and insurance at good rates. To support retail financing, ŠkoFIN prepared the attractive Volkswagen BONUS product. Customers were able to choose one motoring or travelling bonus for every contract concluded: 1) a CCS card worth CZK 20,000 for fuel, 2) a set of winter tires, 3) GPS navigation and 4) a free choice of additional equipment and accessories, in cooperation with a participating VW dealer.
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SEAT FINANCE OFFERS In cooperation with a SEAT importer, ŠkoFIN continued to offer attractive financing under the “SEAT credit – Car for a Half” program in 2009, as well. Interest-free credit of one year was made available to customers (private individuals and businesses) who saved enough to cover half the price of any SEAT model (one-third would also suffice). As funds were tapped, customers paid nothing but the insurance instalments (e.g., for a SEAT Ibiza, the amount was CZK 813 per month, depending on the level of insurance selected). The remaining amount was payable in one year, but even then customers had the choice of paying the remainder of the price by instalment over the succeeding 6 to 48 month period. In 2009, the existing SEAT Advantage and Advantage Plus discounts within the SEAT Finance product line were extended to include a credit version covering all SEAT models. After agreeing with a SEAT dealer, customers were able to obtain extensive discount equipment packages or money off on the purchase of a new car.
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For the new SEAT Exeo model, ŠkoFIN prepared a special financing offer – SEAT Exeo with the CCS card – in both a lease and credit version. In addition to reasonable financing (with a term selectable from 24 to 72 months depending on type of financing and a down payment ranging from 10% to 60% of sticker price) and a good deal on insurance from Česká pojišťovna (liability insurance and comprehensive coverage with fixed instalments guaranteed for the entire contract term), this discount gave customers a chance at a bonus – a CCS card worth CZK 10,000 for fuel, refreshments or car washes.
AUDI FINANCE OFFERS Audi’s year was marked in 2009 by 0% increase offers. The original Audi Leasing/Credit 0% A3 offer with Kooperativa was supplemented by the Audi Leasing/ Credit 0% A4, gradually becoming available for all new vehicles in the model line. Both discounts included down payments starting at 30% for three years and 40% for four years, with the customer paying a total amount identical to leasing or credit as under cash payment, and with a good deal on insurance to boot. Later the offer was expanded to include the Audi Leasing/Credit 0% A6 product, once again offering a 2-year 0% increase with a down payment starting at 40% for all cars in the model line. Tax changes and a VAT deduction for personal cars were one reason for introducing the new Audi Leasing/ Credit A – 19% product for all vehicles in the A3, A4, A5 and A6 lines. Highly variable financing with broadly affordable payments thanks to low interest and insurance rates (from Allianz and Česká pojišťovna) made the offer available for all customers. A credit variant for businesses and corporations included an option for VAT deductions on any vehicle with a 19% down payment – “Put 19% Down and Get A 19% Refund from the Government” (the VAT on the sticker price).
A similar product featuring low interest and insurance rates was available throughout the year labelled Audi Leasing/Credit Q, and was available for the Q5 and Q7 models, as well. In addition to price discount offers, a new product with high added value for customers was introduced: Audi Leasing/Credit GAP. With this product, customers buying automobiles under good conditions get free ŠkoFIN GAP insurance for the term of the lease or credit contract (up to 5 years). The insurance covers the difference between the price of the car and the normal insurance payout if the car is stolen or totalled, including any deductible under the vehicle’s comprehensive insurance coverage. The discount further included a low interest rate and a complete package of liability insurance and comprehensive coverage at good rates from Allianz, along with administrative and legal help under the ŠkoFIN Asistent service free of charge.
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USED CAR OFFERS In recent years, ŠkoFIN has begun to substantially expand its services for used car sales. The company supports their sale under auto-plus and ŠkodaPlus programs with its own financial services offering in the “Used Car Financing” product line. The ŠkodaPlus program saw it’s number of certified business representatives grow from 15 to 27 in 2009, at 37 sales outlets. We put together a special discount in 2009 in the Used Car product line featuring a one-year warranty as a bonus. The offer was tailored for customers wishing to buy a quality used car with a warranty from experts. All a customer needed was to make use of financing at good rates from ŠkoFIN under the “ŠkodaPlus Guarantee” program at Škoda Plus dealers or the “auto-plus Guarantee” program at auto-plus dealers. The bonus applied to used cars no older than five years with no more than 150,000 km mileage. Each customer also received administrative and legal help from the ŠkoFIN Asistent program free of charge. ŠKOFIN POINT Annual pilot operation of a ŠkoFIN Point franchise was initiated in Ústí nad Labem as part of the Direct Mediation project in June of 2009. The ŠkoFIN Point pilot project is designed to test the potential for a new
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sales channel based upon collaboration with regionally established exclusive representatives for financial services from ŠkoFIN, s.r.o. AUTOFIN OFFERS Financing Nongroup Brands with Selected Dealers The AutoFIN discount product line for financing non-group automobiles continued in 2009 with the successful AutoFIN Leasing OPEN discount, enhancing motivation for automobile purchases with a price discount and low interest rates combined with excellent prices on insurance. INSURANCE Lease and Credit Add-On Product An option for automobile insurance at good rates (comprehensive coverage and liability) which may be paid monthly using lease or credit financing instead of via a lump sum payment is already a natural part of ŠkoFIN’s offering. Automobiles used by individual customers become part of the extensive ŠkoFIN vehicle fleet and the customer enjoys considerable benefits unaffordable under individual insurance. Interested customers can also obtain insurance packages with an option to insure their payment obligations – socalled “PPP” insurance, which protects the customer against loss of income – as well as administrative and
Financování lehké jako pírko
Stejně lehké budou i Vaše splátky
Dotované úročení nebo dokonce 0% navýšení pro zvýhodněné pořízení Vašeho nového vozu.
Se ŠkoFINem teď skoulíte nákup nového automobilu i zimních kol – kompletní sadu vám přidáme zdarma jako bonus. Postavili jsme pro vás nabídku, která má hlavu i patu. Využijte pro nákup libovolného nového vozu Škoda výhodný úvěr či leasing od ŠkoFINu a zdarma k němu získáte sadu kvalitních zimních pneumatik na originálních ocelových discích.
Více informací najdete na www.skofin.cz nebo volejte bezplatnou infolinku 800 100 800
legal assistance from ŠkoFIN Asistent. Since 2008, the ŠkoFIN Asistent program has been available for customers who would like ŠkoFIN financing for their Škoda automobile, as well as for those choosing to finance Volkswagen and Seat models or those of various non-group brands in addition to used cars. Assistance under ŠkoFIN Asistent includes interpreting and translation, aid in negotiating with authorities and police abroad, aid in the event of the loss of personal documents or judicial proceedings and many other customer support activities. In view of the growing risk of job loss and to raise customer awareness of the ways they may be protected against an inability to satisfy their payment obligations, we contacted customers in a telemarketing campaign with an offer of additional insurance for payment obligations. Clients thus got a second chance to insure themselves against current risks, even if they had not arranged insurance as part of the financing contract.
COMMON PRODUCT LINE OFFERS Last autumn, the successful Light – Light As a Feather Financing discount program was launched for vehicles from Volkswagen, SEAT, Audi and nongroup vehicles financed under the AutoFIN brand. Close cooperation with our partners allowed us to offer discount interest rates or even 0% increases on the purchase of any new Volkswagen, SEAT, Audi or non-group automobile financed under the AutoFIN brand by lease or credit. The offer allowed customers to purchase a car at an excellent interest rate, supplemented by an insurance discount from Česká pojišťovna. It also targeted many cash customers, as well. Another noteworthy discount offer was the WINTER 09 program, put together by ŠkoFIN in cooperation with Česká pojišťovna for Škoda, Volkswagen, SEAT, Audi and non-group vehicles financed using AutoFIN. The major benefit of the program, apart from its low prices and attractive insurance rates, was a set of winter tires or complete wheels free of charge. This offer has traditionally been prepared for clients who like a free bonus in addition to discount financing. Both offers were communicated during the 2009 autumn campaign on the internet, on radio and in the print media.
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FLEET SERVICES
ŠkoFIN offers services and products aimed directly at the fleet and wholesale customer target group, i.e., groups of customers who need operations-related services in addition to mobility, under its ŠkoFIN Fleet Services registered brand. In addition to these services (operational leasing, full service leasing and fleet management), ŠkoFIN Fleet Services offers its customers comprehensive analysis and consultancy to help clients better orient themselves in matters to do with financing, especially as concerns optimizing car fleet costs. Regardless of company size, clients get a professional solution for the acquisition, maintenance and administration of a vehicle fleet of any type, a solution which meets all their specific desires and requirements. In 2009 ŠkoFIN Fleet Services customers had the following services available: Lease and Credit Financing A standard product targeting automobile purchase financing, with the option to negotiate individual conditions and supplementary services.
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Operational Leasing This service provides the lease of an automobile with a lease term selectable from 6 to 60 months. After termination of the lease contract, the vehicle does not become the property of the lessee but remains in the hands of the lease company, which assumes the risk related to the vehicle’s residual value. Full Service Leasing The service represents an extended version of operational leasing, supplemented by additional services. Depending upon the wishes of the customer, the lease may include services such as: complete insurance, loss adjustment, maintenance and service, summer and winter tires with wheel disks, a replacement vehicle, highway assistance, fuel payment cards and other options. If the customer desires, a detailed cost overview and statistics may be supplied in addition to other services. These services simplify the use of company cars and reduce administrative expenses for our customers.
Fleet Management Under this program, ŠkoFIN Fleet Services provides customers with comprehensive care of their vehicle fleet and other services, as under the Full Service Lease. The fleet may either be the customer’s or be acquired on the basis of a lease or loan with other companies.
Sale and Leaseback As the product name suggests, ŠkoFIN Fleet Services first buys the vehicle fleet from the client, leasing it back to the client. The fleet operator thus gets back its investment and may continue to benefit from the advantages of company cars and other opportunities under the Full Service Lease.
Expert opinions and, more importantly, satisfied customers are testimony to a well-prepared strategy and good work, something also confirmed by the Operational Leasing Online product’s first-place showing at the Automotive Fleet Awards (Corporate Car of the Year) in the Fleet Financing category.
Other Services Apart from the finance and insurance services described above, ŠkoFIN Fleet Services offers its customers comprehensive analysis and consultancy to optimize their vehicle fleet costs.
Operational leasing Online in 2009 confirms successful strategy set by the company. 21
CUSTOMER CARE
A highly competitive marketplace demands an individualized approach not only in preparing offers but, most of all, in dealing with customers. Our chief task is therefore to build and improve upon our customer care concept. The company’s philosophy is to work with customers for the success of the entire Volkswagen group.
The chief goal of ŠkoFIN’s CRM strategy is conceptoriented, effective planning and management of campaigns aimed at various target groups of current and prospective customers. The effectiveness of this strategy may be exemplified by the second wave in the successful General Credit and Consequential Loss Insurance campaign.
ŠkoFIN analyzes all activities and customer processes tied to purchasing behaviour, thus providing for current customer needs and wishes. In 2009, an audit of the customer centre’s work processes and a new motivation plan helped push client relationship management forward and effectively found solutions for customer requirements.
In 2009, existing clients were offered: › insurance products › PNP – consequential loss insurance in cooperation with either Česká pojišťovna or Allianz › PPP – insurance of payment obligations as a new additional insurance product introduced in 2009 › general credit under highly advantageous conditions for selected clients › a retention program for strengthening loyalty in cooperation with Volkswagen, SEAT and Audi importers.
In 2009 we focused on: › an individual approach to handling customer complaints › services for customers unable to meet their payments › sending newsletters under an e-mail request service › distributing customer satisfaction questionnaires for all supplementary products › extending the online document portfolio To intensify the building of long-term relationships, we modernized existing services available to clients for communicating with ŠkoFIN during 2009 (e.g. e-forms, interactive voice response through the free hotline, a VIP line for VIP clients etc.). In addition, based on the results of research into the company’s position and perception, we began working to improve the tools for an active approach to clients and developing Mystery Call and Mystery Visit feedback tools. The customer centre doesn’t communicate with customers only on a passive basis. It actively contacts selected groups of customers with attractive services and products related to the contract – CRM is a database-supported process for gathering, processing and using client data. It enables needs, wishes and purchasing habits to be recognized, understood and forecast, at the same time it supports mutual communication between the company and its customers. In 2009, we undertook an ongoing process of software support adaptation, enabling us to obtain complete, up-to-date client information. CRM also functions as a system for monitoring the quality and speed of e-mail handling.
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The reward for our solid work and well-prepared strategy was a highly positive evaluation of ŠkoFIN’s approach by current and potential customers, primarily in terms of emotional attributes impacting on brand satisfaction and loyalty (research done by GfK Czech, s.r.o., during the second half of 2009). The correctness of the strategy and approach devised for clients and others was confirmed by research done by GfK Czech, s.r.o. during the second half of 2009. ŠkoFIN’s chief marketing goal is to increase market share in the lease and credit markets for personal vehicles, especially the retail segment, using product offers, communications strategies and distribution channels. The research confirmed the correctness of the strategy devised. Of the financing companies discussed, ŠkoFIN was perceived as having the highest level of expertise among potential customers. Its recognition factor exceeded 70% with potential customers and almost half of them named the company first. Within its group of competitors, ŠkoFIN received the highest evaluation in terms of product attractiveness (financial conditions, individual contract setup factors, dealerships, stability and tradition).
COLLABORATION WITH THE DEALER NETWORK
ŠkoFIN works with its customers for the success of the entire Volkswagen group. Maximizing vehicle sales is a prime goal of the VW authorized dealer network. ŠkoFIN supports this goal with its financing products, as well as with subsequent customer care. Dealers are thus able to expand their offerings by including financial services which make the purchase of a new car much easier on customers. The dealer network forms an important link in the sale of ŠkoFIN products and services to customers. In 2009, ŠkoFIN worked with 228 authorized dealers, some of whom offered more than one of the group’s brands in their portfolios. The breakdown of dealers for each brand in 2009 is as follows: Škoda VW
203 58
Audi
28
Seat
34
In recent years, there has also been an increase in the number of dealers who offer other brands in addition to the group’s brands. In 2009, 61 such dealers operated a total of 92 establishments offering brands outside the group. The number of multi-brand dealers and their sales outlets may be expected to continue to rise in future. ŠkoFIN responded to this trend in the past by introducing new competitive products under the AutoFIN brand, developed precisely to finance non-group car makes.
CORPORATE FINANCE The Corporate Customer Finance Department was created at ŠkoFIN in 2000. Since that time, the department has significantly expanded its portfolio of product offerings and records grows each year in the amount of business financed. Testimony to this is the quality of the corporate product offering for dealers. The principal mission of Corporate Customer Finance is the financial stability of authorized Volkswagen group dealers in the Czech Republic. In spite of the turbulent political and economic environment, ŠkoFIN is continuing its established long-term trend of offering products to help our dealers get through these tough times and stabilize the everyday operation of their companies. ŠkoFIN’s Corporate Customer Finance Department product line currently covers all the operational and investment needs of the Volkswagen dealership network. Our broad range of standard product offerings was expanded in 2009 to include modern products which take into account the current needs of the dealership network (ŠkoFIN Power Credit, offering financing for photovoltaic power plants). Yearly increases in total financing testify to satisfaction with the broad range of products we offer, from factoring to operational and credit financing. We offer our partners custom financing, giving us flexibility both in terms of the amount financed and the collateral required. As an example, we don’t ordinarily require a large amount of collateral for factoring, as is often the case with financing a home. Volkswagen auto dealerships are able to gain real competitive advantages thanks to our easy, transparent, reliable financing.
4th place in the Best Financial Institution of 2009 category. 23
HUMAN RESOURCES POLICY
Currently, ŠkoFIN has 230 employees. The age structure runs the full gamut from recent graduates to employees about to enter retirement age. Women make up 56% of the workforce. 36–45% of top managers (at the first and second levels) are women. ŠkoFIN’s personnel strategy is in total accord with the overall strategy of the Volkswagen group. The HR Department takes part in introducing international tools under the “HR Strategic Card” (for example, researching employee moods using the so-called Mood Barometer, which determines how employees perceive the company’s behaviour and what it does for them), helping us to meet key HR management performance indexes under the corporate WIR 2018 Strategy. PERSONAL DEVELOPMENT AND TRAINING In 2009, a pilot program employed several noteworthy instruments focused on increasing the quality of employee management, working with employees, training them and supporting increased quality in services offered to customers (e.g., the competence model, calibration workshops, managed dialogs with employees – so-called staff dialogs, etc.). ŠkoFIN places great emphasis on employee training, including professional skills, targeted training and so-called soft skills. Important skills include, above all, an orientation to the customer, quality teamwork, communications and an improved company culture. The company supports improved qualifications during employment via university education (7% of employees), certification programs in various disciplines and via other means. A mentoring program was successfully launched at the start of 2009. It focused on an adaptation program whose goal is to help new employees to adapt well during their trial period in a new environment and orient themselves quickly to the company’s functioning, becoming full members of their workteams.
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For their personal development our employees also had the the opportunity during 2009 for short-term internships in Volkswagen divisions anywhere in the world, as well as long-term stays for managers to see how foreign divisions are managed. They were able to improve their language skills and widen their perspective by working in a multicultural setting. BENEFITS The employee benefits program is updated each year on the basis of the company’s results and needs, as well as research into the labour marketplace. Benefits represent a key instrument in employee motivation, something which is clear from regular research done into employee satisfaction. ŠkoFIN provides the following benefits: an extra week of holiday, supplementary healthcare, regular vaccinations and vitamins, injury insurance, social security contributions, language courses, cut-rate lease financing of vehicles and general loans for employees and their families, flexible working hours and discounts on products from various suppliers.
SPONSORSHIP AND CHARITABLE ACTIVITIES
As a large company, ŠkoFIN feels a moral obligation apart from its business objectives to pursue other, nonprofit goals and help those in need. Each year, we support several interesting projects in sport and culture, as well as charitable projects. COLLABORATION WITH THE CAR CLUB We began collaborating with the Car Club in 2006, a collaboration which continued successfully in 2009. The Car Club protected workshop provides services and consultancy for people with disabilities. One of the areas in which ŠkoFIN helps is the mobility project, in which we participate by special financing products. We provide an opportunity to lease Škoda automobiles on a long-term basis and an option to apply 50% of the lease price as facultative compensation. For companies and institutions with more than 25 employees, we put together programs for lease financing of Škoda automobiles called Handy One-year Operational Leasing and Handy Two-year Operational Leasing. The monthly lease price includes liability and comprehensive insurance, highway tax, highway assistance, maintenance and service, loss adjustment and a replacement vehicle. These companies, too, have the option to apply 50% of the lease price as facultative compensation.
COLLABORATION WITH THE LEONTINKA FOUNDATION Via Leontinka Foundation, ŠkoFIN supports fieldwork within the “Care for Families of Children with Visual Impairment in Their Early Age in the Czech Republic” program. ŠkoFIN supports the operation of eight Škoda Fabia Combi, seven of which are used by early age care consultants from the “Společnost pro Ranou Péči” association, who use them so that they may give advice to blind and partially sighted children and their families in their natural environment. The eighth car is fully at the disposal of the Leontinka Foundation. CHARITABLE ACTIVITIES BY EMPLOYEES ŠkoFIN employees, too, got involved in charity projects, both organizationally and by providing funding. They chose three different projects: 1) “Project Panenka” – providing healthcare support to developing countries, 2) “Distance Adoption” – bringing educational opportunities and enhancing the quality of life of children in developing countries and 3) “Zvířátko” – a project whose aim is to maintain the numbers of exotic animals and animals close to extinction at the Prague Zoo, as well as to enhance their care.
To finance an automobile purchase, persons with disabilities may make use of the Handy Credit program. This program also brings them a number of benefits such as a discount on the automobile sticker price, discount insurance rates, assistance services, etc.
ŠkoFIN annually supports a number of interesting projects in the field of sport and culture, as well as charitable projects. 25
FINANCIAL SITUATION
In 2009, ŠkoFIN concluded 20,887 new contracts with a total value of CZK 6,709 million. Substantial business was generated in 2009 by non-lease financing. Loans to businesses for personal vehicles rose yearon-year by 148% to CZK 2,444 million. For new car acquisition, the figures rose all the way to 185% for a total CZK 2,046 million. Credit financing accounted for a 73% share of ŠkoFIN’s business in 2009, as opposed to 43% in 2008. In spite of a downtrend, lease financing continues to be of interest to ŠkoFIN customers. 3,133 lease contracts made for a total volume of CZK 1,192 billion. Customer interest in consumer loan financing also continued to rise. Consumer loans and credit financing for businesses saw a 12% increase in new contracts (for a total CZK 4,412 million, CZK 3,166 million of which was credit financing of businesses). The number of new consumer loan contracts and non-lease finance contracts for businesses increased from 13,062 in 2008 to 15,331 new contracts in 2009.
Key 2009 Data Number of newly-closed finance contracts
26
ŠkoFIN’s revenues in 2009 were CZK 8,188 million (2008: CZK 10,789 million), primarily from lease and credit contracts. Dynamic growth of 42% was recorded in receipts from credit financing, from CZK 496 million in 2008 to CZK 706 million in 2009. As a reliable partner to our dealers, ŠkoFIN provides group brands with exclusive financing in the form of factoring and makes substantial contributions to financing investments in the Volkswagen dealership network. A significant investment project started in 2009 was financing for a photovoltaic power plant. The company’s total equity as of year-end 2009 attained CZK 4,153 million. ŠkoFIN is thus one of the top companies in the Czech marketplace for non-bank financial services providers in terms of capital. ŠkoFIN reported better results for 2009 than the market average, which dropped 33%. As a result, the company increased its share in the category of financing for personal and commercial vehicles among the top 20 ČLFA companies, from 15.5% in 2008 to 16.1% in 2009.
2009
2008
20,887
30,628
Total sales volume (CZK million)
6,709
10,414
Revenues (CZK million)
8,188
10,789
After-tax profit (CZK million)
528
212
Average number of employees
230
239
LONG-TERM STRATEGY
Volkswagen Financial Services introduced its WIR 2018 Strategy in 2008, which is a part of Volkswagen’s global strategy. The vision contained in this long-term strategy is one of becoming the top provider of financial services in the world. The chief goal of the WIR 2018 Strategy was presented to company employees at ŠkoFIN in March of 2009. An action plan was custom-designed for ŠkoFIN based upon the goals of the group strategy, aimed at meeting the goals of the WIR 2018 strategy.
SALES VOLUME
The WIR 2018 strategy emphasizes four chief pillars: employment, customers, sales volume and profitability.
Competitiveness in terms of costs, productivity growth and maximizing profit per customer are our chief goals.
Our main goal continues to be the financing of new and used automobiles of group brands, emphasizing further expansion of supplementary services for customers. Our slogan is “At Least Every Second Volkswagen Automobile Sold Will Come with One or More of Our Financial Services Products”. PROFITABILITY
EMPLOYEES The main goal here is a customer-oriented approach by employees, with the slogan “We Support and Demand the Best from Our Employees”. CUSTOMERS Our strong partners are the key to our success in this area, whether they be group brands, dealerships or our business partners. In providing financial support for sales of group brands, we strive for a leading position in the quality of products and services we offer customers and dealers in the Volkswagen network.
27
FINANCIAL PART
29
INDEPENDENT AUDITOR’S REPORT ON THE ANNUAL REPORT
We have audited the financial statements of ŠkoFIN s.r.o, identification number 45805369, with registered office at Pekařská 6, Praha 5 (“the Company”) for the year ended 31 December 2009 disclosed in the annual report on pages 34 – 63 and issued the opinion dated 29 January 2010 and disclosed on pages 32 – 33. 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 2009 is consistent with the financial statements referred to above. Statutory Directors are 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 2009 is consistent, in all material respects, with the financial statements. 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 2009 (the “Report”). The completeness and accuracy of the Report is the responsibility of the Statutory Directors of the Company. Our responsibility is to review the accuracy of information included in the Report. Scope of Review We conducted our review in accordance with the International Standard on Review Engagements 2410 and related application guidance of the Chamber of Auditors of the Czech Republic for review of the report on relations. These standards require that we plan and perform the review to obtain moderate assurance as to whether the Report is free of material 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.
30
INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS
We have audited the accompanying financial statements of ŠkoFIN s.r.o., identification number 458 05 369, with registered office at Pekařská 6, Praha 5 (“the Company”), which comprise the balance sheet as at 31 December 2009, 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 (“the financial statements”). Statutory Directors‘ Responsibility for the Financial Statements The Statutory Directors are responsible for the preparation and fair presentation of the financial statements in accordance with Czech accounting legislation. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. 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 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 and fair presentation of the financial statements 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.
32
BALANCE SHEET AS AT 31 DECEMBER 2009 (CZK ’000)
Assets Note
2008
Provision
Net amount
Net amount 14,182,146
B.
Fixed assets
20,650,157
(11,842,288)
8,807,869
B. I.
Intangible fixed assets
3
496,981
(421,035)
75,946
104,104
B. II.
Tangible fixed assets
4
20,153,176
(11,421,253)
8,731,923
14,078,042
C.
Current assets
13,776,716
(838,395)
12,938,231
10,201,265
C. I.
Inventories
5
1,581
–
1,581
3,607
C. II.
Long-term receivables
6
5,562,564
(146,233)
5,416,331
3,693,617
C. III.
Short-term receivables
6
8,203,891
(692,162)
7,511,819
6,491,291
C. IV.
Financial assets
8,590
–
8,590
12,750
D. I.
Accruals and deferrals
81,943
–
81,943
87,476
34,508,816
(12,680,683)
21,828,133
24,470,887
9
Total assets
Liabilities and Equity
2009
2008
Note
Net amount
Net amount
7
4,153,365
3,625,649
A.
Equity
A. I.
Share capital
865,000
865,000
A. II.
Capital funds
1,735,848
1,735,848
A. III.
Reserve funds
257,200
257,200
A. IV.
Profit of previous years
767,601
555,760
A. V.
Profit for the current period
527,716
211,841
B.
Liabilities
15,205,361
16,810,660
B. I.
Provisions
8
216,839
276,724
B. II.
Long-term liabilities
10
506,108
1,064,708
B. III.
Short-term liabilities
10
4,787,182
4,934,298
B. IV.
Bank loans & overdrafts
11
9,695,232
10,534,930
C. I.
Accruals and deferrals
9
Total Liabilities and Equity
34
2009 Gross amount
2,469,407
4,034,578
21,828,133
24,470,887
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2009 (CZK ’000) Note
2009
2008
13
57,339
82,161
I.
Sales of goods
A.
Cost of goods sold
60,683
83,702
+
Gross profit
(3,344)
(1,541)
7,389,415
10,164,207
II.
Sales of production
B.
Cost of sales
+
Added value
C.
Staff costs
D.
Taxes and charges
E.
Depreciation of long-term assets
13
14
3, 4
783,245
1,123,905
6,602,826
9,038,761
190,011
191,969
13,194
14,976
5,796,766
7,968,759
III.
Sale of long-term assets and raw materials
1,712,447
2,243,347
F.
Net book amount of long-term assets and raw materials sold
2,001,906
2,491,342
G.
Change in provisions for operating liabilities and charges
IV.
Other operating income
3,4,5,6,8
(17,574)
57,095
455,107
456,905
H.
Other operating charges
326,793
579,348
*
Operating result
459,284
435,524
K.
Expense related to financial investments
X.
Interest income
N.
Interest expense
XI.
Other financial income
2,225
6,664
O.
Other financial expense
26,587
35,071
239,330
(154,240)
13
452
21,052
741,603
543,233
477,459
648,014
**
Financial result
Q.
Tax on profit or loss on ordinary activities
**
Profit on ordinary activities after taxation
***
Net profit for the financial period
527,716
211,841
***
Net profit before tax
698,614
281,284
12
170,898
69,443
527,716
211,841
35
STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY YEAR ENDED 31 DECEMBER 2009 (CZK ’000)
Note At 1 January 2008 Shareholder’s equity contribution Net profit for the current period At 31 December 2008 Net profit for the current period At 31 December 2009
36
7
Share capital
Other Capital funds
Statutory reserve fund
Other funds
Retained earnings
Total
865,000
–
110,000
147,200
555,760
1,677,960 1,735,848
–
1,735,848
–
–
–
–
–
–
–
211,841
211,841
865,000
1,735,848
110,000
147,200
767,601
3,625,649
–
–
–
–
527,716
527,716
865,000
1,735,848
110,000
147,200
1,295,317
4,153,365
CASH FLOW STATEMENT YEAR ENDED 31 DECEMBER 2009 (CZK ’000)
Cash flows from operating activities Net profit on ordinary activities before tax
2009
2008
698,614
281,284
5,943,533*
8,161,108*
A.1
Adjustments for non-cash movements:
A.1.1
Depreciation of fixed assets
A.1.2
(Decrease)/increase in provisions
(39,013)
8,329
A.1.3
Loss on disposal of fixed assets
289,459
247,995
A.1.4
Interest income less interest expense
(264,144)
104,781
A.*
Net cash flow from operating activities before tax, changes in working capital and extraordinary items
6,628,449
8,803,497
A.2
Working capital changes:
A.2.1
Increase in receivables and prepayments
(2,950,523)
(1,643,179)
A.2.2
Decrease in short-term payables and accruals
(1,669,930)
(1,787,685)
A.2.3
Decrease in inventories
A.**
Net cash flow from operating activities before tax and extraordinary items
A.3
Interest paid
A.4
Interest received
A.5
Income tax on ordinary activities paid
2,026
35,314
2,010,022
5,407,947
(441,461)
(612,143)
741,603
543,233
(367,209)
(114,416)
1,942,955
5,224,621
(2,320,309)
(6,542,047)
A ***
Net cash fl ow from operating activities
*)
Figure contains depreciation charge and residual value of disposed fixed assets due to damages.
B.1
Acquisition of fixed assets
B.2
Proceeds from the sale of fixed assets
1,712,447
2,243,347
B***
Net cash flow from investing activities
(607,862)
(4,298,700)
C.1
Change in long and short-term liabilities:
C.1.1
Increase in bank loans
(839,698)
(2,151,024)
C.1.2
Decrease in long-term loans
C.1.3
(Decrease)/increase in loans provided by related parties
Cash flows from investing activities
Cash flows from financing activities
C.1.4
(Decrease)/increase in liabilities from issued securities
C.2
Change in equity:
C.2.1
Shareholder’s equity contribution
C***
Net cash flow from financing activities
–
319,381
(400,000)
(400,000)
(99,555)
(429,792)
–
1,735,848
(1,339,253)
(925,587)
Net (decrease)/increase in cash and cash equivalents
(4,160)
334
Cash and cash equivalents at the beginning of the year
12,750
12,416
8,590
12,750
Cash and cash equivalents at the end of the year
37
1. GENERAL INFORMATION
ŠkoFIN s.r.o. (“the Company”), was incorporated on 10 August 1992, and has its registered office at Pekařská 6, Prague 5. The Company’s business activities are the purchase of assets with intended use for sale, sale (leasing of cars) and the provision of consumer credits. The statutory representatives as at 31 December 2009 were as follows: Statutory representatives
Position
Stefan Rasche
statutory representative
Jiřina Tapšíková
statutory representative
Oliver Schmitt
statutory representative (effective till 30 June 2009)
Authorised signatory Martin Kofroň Jana Gregorová
(effective since 24 December 2009)
Dušan Fornůsek
(effective since 24 December 2009)
Except for the above mentioned there were no other changes entered in the Register of Companies.
38
The Company is organised as follows:
Stefan Rasche Statutory representative
Jiřina Tapšíková Statutory representative
Assistant
Secretary
Marketing
Compliance Officer
Corporate financing
Accounting department
Sales
Controlling/Credit & Risk Management
Contracts approval
Legal department
Administration
Human resources
Information technologies
Changes in the organisation structure during the year 2009: During 2009 Strategic Marketing was integrated into Business operations and product marketing and this department was renamed Marketing. Credit management was integrated into Controlling/Risk management. The position Specialist for internal process and operations control was renamed Compliance Officer, Sales and dealer care department was renamed Sales, Information systems / Organization was renamed Information technologies, Human resources / Building administration was renamed Human resources.
39
2. ACCOUNTING POLICIES
(a) Basis of preparation The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in the Czech Republic and Czech Accounting Standards. The financial statements have been prepared under the historical cost convention. Figures are stated in CZK ‘000. Translation note This version of notes to financial statements is a translation from the original, which was prepared in Czech. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of notes to financial statements takes precedence over this translation. (b) Intangible fixed assets Purchased intangible fixed assets are recorded at cost, which include costs incurred in bringing the assets to their present location and condition. Intangible fixed assets are amortised applying an annual amortisation charge of 33% – 50% (depending on the class of the intangible fixed asset). Intangible fixed assets with a unit cost less than CZK 60,000 are expensed upon acquisition. A provision for impairment is established when the carrying value of an asset is greater than its estimated recoverable amount. (c) Tangible fixed assets Acquired tangible fixed assets are recorded at cost, which includes costs incurred in bringing the assets to their present location and condition. 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 – leasing fixed assets (further divided into financial lease, operating lease) 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 daily straight line basis from the date of contract inception 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 over the lease term; › Accounting depreciation of tangible fixed assets not subject to lease are calculated using the straight-line method over the fixed asset`s estimated useful life.
40
The Company applies an annual depreciation charge of 11% – 50% (depending on the class of tangible fixed assets). Land is not depreciated. A provision for impairment is established when the carrying value of an asset is greater than its estimated recoverable amount. Repairs and maintenance expenditure relating to tangible assets are expensed as incurred. Property enhancements 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. (d) Inventories Inventories are stated at the lower of cost and net realisable amount. Cost includes the appropriate overheads incurred to bring inventory to its present condition and location (mainly transport, etc.). A provision for inventory is created on the basis of analysis of turnover and an individual evaluation of inventories. (e) Receivables Receivables are stated at nominal value less a provision for doubtful amounts. Irrecoverable receivables are generally only written-off on the basis of a court decision or completion of bankruptcy proceedings against the customer. A provision for bad debts is recognised on the basis of an individual evaluation of the receivable. (f) 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, long-term deposits with a maturity date of less than 3 months and liquid commercial papers held for sale on a financial market. (g) Foreign currency translation Transactions denominated in a foreign currency are translated and recorded at the rate of exchange ruling at the date of transaction. All monetary assets and liabilities denominated in foreign currencies have been translated at the year-end exchange rate as published by the Czech National Bank. All foreign exchange gains and losses from translation of receivables and payables are recognised in the income statement.
41
(h) Revenue recognition Sales of production 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 inception of the lease contract to the normal or early termination of the lease contract. Contractual fees and penalties are recognised when enforced. Revenues from 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. (i) Leases for assets used by the Company The cost of assets held under operating leases, where the Company is a lessee, are recorded as expenses evenly over the life of the lease. Amounts payable in future periods but not yet due are disclosed in the notes but are not recognised in the balance sheet. (j) 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. Unpaid income tax liability is recognised in provisions. (k) Issued securities Liabilities from issued short term securities are carried at amortised costs and are recognised in balance sheet in short term liabilities. (l) 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 expenses are included in the result from financing activities. (m) Deferred taxation Deferred tax is recognised on all temporary differences arising between the carrying amount of an asset or liability in balance sheet and its tax base. Deferred tax assets are recognised if it is probable that sufficient future taxable profit will be available against which the assets can be utilised.
42
(n) Related parties The Company’s related parties are considered to be the following: › group companies; › shareholders, of which the Company is a subsidiary or an associate, directly or indirectly, and other subsidiaries and associates of these shareholders; › members of the Company’s or parent company’s statutory and supervisory bodies 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 Note 15. (o) Cash flow statement The Company has prepared a cash flow statement following the indirect method. Cash equivalents represent short-term liquid investments, which are readily convertible for a known amount of cash. (p) 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 at the balance sheet date. Where significant events occur subsequent to the balance sheet date but prior to the 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.
43
3. INTANGIBLE FIXED ASSETS
Cost CZK’000
1 January 2009
Additions/transfers
Disposals
31 December 2009
Software
439,363
22,726
9,750
452,339
Royalties
37,817
–
–
37,817
Intangible assets in the course of construction
13,474
33,920
40,569*
6,825
490,654
56,646
50,319
496,981
1 January 2009
Additions/ amortisation
Disposals/release
31 December 2009
Software
345,553
46,333
9,753
382,133
Royalties
37,327
148
–
37,475
382,880
46,481
9,753
419,608
–
2,243
Total
Accumulated amortisation CZK’000
Total Net book amount before impairment provision Impairment provision against software Net book amount
107,774
77,373
3,670 104,104
1,427 75,946
Cost CZK’000
1 January 2008
Additions/transfers
Disposals
31 December 2008
Software
416,519
32,370
9,526
439,363
Royalties
37,240
577
–
37,817
Intangible assets in the course of construction
37,973
30,524
55,023*
13,474
491,732
63,471
64,549
490,654
1 January 2008
Additions/ amortisation
Disposals/release
31 December 2008
Software
326,036
29,210
9,693
345,553
Royalties
37,240
87
–
37,327
Total
363,276
29,297
9,693
382,880
Net book amount before impairment provision
128,456 –
1,835
Total
Accumulated amortisation CZK’000
Impairment provision against software Net book amount
5,505 122,951
107,774 3,670 104,104
Additions to the cost of intangible fixed assets are represented mainly by acquisitions. Additions to accumulated amortisation of intangible fixed assets are represented mainly by amortisation charges. Disposals of cost and accumulated amortisation of intangible fixed assets are represented mainly by disposals.
44
4. TANGIBLE FIXED ASSETS
Cost CZK’000
1 January 2009
Additions/transfers
Disposals
41,299
–
–
41,299
599,100
–
133,820
465,280
27,916,521
2,427,022
10,701,474
19,642,069
7,372
896,725
899,569
4,528
28,564,292
3,323,747
11,734,863
20,153,176
1 January 2009
Additions/ depreciation
Disposals/release
31 December 2009
278,168
56,991
129,821
205,338
Equipment
13,760,821
5,708,358
8,473,353
10,995,826
Total
14,038,989
5,765,349
8,603,174
11,201,164
Net book amount before impairment provision
14,525,303
–
–
8,952,012
447,261
432,763
659,935
220,089
14,078,042
–
–
8,731,923
1 January 2008
Additions/transfers
Disposals
31 December 2008
43,949
–
2,650
41,299
546,664
52,436
–
599,100
Land Buildings, halls and constructions Equipment Tangible fixed assets in the course of construction Total
Accumulated depreciation CZK’000 Buildings, halls and constructions
Impairment provision against tangible fixed assets Net book amount
Cost CZK’000 Land Buildings, halls and constructions Equipment
31 December 2009
34,039,037
6,680,641
12,803,157
27,916,521
Tangible fixed assets in the course of construction
52,924
1,851,526
1,897,078
7,372
Advances paid for tangible fixed assets
32,367
45,220
77,587
–
34,714,941
8,629,823
14,780,472
28,564,292
1 January 2008
Additions/ depreciation
Disposals/release
31 December 2008
217,215
60,953
–
278,168
Equipment
15,931,469
7,890,477
10,061,125
13,760,821
Total
16,148,684
7,951,430
10,061,125
14,038,989
Net book amount before impairment provision
18,566,257
–
–
14,525,303
157,795
525,906
236,440
447,261
18,408,462
–
–
14,078,042
Total
Accumulated depreciation CZK’000 Buildings, halls and constructions
Impairment provision against tangible fixed assets Net book amount
The net book amount of tangible fixed assets subject to lease contracts totalled to CZK 8,724,024,000 as at 31 December 2009 (2008: CZK 14,068,477,000).
45
The impairment provision against tangible fixed assets can be analysed as follows: CZK’000 Impairment provisions against buildings Impairment provision against residual values on operating lease assets
31 December 31 December 2009 2008 6,728
2,654
104,276
342,645
Impairment provisions against individual tangible assets
109,085
101,962
Total amount of impairment provision against tangible fixed assets recognised in the balance sheet in the column “Provisions”
220,089
447,261
Repair and maintenance expenses are recognised in the period when they are incurred. During 2009, these expenses amounted to CZK 106,997,000 (2008: 101,432,000). Tangible fixed assets also include vehicles stemming from terminated operational lease contracts with a residual value of CZK 65,769,000 as at 31 December 2009 (2008: CZK 331,969,000). The Company created impairment provision of CZK 18,190,000 (2008: CZK 112,276,000) against these assets. This provision is recorded in provisions against residual value risk. Additions to the cost of tangible fixed assets are represented mainly by acquisitions. Additions to accumulated depreciation of tangible fixed assets are represented mainly by depreciation. Disposals of cost and accumulated amortisation of tangible fixed assets are represented mainly by disposals through sale. In 2009, the cost of disposal through sale amounted to CZK 10,301,800,000 (2008: 12,342,007,000). The other reasons for disposals (mainly stolen and damaged cars) of tangible fixed assets in 2009 had an original cost of the fixed assets of CZK 334,483,000 (2008: 468,587,000). 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) for the year ended 31 December 2009 totalled CZK 22,601,000 (2008: 22,066,000). The Company does not use any assets under finance lease contracts. Commitments arising from operating lease contracts are disclosed in Note 17. Fixed assets are not burdened by any conditional transfer of ownership rights or collateral.
46
5. INVENTORIES
CZK’000 Goods for resale Provision for diminution in value Net book amount
31 December 2009
31 December 2008
1,581
3,607
–
–
1,581
3,607
Goods for resale represents recovered cars from leasing in amount CZK 667,000 (2008: 2,850,000) and advertising materials. The change in the provision for diminution in value is analysed as follows:
CZK’000
2009
2008
Opening balance as at 1 January
–
1,380
Charge for the year
–
–
Release of provision
–
(1,380)
Closing balance as at 31 December
–
–
47
6. RECEIVABLES
CZK’000 Trade receivables
– current – overdue
– up to 5 years – above 5 years
Other receivables
– current – overdue
– up to 5 years – above 5 years
Estimated receivables Short-term receivables – gross Provision for doubtful receivables
31 December 2009
31 December 2008
6,438,097
5,347,868
845,791
764,164
37,459
33,844
7,321,347
6,145,876
766,554
749,177
6,144
14,726
–
–
772,698
763,904
109,936
129,704
8,203,981
7,039,484
(692,162)
(548,193)
Net short-term receivables
7,511,819
6,491,291
Long-term trade receivables
4,329,895
3,158,184
Other long-term receivables
1,232,669
612,821
Long-term receivables – gross
5,562,564
3,771,005
Provision for doubtful receivables Net long-term receivables Net total receivables
(146,233)
(77,388)
5,416,331
3,693,617
12,928,150
10,184,908
Receivables from consumer credits are secured by the conditional transfer of ownership rights, the guarantor and pledged collateral, respectively. Factoring receivables are secured on 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 comprehensive portion of financial services of the Škoda brand 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 Import Volkswagen Group s.r.o. in the Czech Republic. The total amount of receivables resulting from these services, as at 31 December 2009 for ŠKODA AUTO a.s. amounts to CZK 2,118,762,000, (2008: 1,995,476,000). The total amount of receivables resulting from these services provided, as at 31 December 2009 for Import Volkswagen Group s.r.o. amounts to CZK 1,240,203,000, (2008: 679,756,000). Other short-term receivables include mainly short-term loans as at 31 December 2009 amounting to CZK 4,285,000 (2008: CZK 4,921,000) and short-term loans provided to dealers as at 31 December 2009 CZK 685,150,000 (2008: CZK 697,587,000). Short-term receivables and advances paid as at 31 December 2009 are secured by promissory notes amounting to CZK 254,000 (2008: CZK 352,000). Receivables for consumer credits are secured by the pledge of collateral with a cost of CZK 679,164,000 as at 31 December 2009 (2008: CZK 529,159,000) and ownership rights of CZK 970,550,000 as at 31 December 2009 (2008: CZK 824,284,000). Estimated receivables principally include estimated revenues from prematurely terminated leasing contracts.
48
Long-term trade receivables include mainly the long-term portion of consumer credits provided to customers as at 31 December 2009 amounting to CZK 4,329,895,000 (2008: CZK 3,158,168,000). Penalties related to trade receivables as at 31 December 2009 amounting to CZK 20,936,000 (2008: CZK 12,902,000) are recognised in balance sheet in short term receivables. Other long-term receivables include mainly long-term loans provided to dealers as at 31 December 2009 amounting to CZK 1,230,246,000 (2008: CZK 609,552,000). Interest income from short-term and long-term consumer credits and commissions from cession of receivables are disclosed in Note 13. Long-term receivables are secured by promissory notes totalling to CZK 858,113,000 as at 31 December 2009 (2008: CZK 185,852,000). Changes in the provision against doubtful receivables may be analysed as follows: CZK’000 Opening balance as at 1 January Charge for the year Written off during the year Closing balance as at 31 December
2009
2008
625,581
787,202
551,430
518,845
(338,616)
(680,466)
838,395
625,581
49
7. EQUITY
The Company is wholly-owned by VOLKSWAGEN FINANCIAL SERVICES AG, incorporated in Braunschweig, Germany, and the ultimate holding company is VOLKSWAGEN AG, incorporated in Wolfsburg, Germany.
The statutory reserve fund is created according to law from the profit of the Company and may not be distributed to the shareholder, but may be used to offset losses. As of the date of preparation of the financial statements there was no resolution of the General Meeting to pay a dividend. According to General Meeting decision, the net profit of the year 2008 in amount of CZK 211,841,000 was transferred to retained profits during 2009. The General Meeting approved an increase of equity by a non-share capital contribution of CZK 1,735,848,000 on 5 September 2008. This contribution was recognised in Other capital funds. In 2009 there was no change in Other capital funds.
50
8. PROVISIONS
CZK’000 Opening balance as at 1 January 2008 Charge for the year
Income tax provision
Other provisions
Total
68,173
70,913
139,086
311,499
41,058
352,557
(106,326)
(108,593)
(214,919)
Closing balance as at 31 December 2008
273,346
3,378
276,724
Charge for the year
300,435
970
301,405
(359,346)
(1,944)
(361,290)
214,435
2,404
216,839
Used in the year
Used in the year Closing balance as at 31 December 2009
Provision for corporate income tax of CZK 300,435,000 (2008: CZK 311,499,000) was reduced by advance payments made related to corporate income tax in amount of CZK 86,000,000 (2008: CZK 38,153,000). The current and deferred income tax calculation is included in Note 12. The Company created other provisions against court cases of CZK 2,404,000 (2008: CZK 3,378,000).
51
9. ACCRUALS AND DEFERRALS
CZK’000
31 December 2009
31 December 2008
Prepaid expense
49,972
62,600
Accrued revenue
31,971
24,876
Total
81,943
87,476
2,469,407
4,034,578
Deferred revenue Accrued expense Total
–
–
2,469,407
4,034,578
Accruals and deferrals relate mainly to individual leasing contracts. Based on this, 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 45,659,000 as at 31 December 2009 (2008: CZK 60,009,000). Deferred revenue includes mainly the unamortized part of the leasing downpayment.
52
10. LIABILITIES
CZK’000
31 December 2009
31 December 2008
Trade payables
422,437
406,062
Short-term borrowings (see Note 11 and 15)
423,900
400,000
3,030,889
3,145,265
Other payables Estimated liabilities Total short-term payables Long-term borrowings (see Note 11 and 15) Deferred tax liability (see Note 12) Other payables Total long-term liabilities Total short – and long-term liabilities
909,956
982,971
4,787,182
4,934,298
–
423,900
503,408
640,808
2,700
–
506,108
1,064,708
5,293,290
5,999,006
The Company has no overdue short-term liabilities as at 31 December 2009. Trade and other payables have not been secured over any assets of the Company. The Company as at 31 December 2009 is not aware of any defaulted liabilities. Trade payables and other payables were not secured by any property of the Company.
Trade liabilities include advances received for financial lease contracts amounting to CZK 7,442,000 as at 31 December 2009 (2008: CZK 16,502,000) and related parties liabilities due to factoring of receivables in amount of CZK 133,613,000 (2008: CZK 63,825,000) (see Note 15). As at 31 December 2009 the Social security and Health insurance liability amounted to CZK 3,693,000 (2008: 3,975,000). Company has no tax arrears. Other payables as at 31 December 2009 include mainly a short-term loan from ŠKODA AUTO a.s. amounting to CZK 3,000,000,000 (2008: CZK 3,000,000,000) (see Note 15). Issued medium-term notes were repaid during 2009 (2008: CZK 99,555,000). Estimated liabilities include estimated payables for services and supplies not yet invoiced and insurance relating to leasing contracts not yet invoiced, employee bonuses, including social and health insurance and unpaid interest.
53
11. BANK LOANS AND OTHER BORROWINGS
CZK’000 Bank overdrafts Other bank loans due within 1 year (including the current portion of long-term loans)
31 December 2008
777,052
568,958
4,762,531
5,692,790
Long-term loans due between 1 – 5 years
4,160,649
4,273,182
Total bank loans and overdrafts
9,695,232
10,534,930
Total short-term borrowings (see Notes 10 and 15)
423,900
400,000
Total long-term borrowings (see Notes 10 and 15)
–
423,900
10,119,132
11,358,830
Total of which – short-term loans
5,958,483
6,661,748
of which – long-term loans
4,160,649
4,697,082
Interest rates charged on loans drawn in 2009 varied between 1.30% p.a. and 6.08% p.a. During 2008, this interest rate varied between 2.05% p.a. and 5.79% p.a.
54
31 December 2009
12. TAXATION
The income tax expense consists of the following: CZK’000 Current tax expense (see Note 8) Deferred tax credit Underestimated current tax in prior years Total
2009
2008
300,435
311,499
(137,400)
(250,146)
7,863
8,090
170,898
69,443
Current tax can be analysed as follows: CZK’000 Net profit before taxation
2009
2008
698,614
281,284
Adjustments to tax base: – additional tax deductible costs – non – tax deductible costs – non-taxable income – additional taxable income Net taxable profit
(282,902)
(281,373)
1,238,468
1,506,829
(180,571)
(57,076)
28,992
33,793
1,502,601
1,483,457
Adjustments to tax base: – gifts
(425)
(126)
1,502,176
1,483,331
300,435
311,499
31 December 2009
31 December 2008
603,568
769,021
Other provisions
82,583
108,813
Other temporary differences
17,577
19,400
503,408
640,808
Adjusted tax base Corporate taxation at 20% (2008: 21 %)
The deferred tax liability can be analysed as follows: CZK’000 Deferred tax liability: Accelerated tax depreciation of long-term tangible fixed assets subject to financial lease Deferred tax asset:
Net deferred tax liability
Deferred tax as at 31 December 2009 was calculated using the tax rate 19% (tax rate valid for year 2010 and following years) depending on the period when the deferred tax liabilities or assets are expected to be used. Deferred tax as at 31 December 2008 was calculated using the tax rate 20% (tax rate valid for year 2009) and 19% (valid for year 2010).
55
13. REVENUE ANALYSIS
Revenue from ordinary activities has been generated as follows: CZK’000 Leasing revenues
– domestic
Stock cars financing Factoring commission income Sales of production Revenues from sale of cars Total Revenues from consumer credits (interest income) Other interest income Interest income Total
56
– domestic
2009
2008
7,262,725
9,933,143
–
711
126,690
230,353
7,389,415
10,164,207
57,339
82,161
7,446,754
10,246,368
705,918
496,135
35,685
47,098
741,603
543,233
8,188,357
10,789,601
14. EMPLOYEE ANALYSIS
Employee numbers
2009
Average number of management
2008
12
13
Average number of other staff
218
226
Total
230
239
The Company’s management includes the statutory representatives, the authorised signatories and the heads of the Company’s departments 2009 CZK’000
Management
Other staff
Total
25,647
115,705
141,352
2,979
41,777
44,756
594
3,309
3,903
29,220
160,791
190,011
Wages and salaries Social security costs Other social costs Total
2008 CZK’000
Management
Other staff
Total
Wages and salaries
25,916
115,871
141,787
Social security costs
3,042
43,334
46,376
594
3,212
3,806
29,552
162,417
191,969
Other social costs Total
Other transactions with the Company’s employees are described in Note 15.
57
15. RELATED PARTY TRANSACTIONS
The Company was involved in the following related party transactions: Revenues CZK’000 Sale of goods
– Foreign – Domestic
Sale of services
– Foreign – Domestic
Total
2009
2008
-
214,256
41,148
-
6,203
5,086
4,748,338
644,835
4,795,689
864,177
Costs CZK’000 Purchase of goods
– Domestic
2009
2008
495,854
1,296,445
25,703
28,219
Purchase of services and receivables factoring: – Foreign of which: parent company – Domestic Total
58
2,096
5,099
26,082,662
23,390,321
26,604,219
24,714,985
The following related party balances were outstanding at: Trade receivables CZK’000 IMPORT VOLKSWAGEN GROUP s.r.o. ŠKODA AUTO a.s. VOLKSWAGEN LEASING GmbH
31 December 2009
31 December 2008
2,497
1,421
495
6,292
–
149
PORSCHE INTER AUTO CZ s.r.o.*
501
–
SCANIA CZECH REPUBLIC s.r.o.*
109
–
12
–
VOLKSWAGEN BANK POLSKA VW GROUP FINANZ Total
–
518
3,614
8,380
31 December 2009
31 December 2008
Trade payables CZK’000 IMPORT VOLKSWAGEN GROUP s.r.o. ŠKODA AUTO a.s. (Note 10) INIS INTERNATIONAL INSURANCE SERVICE s.r.o. PORSCHE INTER AUTO CZ s.r.o.* VOLKSWAGEN COACHING GmbH VOLKSWAGEN LEASING GmbH VOLKSWAGEN FINANCIAL SERVICES N.V. Total
20,210
59,105
3,128,205
3,030,489
14,582
–
3,940
–
42
–
15
–
423,900
840,297
3,590,894
3,929,891
Others CZK’000
2009
2008
–
59,582
Sale of cars stemming from terminated operational lease to Škoda Auto Deutschland GmbH
–
154,674
Compensation received from Škoda Auto a.s.
–
119,000
110,708
158,701
Sale of cars stemming from terminated operational lease to Vehicle Trading International GmbH
Interest expense VOLKSWAGEN FINANCIAL SERVICES N.V., VOLKSWAGEN INTERNATIONAL FINANCE N.V., ŠKODA AUTO a.s., INIS INTERNATIONAL INSURANCE SERVICE s.r.o.
*) the company became related party in 2009
The aforementioned transactions arose under the same terms and conditions as with unrelated parties. The loans 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. No provision against receivables from related parties has been recognised. Cars under the Company‘s ownership, with an acquisition cost of CZK 47,516,000 are made available for the business and private use of the statutory representatives, the Company‘s other managers and other staff as at 31 December 2009 (2008: CZK 57,821,000). In 2009 loans have been provided to the management of the Company with a balance of CZK 280,000 as at 31 December 2009 (2008: CZK 376,000). Loans are provided under common market conditions. Except for the aforementioned remuneration and benefits, there was no other consideration provided to the Company’s statutory representatives and management in 2009 and 2008.
59
16. FEES PAID AND PAYABLE TO THE AUDIT COMPANY AND ITS RELATED PARTIES
The total fees paid and payable for services performed by the audit company and its related parties can be analysed as follows: CZK’000
2009
2008
Statutory audit of financial statements (PricewaterhouseCoopers Audit, s.r.o.)
3,731
2,784
–
180
Other assurance services (PricewaterhouseCoopers Audit, s.r.o.) Tax consultancy (PricewaterhouseCoopers ČR, s.r.o.) Total fees paid and payable to the audit company and its related parties
143
179
3,874
3,143
17. COMMITMENTS
Capital commitments resulting from operating lease contracts entered into by the Company are summarised as follows: CZK’000
31 December 2009
31 December 2008
Current within one year
19,254
22,132
Due after one year but within five years
52,949
88,528
Due after five years Total
–
–
72,203
110,660
Due to the credit product for dealers, a future commitment of the Company of CZK 98,651,000 came into existence and equates to the unused part of the agreed credit facility (2008: CZK 92,084,000).
60
18. CONTINGENT ASSETS
In 2009, the Company received a bank guarantee of CZK 6,200,000 (2008: CZK 7,100,000). The Company does not expect to utilise this guarantee.
19. CONTINGENT LIABILITIES
The management of the Company is not aware of any other significant unrecorded contingent liabilities as at 31 December 2009.
61
20. RECENT VOLATILITY ON CZECH FINANCIAL MARKETS IN 2009
Management continuously assesses impacts of the current economic situation on the financial position and results of the Company, the valuation of its assets, and evaluation of the adequacy of the Company’s internal processes. To the extent that information is available, management has reflected in these financial statements the impact of market conditions on customer credit risk and asset residual values.
62
21. SUBSEQUENT EVENTS
No events have occurred subsequent to year-end that would have a material impact on the financial statements as at 31 December 2009. Statutory approvals These financial statements have been approved and signed by the Company’s statutory representatives: 29 January 2010
Stefan Rasche
Ing. Jiřina Tapšíková, MBA
Statutory Representative
Statutory Representative
63
REPORT ON RELATIONS BETWEEN RELATED PARTIES
(between the controlling entity and the controlled entity and about relationships between the controlled entity and other entities controlled by the same entity), pursuant to provision § 66a paragraph 9 of the Act No. 513/1991 Coll., Commercial Code, as amended (hereinafter “Commercial Code” / hereinafter “Report on relations”) In accordance with the Commercial Code, the statutory body of ŠkoFIN s.r.o., with its registered office at Prague 5, Pekařská 6, 155 00, ID No.: 45805369, prepared the Report on relations pursuant to provision § 66a paragraph 9 of the Act No. 513/1991 Coll., Commercial Code, as amended, between VOLKSWAGEN AG, with its registered office in Wolfsburg, Germany, (hereinafter referred to as the “Controlling Entity” or “Volkswagen”) and ŠkoFIN s. r. o. (hereinafter referred to as the “Controlled Entity” or “ŠkoFIN”), and between ŠkoFIN and other entities controlled by Volkswagen (hereinafter referred to as the “other related parties”) for the accounting period 2009 (hereinafter referred to as the “accounting period”). VOLKSWAGEN AG is the entity that indirectly controls ŠkoFIN via VOLKSWAGEN FINANCIAL SERVICES AG which was sole shareholder of ŠkoFIN during the whole accounting period. The Report on relations includes all contracts concluded between related parties in specified areas, other legal acts carried out on behalf of these parties and all other measures adopted or taken on the behalf of or at the incentive of these parties by the Controlled Entity in the accounting period 2009.
Contracts concluded in 2009 Contractual counterparty
Contracts
IMPORT VOLKSWAGEN GROUP s.r.o.
Factoring contracts
ŠKODA AUTO a.s.
Contracts on business cooperation Contract on providing services
PORSCHE INTER AUTO CZ s.r.o.
Contracts on business cooperation Contract on providing services
SCANIA CZECH REPUBLIC s.r.o.
Contracts on business cooperation
VOLKSWAGEN BUSINESS SERVICES GmbH
Contract on providing services
Other
64
INIS INTERNATIONAL INSURANCE SERVICE s.r.o.
Loans provided to ŠkoFIN
PORSCHE CENTRAL EASTERN EUROPE s.r.o.
Car leasing
Other legal acts In the accounting period no legal acts were reported which were carried out in favour of Volkswagen and/or entities controlled by Volkswagen, which went beyond the scope of standard legal acts carried out by Volkswagen while exercising its rights as the Controlling Entity. Other measures During the accounting period no other measures were adopted or taken on the behalf of or at the incentive of Volkswagen and/or other entities controlled by Volkswagen, other than steps normally taken vis-a-vis Volkswagen as the sole shareholder of ŠkoFIN. Performance provided and counter – Performance accepted The amount of individual performances and counter-performances are disclosed in note 15 of the notes to the financial statements. Declaration of the statutory body of ŠkoFIN s.r.o. The statutory representatives of ŠkoFIN, as a collective statutory body, declare that the information stated in this Report on relations pursuant to provision § 66a paragraph 9 of the Act No. 513/1991 Coll., Commercial Code, as amended, is complete, true and correct. At the same time, they declare that ŠkoFIN did not suffer from any damage or detriment as a result of the conclusion of the above mentioned contracts, the other aforesaid legal acts, other measures, performance provided or accepted counter-performance and thus there is no reason to enforce the detriment on any related party.
Stefan Rasche
Ing. Jiřina Tapšíková, MBA
statutory representative
statutory representative
Prague, 31 March 2010
65
BRAND FINANCING OF VOLKSWAGEN GROUP VEHICLES
CONTACT ŠkoFIN s.r.o. Pekařska 6, 155 00 Praha 5 Telefon: +420 224 992 410 Fax: +420 224 992 307 E-mail: skofin@skofin.cz Internet: www.skofin.cz Consulting, design and production: B.I.G. Prague, 2010
