ŠKODA AUTO
ANNUAL REPORT
03 	 FOREWORD OF THE CHAIRMAN
	 OF THE BOARD OF MANAGEMENT
04 	 FOREWORD OF THE CHAIRMAN
	 OF THE SUPERVISORY BOARD
MANAGEMENT REPORT
06 	 ŠKODA AUTO COMPANY PROFILE
08 	 CORPORATE GOVERNANCE
08 	 ŠKODA AUTO BODIES
09 	 DECLARATION OF COMPLIANCE WITH
	 THE CODE OF CORPORATE GOVERNANCE
10 	 BUSINESS OPERATIONS
10 	 STRATEGY
13 	 PRODUCT PORTFOLIO
23 	 FINANCIAL SITUATION
23 	 OTHER INFORMATION
24 	 TECHNICAL DEVELOPMENT
28 	 PROCUREMENT
30 	 PRODUCTION AND LOGISTICS
35 	 SALES AND MARKETING
41 	 PEOPLE AND CULTURE
45 	 SUSTAINABILITY
53 	 REPORT ON RISKS AND OPPORTUNITIES
57 	 SHORT-TERM AND LONG-TERM OUTLOOK
FINANCIAL SECTION
59 	 AUDITOR’S REPORT
60 	 SEPARATE FINANCIAL STATEMENTS FOR THE YEAR 2021
62 	 NOTES TO THE SEPARATE FINANCIAL STATEMENTS
	 FOR THE YEAR 2021
108 	 REPORT ON RELATIONS
113 	 GLOSSARY OF TERMS AND ABBREVIATIONS
114 	 KEY FIGURES AND FINANCIAL RESULTS IN BRIEF
CONTENT
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Thomas Schäfer
CHAIRMAN OF THE BOARD OF MANAGEMENT
ŠKODA AUTO A.S.
DEAR READERS,
2021 was overshadowed by the Covid-19 pandemic and
the semiconductor shortage. We were once again forced
to halt production at certain points and were limited in our
capacity to meet the high demand for our models. Despite
these difficulties, we managed to successfully navigate
ŠKODA AUTO through the year.
In total, we delivered 878,200 vehicles worldwide
and achieved a 6.2% return on sales. On behalf of the
Board, I would like to thank the almost 43,000 Škodians
worldwide as well as our social partner KOVO and its
Chairman Jaroslav Povšík for this great team performance
and close cooperation.
We intensified our product campaign throughout 2021;
the ENYAQ iV, our first all-electric SUV, has been extremely
well received by our customers. Our refreshed best-selling
SUVs KODIAQ and KAROQ are also proving popular, as
is the new FABIA. In India, we have set the course for the
future work in our regions with our new KUSHAQ and
SLAVIA models.
This is an integral part of our new corporate strategy
NEXT LEVEL – ŠKODA STRATEGY2030 that we
presented in summer 2021. It sets out how we will be
making ŠKODA even more electric, digital and international
– and thus fit for the future.
We are making rapid progress in implementing our
strategy:
	■ We will be introducing at least three more all-electric
models below the ENYAQ iV by 2030, and we aim to
achieve an electric market share of 50 to 70 per cent in
Europe.
	■ We now have regional responsibility for Russia, North
Africa and India and are thus systematically expanding
our international presence.
	■ And we have assumed responsibility for the MQB-A0
Global Platform. This is a great honour for our
engineers and strengthens our position within the
Volkswagen Group.
In 2022, we will be launching our highly emotive
ENYAQ COUPÉ iV and the sporty ENYAQ RS iV
derivatives. During the year, we will also be unveiling a new
design language for ŠKODA that will ensure the brand is
well-positioned for the future.
Our team spirit, outstanding products and a clear
strategy will continue to make ŠKODA AUTO strong for
the upcoming years.
Kind regards,
FOREWORD OF THE CHAIRMAN
OF THE BOARD OF MANAGEMENT
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FOREWORD OF THE CHAIRMAN
OF THE SUPERVISORY BOARD
LADIES AND GENTLEMEN,
2021 has once again presented the automotive industry
with major challenges. Nevertheless, ŠKODA AUTO was
able to use the past year to set an important course for the
future: With the corporate strategy NEXT LEVEL - ŠKODA
STRATEGY2030, the brand defined its roadmap for this
decade, working with three main priorities: EXPAND,
EXPLORE and ENGAGE.
Thereby EXPAND contains the ambition to develop
ŠKODA AUTO into one of the five best-selling car brands
in Europe by 2030. A clear focus on the electrification of
the fleet across all segments is of central importance to
achieve this goal. The e-mobility hub in the Czech Republic,
ŠKODA AUTO’s home country, will be an important driver
of this transformation. From there – I am sure – the brand
will also send important signals to the Volkswagen Group.
After all, ŠKODA AUTO has already demonstrated
its vital role within the Group. Its activities in Russia, India
and North Africa are managed from Mladá Boleslav. The
global lead for the MQB-A0 platform lies now with the
company, as does the development of the next generation
Volkswagen Passat and ŠKODA SUPERB.
ŠKODA AUTO will succeed in staying on this
successful course if it maintains a clear focus on excellent
products, high functionality and profitability. Almost
43,000 employees worldwide have demonstrated this
commitment in 2021 and were thus able to close an
extremely challenging year with a respectable result.
Their success even in times of crisis is an important
starting point for the further development of ŠKODA
AUTO under the new strategy. If business decisions are
consistently aligned with it, the brand will achieve its
ambitious goals and sustainably strengthen its role within
the Volkswagen Group.
Kind regards,
Murat Aksel
CHAIRMAN OF THE SUPERVISORYBOARD
ŠKODA AUTO A.S.
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MANAGEMENT
REPORT
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COMPANY
PROFILE
MISSION
Modern accessible
mobility with everything
you need and surprises
you love.
VISION
We will help the world
live smarter.
A N N U A L R E P O R T 2 0 2 1
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ŠKODA AUTO a.s. (hereinafter the “Company” or
“ŠKODA AUTO”) is one of the oldest car manufacturers
in the world. The history of the Company stretches
back to 1895 when Václav Laurin and Václav Klement
laid the foundations for today’s global company. After
initially manufacturing bicycles and motorcycles, the first
passenger cars were manufactured in Mladá Boleslav in
1905. Throughout its history, the Company has held an
unmistakable position in the automotive industry that will
continue long into the future due to its broad and attractive
portfolio, and in a large part because it has been part of
the VOLKSWAGEN Group (hereinafter the “Group”) for
30 years. It has become a strong, internationally successful
company that is active worldwide and offers its customers
a total of twelve model lines.
ŠKODA AUTO has long been a pillar of the Czech
economy, currently employing more than 35,000 people
in the Czech Republic. It also makes sure it is a good
neighbour in all the regions where it is active in terms of
social responsibility.
The Company is based in Mladá Boleslav, where one
of its production plants is also located; another two can be
found in Kvasiny and Vrchlabí. However, vehicles bearing
the winged arrow are also manufactured in China, Russia*,
Slovakia and India, mostly via Group partnerships, and in
Ukraine in collaboration with a local partner.
The business activity in which the Company is engaged
primarily focuses on the development, manufacture and
sale of cars, components, original parts, ŠKODA brand
accessories and the provision of servicing. However,
ŠKODA AUTO is undergoing a transformation where
it aims to emerge even stronger via the NEXT LEVEL –
ŠKODA STRATEGY2030. The Company intends to be
one of the top five selling makes in Europe by 2030 with
its attractive ranges in incoming segments and other
electric models. It has also set the ambitious target of
becoming the most successful European make in India,
and North Africa.
100+ŠKODA AUTO’S UNBELIEVABLE
JOURNEY SPANS OVER MORE THAN
125 YEARS, THE BRAND IS NOW
PRESENT IN 100+ GLOBAL MARKETS
* The development in Russia will depend on further unfolding of the Russian-Ukrainian conflict.
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A N N U A L R E P O R T 2 0 2 1
CORPORATE GOVERNANCE
ŠKODA AUTO BODIES
SUPERVISORY BOARD
As of 31 December 2021, the Supervisory Board had the following members:
Murat Aksel
(*1972)
— Chairman of the Supervisory Board since 12 May 2021
(Member since 1 May 2021)
— Chairman of the Council of Chairmans and of the Works Council
of Odbory KOVO MB trade union
— Appointed by the sole shareholder
Jaroslav Povšík
(*1955)
— Vice Chairman of the Supervisory Board since 12 May 2021
(Member since 16 April 1993)
— Chairman of the Trade Union Works Council, Odbory KOVO
MB (Trade Union Mladá Boleslav)
— Elected by the employees of the Company
Ralf Brandstätter
(*1968)
— Member of the Supervisory Board since 1 May 2021
— Chairman of the Board of Management of the Volkswagen
Passenger Car brand
— Appointed by the sole shareholder
Daniela Cavallo
(*1975)
— Member of the Supervisory Board since 1 May 2021
— Chairwoman of the General and Group Works Councils
of VOLKSWAGEN AG
— Appointed by the sole shareholder
Prof. Dr. Jochem Heizmann
(*1952)
— Member of the Supervisory Board since 1 February 2019
— Independent advisor
— Appointed by the sole shareholder
Miloš Kovář
(*1964)
— Member of the Supervisory Board since 1 May 2015
— Production Coordinator of Odbory KOVO MB trade union
— Elected by the employees of the Company
Martin Lustyk
(*1965)
— Member of the Supervisory Board since 14 January 2019
— Chairman of Odbory KOVO KV z.s. trade union
— Elected by the employees of the Company
Peter Daniell Porsche
(*1973)
— Member of the Supervisory Board since 1 January 2015
— Entrepreneur and owner of PDP GmbH holding
— Appointed by the sole shareholder
Melanie Leonore Wenckheim
(*1967)
— Member of the Supervisory Board since 9 November 2018
— Entrepreneur and shareholder of Porsche Piëch Holding GmbH
— Appointed by the sole shareholder
CHANGES TO THE BOARD OF MANAGEMENT
Left the Board of Management:
— Ing. Bohdan Wojnar – Member of the Board of Management
from 1 January 2011 to 28 February 2021
— Alain Favey – Member of the Board of Management
from 1 September 2017 to 28 February 2021
— Dipl.-Kfm. Klaus-Dieter Schürmann – Member of the Board of
Management from 1 August 2016 to 30 September 2021
Appointed to the Board of Management:
— Dr.-Ing. Johannes Neft – Member of the Board
of Management from 1 January 2021
— Maren Gräf – Member of the Board of Management
from 1 March 2021
— Ing. Martin Jahn – Member of the Board of Management
from 1 March 2021
— Dipl.-Vw. Christian Schenk – Member of the Board
of Management from 1 October 2021
CHANGES TO THE SUPERVISORY BOARD
Left the Supervisory Board:
— Frank Witter – Vice Chairman of the Supervisory Board
from 30 May 2018 (Member from 9 November 2015)
to 31 March 2021
— Dr. Herbert Diess – Chairman of the Supervisory Board
from 30 May 2018 (Member from 14 May 2018)
to 30 April 2021
— Bernd Osterloh – Member of the Supervisory Board
from 1 January 2015 to 30 April 2021
Appointed to the Supervisory Board:
— Murat Aksel – Member of the Supervisory Board
from 1 May 2021
— Ralf Brandstätter – Member of the Supervisory Board
from 1 May 2021
— Daniela Cavallo – Member of the Supervisory Board
from 1 May 2021
The Honorary Chairman of the Supervisory Board is
Prof. Dr. Carl H. Hahn (*1926), former Chairman of the Board of
Management of VOLKSWAGEN AG. No powers and responsibility
are connected to this chairmanship, unlike the above-mentioned
members of the Supervisory Board.
ŠKODA AUTO has a sole shareholder, a General Meeting is not held and its powers are executed by the sole shareholder VOLKSWAGEN
FINANCE LUXEMBURG S.A. with its registered seat in Luxembourg, the Grand Duchy of Luxembourg. The Company bodies are
the Supervisory Board and the Board of Management.
The sole shareholder of VOLKSWAGEN FINANCE LUXEMBURG S.A. is VOLKSWAGEN AG with its registered office in Wolfsburg,
Federal Republic of Germany.
BOARD OF MANAGEMENT
As of 31 December 2021, the Board of Management had the following members:
Dipl.-Ing. Thomas Schäfer
(*1970)
— Chairman of the Board of Management since
3 August 2020 (member since 1 August 2020), responsible
for Central Management
Previous position:
— Chairman of the Board of Management and Managing Director
of Volkswagen Group South Africa (2015-2020)
Maren Gräf
(*1969)
— Member of the Board of Management since 1 March 2021,
responsible for People and Culture
Previous position:
— Head of VOLKSWAGEN Group Human Resources Top
Management (2018–2021)
Ing. Martin Jahn
(*1970)
— Member of the Board of Management since 1 March 2021,
responsible for Sales and Marketing
Previous position:
— Vice President, Sales, Marketing and Aftersales and Managing
Director of the Volkswagen Brand, FAW-VW, China
(2016–2020)
Dr.-Ing. Johannes Neft
(*1969)
— Member of the Board of Management since 1 January 2021,
responsible for Technical Development
Previous position:
— Head of Vehicle Body Development, VOLKSWAGEN AG
(2016–2020)
Dr. Michael Oeljeklaus
(*1963)
— Member of the Board of Management since
1 August 2010, responsible for Production and Logistics
Previous position:
— Member of the Board of Management, Production
and Technical Development, Shanghai-Volkswagen
Automotive Co., Limited (2005–2010)
Dipl.-Vw. Christian Schenk
(*1973)
— Member of the Board of Management since 1 October 2021,
responsible for Finance and IT
Previous position:
— Member of the Board of Management, Finance, IT and Legal,
MAN Truck & Bus SE (2019–2021)
Dipl.-Ing. Karsten Schnake
(*1968)
— Member of the Board of Management since 1 July 2020,
responsible for Procurement
Previous position:
— Executive Vice President of Volkswagen Group China
(2018–2020)
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The company ŠKODA AUTO (hereinafter referred to as
the “Company”) is aware of its extraordinary position in the
Czech business environment and the rising level of respect
it commands within the VOLKSWAGEN Group and from
competing car manufacturers. The Company thus places
considerable emphasis on ensuring that its employees,
business partners, all its customers and the general public
view it as a successful and transparent company that is
open to providing information. The Company is aware of
its long-standing tradition and the reputation it has built up
over many years, something it considers a key value for the
successful development of its business activities into the
future.
In view of these facts, the Company complies with the
recommendations and rules of the Corporate Governance
Code Czech Republic 2018 (the “Code”), available online.
The Company aims to continually improve internal
processes and rules in accordance with the Code, to
promote transparency, and to respect the legal regulations
and ethical conduct in business practice in the Czech
Republic.
LEVEL OF COMPLIANCE WITH THE
RECOMMENDATIONS OF THE CORPORATE
GOVERNANCE CODE
Following on the best practice in place at the
VOLKSWAGEN Group, the major share of internal
processes in terms of corporate governance has long
been set in accordance with the relevant rules of the
Code. With respect to the shareholding structure at the
Company (sole shareholder – the company VOLKSWAGEN
FINANCE LUXEMBURG S.A.), the organisational structure
of the company VOLKSWAGEN AG (see website
VOLKSWAGEN AG: www.volkswagenag.com), and that
shares in the Company are non-tradable on the public
market, some of the recommendations of the Code are not
relevant or are implemented to the corresponding extent at
a pan-Group level to ensure effectiveness and synergy.
The Company has created and applies a due and
effective policy of preventing, identifying and managing
conflicts of interest among the people at the Company.
Company policy is also based on the ŠKODA AUTO Group
Code of Conduct (“Code of Conduct”), the updated version
of which was presented to employees at the end of 2019.
The Code of Conduct emphasises the rules that ensue
from the valid legal and internal regulations that have the
greatest impact on the Company and supports employees
in adhering to generally recognised social values.
The Code of Conduct comprehensibly articulates
the Company’s requirements on how employees should
conduct themselves, stresses the role of employees in
maintaining the reputation of the Company, and details
the rules in place to prevent any conflict of interest and
corruption and for handling information and Company
property. The Code of Conduct also sets out the
fundamental rules of how to act towards business partners
and other persons and clearly articulates the interest the
Company has in protecting fair economic competition.
The Company’s other commitments to which the Code
of Conduct applies are occupational health and safety and
environmental protection.
As the Company has a sole shareholder, no general
meeting is held and the sole shareholder acts in the capacity
of the general meeting. This means that recommendations
concerning the convening and holding of the general meeting
are not relevant to the Company. Before choosing the
members of its appointed bodies, due consideration is made
of the trustworthiness, experience, and expert abilities of the
DECLARATION OF COMPLIANCE
WITH THE CORPORATE
GOVERNANCE CODE
potential members of those bodies. The Company leaves
the task of evaluating whether those requirements are met
during their term of office to the members of the individual
bodies under the provisions of Section 159 of the Civil
Code.
Members of the Board of Management and two-thirds
of the members of the Supervisory Board are elected
and removed by the general meeting, in this case, the
sole shareholder, primarily in line with the professional
and specialised requirements it demands. The fact that
no general meeting is held means that the candidates
nominated do not attend any sitting of the general meeting
that would otherwise consider their appointment.
The Board of Management at the Company has
seven members and is responsible for the governance of
the Company’s interests. Each member of the Board of
Management is responsible for one specialised area. The
members of the Board of Management are obliged to carry
out their duties with due diligence and are responsible
for their activities to the extent laid down in the legal
regulations of the Czech Republic.
The Supervisory Board has nine members. Two-thirds
of the members of the Supervisory Board are appointed
and removed by the general meeting, in accordance
with the law. One-third of the members are appointed
by Company employees in elections, in accordance with
the valid voting rules. However, the Company has no
instrument in place that would make it possible to influence
the make-up of this part of the Supervisory Board, in line
with the policy on diversity. The Company professes the
principles of non-discrimination and equal treatment,
not only in staffing governing and management positions
but throughout the Company as a whole.
The Company is not fully compliant with the
recommendations made under paragraph 9.2 of the Code,
according to which the Supervisory Board or the Board of
Management should set up non-executive committees,
primarily a committee for appointments, a committee
for remuneration and a committee for risks, so that the
effectiveness of its activity may be improved. In light of
the shareholder structure in place at the Company, the
activities associated with committees fall within the remit
of the Supervisory Board or are effectively delegated to the
Group level. Failure to meet the relevant recommendations
of the Code specified above does not, however, mean
failure to fulfil the mandatory requirements of the law of
the Czech Republic and is not a legal risk for the Company.
Cooperation between the Board of Management and
the Supervisory Board is governed by statutory provisions,
the Company’s Articles of Association, and the rules of
procedure in place for the Board of Management at the
Company, which set out detailed regulations for the work
of the Board of Management at the Company, including
the actions and measures requiring the involvement of
the Supervisory Board and the obligation to inform the
Supervisory Board.
The Company regularly publishes all relevant
information about its activities in a transparent manner in
the Annual Report. It also provides information regarding
the impacts of its activities on the surrounding area in
a Sustainability Report. The risk management system and
internal control system are described in detail in the chapter
entitled Report on Risks and Opportunities.
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BUSINESS OPERATIONS
CORPORATE STRATEGY
1.5IN 2030, THE BRAND’S
GLOBAL SALES POTENTIAL IS
1.5 MILLION CARS A YEAR
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A N N U A L R E P O R T 2 0 2 1
In June 2021, the Company introduced a new
development plan for the third decade titled NEXT LEVEL
– ŠKODA STRATEGY2030. This aims to build on the
success of Strategy 2025+ to accelerate in the sphere of
internationalisation, electrification and digitisation.
NEWVISION, NEW MISSION
The new NEXT LEVEL – ŠKODA STRATEGY2030
provides specific answers to the question of how the
Company will successfully steer through the transformation
process and make sure that it is even stronger in 2030 than
at present. The Company has defined a new vision and
a new mission for its journey into the future. The new
vision is We will help the world live smarter. The new
mission is Modern accessible mobility with everything
you need and surprises you love. At the same time,
ŠKODA AUTO will continue to build on its trusted values:
simplifying, human, and surprising. It is precisely these
strong values that have always distinguished the brand.
The strategy for the third decade focuses on three
priorities, which can be summarised as EXPAND, EXPLORE
and ENGAGE. At the same time, ŠKODA AUTO will
remain a proud brand connected to the people that work
for it. The strong identification that employees have with
the brand, an innovative approach, and their courage to
explore new challenges will continue to distinguish the
Company from others even in 2030.
A LEADING POSITION
ON PROSPECTIVE MARKETS
As part of the EXPLORE priority, ŠKODA aims to become
the leading European brand on the prospective markets of
India, Russia*, and North Africa, and in doing so contribute
to the brand’s global sales potential of 1.5 million
cars a year. The manufacturing of models specifically
customised to those markets is designed to support this.
This approach is demonstrated in the ŠKODA KUSHAQ,
the first batch-produced car developed by the brand as
part of the INDIA 2.0 project. This compact SUV began
rolling off the assembly line at the plant in Pune in 2021 and
will be launched on other growth markets over the
medium term. The second car developed in India for the
Indian market is the SLAVIA liftback, which the Company
introduced to the public at the end of 2021. The Company
has now assumed responsibility for the Indian, Russian, and
North African regions for the entire VOLKSWAGEN Group,
and is ready to take on other new assignments. On
top of that, ŠKODA AUTO is now responsible for the
MQB-A0 Global platform.
TOP 5 IN EUROPE THROUGH
ELECTROMOBILITY AND FOCUS
ON ACCESSIBILITY
The EXPAND priority aims to elevate the ŠKODA brand
among the five best-selling car brands in Europe. The
Company plans to achieve this by fortifying its position
in the affordable car segment; for example, with the
ŠKODA FABIA and an affordable electric car in the A0
segment in the future.
A strong, electrified portfolio of models is fundamental
in achieving success in Europe and the Company
will broaden its range to include at least three more
purely-electric models by 2030. These will be at a price and
size below those of the ŠKODA ENYAQ iV. Depending on
market developments, ŠKODA AUTO will endeavour to
ensure that fully-electric models account for 50 to 70% of
sales of ŠKODA brand models in Europe.
Electrification is also closely linked to the plan to
transform Central and Eastern Europe into a centre
of electromobility: all three of the Company’s Czech
production plants should be manufacturing electric cars
or electric components by 2030. Therefore, a traditional
industrial country will be transformed into a hub of
electromobility. These activities will allow the Company to
secure existing jobs and create new ones.
ŠKODA REMAINS SIMPLY CLEVER
The third priority, ENGAGE, cuts across many areas since
it takes in specific objectives concerning customers’ digital
experience, the environment, diversity, and education. The
Company intends to be the benchmark for the Simply
Clever User Experience. A customer who buys a new
ŠKODA car or a service should be able to immediately
and intuitively use it. ŠKODA AUTO is already putting this
idea into practice with its POWERPASS, which enables
comfortable charging of the brand’s electrified models, or
during the process of buying a ŠKODA car. The Company
plans to sell every fifth car online in 2025, while customers
are already now benefiting from a virtual showroom
concept in selected European markets.
The Simply Clever strategy is designed to not only deal
with physical solutions for the brand’s cars but also the
associated services and user experiences. ŠKODA AUTO
wants to listen to its customers even more carefully when
designing its products.
THE SHARE OF FULLY ELECTRIC
MODELS IN ŠKODA BRAND SALES IN
EUROPE WILL BE 50 TO 70% IN 2030
70
* The development in Russia will depend on further unfolding of the Russian-Ukrainian conflict.
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HIGHER ENVIRONMENTAL TARGETS
AS A CHALLENGE
As part of its ENGAGE priority, the Company will also
intensify its efforts concerning the environment and make
its environmental targets significantly stricter. By 2030 it
plans to reduce its fleet emissions by 50% in comparison
with 2020 and convert all its Czech and Indian plants to
carbon-neutral production. In doing so, it will meet the
ambitious requirements of the Green Deal for Europe.
AN OPEN AND TOLERANT
CORPORATE CULTURE
The NEXT LEVEL – ŠKODA STRATEGY2030 also brings
diversity to the fore: 25% of management positions at the
Company should be held by women by 2030. Diversity,
inclusion, and equality are natural parts of the corporate
culture at ŠKODA AUTO, which stands out for its
openness and tolerance.
The Czech automotive company will continue
to support education of its employees as part of
the transformation process and will invest almost
CZK 13 billion in this area between 2022 and 2030 to
secure the jobs also in the future.
EMPHASIS ON EFFICIENCY
AND SIMPLIFICATION
ŠKODA AUTO will build on efficiency and simplification,
two traditional strengths that have brought much success
in the past, to achieve the objectives of NEXT LEVEL –
ŠKODA STRATEGY2030. These are to maintain the
highest cost efficiency among its European competitors,
for example by using internal digitisation, smart automation
and data analytics, to deliver a sustainable return on sales
of at minimum 8%. It has also taken the first steps in
simplifying its processes and reducing bureaucracy. One
example of this is adapting the range of versions and
customised extras. With further electrification of the model
range, it is expected in the medium-term to reduce the
number of available product offer combinations by 40%.
BY 2030, THE CARMAKER WILL
INVEST CZK 13 BILLION IN
EMPLOYEE EDUCATION
13
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PRODUCT
PORTFOLIO
The Company launched its first all-electric SUV, the
ENYAQ iV on international markets and brought out
a new generation of the FABIA in 2021. The fourth
generation should follow on from the successful
sales of its predecessors due to a more emotive
appearance, more space, enhanced safety and a higher
level of connectivity than at any time before.
ŠKODA’s SUV models, the KODIAQ and
KAROQ, were also upgraded. Both cars aim to satisfy
customers’ wishes at an even higher level and come
with an innovative design, generous space, advanced
assistance systems, and modern, effective diesel and
petrol engines.
The Company introduced two new models
in 2021 - the KUSHAQ and the SLAVIA – both
developed for the Indian market, where they
became the first cars in the INDIA 2.0 model
offensive. ŠKODA AUTO is responsible for all of
the VOLKSWAGEN Group’s activities in the Indian
subcontinent. The objective is to strengthen the
position of the Company and the Group on the Indian
market over the long term by broadening the range of
cars in the volume segment.
The past year also saw the launch of the
SPORTLINE version of four models: the ENYAQ iV
and OCTAVIA in the first half of the year, followed by
the KODIAQ and KAROQ SUV, which were given
a sporty makeover in the second half of the year.
This meant that the Company began selling the
SPORTLINE version of the KODIAQ and KAROQ
SUV at the same time as the upgraded versions.
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ŠKODA FABIA
One of the brand’s key models, the ŠKODA
FABIA, was given a new appearance in 2021.
This fourth-generation model is fitted with the
most advanced technology and economical
petrol engines and comes in an attractive
design. The car is built on the Group’s MQB-A0
platform so offers its customers even more
space. The modular MQB platform also raises
safety standards, particularly for the car body,
where the number of structural elements made
of maraging steel has been increased. Greater
safety is also provided by the modern assistance
systems, which are better known from higher
classes of cars. In combination with the optional
50-litre tank, the travel distance for 3-cylinder
engines is more than 900 km in WLTP mode.
The modern interior concept is dominated by
third-generation infotainment systems, with
a diagonal display size of up to 9.2 inches.
Naturally there is a generous and well used
interior space complemented by many Simply
Clever features.
The FABIA can be powered by economical
and highly efficient three-cylinder engines
with a power output of 48 kW to 81 kW. The
top-of-the-range engine comes in the form of
a dynamic four-cylinder 1.5 TSI version with
a power output of 110 kW (150 k) equipped
with active cylinder technology (ACT). All
Evo-generation drive units comply with the
Euro 6d emission standard.
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A N N U A L R E P O R T 2 0 2 1
ŠKODA RAPID
Excellent price-to-utility value, ample interior
space, and a generously-sized boot all
characterise the ŠKODA RAPID models made
for the Chinese, Indian, and Russian markets.
The Chinese RAPID was upgraded in 2020,
only a few short months after significant
innovations to the RAPID model in Russia.
ŠKODA SLAVIA
The ŠKODA SLAVIA is the second
ŠKODA model in the INDIA 2.0
project. The SLAVIA, built on the
MQB-A0-IN platform, broadened the
range of sedans made by the Czech
automotive company in India to
include a model from the A0 segment.
The car provides a high level of active
and passive safety. Passengers are
protected by up to six airbags, while
the range comes in two efficient and
economical TSI spark-ignition engines
with outstanding driving performance
and exemplary economy.
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A N N U A L R E P O R T 2 0 2 1
ŠKODA SCALA
The compact SCALA model boasts high
levels of active and passive safety, full LED
headlights and tail lights, plenty of room
for passengers and luggage, and an array
of Simply Clever elements. Six different
engines are available, ranging from 66 kW
to 110 kW in power. This five-door
hatchback combines an emotional design
with a high level of functionality and
state-of-the-art connectivity options.
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A N N U A L R E P O R T 2 0 2 1
ŠKODA OCTAVIA
The fourth generation of the ŠKODA
OCTAVIA, available in liftback and estate
versions, holds the title of the best-selling
ŠKODA model. Characteristic design
language, cutting-edge aerodynamic
properties, the compact yet extraordinarily
spacious body, advanced assistance systems,
and a wide range of engines are just some
of the qualities of the car. The ŠKODA
OCTAVIA now comes as a plug-in hybrid
version, the OCTAVIA iV, the mild-hybrid
OCTAVIA e-TEC, and a version that runs
on natural gas, the OCTAVIA G-TEC.
Meanwhile, the OCTAVIA SCOUT, a robust,
versatile model with four-wheel drive,
underlines the practical nature of the range.
The sporty OCTAVIA RS is available in
three different types of propulsion - a TSI
spark-ignition engine, a TDI compression
ignition engine, and a plug-in hybrid power
train in the OCTAVIA RS iV, which also
enables a purely electric drive.
ŠKODA OCTAVIA PRO
The ŠKODA OCTAVIA PRO for the
Chinese market uses the same emotive
design language as the fourth-generation
OCTAVIA in Europe. It excels with
sculptural elements, precise lines and
modern, clearly defined surfaces. Overall,
the OCTAVIA PRO looks like a dynamic
coupé. This impression is reinforced by
front and rear aprons in the style of the
sporting OCTAVIA RS combined with
a black roof, black exterior mirrors and
alloy wheels measuring up to 18” in
diameter. The slim headlights and tail
lights are sharply drawn, feature the
signature ŠKODA crystalline elements
and come with LED technology as
standard.
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A N N U A L R E P O R T 2 0 2 1
ŠKODA KAMIQ
The Company broadened its successful range of
European SUVs to include a third model with the
ŠKODA KAMIQ, and in doing so moved into the
fast-growing urban SUV segment. The KAMIQ
combines the classic benefits of sport utility models,
such as larger headroom and raised seats, with the
agility of a compact car and the emotional design so
typical of the ŠKODA brand. The very latest assistance
and infotainment systems, generous space and plenty
of Simply Clever elements ensure that the ŠKODA
KAMIQ is a typical ŠKODA car: one that satisfies the
demands of lifestyle and family-focused customers.
ŠKODA KAMIQ GT
As with the larger KODIAQ GT, the KAMIQ GT
SUV coupé is sold exclusively on the Chinese
market. This sporty model is derived from the
KAMIQ city SUV. Its dynamic appearance,
larger interior space, and range of practical
elements are ideal for young lifestyle-focused
customers. During the development of this
model, the emphasis was primarily placed on
the driving experience and the emotive design.
Advanced connectivity elements and a modern
infotainment system come as standard.
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A N N U A L R E P O R T 2 0 2 1
ŠKODA KUSHAQ
The ŠKODA KUSHAQ symbolises the beginning
of a new era at ŠKODA AUTO in India. This
SUV is the first batch model in the INDIA 2.0
project, developed and manufactured in India for
the local market. The KUSHAQ is built on the
specially-adapted MQB-A0-IN modular platform.
Its sporty yet robust appearance is underlined by
headlamps and tail lights that use modern LED
technology. While its compact outer dimensions
make the KUSHAQ ideal for the Indian city, it is still
able to boast the generous interior space so typical
of the ŠKODA brand. The interior is characterised
by exemplary ergonomics, fresh colours, and
ambient lighting. A high level of active and passive
safety is ensured by a wide range of assistance
systems, including multi-collision brakes, a tyre
pressure monitoring system, and a Hill Hold Control.
ŠKODA KAROQ
The end of 2021 saw the première of the
upgraded ŠKODA KAROQ, which at a length of
4.38 metres can be classed as a compact SUV. The
KAROQ comes with newly-shaped headlamps that
employ Matrix technology and the characteristic
“four-eye” design typical of ŠKODA’s range of SUV
models. Plenty of improvements were also made
to the interior, with new upholstery containing
environmentally-friendly materials, more ambient
LED lighting, and an 8-inch virtual cockpit as
standard. The KAROQ’s strength is its system
VarioFlex, which allows for a variable layout rear
seats. Removing them provides luggage space of
up to 1,810 litres.
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A N N U A L R E P O R T 2 0 2 1
ŠKODA KODIAQ
The Company’s first large SUV was
upgraded in 2021. The most obvious
changes to the nose of the exterior are the
new front bumper and the newly-shaped
headlamps, which use Matrix technology.
The tail lights were also upgraded with
animated indicators to become even more
attractive. In addition to the standard
ranges of extras, the new KODIAQ is
also available in the SPORTLINE version,
as the luxury L&K, and as the popular,
dynamic KODIAQ RS, which was also
given a 2.0 TSI petrol engine with a power
output of 180 kW, four-wheel drive, and
DSG gearbox as part of its upgrade.
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A N N U A L R E P O R T 2 0 2 1
ŠKODA KODIAQ GT
A car intended solely for the Chinese market brings together the
robust exterior and versatility of an SUV and the elegance and
dynamics of a coupé. The mighty appearance of the car is enhanced
by LED headlamps, a three-dimensional bumper, and a front spoiler
with wide openings to let air in. There are two efficient spark-ignition
engines to choose from. The 2.0 TSI engine with a power output
of 137 kW is used for front-wheel drive, while the 2.0 TSI engine
with a power output of 162 kW comes with a four-wheel drive and
7-speed DSG gearbox. Wi-Fi connection and MirrorLink™, Apple
CarPlay, or Baidu CarLife interface mean that the KODIAQ GT is
always online while providing the most advanced level of connectivity.
ŠKODA SUPERB
The ŠKODA brand’s flagship model comes
with a hatchback or as an estate, in SCOUT
and SPORTLINE versions, and with a plug-in
hybrid drive. Technology such as full LED
matrix headlamps and a comprehensive range
of innovative assistance services combine to
ensure that the ŠKODA SUPERB is one of the
safest and most comfortable cars in its class. It
also continues to set the benchmark in terms of
space.
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A N N U A L R E P O R T 2 0 2 1
ŠKODA ENYAQ iV
The ŠKODA ENYAQ iV, which premièred
in Prague in September 2020, marks
another step in bringing the Company’s
electromobility strategy to fruition. With this
model, the Company has further developed
its emotive design language. The purelyelectric
SUV is the first ŠKODA manufactured
vehicle built on the VOLKSWAGEN Group’s
MEB modular platform for electric cars. The
ENYAQ iV brings together rear-wheel drive
or four-wheel drive, a practical travel distance
of more than 520 km in WLTP mode, and the
generous space so typical of ŠKODA cars.
The ENYAQ iV electric SUV offers an entirely
new interior concept, with an optional design
instead of traditional packages of extras, and
a new structure to the range of models.
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A N N U A L R E P O R T 2 0 2 1
OTHER INFORMATION
In the past, certain ŠKODA cars were fitted with
1.2 litre, 1.6 litre and 2.0 litre EA189 diesel engines.
In 2015, the competent authorities raised questions
about the behaviour of the software that detects
when these cars are running in test conditions. This
software was found in approximately 1.2 million
ŠKODA brand cars. ŠKODA AUTO decided to launch
a servicing campaign to update those cars. The required
technical measures were developed and prepared for
the modification of these cars so that the servicing
campaign could begin in 2016. Technical measures
were drawn up for all the ŠKODA cars in question
and were presented to the competent homologation
authorities. The servicing campaign will continue in
2022. The costs of the servicing campaign were taken
into account in the financial statements for previous
periods. These costs had no significant impact on the
economic result in 2021.
FINANCIAL
SITUATION
OTHER
INFORMATION
The financial results at ŠKODA AUTO are reported in
accordance with IFRS, as adopted by the European Union.
The year 2021 was significantly affected by the impact
of the Covid-19 pandemic, which, together with natural
disasters, caused problems in the supply chain, particularly
in the availability of semiconductors. Despite the tough
conditions, the Company achieved a positive operating
result and maintained strong financial performance and
stability thanks to good margins and cost discipline.
THE COMMERCIAL DEVELOPMENT
OF THE COMPANY
A total of 878 thousand ŠKODA cars were delivered
to customers in 2021, including deliveries in China
(2020: 1,005 thousand cars).
ŠKODA AUTO sales fell by 11.8% year-on-year to
692,000 cars. Meanwhile, Company revenues reached
CZK 422.6 billion (-0.4%). Car sales accounted for 77.5%
of the overall turnover (2020: 81%). The best-selling
models were the ŠKODA OCTAVIA and ŠKODA KAMIQ.
Deliveries of components and sets of disassembled cars
to companies in the VOLKSWAGEN Group accounted
for 12.1% of total revenues (2020: 10.6%). Business
in original parts and accessories accounted for 5.7% of
overall revenues (2020: 5%), while the remaining 4.7%
(2020: 3.4%) were revenues from the sale of services
(e.g. ŠKODA Connect), licences, and other revenues.
The cost of sales fell by 0.1% year-on-year to
CZK 380.7 billion. The gross profit margin stood at 9.9%
in 2021, meaning a slight decline of 0.3 percentage point
year-on-year.
Distribution costs stood at CZK 10.3 billion, entailing
a year-on-year drop of 16.7%. Administrative costs stood
at CZK 12.3 billion in 2021, meaning a year-on-year
decrease of 9.5%.
The operating profit during the reference period was
CZK 26.2 billion, marking a year-on-year improvement
of 51.4%. This improvement was driven mainly by the
optimisation of the sales mix, the reduction of sales costs,
and the development of exchange rates. Profit before
tax stood at CZK 27.3 billion (2020: CZK 17.9 billion).
Meanwhile, profit after tax was CZK 22.4 billion
(2020: CZK 15.2 billion) and the return on sales before tax
rose to 6.5% (2020: 4.2%).
CASH FLOW AT THE COMPANY
Cash flow from operating activities in 2021 stood at
CZK 51.9 billion, meaning a year-on-year upturn of 41.4%
driven mainly by an improved operating result. Net liquidity
stood at CZK 20.4 billion as at 31 December 2021
(CZK 16.4 billion as at 31 December 2020). ŠKODA AUTO
paid out a dividend amounting to CZK 15.2 billion
(2020: CZK 31.7 billion).
COMPANY ASSETS AND CAPITAL STRUCTURE
The Company’s balance-sheet total as at
31 December 2021 amounted to CZK 231.5 billion,
representing an increase of CZK 3.5 billion on the
balance-sheet total at the end of the previous year. The
value of non-current assets rose slightly year-on-year
by 0.2% to CZK 144.9 billion and current assets
stood at CZK 86.6 billion on the record date (as at
31 December 2020: CZK 83.3 billion). This increase in the
balance-sheet total on the asset side mainly occurred as
a result of increased inventories of unfinished goods due to
the lack of semiconductors.
Equity rose by CZK 6.6 billion during 2021 to a total
of CZK 101.5 billion, in particular due to an increase in the
economic result. Equity ratio in 2021 stood at 44%.
The value of non-current liabilities fell to
CZK 26.1 billion. Current liabilities decreased to
CZK 103.8 billion in comparison with the previous year.
COMPANY INVESTMENT ACTIVITY
Investments in 2021 (excluding development
costs) accounted for a total of CZK 15.3 billion
(2020: CZK 17.8 billion). The biggest portion was invested
in new models, of which more than CZK 4 billion went
into new technologies, particularly electromobility and
digitalisation.
The Company spent CZK 21.5 billion on
research and development for new products in 2021
(2020: CZK 18.5 billion).
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A N N U A L R E P O R T 2 0 2 1
TECHNICAL
DEVELOPMENT
IN 2021, ŠKODA MOTORSPORT
SOLD 443 FABIA RALLY2 AND
FABIA RALLY2 EVO CARS
THROUGH ITS CUSTOMER
PROGRAMME
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A N N U A L R E P O R T 2 0 2 1
In 2021, Technical Development successfully continued
with the transformation that will allow it to respond
flexibly to demanding challenges. It embarked on the
journey from classic development, which focuses on parts,
to development that concentrates on functions. The
Technology Centre was put into service and planning began
for the new Klimacentrum, which will contribute toward
product sustainability.
TRANSFORMING
AND UPDATING THE STRATEGY
Technical Development faced some major challenges in
2021, primarily in the sphere of product innovation. To
provide an adequate response, it continued in the essential
transformation and associated development of the
competencies and capacities in the area of new themes,
including e-mobility and functionally-oriented development.
To this end, it succeeded in transforming 100 employment
positions from conventional to new thematic areas in 2021.
User experience and HMI (human-machine interface)
design, which is becoming a key element in brand identity,
remained major themes at Technical Development. In the
past year, the HMI team worked on projects including the
logic and appearance design of systems for driver and crew
interaction.
RESPONSIBILITY FOR NEW PROJECTS
ŠKODA AUTO assumed Group-wide responsibility for
the MQB-A0 global platform in 2021. This is designed
for regions with high growth potential such as India,
Russia*, Africa, and ASEAN and Latin American countries.
At the same time, it began preparations to take over
developmental responsibility for the MQB 27 (W) Global
platform next year. Therefore, ŠKODA AUTO will
be responsible for managing the development of all
components in areas such as air-conditioning, steering,
batteries, the exhaust system, and the architecture of
electronics in cooperation with Volkswagen do Brasil.
Technical Development reached a significant milestone
in the fulfilment of the Beta+ project, part of which secures
the joint development of new ŠKODA SUPERB and
Volkswagen Passat models.
* The development in Russia will depend on further unfolding of the Russian-Ukrainian conflict.
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A N N U A L R E P O R T 2 0 2 1
BUILDING DEVELOPMENT
AT THE ČESANA COMPLEX
The Company ceremonially opened its Technology
Centre in 2021, after investing almost CZK 560 million
in construction. This is among the most important
investments in Technical Development in the past
few years and enlarges office space by 9,100 m2 and
technology space by 7,200 m2. In doing so, the Company
has provided a modern space for 425 developers and
technological space for new themes and activities in
technical development, such as the development of
electromobility, HMI, UX, and the physical and digital safety
of cars. The Technology Centre also meets the conditions
for new work methods that require shared space, meeting
rooms equipped for online communication, and separate
acoustic booths.
Work also successfully continued on the Model
Construction building, which will provide modern,
centralised, and highly-effective space for the production
of models in the early stages of development. An actual
model is an essential part of the development of a car, and
in combination with digital and virtual methods secures the
optimum working conditions for decision-making in the
early stages of development.
Technical Development is aware of the importance of
new trends in digitisation and virtualisation, without which
companies would not be able to manage nowadays. For
this reason, Technical Development worked intensively in
2021 on preparing investment in the Virtual Development
Centre, which will provide modern conditions for a whole
range of virtual activities. It is planned to be put into
operation in mid-2023.
Technical Development was also involved in preparing
investment in the new Klimacentrum, with test cylinders
for better simulation of the internal and external airflow
of a car under various climatic conditions. The reason for
building the Klimacentrum is to raise competencies in
product sustainability and to enhance the utility values
of products for customers. It is planned to be put into
operation at the end of 2023.
NEW PRODUCTS
The year 2021 was one of launches and new products
at Technical Development. The ENYAQ iV became the
first purely-electric SUV that the Company launched
on the market. This marked another step in the
consistent implementation of the e-mobility strategy.
The fourth-generation FABIA was also introduced to
the public and now provides more space, comfort, and
functions due to its switch to the MQB platform. The
Company also launched the KUSHAQ on the market as
part of the INDIA 2.0 project. This was the first car to have
been developed specifically for the Indian market and was
followed by the Volkswagen Taigun, also developed by
ŠKODA AUTO.
120 YEARS SINCE THE BIRTH
OF A FAMOUS RACING TRADITION
ŠKODA celebrated 120 years in the world of motorsport
in 2021. The whole year was a national and international
celebration of this significant anniversary.
At the beginning of the year, ŠKODA Motorsport
delighted its customers with the introduction of the
special edition ŠKODA FABIA Rally2 evo Edition 120, only
twelve of which were made. These fully-equipped cars,
with technical innovations and extra accessories, created
enormous interest among race teams and fans alike.
However, the strategy at ŠKODA Motorsport
involved the comprehensive development and support
for the customer programme, which with the sale of the
443 FABIA Rally2 and FABIA Rally2 evo cars, is the central
point of its activities. As a result, ŠKODA Motorsport raised
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A N N U A L R E P O R T 2 0 2 1
the level of its services by introducing the highly-successful
sale of spare parts during selected races in the World
Rally Championship (WRC) and the European Rally
Championship (ERC) to all its customers, who had long
been calling for such a service.
It was also in 2021 that ŠKODA Motorsport began
its collaboration with the top customer team Toksport
WRT, which was provided with deluxe technical support
at races in both the mentioned championships. The
experienced driver Andreas Mikkelsen used this support
to the maximum and defended its team title in the WRC2
drivers’ category. He took his success to yet another level
by winning the ERC and becoming European champion
helping the customer team Toksport WRT to win the ERC
title in the team category.
The anniversary celebrations were joined by a domestic
importer that provided support to seven ŠKODA dealership
teams and entered eight racing crews in the Czech
Championships. One of those crews was the victorious duo
of Jan Kopecký and Jan Hloušek, driving for the AGROTEC
ŠKODA Rally Team.
The notional culmination of celebrations to mark the
120th anniversary on home soil was the Rally Bohemia,
with the ŠKODA Motorsport factory team entering
three crews - Jan Kopecký and Jan Hloušek, Dominik
Stříteský and Jan Hovorka, and Marco Bulacia with Marcelo
Der Ohannesian. All three crews fought off the strong
competition and successfully represented the ŠKODA
brand, finishing first, second, and fifth respectively.
PREPARATION FOR THE NEW SEASON
For developers at ŠKODA Motorsport, the past year was
one of developing and testing a new generation of racing
cars. The competition special, drawing on the fourth
generation of the batch-produced ŠKODA FABIA, will
again fall within the Rally2 category under FIA rules. The
car underwent intensive tests in the second half of the year
under varying conditions on asphalt and gravel tracks, and
the project is now ready to move to the next stage in 2022.
One special chapter last year was the support for the
development of an electric rally special, the ŠKODA RE-X1
Kreisel, created in cooperation with Kreisel Electric and the
Baumschlager Rallye & Racing team. The alternative-drive
car was successfully approved by the Austrian Motorsport
Federation during the year and displayed its technical and
sporting quality by taking the third position on its debut in
the Austrian championships.
10,000 RALLY STARTS
One significant sporting milestone was reached by the
FABIA Rally2 and Rally2 evo cars starting 11,000 rallies
since the beginning of the project in 2015. Therefore, the
2021 season wrote itself into the history books at ŠKODA
Motorsport in yet another way. A successful customer
programme and customer satisfaction remain the priority
at the Company, and one of the biggest challenges in the
years to come.
THE COMPANY INVESTED
CZK 560 MILLION IN THE
TECHNOLOGY CENTRE IN
ČESANA
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A N N U A L R E P O R T 2 0 2 1
PROCUREMENT
1,771THE PROCUREMENT TEAM SECURED
1,771 NEW PARTS FOR THE BETA+ JOINT
GROUP PROJECT (SUPERB AND PASSAT)
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A N N U A L R E P O R T 2 0 2 1
Procurement is responsible for securing material,
components and services in the quantity and quality that
enables ŠKODA AUTO to satisfy the demands placed on
it by customers while simultaneously building a positive
brand image. The Procurement strategy fully follows on
from NEXT LEVEL – ŠKODA STRATEGY2030, which
defines the development of the Company plan.
SUPPORT FOR BATCH PRODUCTION
AND NEW LAUNCHES
The impact of the Covid-19 pandemic gradually worsened
at the beginning of 2021, causing considerable problems in
terms of direct deliveries and strongly affecting ship and rail
transport capacities. The spread of the pandemic into the
ASEAN region in the second half of the year significantly
impacted the manufacturers of semiconductors and chips
for the automotive industry and other sectors alike. The
lack of chips led the Group to introduce crisis management,
allowing the Company to fully exploit the Group’s
procurement synergy and in doing so minimise negative
impacts to the lowest level possible.
The main priorities of the Procurement Department
were to stabilise deliveries over the medium and long term,
identify risky suppliers, and introduce counter-measures in
procedural and financial support of suppliers.
Maximum effort was required by employees in the
tender for projects involving the successor to the KODIAQ
and the BETA+ joint Group project (SUPERB and PASSAT),
for which the Procurement team secured 1,771 new
parts in all existing colours. Eight entirely new suppliers to
ŠKODA AUTO were among those taking part in the tender.
resources. It kept a constant eye on what was happening
on the innovation market and actively engaged in seeking
new solutions at supplier workshops and comparison boot
camps. For example, workshops for suppliers on the subject
of sustainability have already generated around seventy
innovative ideas, nine of which have moved on to the pilot
project stage and will be implemented in future generations
of ŠKODA models.
VOLUME OF PROCUREMENT
ŠKODA AUTO spent CZK 202.8 billion on procuring
production material in 2021, meaning a year-on-year
decrease of CZK 700 million caused by the continuous
outage of chip supplies throughout the year. The lion’s
share of this was spent in the Czech Republic (37.1%),
followed by Germany, where Procurement bought around
one-quarter (26.1%) of production material. The total
volume of General Procurement was CZK 33.6 billion,
THE DEVELOPMENT OF PRODUCTION SPACE
AND PERSONNEL CAPACITIES
A key project for General Procurement was the investment
in a new office building in Mladá Boleslav at an approved
cost of CZK 1.9 billion. Another significant milestone was
a tender to secure 3,000 agency employees for a period
of five years – one of the biggest contracts in this field in
the Czech Republic. The team secured an order for the
restoration of the foundry at the plant in Mladá Boleslav,
with an approved budget of almost CZK 590 million.
General Procurement also worked with colleagues from
Volkswagen Group Rus in 2021 on securing investment
costs totalling CZK 4.7 billion, money intended to increase
and expand capacities at the engine shop, the welding shop,
the painting shop, and assembly at the Russian Kaluga
plant.
FIRST TWO MODELS FOR INDIA
As part of its model offensive for the Indian market, and
despite all the obstacles in its path, the Company was able
to successfully launch batch production of its first two
models on the common MQB-A0 platform - the ŠKODA
KUSHAQ and the Volkswagen Taigun. The cars are priceattractive
and meet the specific requirements of Indian
customers. The level of localisation of components for
these models was high indeed, standing at almost 95%.
SUSTAINABILITY AND INNOVATION
Procurement significantly broadened its activities in
examining the very latest technological innovations in 2021,
focusing on sustainable products to increase the value of
the product to customers, and the responsible use of all
meaning an increase of 35.8% on 2020. The Production
Procurement database held some 2,019 suppliers from all
over the world in 2021. Moreover, General Procurement
had more than 6,051 cooperating suppliers on its books
from all over the world.
MARKET PRICES OF KEY MATERIALS
ŠKODA AUTO and the VOLKSWAGEN Group were forced
to face up to the changes in the market prices of materials
in 2021. Cooperation with the Group’s Procurement
Division meant that the risks associated with developments
on the materials markets could be considerably reduced.
In comparison to the previous year, there was another
significant increase in the prices of aluminium and lead.
The price of copper also rose dramatically. Despite these
influences, the Company was able to achieve significant
cost optimisation, which was crucial in helping the brand
achieve a positive overall result.
THE LEVEL OF LOCALISATION OF
COMPONENTS FOR ŠKODA KUSHAQ
AND VOLKSWAGEN TAIGUN MODELS
WAS STANDING AT ALMOST 95%
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A N N U A L R E P O R T 2 0 2 1
100,000
PRODUCTION
AND LOGISTICS
IN AUGUST 2021, THE
ONE-HUNDRED-THOUSANDTH iV
MODEL ROLLED OFF THE LINE OF
THE PLANT IN MLADÁ BOLESLAV
30
A N N U A L R E P O R T 2 0 2 1
ŠKODA AUTO manufactured 802,266 ŠKODA cars
worldwide in 2021 (2020: 941,131 cars). This decline was
primarily caused by the Covid-19 pandemic and its impact
on the global economy. The main issue was the limited
availability of semiconductors, caused by stoppages due to
the pandemic, storms in Texas, and earthquakes in Japan.
The shortage of semiconductors led to complications that
spread to the supply chain, and the Company was forced to
reduce the volume of car production and the manufacture
of components and semi-finished cars.
Far-reaching hygiene measures and changes in the
organisation of individual operations enabled the Company
to actively and effectively prevent the virus from spreading
in workplaces and protect the health of its employees to
the maximum possible extent. To this end, the Company
and its social partner, the KOVO Trade Union, designed and
implemented more than 80 preventive measures, drawing
on the concepts of Safe Production and Safe Office. These
measures focused on a highly-effective and robust system
of testing its employees every week. A total of 1,052,895
tests were carried out in 2021. These measures meant that
production did not come to a halt in 2021 as a result of the
Covid-19 pandemic.
THE ŠKODA PRODUCTION STRATEGY ABROAD
Manufacturing plants abroad prepared themselves for
the production launch of new and innovated models that
rolled on to the production lines in 2021. The Company
began production of the new ŠKODA OCTAVIA at the
Aurangabad plant in India in March and the revised ŠKODA
KODIAQ in December. This rejuvenated model also started
A PARENT PLANT WITH PROSPECTS
The FABIA (third generation of the car in the COMBI
(estate) version and the fourth generation of the model,
which for the first time draws on the MQB-A0 modular
platform), SCALA, KAMIQ, OCTAVIA, and ENYAQ iV
models were all made at the plant in Mladá Boleslav in
2021. The rising volume of production and the number
of versions of these models naturally result in increasing
demands on the expansion and modernisation of
production and logistic capacities. Further investment
was made into electromobility and strengthening the
associated fire safety at the parent plant in 2021. Moreover,
the production line in Mladá Boleslav is currently the only
line in the Group to facilitate the parallel production of
vehicles based on the modular platform for electromobility
(MEB) and the modular platform for cars with conventional
engines (MQB).
The Company put its new Central Pilot Hall into
operation in January 2021, where extensive analyses will
be carried out during the development of new models
and where pre-production cars will be made. In Hall M13,
all water test technology was replaced and a new frontcage
feeder was installed for the assembly of the chassis to
ensure smooth assembly for multiple platforms. The new
Hall M13E was built to ensure a smooth flow of production
in Hall M13; this new hall will be used for refitting work
and quality control. The U6C central warehouse was also
completed. This is connected to the neighbouring Hall M13
rolling off the production line at the Company’s Russian
partner plant in Nizhny Novgorod in November. In May, the
Company began batch production of a new compact SUV,
the ŠKODA KUSHAQ, at its Indian plant in Pune, followed
by the related Volkswagen Taigun model in August.
The new ŠKODA SLAVIA sedan also went into batch
production in Pune in December.
PRODUCTION OF NEW MODELS IN THE EU
The Company built on the successful launch of the basic
model of its first fully-electric SUV, the ŠKODA ENYAQ iV,
by introducing various derivatives in 2021. A special
SPORTLINE version was first manufactured in April and
batch production of cars with four-wheel drive began in the
summer, followed by a limited edition of 1,895 Founders
Edition cars with an illuminated front grille. This version of
the grille subsequently became an optional extra for the
basic model. ŠKODA AUTO launched production of the
fourth-generation ŠKODA FABIA in hatchback version
in June, then enhanced the model in September with
additional aggregates and a right-hand-drive version. The
redesigned KODIAQ was also launched in June 2021.
Production of these models was successfully launched
despite the negative global developments in the car
market caused by the Covid-19 pandemic. The exemplary
interaction between staff at Production Planning, Machine
Production, Car Production, and Procurement meant that
all required sets of machinery, quality components and
materials were secured in time within the global supply
network.
by a covered conveyor bridge nine metres above the
thoroughfares, thus ensuring that a large part of the
process of picking and transporting parts is automated.
Two fundamental investments in technology at the
press shop were completed in 2021. The new L53 coil
cutting line was ceremonially put into operation in July,
making the Company self-sufficient in the supply of cut
metal sheets for pressing lines. In December, the new L28
pressing line went into operation in Hall M12, replacing two
smaller pressing lines that had served the hall for an average
of 30 years.
The Company was presented with a special Automotive
Lean Production Award in November for the excellent
launch of its new paint shop in 2019. The precision and
effectiveness of production are now optimised at the paint
shop due to the high level of automation of procedures and
processes.
The plant in Mladá Boleslav reached several key
milestones in 2021. The two-millionth SUV rolled off
the production line on the first day of March; the jubilee
vehicle was also the two-hundred-and-fifty-thousandth
ŠKODA KAMIQ. The Company marked another significant
event five days later when the fifteen-millionth car since
1905 was made at its main plant in Mladá Boleslav. The
jubilee car was a ŠKODA ENYAQ iV in Arctic metallic silver.
The one-hundred-thousandth iV model rolled off the line at
the end of August.
IN MARCH 2021, THE
FIFTEEN-MILLIONTH CAR
WAS MADE AT ITS MAIN
PLANT IN MLADÁ BOLESLAV
SINCE 1905
31
A N N U A L R E P O R T 2 0 2 1
DYNAMICALLY-DEVELOPING KVASINY
The ŠKODA AUTO plant in Kvasiny is an important pillar
in the Company’s network of production capacities,
its portfolio currently boasting the ŠKODA SUPERB,
SUPERB iV, KAROQ, and KODIAQ models. In recent years,
the Company has heavily invested in the development and
modernisation of the plant.
Automation of spraying the internal bodywork in the
door area brought savings in paint, a reduction in defects
linked to manual application, and harmonisation of the
quality of interior spraying. The installation of a new
generation of Kuka Quantec 2 robots in the welding shop
increased the production capacity of the welding lines.
The advantage of these robots lies in the smaller installation
dimensions and the slighter body of the robot, making it
possible to include work activities that had previously been
inaccessible. Application of an automatic workplace for
the hub covers that stock both assembly lines provided
greater effectiveness and improved ergonomics and safety.
At the same time, the picked hub covers are controlled
using cameras.
COMPONENT PRODUCTION
A total of 841,943 gearboxes were made at ŠKODA
AUTO in 2021, 374,771 of these were MQ200
gearboxes, 44,054 were MQ/SQ100 gearboxes and
423,118 were DQ200 gearboxes. These were in addition
to 426,868 engines and 128,031 batteries for plug-in
hybrid cars. The company produces components not only
for its own use, but also for the needs of other Group
brands. In total, it manufactured 202,021 engines (47% of
the total number of aggregates made), 515,952 gearboxes
(61% of the total number of gearboxes produced), and
101,823 batteries (80% of the total number of batteries
produced) for other Group makes.
The production of axles, of which ŠKODA AUTO
made 7,580 per day, is another integral part of component
production. A total of 1.4 million axles were made in
2021 for the assembly plants in Mladá Boleslav, Kvasiny,
and Bratislava.
ŠKODA AUTO celebrated several jubilees in
component production in 2021. The one-hundredthousandth
high-voltage traction battery was made at
the plant in Mladá Boleslav just 15 months after launching
production, while the eight-millionth MQ200 gearbox was
manufactured at the parent plant in June.
PRODUCTION OF ŠKODA CARS ABROAD
Some 3,513 ŠKODA cars were made at the Aurangabad
plant in India in 2021, and 22,746 at the plant in Pune
meaning a year-on-year increase of 221.5%. Some
47,140 cars rolled off the line at the Company’s partner
plant in Nizhny Novgorod in 2021, 18.9% less than in 2020.
The Kaluga plant in Russia produced 40,046 ŠKODA cars,
meaning an increase of 22.2%. A total of 54,427 cars were
manufactured in 2021 at partner plants in China.
The Company reached a significant milestone
in Russia, where it celebrated the seven-hundred-and-fifty-thousandth
ŠKODA car made in the country in
April. The jubilee model was a ŠKODA KODIAQ, which
rolled off the line at the Company’s partner production
plant in Nizhny Novgorod.
IN 2021, ŠKODA AUTO PRODUCED
7,580 AXLES PER DAY
7,580
32
A N N U A L R E P O R T 2 0 2 1
ŠKODA CITIGO There was an 80.1% drop
in the production of ŠKODA CITIGO cars.
Some 2,887 ŠKODA CITIGO cars were made
at the VOLKSWAGEN plant in Bratislava
(2020: 14,495 cars).
ŠKODA FABIA A total of 94,096 ŠKODA FABIA
cars were made worldwide in 2021, meaning
a year-on-year decrease of 6.3% (2020: 100,425
cars).
ŠKODA RAPID A total of 55,905 ŠKODA RAPID
cars were made worldwide in 2021, meaning
a year-on-year drop of 25.8% (2020: 75,324).
ŠKODA SCALA A total of 44,229 ŠKODA
SCALA cars were manufactured in 2021, marking
a year-on-year decrease in production of 23.8%
(2020: 58,054 cars).
ŠKODA OCTAVIA The ŠKODA OCTAVIA
was again the most significant model at
ŠKODA AUTO in terms of volume in 2021.
A total of 172,114 OCTAVIA cars were made
worldwide, meaning a decrease in production
of 26.4% (2020: 233,972). This model also
accounted for the lion’s share of the annual
worldwide production of ŠKODA cars with
21.5%.
ŠKODA SUPERB A total of 57,721 ŠKODA
SUPERB cars were produced worldwide in 2021,
signalling a drop of 28.6% (2020: 80,880 cars).
ŠKODA KAMIQ A total of 109,737 cars were
made worldwide in 2021, meaning 3.0% less than
in the previous year (2020: 113,164 cars).
ŠKODA KAMIQ GT A total of 1,225 cars
were made at the Nanjing plant in China in
2021 (2020: 13,226 cars).
ŠKODA KAROQ This compact SUV has
been manufactured since 2017. Some
109,497 cars were made worldwide in 2021,
meaning a year-on-year decrease of 17.5%
(2020: 132,718 cars).
ŠKODA KODIAQ A total of 88,408 ŠKODA
KODIAQ cars were made worldwide in 2021,
meaning a year-on-year decrease of 22.6%
(2020: 114,155 cars).
ŠKODA KODIAQ GT The ŠKODA KODIAQ
GT is the fourth ŠKODA SUV on the Chinese
market. Some 149 cars were made at the plant
in Changsha in 2021 (2020: 3,682 cars).
ŠKODA ENYAQ iV Production of the brand’s
first purely-electric SUV began at the plant
in Mladá Boleslav at the end of 2020 with
49,811 cars made in 2021 (2020: 939 cars).
ŠKODA KUSHAQ A total of 16,353 cars were
manufactured at the Pune plant in India in
2021 (2020: 97 cars).
ŠKODA SLAVIA Production of the new
ŠKODA SLAVIA commenced at the Pune plant
in India in 2021 with 134 cars manufactured.
PRODUCTION BY MODEL
33
A N N U A L R E P O R T 2 0 2 1
PRODUCTION OF CARS
AT ŠKODA AUTO COMPANY*
VEHICLES
2021
VEHICLES
2020
CHANGE (%)
2021/2020
PRODUCTION OF ŠKODA CARS
ŠKODA FABIA 63,845 61,903 3.1%
ŠKODA FABIA COMBI 30,251 38,522 (21.5%)
ŠKODA FABIA TOTAL 94,096 100,425 (6.3%)
ŠKODA SCALA 44,229 58,054 (23.8%)
ŠKODA OCTAVIA 48,726 37,426 30.2%
ŠKODA OCTAVIA COMBI 96,878 149,759 (35.3%)
ŠKODA OCTAVIA TOTAL 145,604 187,185 (22.2%)
ŠKODA SUPERB 21,700 26,999 (19.6%)
ŠKODA SUPERB COMBI 32,347 44,103 (26.7%)
ŠKODA SUPERB TOTAL 54,047 71,102 (24.0%)
ŠKODA KAMIQ 92,941 86,042 8.0%
ŠKODA KAROQ 70,460 88,265 (20.2%)
ŠKODA KODIAQ 70,709 80,888 (12.6%)
ŠKODA ENYAQ iV 49,811 939 5,204.7%
ŠKODA BRAND TOTAL 621,897 672,900 (7.6%)
PRODUCTION OF SEAT CARS
SEAT ATECA 58,500 76,710 (23.7%)
SEAT BRAND TOTAL 58,500 76,710 (23.7%)
TOTAL ŠKODA AUTO PRODUCTION 680,397 749,610 (9.2%)
* Production in the Czech Republic only in the Company’s plants in Mladá Boleslav and Kvasiny.
ŠKODA BRAND
PRODUCTION WORLDWIDE
VEHICLES
2021
VEHICLES
2020
CHANGE (%)
2021/2020
PRODUCTION OF ŠKODA CARS IN INDIA
ŠKODA KUSHAQ 16,353 97 —
ŠKODA RAPID 6,259 6,700 (6.6%)
ŠKODA OCTAVIA 1,670 14 —
ŠKODA SUPERB 1,704 1,352 26.0%
ŠKODA KODIAQ 139 5 —
ŠKODA SLAVIA 134 0 —
TOTAL ŠKODA IN INDIA 26,259 8,168 221.5%
PRODUCTION OF ŠKODA CARS IN SLOVAKIA
ŠKODA CITIGO / ŠKODA CITIGOe iV 2,887 14,495 (80.1%)
ŠKODA KAROQ 9,610 3,403 182.4%
TOTAL ŠKODA IN SLOVAKIA 12,497 17,898 (30.2%)
PRODUCTION OF ŠKODA CARS IN RUSSIA
ŠKODA RAPID 40,046 32,764 22.2%
ŠKODA KODIAQ 16,292 20,623 (21.0%)
ŠKODA KAROQ 19,152 17,662 8.4%
ŠKODA OCTAVIA 11,696 19,843 (41.1%)
TOTAL ŠKODA IN RUSSIA 87,186 90,892 (4.1%)
PRODUCTION OF ŠKODA CARS IN CHINA
ŠKODA RAPID 9,600 35,860 (73.2%)
ŠKODA OCTAVIA 13,144 26,930 (51.2%)
ŠKODA SUPERB 1,970 8,426 (76.6%)
ŠKODA KAMIQ 16,796 27,122 (38.1%)
ŠKODA KAMIQ GT 1,225 13,226 (90.7%)
ŠKODA KAROQ 10,275 23,388 (56.1%)
ŠKODA KODIAQ 1,268 12,639 (90.0%)
ŠKODA KODIAQ GT 149 3,682 (96.0%)
TOTAL ŠKODA IN CHINA 54,427 151,273 (64.0%)
TOTAL ŠKODA BRAND WORLDWIDE* 802,266 941,131 (14.8%)
TOTAL ŠKODA PRODUCTION WORLDWIDE,
INCLUDING OTHER GROUP BRANDS** 860,766 1,017,841 (15.4%)
* Including production of ŠKODA cars at ŠKODA AUTO company as well as at foreign plants in the rest of the world.
** Including pre-series cars.
34
A N N U A L R E P O R T 2 0 2 1
SALES
AND MARKETING
IN THE ROLE OF THE OFFICIAL MAIN PARTNER
ŠKODA AUTO HAS SUPPORTED TOUR DE
FRANCE FOR THE EIGHTEENTH TIME
35
A N N U A L R E P O R T 2 0 2 1
CUSTOMER DELIVERIES
LARGEST MARKETS
VEHICLES
2021
VEHICLES
2020
CHANGE (%)
2021/2020
GERMANY 136,781 161,775 (15.4%)
RUSSIA 90,443 94,632 (4.4%)
CZECH REPUBLIC 79,928 83,249 (4.0%)
CHINA 71,200 173,000 (58.8%)
GREAT BRITAIN 55,839 58,431 (4.4%)
POLAND 47,069 56,152 (16.2%)
FRANCE 31,057 30,587 1.5%
ITALY 25,242 25,085 0.6%
TURKEY 25,228 24,175 4.4%
SPAIN* 24,642 21,058 17.0%
INDIA 22,779 10,902 108.9%
AUSTRIA 21,786 23,708 (8.1%)
ISRAEL 19,423 18,758 3.5%
NETHERLANDS 19,336 16,242 19.0%
SWITZERLAND 17,392 17,560 (1.0%)
ŠKODA BRAND TOTAL 878,202 1,004,816 (12.6%)
* Excluding the Canary Islands.
CUSTOMER DELIVERIES
BY REGION
VEHICLES
2021
VEHICLES
2020
CHANGE (%)
2021/2020
MARKET SHARE
(%) 2021**
MARKET SHARE
(%) 2020**
CENTRAL EUROPE* 164,050 181,937 (9.8%) 17.24% 19.64%
EASTERN EUROPE 126,253 134,050 (5.8%) 6.47% 7.10%
WESTERN EUROPE 408,970 434,461 (5.9%) 3.82% 3.98%
OVERSEAS/ASIA 178,929 254,368 (29.7%) 0.31% 0.47%
ŠKODA BRAND TOTAL 878,202 1,004,816 (12.6%) 1.24% 1.48%
*	 Including the Czech Republic.
**	Shares on passenger car market shares, total markets.
ŠKODA AUTO delivered a total of 878,202 cars to its
customers in 2021. Deliveries to customers dropped by
12.6% (2020: 1,004,816 cars), mainly as a result of the
Covid-19 pandemic and a lack of semiconductors. Despite
these obstacles, the Company still achieved a number
of sales successes. The fully-electric ENYAQ iV arrived
successfully on the market, with almost 45,000 cars
delivered. ŠKODA AUTO also grew in India, as a result of
the new KUSHAQ model, and improved its position in
other markets.
CENTRAL EUROPE
The Company delivered 164,050 cars to its customers in
Central Europe, a drop of 9.8% on the previous year. The
ŠKODA brand achieved a market share of 17.2% in the
region. On the domestic market, deliveries to customers fell
by 4.0% to 79,928 cars (2020: 83,249 cars). Therefore, the
Czech Republic was the Company’s third-biggest market in
the world, with a stable market share of 38.6%.
EASTERN EUROPE
In Russia, the 90,443 cars that the Company
delivered marked a drop of 4.4% on the previous year
(2020: 94,632 cars). However, this was sufficient to ensure
that Russia moved up to second place behind Germany in
the table of deliveries on the world markets. Total sales in
Eastern Europe, excluding Russia, fell by 9.2%.
WESTERN EUROPE
The Company delivered a total of 408,970 cars to
customers in Western Europe (2020: 434,461 cars;
−5.9%). In Germany, the Company’s biggest market,
it delivered 136,781 cars to customers in 2021,
meaning 15.4% fewer than in the previous year
(2020: 161,775 cars). Great Britain, where ŠKODA AUTO
delivered 55,839 cars, maintained its position in the brand’s
TOP 5 most significant markets.
In a number of Western European countries, ŠKODA
AUTO saw growth running into double digits. Among
these were Norway (9,837 cars; +36.9%), the Netherlands
(19,336 cars; +19.0%), Spain (24,642 cars; +17.0%),
Portugal or Ireland.
OVERSEAS/ASIA
In China, the Czech car manufacturer delivered 71,200 cars
to its customers in 2021. This marked a drop of 58.8%
(2020: 173,000 cars). Therefore, China lost its position as
the brand’s strongest market after several years, dropping
to fourth.
In India, ŠKODA AUTO made significant improvements
after the launch of the KUSHAQ, a model developed
especially for the Indian market. The Company
delivered a total of 22,779 cars to customers there in
2021, representing a year-on-year increase of 108.9%
(2020: 10,902 cars). The Company again consolidated its
value in Turkey, where sales stood at 25,228 cars (+4.4%).
36
A N N U A L R E P O R T 2 0 2 1
ŠKODA CITIGO The production of this minicompact
car came to an end in August 2019. However, batch
production of the ŠKODA CITIGOe iV model, an
environmentally-friendly city car solely powered by an
electric engine, was launched in October 2019. Sales of
this model ended in the summer of 2021. The Company
delivered 4,373 cars to its customers in 2021.
ŠKODA FABIA Since a launch of the third generation on
the market in 2014, the FABIA has retained its position
at the top, beating off the competition as a result of the
quality of its execution, the size of the interior and luggage
space, its excellent range of equipment, and fine steering.
The Company introduced the fourth generation of this
successful car in 2021. The model saw a drop in deliveries
of 6% on the previous year, with 99,104 cars delivered.
However, sales rose year-on-year in the Czech Republic
and, for example, in Switzerland and Spain.
ŠKODA RAPID The liftback model was launched on world
markets in 2012 with the ŠKODA RAPID SPACEBACK
following one year later. Production of these models for
European markets came to an end in May 2019 although
special versions of the RAPID are still available in China,
India and Russia and are also manufactured in those
countries. 63,657 ŠKODA RAPID and ŠKODA RAPID
SPACEBACK cars were delivered to customers in 2021,
a year-on-year drop of 20.1%.
ŠKODA SCALA This model combines an emotional
design with a high level of functionality and state-ofthe-art
connectivity options. It arrived on the market in
February 2019 and has since become hugely popular with
customers. 48,154 cars were delivered to customers in
2021, marking a drop of 23.8%. Despite this, the model
saw record-breaking deliveries in a number of countries,
including Portugal, Spain, Ukraine, Tunisia, Egypt, and
Morocco.
ŠKODA OCTAVIA The Octavia range underwent
a generational transformation in 2020 and was expanded
to include a plug-in hybrid version, the OCTAVIA iV, the
mild-hybrid OCTAVIA e-TEC, an environmentally-friendly
model that runs on natural gas, the OCTAVIA G-TEC,
and the sturdy, universal OCTAVIA SCOUT. The ŠKODA
OCTAVIA has long been the brand’s best-selling model.
However, with a total of 200,771 cars delivered in 2021,
there was a drop of 22.0% compared to 2020.
ŠKODA SUPERB The third-generation ŠKODA SUPERB,
launched in 2015, saw the ŠKODA brand move into a new
era. The Company began making a plug-in hybrid version of
the model in 2020. There was a 23.2% drop in the number
of cars delivered in 2021 to 66,146.
ŠKODA KAMIQ The ŠKODA KAMIQ city SUV, designed
for the Chinese market, was given its world première
in Peking in 2018. Customers in Europe first had the
opportunity to buy the model in 2019. Therefore, the
Company extended its successful range of European SUVs
with a third model, and in doing so entered the growing city
SUV segment. 120,742 cars were delivered to customers
in 2021, a year-on-year drop of 6.1%. Nonetheless, the
KAMIQ became the Company’s second most successful
model. Record deliveries were made on around forty
markets all over the world, among them the Czech
Republic, Great Britain, Austria, Italy, Spain, and France.
ŠKODA KAROQ The new compact ŠKODA KAROQ
SUV first saw the light of day in 2017, with innovations
in 2018 coming in the shape of the sporty KAROQ
fewer than in the previous year. Record-breaking deliveries
were made on the markets of Turkey, Egypt, Tunisia, Chile,
and Uzbekistan.
ŠKODA ENYAQ iV The première given to this fully-electric
SUV was the main event of 2020. The model was launched
on the market in September 2020 as the first batch-made
ŠKODA car based on the modular electric drive matrix
platform (MEB). This innovation, which had excellent
reviews from experts and the public alike, made hugely
successful inroads on the market. The Company delivered
a total of 44,718 cars from January to December 2021.
ŠKODA KUSHAQ Production of the ŠKODA KUSHAQ
began in June. This SUV is the first batch-produced model
made locally in India as part of the INDIA 2.0 project.
The distinctive design of the car, the generous space,
the high level of comfort, extensive safety features, and
other benefits all combined to ensure that ŠKODA AUTO
delivered 12,815 cars on the local market within the
space of only six months. As a result, the ŠKODA brand
strengthened considerably on the Indian market.
CUSTOMER DELIVERIES
BY MODEL
VEHICLES
2021
VEHICLES
2020
CHANGE (%)
2021/2020
ŠKODA CITIGO / CITIGOe iV 4,373 14,971 (70.8%)
ŠKODA FABIA 65,380 65,870 (0.7%)
ŠKODA FABIA COMBI 33,724 39,589 (14.8%)
ŠKODA FABIA TOTAL 99,104 105,459 (6.0%)
ŠKODA RAPID 61,909 75,499 (18.0%)
ŠKODA RAPID SPACEBACK 1,748 4,203 (58.4%)
ŠKODA RAPID TOTAL 63,657 79,702 (20.1%)
ŠKODA SCALA 48,154 63,181 (23.8%)
ŠKODA OCTAVIA 89,258 104,805 (14.8%)
ŠKODA OCTAVIA COMBI 111,513 152,559 (26.9%)
ŠKODA OCTAVIA TOTAL 200,771 257,364 (22.0%)
ŠKODA KAMIQ 120,742 128,539 (6.1%)
ŠKODA YETI 0 2 —
ŠKODA KUSHAQ 12,815 0 —
ŠKODA KAROQ 119,156 137,223 (13.2%)
ŠKODA KODIAQ 98,566 131,590 (25.1%)
ŠKODA SUPERB 30,194 40,930 (26.2%)
ŠKODA SUPERB COMBI 35,952 45,221 (20.5%)
ŠKODA SUPERB TOTAL 66,146 86,151 (23.2%)
ŠKODA ENYAQ 44,718 634 —
ŠKODA BRAND TOTAL 878,202 1,004,816 (12.6%)
SPORTLINE and the adventurous KAROQ SCOUT.
A modernised version of the model was introduced at the
end of 2021. Customers throughout the world have been
captivated by the car ever since it reached the market, and
in 2021 the KAROQ was the brand’s third best-selling
model, closely behind the KAMIQ. 119,156 cars were
delivered to customers in 2021, meaning 13.2% fewer than
in the previous year. The ŠKODA KAROQ was again an
important engine of growth. The highest level of interest in
this model was seen in the markets of Hungary, Romania,
Ireland, Belgium, Tunisia, Russia and Australia.
ŠKODA KODIAQ The Company’s first large SUV, which
premièred in 2016, has had a highly successful year. The
range was expanded in 2018 to include the KODIAQ RS,
the first member of the RS family with SUV bodywork, and
the first SUV coupé, the ŠKODA KODIAQ GT, designed
for the Chinese market. The car underwent extensive
modernisation in 2021 and was also made available in
the SPORTLINE version and as the luxury L&K. A total of
98,566 cars were delivered to customers in 2021, 25.1%
DELIVERIES BY MODEL
37
A N N U A L R E P O R T 2 0 2 1
THE ŠKODA BRAND MARKETING STRATEGY
The brand marketing strategy draws on the knowledge
of our customers and then is adapted in the inventive and
imaginative way so typical of the ŠKODA brand. The global
communication strategy of the brand is shifting within the
new NEXT LEVEL – ŠKODA STRATEGY2030, drawing
closer to the new vision and mission at the Company.
ŠKODA AUTO needs to adapt to the changing industrial
environment to satisfy its customers’ needs and become
a people-focused brand that provides end-users with
genuine value.
THE UBIQUITOUS ESSENCE OF THE BRAND
Seeking smarter and better solutions has been an endless
source of motivation for the ŠKODA brand from the very
beginning. Even now, the ŠKODA brand aims to enhance
the position of its customers and bring them the very best
quality, value, and intuitive modern design. Regardless of
the product or service used, ŠKODA customers will always
encounter the brand values: Simplifying, Surprising, and
Human.
THE EMOTIVE WORLD OF THE ŠKODA BRAND
ŠKODA AUTO implements an extensive range of activities
aimed at emotionalising the ŠKODA brand and taking it
closer to its customers’ hearts. The brand connects to
culture, in particular through sport – cycling, ice hockey, and
motorsport. A common passion for continual improvement
is shared by the ŠKODA brand and sportsmen and women,
which drives us forward.
The popular Sachsen Classic vintage car rally also
celebrated the history of the races and came to Mladá
Boleslav for the first time in August. The Company started
five of its cars in the rally, which covers almost 700
kilometres across Germany and the Czech Republic.
NEW PRODUCTS PREMIÈRED
While the norm in the past was to introduce new products
before an audience, which would include personalities
and media representatives, May’s première of the fourth
generation ŠKODA FABIA was entirely different: the
continuing restrictions to combat the Covid-19 pandemic
meant that the car was launched digitally. The première
was more than an informative presentation for the expert
public and gave customers and fans of the brand their first
chance to get to know the car. They were able to follow the
unveiling online, using 360 ̊cameras to examine in detail the
qualities of the car while getting to know the story behind
all the generations of this successful model.
The world première of the ŠKODA KUSHAQ, a new
compact SUV designed for the Indian market, was also
broadcast live on the ŠKODA Storyboard platform. The
name KUSHAQ, with a K at the beginning and a Q at the
end, fits in with the morphology of the ŠKODA brand’s
successful SUV family and comes from the ancient Indian
Sanskrit language. The word “Kushak” in Sanskrit means
king or ruler.
OVER 125 YEARS ON THE MARKET
In 2020, ŠKODA AUTO celebrated its 125th anniversary,
as well as 115 years since the launch of car production. It
did this through hosting activities, promotions, and events
all over the world. Because of the Covid-19 pandemic, the
organisers had to postpone some of these to 2021. One
example was a benefit concert by the Czech Philharmonic
in May, with the proceeds helping the families of carers in
social services who died as a result of Covid-19. We also
continued an extensive marketing and communication
campaign on all the brand’s social networks and ŠKODA
Storyboard websites under the name of “Driven by
inventiveness since 1895”.
120 YEARS OF FAMOUSVICTORIES
In 2021, the Company also celebrated 120 years of the
ŠKODA brand in the world of motorsports. The central
point of the celebrations was the Rally Bohemia, which saw
the success of the crews driving ŠKODA FABIA Rally2 and
Rally2 evo cars. The limited-edition ŠKODA FABIA Rally2
evo Edition 120 was also created to mark the jubilee. Fans
were enthralled by a video entitled 120YEARS BEHIND
THE WHEEL OF RACING LEGENDS, which introduced
the 1908 LAURIN & KLEMENT FC, one of the first
racing cars made in Mladá Boleslav, and the marvellous
ŠKODA SPORT car. This famous roadster missed out on
an incredible result in the famous Le Mans 24-hour race in
1950 only because of astonishing bad luck. The ŠKODA
Museum also celebrated twelve decades of sporting
success with a new exhibition, 120 years of ŠKODA
Motorsport, which drew visitors into the atmosphere of the
races and the competitions of the past.
AN ESSENTIAL CHANGE OF COMMUNICATION
The launch of the ENYAQ iV on the market in May played
out against the backdrop of the Covid-19 pandemic
and restrictive measures throughout Europe. When
planning the communication strategy, the marketing
team emphasised the inclusion of formats that would
allow customers to view the ENYAQ iV from the comfort
and safety of their homes. This led to the creation of the
Innovation Agenda Framework, which offered new formats
so customers could view the new electric car in artificial
and virtual reality on key online channels, and across the
stages of the buying process.
For example, the Web AR visualiser intermediated
partial configurations of the ENYAQ iV in augmented reality
simply by using a mobile phone camera, with no need to
download an application. On Facebook, those interested
could use a 3D Instant Experience configurator for different
versions of the car and see their dream configuration in
a 3D video. ŠKODA AUTO was also the first automotive
company in Europe to activate a virtual showroom on
Amazon Fire TV.
The ŠKODA Storyboard online magazine, which
attracts more than 200,000 visitors a month, was
alongside social networks, another integral part of building
and strengthening relationships with customers. Among
the most successful articles on the site were those that
showed how legendary cars from the history of ŠKODA
AUTO would look if given a makeover by the designers of
today. For example, the very first car from Mladá Boleslav,
the L&K VOITURETTE A, the racing legend 130 RS,
the FELICIA cabriolet, and the vampire FERAT from the
famous film directed by Juraj Herz.
THE COMPANY CELEBRATED
120 YEARS OF THE ŠKODA
BRAND IN THE WORLD OF
MOTORSPORTS
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A N N U A L R E P O R T 2 0 2 1
THE ENYAQ iVFOR THE CZECH PRESIDENCY OF
THE COUNCIL OF THE EU
In autumn, the Company won the tender to provide the
cars to transport top-level politicians during the secondever
Czech presidency of the Council of the EU, which will
begin in July 2022. ŠKODA AUTO will lend 55 ŠKODA
ENYAQ iV cars to transport prominent delegates to
summit meetings and informal meetings of the Council of
the EU.
THE CHARGING NETWORK CONTINUES TO
GROW
The Company introduced a simple and smart way of
charging electrified cars to mark the arrival of the new
ENYAQ iV electric SUV on the Czech market. ŠKODA
electric car owners can use more than 200,000 charging
points in most European countries thanks to the
POWERPASS service. The points supported include
charging points within the ŠKODA AUTO Czech Republic
authorised network and the IONITYsuper-charging
network. The charging process can begin by simply using
a single RFID card or the POWERPASS application with
clear and uniform prices on a smartphone.
The Company sells three versions of the wallbox
that can be used to charge at home. The basic
ŠKODA iV Charger is mainly used in households, the
ŠKODA iV Charger Connect can connect to a LAN or Wi-Fi
network and has an RFID reader while the more advanced
iV Charger Connect+ combines these functions with
connectivity in LTE mobile networks.
A YEAR OF AWARDS
ŠKODA models find favour with customers and the expert
public alike. The ŠKODA ENYAQ iV, the Company’s first
electric car, built on the new MEB platform, won a whole
range of plaudits in 2021. In February, it won the Best
Cars 2021 readers’ award, presented by the German
Auto Motor und Sport magazine, in April it won the Red
Dot Award for its expressive and efficient design, in May
it scored points with readers of Auto Bild magazine in
the electric cars with four-wheel drive category, and in
September it won three awards in a readers’ poll by the
specialised German magazine AUTO Straßenverkehr in
the Best Technology and Best Design categories, and
overall first prize. The SUPERB COMBI also won three
prizes in the Family Car of theYear poll, organised annually
by AUTO Straßenverkehr magazine. In addition to the
overall first prize, the model can also boast the titles of
Best Price to Utility Value Ratio and Best Technology. The
flagship SUPERB remains the model that has won the most
awards in the history of the brand, winning the annual Fleet
News Awards for the sixth time and retaining its title of
Best Middle-of-the-Range Car.
ŠKODA AUTO WILL LEND 55 ŠKODA
ENYAQ iV CARS FOR DELEGATES OF
THE EU PRESIDENCY
39
A N N U A L R E P O R T 2 0 2 1
The ŠKODA OCTAVIA, the brand’s best-selling car,
continued its success with a variety of plaudits. In March,
the OCTAVIA and OCTAVIA COMBI (called the ESTATE
on the British market) were named British car of the year in
their class. Just a few days later, the ŠKODA OCTAVIA won
the title of Women’s World Car of theYear in the family car
category. In July, the prestigious Auto Express magazine
named the OCTAVIA family car of the year and the
OCTAVIA COMBI the estate car of the year in the annual
Auto Express New Car Awards.
A PROUD PARTNER TO THE TOUR DE FRANCE
ŠKODA AUTO was again the Official Main Partner of the
most famous cycling stage race in the world in 2021. The
peloton at Tour de France 2021 was headed by a speciallymodified
Red Car ENYAQ Sportline iV. The car headed the
peloton as the director’s car on 16 stages of the race. The
other stages were fronted by specially-modified SUPERB
L&K iV cars. The Company provided the race organisers
with a total of 250 cars; a significant part of the fleet
comprised models from the ŠKODA iV family with plug-in
hybrid or purely-electric drive.
The Company also sponsored the Green Jersey,
meaning that the jersey worn by the leading rider on
points bore the ŠKODA logo on the race around France
for the seventh consecutive year. The Company were also
responsible for making a 60-cm high trophy weighing
4 kilograms for the winner, created by Czech glassmakers.
As has become the tradition, the design was created by
members of the ŠKODA Design team, drawing on the
environment, nature, and clean energy.
its involvement in the sport, building on the team aspect
and focusing on national teams. It was this relationship that
gave rise to the multi-channel WeLoveCycling.com platform,
which connects the ŠKODA brand to cycling and acts as an
umbrella for all its activities in this field.
The global version of the platform allowed the Company
to provide news of the world-renowned races it supports,
such as Le Tour de France, LaVuelta, and Paris-Roubaix, and
examine topics such as road safety, e-mobility and car models
that suit cyclists.
The Company also began cooperation with the Strava
platform. As a result, it built on Le Tour de France during
the summer, challenging fans to cycle more. Among the
prizes for the winner were a carbon bike ridden by brand
ambassador and former Tour de France winner Andy
Schleck.
In addition to the Tour de France and as is tradition, the
Company also supported the La Vuelta, Paris–Nice, ParisRoubaix,
Volta Catalunya, Critérium du Dauphiné, La Flèche
Wallonne, Liège–Bastogne–Liège, and the Paris–Tours
cycling races.
FROM THE CZECH NATIONAL TEAM
TO THE GENERAL PUBLIC
The ŠKODA brand has had strong links to cycling since its
inception – a bicycle was the Company’s first product back in
1895. For this reason, it also sponsored a number of amateur
races for the general public, including the Kolo pro život
(Bike for Life) series of mountain bike races, and remained
the general partner to the Czech national team in all cycling
disciplines. Its links to the Czech Cycling Federation meant
that the Company was the general partner to national teams
in all eight disciplines of cycling. Therefore, it continued with
A PARTNER TO THE FASTEST
TEAM SPORT ON THE PLANET
ŠKODA AUTO is also involved in other popular sports. It
has been General Partner to the IIHF World Ice Hockey
Championships since 1992. The Company also supports
the development of hockey in the Czech Republic and is an
official partner to the Czech Team, the Czech Ice Hockey
Association – Czech Ice Hockey Team, and the Tipsport
extraliga, the elite-level league in the country. Measures to
counter the pandemic meant that the number of fans at
the IIHF World Ice Hockey Championships was restricted.
However, the stands did not remain empty. The Company
made it possible for fans to send a cardboard cut-out of
themselves to the stadium to take their place. All they had
to do was take a photograph via the ŠKODA Storyboard
platform and the Company and its local partners did the
rest. ŠKODA FanBoards put 15,000 cardboard fans on
seats, from all the countries taking part in the tournament.
40
A N N U A L R E P O R T 2 0 2 1
PEOPLE
AND CULTURE
ŠKODA ACADEMY PROVIDED TRAINING
IN ELECTROMOBILITY TO MORE THAN
3,000 PARTICIPANTS IN 2021
3,000
41
A N N U A L R E P O R T 2 0 2 1
The People and Culture department plays a crucial role in
the achievement of the NEXT LEVEL – ŠKODA STRATEGY
2030, as it is our employees who drive this Company-wide
transformation. For this reason, the department introduced
its “Next Level S” functional strategy to support the
Company-wide plan from the perspective of human care.
The principal tasks in this area in 2021 also included
guiding employees through the uneasy times of the
Covid-19 pandemic, preparing them for electromobility,
introducing digital tools to their everyday work, and
promoting diversity and open corporate culture. At the
same time, People and Culture department endeavoured to
secure technically-educated, highly-qualified specialists for
the Company.
A NEWVISION IN THIS AREA
The changes required by the new Company strategy
cannot be successfully resolved without employee
involvement and teamwork across all divisions. For
this reason, People and Culture invited all staff at the
department to a strategy forum at the ŠKODA Museum
in September. There, clear steps were presented to be
taken over the coming years to support the targets that
the Company has set itself until 2030 – and all employees
had the chance to vote for a new name. Management
also familiarised those in attendance with the issues that
employees can expect to face regarding the transformation.
A clear sign of the change in approach was that for the first
time, staff were able to sign up to participate in 9 strategic
initiatives covering 24 different projects that People and
Culture will focus on to ensure a successful transformation
and to actively join in the discussion using the Slido app.
EDUCATION IN ELECTROMOBILITY
People and Culture continues to support the development
of electromobility at the Company in the field of education.
It systematically and pointedly prepares employees, pupils
at vocational schools, workers at supply firms, and agency
employees for the new demands placed on them.
The Company’s ŠKODA Academy and assembly
training centres provided training in electromobility to
more than 3,000 participants in 2021 including external
workers, agency staff, and pupils at vocational schools.
This means that almost 21,000 staff members have
enhanced their education in this area since May 2016. The
ŠKODA Academy also increased its range of online courses
for Company employees in 2021, with staff showing great
interest, primarily in the range of IT courses.
INVESTMENT IN THE FUTURE
ŠKODA AUTO has long provided support to education in
technical specialisations. It prepared the EDU.LAB project
for pupils in the 8th and 9th grades at primary school,
which entertainingly presented the very latest technology
and showed pupils the cutting-edge operations at the
Company. ŠKODA Academy Kvasiny began cooperation
with the College and Secondary Industrial School in
Rychnov nad Kněžnou. As a result, pupils will be provided
with more detailed information about the attraction of
specialisations connected to electrical engineering, will
be given the opportunity to gain experience or undertake
a specialised placement at the Company, and may have
the opportunity to work there after completing their
SAFETY FIRST
The health of our employees is a top priority at the Company
and at the KOVO Trade Union alike. As a result, they went
beyond the government regulations in the battle against
Covid-19 from the very beginning of the pandemic by
introducing more than 80 measures to help prevent the
spread of the pandemic at all Company premises shortly
after the pandemic broke out. The Company has so far
spent more than CZK 1 billion on protecting the health of
its employees and helping people and organisations in the
front line. A thorough internal tracing system also helped to
effectively limit further transmission of the disease.
To quickly and effectively vaccinate staff against
Covid-19, ŠKODA AUTO set up a separate vaccination
centre field office at the local Klaudián Hospital in Mladá
Boleslav to help boost capacity. The Company also organised
a mobile vaccination team. It launched a system to register
those interested in the vaccine in the spring and used its own
medical staff to help administer vaccinations both inside and
outside the Company; for example, in retirement homes.
The Company also launched the ŠKODA AUTO
PROčkování campaign, answering the most frequently asked
questions by staff regarding the administration of the vaccine
and emphasising the benefits of vaccination in an easy to
understand way. Colleagues that had already received the
vaccine became the face of the campaign. In August, the
Company announced a motivational programme to support
staff vaccination after reaching an agreement with the KOVO
Trade Union: every employee that was vaccinated by the end
of November received a reward of CZK 2,000 in points in the
in-house ŠKODA Benefits programme or two days off work.
The campaign was extended for additional booster shots.
professional training and studies. The Company opened
the new Tech Trainee development programme for
university graduates, which focuses on electromobility and
digitisation. Students who have completed their bachelor’s
or master’s studies can join the year-long programme. After
completing the programme, they will have a specialisation
in their selected field, such as technical development,
planning production, digitisation, cybernetic security, or the
quality of conventional and electric cars. ŠKODA AUTO
also decided to support the building of a non-profit
education institute for programmers, 42Prague, which will
go into operation in 2022 and form part of an international
network of top schools educating IT specialists in
22 countries.
The Company also joined forces with Czechitas in
2021, a non-profit organisation that for many years has
helped women and children learn about the world of
information technology through programming, coding, and
working with data. It contributed toward the organisation
of courses designed for the public and lessons focusing on
specific areas for secondary school pupils in Mladá Boleslav
and the surrounding areas. Specialised courses were
also opened up to Company employees on maternity or
parental leave to make their return to work that bit easier.
A practical online webinar for managers also included staff
looking after their children.
COMPANY WORKFORCE*
HEADCOUNT
31 DECEMBER 2021
HEADCOUNT
31 DECEMBER 2020
CHANGE (%)
2021/2020
ŠKODA AUTO – PERMANENT EMPLOYEES 35,153 34,514 1.9%
OF WHICH:
— MLADÁ BOLESLAV PLANT 27,567 26,800 2.9%
— VRCHLABÍ PLANT 850 824 3.2%
— KVASINY PLANT 6,736 6,890 (2.2%)
ŠKODA AUTO – APPRENTICES 879 923 (4.8%)
ŠKODA AUTO TOTAL** 36,032 35,437 1.7%
ŠKODA AUTO – TEMPORARY STAFF 2,120 3,262 (35.0%)
* Company workforce in ŠKODA AUTO a.s. in the Czech Republic only.
** The actual number of employees at the end of the year, including apprentices, excluding temporary staff, excluding subsidiaries.
QUALIFICATION STRUCTURE OF THE
COMPANY’S PERMANENT EMPLOYEES
AS OF 31 DECEMBER 2021
PRIMARY SCHOOL 7.8%
VOCATIONAL SCHOOL 43.1%
HIGH SCHOOL WITH A LEVELS 32%
UNIVERSITY GRADUATE 17.1%
42
A N N U A L R E P O R T 2 0 2 1
COOPERATION WITH UNIVERSITIES
ŠKODA AUTO supports twenty universities throughout
the Czech Republic and abroad and provides them with
cars and components for study and research purposes. The
Company also provides support in the form of professional
student placements, an international trainee programme
with placements abroad, and a development and talent
programme for doctorate students.
In September, the Company launched the AIM.Lab
(Artificial Intelligence in Manufacturing Lab) in collaboration
with VSB - Technical University of Ostrava. The laboratory,
the first of its kind in the automotive industry, focuses
on data analysis, the application of machine learning and
artificial intelligence, and the issue of optimisation in
industrial practice.
The ŠKODA iV DAYroadshow was launched at
the University of Pardubice, informing students of the
innovations in the sphere of electromobility. The roadshow
visited nine Czech universities that focus on technical
education and included discussions with experts so the
participants could familiarise themselves with the wide
range of iV electric cars and plug-in hybrids.
DIGITISATION OF INTERNAL PERSONNEL PROCESSES
A number of processes were digitised in 2021 to make
work easier for employees, reduce the administrative
load on direct superiors, primarily in production, and
support remote cooperation. Management and employee
self-service were further broadened within the SAP
SuccessFactors personnel system, known in-house
as KOMPAS, where documents can be generated or
amended. The digitisation process was also deployed in
the Company to remain successful and be able to recruit
talented people. Staff at People and Culture develop
activities that contribute to long-term understanding
among colleagues. These include a series of interactive
training sessions for 2,000 management employees at
the Company where the participants learned how to work
with unconscious prejudices. ŠKODA AUTO won an award
for this programme in the TOP Responsible Company
2021 competition.
The Company signed the European Diversity Charter in
2019, which was then elevated to gold signatory status for
2020 to 2022. The Company took part in the international
European Diversity Day conference at the Parliament of the
Czech Republic in May 2021, where business, political, and
science leaders exchanged views on how to conceptually
anchor diversity in corporate governance. Thomas
Schäfer the CEO, Maren Gräf a member of the Board of
Management for People and Culture, and Elke Heitmüller,
the Diversity Manager for the VOLKSWAGEN Group, all
the battle against the Covid-19 pandemic. For example,
an electronic record of infected persons was introduced,
a record of self-testing at the workplace, a vaccine booking
system, and an electronic vaccination certificate. Moreover,
the preparation of a ticketing system for personnel care
was started. This will be used as the central communication
system at the future HR Consulting Centre and will keep
a record of all requests made to HR along with the reports
on how these requests are resolved.
DIVERSITY STRATEGY
Equality of opportunities and equal treatment are
directly embedded in the Code of Ethics in place
at the ŠKODA AUTO Group. Nobody should face
discrimination at ŠKODA AUTO based on ethnicity or
nationality, gender, faith, world view, age, disability, sexual
orientation, skin colour, political opinions, or social origin.
Support for diversity and the creation of an inclusive
work environment is also an important prerequisite for
confirmed their commitment to diversity and inclusion at
ŠKODA AUTO and throughout the Group.
To mark European Diversity Month, the Company
organised ŠKODA OPEN TALK where management
representatives met to discuss the interconnection of
strategy and diversity with employees. Along with other
topics, they looked at creating a community of diversity
at the Company where employee engagement is a key
prerequisite in creating an inclusive work environment.
In May, ŠKODA AUTO joined the Pride Business forum
via Memorandum 2017+. The forum supports LGBT+
employee diversity and inclusion at companies and
reciprocal, open, and fair treatment irrespective of sexual
orientation or gender identity. Moreover, the Company
supported the work of the ŠKODA Proud employee group,
which was set up on the initiative of employees and aims
to ensure that LGBT+ workers feel safe and comfortable at
work.
THE COMPANY SPENT MORE THAN
CZK 1 BILLION ON PROTECTING
THE HEALTH AND FIGHTING
AGAINST COVID-19 PANDEMIC
43
A N N U A L R E P O R T 2 0 2 1
BETTER WORKING ENVIRONMENT
ŠKODA AUTO worked with its social partner, the KOVO
Trade Union, to continually improve social infrastructure.
A significant milestone came on 1 September 2021, when
the Company became an entirely smoke-free company.
The smoking ban applies to all premises and operations.
By imposing the smoking ban, the Company meets its
responsibility as an employer that cares for the health of
its employees, while emphasising the environmental and
economic impacts of smoking.
A new central kitchen went into operation at the plant
in Mladá Boleslav in April 2021. The kitchen, fitted with
the most advanced equipment, will be able to make up to
35,000 meals a day, a capacity unmatched in the Czech
Republic. A local public transport route was also extended
to the main production plant in Mladá Boleslav in July to
make the journey to work more comfortable.
MENTAL HEALTH MATTERS
The Company has paid maximum attention to its
employees’ mental health in recent years. All Company
employees have the opportunity to take a free
psychological consultation, something they have also been
able to do online since 2020 in response to the Covid
crisis. The Company also organised intensive education
campaigns for employees aimed at fortifying personal
resilience and working with stress.
A pilot study of a new method of evaluating the
mental demands of different jobs was conducted in 2021.
The result of this will help the Company to adapt the
corresponding recruitment and personal development of
employees in mentally-demanding positions in the future.
DIRECT CORPORATE CULTURE
Openness, a friendly work environment, the opportunity
for career growth, and a higher degree of independence are
among the fundamental requirements of the new generation
of employees. This is why work continued on reinforcing
the corporate culture at the Company. The priorities in
forthcoming years are to build a more open corporate culture
and increase the percentage of women in management.
Changes were made to the Board of Management at
ŠKODA AUTO in March, when the Board Member for
People and Culture, Maren Gräf, became the first woman in
the history of the Company to join the Board, which confirms
this objective.
Alongside ongoing activities supporting our company
culture which have started in previous years (e.g. Role Model
Programme, Company Culture Workshops for leaders,
Open Talks), the Mindset Change Project has been initiated in
connection with our new strategy this year. Its goal is for us
to determine what kind of company culture we want to have
in the future and what we need to do to achieve it. The areas
that have been identified as key in many discussions across
the Company are: Courage, Openness, Empowerment,
Customer, People and Cleverness.
Each topic has its owner who is leading a Lighthouse
Project on the topic. An example could be the ScrewUp
Talk, in which top managers spoke openly about the biggest
blunders of their professional careers and explained how they
managed to learn from them. Also, for each topic, discussion
meetings with employees who joined on a voluntary basis
were the so-called Cultural Dialogues. The outcomes of these
six meetings will be put together with the other findings of
the Mindset Change Project to shape our target company
culture.
35,000IN 2021, MORE THAN
35,000 EMPLOYEES
WORKED IN ŠKODA AUTO
44
A N N U A L R E P O R T 2 0 2 1
SUSTAINABILITY
2030THE COMPANY’S CZECH
PRODUCTION PLANTS TO
ACHIEVE A NEUTRAL CO2
BALANCE OF ENERGY BY 2030
45
A N N U A L R E P O R T 2 0 2 1
Protecting the environment is one of the Company’s
fundamental pillars of sustainability. The environmental
pillar has been covered since 2012 by the in-house
GreenFuture strategy, which governs and effectively
controls all environmental protection activities. The
individual measures based on the strategy are then
determined at the production, product, and process level.
The philosophy of the GreenFuture strategy is
to minimise the environmental impact on all mobility
products and services throughout their life cycle. The aim
of this is to maintain untouched ecosystems, positively
affect society, and develop the entire region. Adherence
to environmental regulations, standards, and our own
voluntary commitments is a fundamental prerequisite of all
Company activities.
EFFORTS TO ACHIEVE CARBON-NEUTRALITY
The Company views the key objectives in this area
as reducing the CO2 emissions produced by its fleet
of vehicles by more than 50% of their 2020 level and
transforming the Company’s Czech production plants to
achieve a neutral CO2 balance of energy by 2030. Both
these measures will contribute to the long-term reduction
of greenhouse gases throughout the life cycle of our
products, and in turn achieve the Group’s objective to
become a carbon-neutral company by 2050. By promoting
sustainable development, the Company has been able to
reduce the impact of production on the environment at its
Czech plants by 41% in comparison with 2010.
standard and the requirements of the management system
in the sphere of compliance. For the Company to meet the
demands placed on environmentally-responsible operation,
all employees undergo training in adherence to regulations
on the climate and the environment. These standards apply
to large ŠKODA production and development plants and
also to smaller companies. The Company stresses these
for all activities, products, and services at the Group and
its brands. The newly-introduced Product Compliance
Management System (PCMS), which is closely linked to
the ECMS, is also in place to make sure that all automotive
products conform.
EMISSION-FREE FUTURE OF PRODUCTION
The Company places ever-greater emphasis on the use of
energy from CO2-neutral sources in all its activities. Its first
roof-top photovoltaic system began life as a supported
project - “Installation of low-carbon technology” - on the
roofs of the Servicing Centre in Kosmonosy. The facility
generates more than 450 MWh of ecologically-obtained
energy a year. This covers almost a quarter of the electricity
consumption at the Servicing and Training Centre through
the new photovoltaic modules. The electricity provided
by solar panels is used to run the premises and to charge
cars in an environmentally-friendly way contributing to
reduction of CO2 emissions.
In the future, the Company intends to install further
solar projects on suitable factory buildings. For this reason,
it has agreed with the energy company ČEZ on the
construction of the largest roof-top photovoltaic power
plant in the Czech Republic. This will be built on the roofs of
the ŠKODA Parts Centre and logistics buildings at the main
RAISING STANDARDS
In terms of integrity, the Company focused on raising
standards, particularly regarding compliance and the
environment. For example, in Procurement, environmental
and sustainability criteria have become as equally important
for our potential business partners as logistics and the
quality of services on offer.
goTOzero – REDUCING ENVIRONMENTAL RISKS
The new goTOzero environmental mission was approved
in 2019 as part of the GreenFuture Strategy. The mission
addresses four priority areas: climate change, development,
air quality, and adherence to environmental regulations.
These areas were taken into consideration when updating
the “Environmental Targets to 2025” document along
with the target value of key indicators (decarbonisation
index, reducing the environmental impact of production,
the percentage of battery electric vehicles (BEV) sold, and
the implementation of ECMS - Environmental Compliance
Management System).
IN LINE WITH STANDARDS
ŠKODA AUTO proceeds in line with ISO 14001
(environmental management) and ISO 50001 (energy
management) standards at all stages of the product life
cycle.
The Company introduced the Environmental
Compliance Management System (ECMS) aimed at
determining and managing environmental risks and
opportunities throughout the life cycle of products and
services. The ECMS combines general environmental
management in line with the globally-valid ISO 14001
production plant in Mladá Boleslav. Electricity generation
will exceed 2,200 MWh, with the project to be completed
and connected to the grid in 2022. ŠKO-ENERGO will be
responsible for coordinating the project.
The Company also takes a responsible approach to
environmental protection at the plants in India, which it has
operated since 2019. An example of this is the opening
of one of the largest roof-top solar power plants in the
Indian city of Pune in November 2019. The facility currently
generates 22,000 MWh a year, covers 25% of the plant’s
total annual electricity consumption, and significantly
contributes to the carbon-neutrality of local production.
OTHER MEASURES TO REDUCE AIR EMISSIONS
Volatile organic compounds (VOC) are the most significant
pollutant emitted into the atmosphere. The paint shops
are mostly accountable for the quantity of VOC emitted.
Despite the fluctuating production due to a lack of parts,
the emission of these substances was significantly reduced
in 2021 to less than one-half of the valid emission limit of
35 g per m2 of a painted surface.
The Company also focuses on smaller sources of VOC.
Another paint shop at the Servicing Centre in Kosmonosy
was modernised, while new painting booths at Technical
Development also began full operation.
The installation of equipment for the thermal limitation
of VOC on the ALD vacuum hardening line at the hardening
shop in Mladá Boleslav was also completed in 2021. With
an extremely high efficiency of more than 99%, VOC
emissions from the hardening process were reduced by
more than 2.9 tons in 2021.
ŠKODA AUTO WILL BECOME
A CARBON-NEUTRAL
COMPANY BY 2050
EMPHASIS ON SUSTAINABILITY AND OUR
GREEN FUTURE STRATEGY
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A N N U A L R E P O R T 2 0 2 1
Technology at the aluminium foundry was also
modified. The original refining booths from which air mass
was extracted without prior treatment, were replaced
with equipment for degassing and refining aluminium
by an effective dry scrubber of particulate pollutants.
The modernisation of blasting processes also reduced
particulate pollutant emissions.
TRADITIONAL PROTECTION OF SOIL AND WATER
The Company continues to protect water sources and
land from pollution. Total water consumption in 2021
stood at 1.35 million m3, a quantity affected by the
repeated interruption of production due to a lack of
parts. The Company uses advanced technology in this
area that complies with European criteria for the Best
Available Technique and reduces water consumption. The
Company also cares for how it manages and uses rainwater.
Therefore, rainwater from newly-paved surfaces was
collected when building the new Central Kitchen.
The Company also places considerable emphasis on
the safe handling of substances that could endanger soil
or water if allowed to leak. Strict adherence to safety rules
is standard; for example, the application of multiple barrier
protection. The Company also applies these principles
when implementing electromobility plans. ŠKODA AUTO
favours substances that are considerate to the environment
and applies effective technology to eliminate the production
of hazardous substances.
WASTE AS A RESOURCE IN A CIRCULAR ECONOMY
ŠKODA AUTO is actively engaged in applying the principles
of a circular economy. The opportunities and ideas of
sustainable waste handling are discussed at round tables in
multilateral dialogue with suppliers, waste processors, and
experts on material flow. Extending the lifetime of the oils
used, where the oils are filtered using mobile units directly
at the source, is a good example of an integrated approach.
Whenever waste is produced during the production
process, a waste hierarchy is consistently applied where
material and energy use is favoured over dumping. Even in
the complicated year of 2021, the Company was able to
maintain the situation in which no production waste from
Czech plants was dumped.
ŠKODA AUTO now applies the principles of a circular
economy to all stages of the new product planning
process. One source of inspiration for the future is a project
involving the secondary use of batteries in collaboration
with a business partner coming from an area of distribution
network.
DISCLOSURE PURSUANT TO ACT NO 542/2020 COLL.,
ON END-OF-LIFE PRODUCTS
ŠKODA AUTO procures the take-back of waste tyres
from end customers in the Czech Republic through its
authorised service network and other partners. A list of
take-back locations is available online: www.skoda-auto.cz/
o-spolecnosti/rozsirena-odpovednost-vyrobce. In 2021,
almost 1,900 tons of tyres have been taken back under an
individual scheme. The majority of such waste has been
processed into secondary raw materials suitable for further
use, which has reduced the consumption of primary raw
materials. Producer registration number: 00052/14-PCZ.
The take-back rate in 2021 was 82.1%. The total cost of
the take-back of waste tyre processing and recovery in
2021 was CZK 6.4 million. The deposit provided under this
law is CZK 2 million. The cost of the take-back is invoiced
as a separate item for the product (CZK 30/piece).
LET’S CLEAN UP THE WORLD, LET’S CLEAN UP
THE CZECH REPUBLIC
For the seventh consecutive year, the Company was the
main partner to the national clean-up campaign known as
“Ukliďme svět, ukliďme Česko” (Let’s clean up the world,
let’s clean up the Czech Republic). The campaign runs
throughout the Czech Republic and aims to clean up illegal
dumps and waste in the countryside. The pandemic year
of 2020 aside, Company employees put their efforts into
cleaning up the areas around their production plants, as is
now the tradition. In 2021, volunteers collected 700 kg
of waste in the surroundings of the Company’s plants in
Mladá Boleslav, Kvasiny, and Vrchlabí.
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SOCIAL SUSTAINABILITY STRATEGY
The concept of social sustainability is one of the three
pillars of the sustainability strategy. In cooperation with the
KOVO Trade Union, the Company has long been devoted
to caring for its employees, increasing the attractiveness
of the regions around its production plants and to a set of
socially sustainable projects, particularly in relation to traffic
safety, technical education, support for disadvantaged
children, and the development of barrier-free mobility. As
is tradition, Company employees involve themselves in
a variety of voluntary activities.
The Company established the ŠKODA AUTO
Endowment Fund in 2018 to intensify long-term support
for the development of the Mladá Boleslav region, which
fast became a local strategic partner for development
activities, thus expanding its scope of activity into the
Kvasiny and Vrchlabí regions in 2021.
TRAFFIC SAFETY
ŠKODA AUTO does not only focus on the safety of the
cars it makes. It also supports the development of safe
traffic infrastructure and projects aimed at educational and
preventive activities at primary and secondary schools.
Hundreds of entertaining talks for children and young
people at school were arranged as part of the Safe Friday
project, which aims to make Czech roads a safer place.
This project is built on more than ten years’ experience
of experts from the unique traffic safety research team.
The team analyses in detail the causes, circumstances,
and events of road traffic accidents and assesses how to
eliminate, or preferably prevent, their consequences.
ŠKODA AUTO offered its support to the Start Driving
project in 2021. The project, run by the Czech Association
of Driving Schools, aims to reduce the accident rate by
raising the level of knowledge, responsibility, and driving
skills among novice drivers. Around 3,000 novice drivers
were involved in the project at 88 driving test centres.
BARRIER-FREE MOBILITY
Barrier-free mobility projects are designed to help people
with disabilities get affordable mobility in order to make
their lives easier and more independent.
The specially-trained dealers at ŠKODA Handy
Centres in dealerships throughout the Czech Republic
help clients choose the right car and modifications and
with applications for government contributions. The
Vozejkmap (wheelchair map) information database, created
in collaboration with the Czech Paraplegic Association,
makes life easier for people with disabilities when planning
journeys.
The ŠKODA NEŘÍDIT programme (which translates as
“a pity not to drive”) aims to provide financial support and
motivation to people with disabilities to obtain a driving
licence. Since the project was launched in 2018, the
Company has supported approximately fifty applicants with
a total of CZK 580,000. A complex educative guide and an
educational programme ŠKODA NEŘÍDIT on barrier-free
mobility in cooperation with partner NGO Cesta za snem
(Way to the Dream) was created to maximize the benefits
of support for the disabled. In 2021, the Cycling Without
Barriers grant programme was newly opened, as part of
which people with disabilities can apply for support for the
purchase of a handbike, tricycle or modified bicycle.
SOCIAL SUSTAINABILITY AND SOCIAL
RESPONSIBILITY
3,000IN 2021, MORE THAN 3,000 PEOPLE
VISITED ŠKODA AUTO EDU.LAB
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TECHNICAL EDUCATION
Support for education is deep-rooted in the history of
ŠKODA AUTO. The Company runs its own Secondary
Vocational School and supports the ŠKODA AUTO
University. It also endeavours to help popularise technical
subjects by supporting other organisations.
The ŠKODA AUTO EDU.LAB project was established
in 2021 – a mobile laboratory in the trailer of a truck
aimed at popularising technical education. By visiting
the laboratory, primary school pupils could broaden their
awareness of modern technology in the sphere of robotics,
thermal vision, electromobility, artificial intelligence, virtual
reality, and their use in practice. The truck visited more than
3,000 pupils, teachers, and other interested technology
parties on its roadshow around the country.
The Company is also a long-term partner to the
Science Has a Future programme, which promotes the
motivation of teachers at primary schools. At the same
time, project activities help popularise science and technical
specialisations.
SUPPORT FOR DISADVANTAGED CHILDREN
The tradition of helping children from a disadvantaged
background at ŠKODA AUTO stretches back to the days
of Laurin & Klement. The current strategy for this tradition
primarily involves cooperation with the Tereza Maxová
Foundation.
ŠKODA AUTO was the general partner to the Get
Moving with Teribear charity event, otherwise known as
Fun Movement with the Bear. Some 23,000 people took
part in the seventh year of the event, including almost
11,000 children from 261 schools, children’s homes, sports
clubs, and more than 100 employees, whose efforts raised
a total of CZK 10 million. The funds went to help children
from disadvantaged backgrounds.
The I’ll Get It Going! project is specifically designed
to help motivate children from children’s homes to get
an education, help them with their choice of future
occupation, and support children in their relationship with
their biological family. In 2021, 131 children participated in
the project. Cooperation with the Medical Clown non-profit
organisation also continued in 2021. The Company helped
the organization maintain its programme of regular clown
shows for hospitalised children at 63 Czech hospitals and
other special facilities.
SUSTAINABLE DEVELOPMENT OF ŠKODA AUTO REGIONS
Support for the sustainable development of the Mladá
Boleslav, Kvasiny, and Vrchlabí regions is a long-term
priority at ŠKODA AUTO. It initiates and financially
supports a whole range of projects that improve the
quality of life of the people that live there in cooperation
with local municipalities. The Company invested tens of
millions of Czech crowns in priority areas in 2021, such
as education, the restart of culture in connection with the
Covid-19 pandemic, amateur sport, and the availability of
social and health services. Support for clubs and societies,
young families with children, and projects that focus
on protecting nature are of extreme importance to the
Company in all three regions.
ŠKODA AUTO contributed to the work of more than
40 joint projects in cooperation with the town of Mladá
Boleslav. Dozens of projects promoted the availability of
local social services, and the Company was also a general
partner to cultural events in the region in 2021 through
its partnership with the town’s Culture in Mladá Boleslav
organisation. It supported the historical legacy in the region
by investing in the revitalisation of regional monuments and
reconstruction of the summer house at the Klementinka
Social Services Centre, once an orphanage, and its adjacent
garden. These grounds were donated to the town of Mladá
Boleslav by Václav Klement back in 1935.
Signed in 2015, the Memorandum of Cooperation
between ŠKODA AUTO, the Hradec Králové Region,
and the Government of the Czech Republic has resulted
in significant investment into the region surrounding
the Kvasiny plant by way of the Government resolution.
The investment primarily supports projects that focus
on technical and transport infrastructure in the region.
ŠKODA AUTO is a key partner to many of these projects.
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A N N U A L R E P O R T 2 0 2 1
An amendment to the resolution in 2021 confirmed
funding for the modernisation of the hospital in Rychnov
nad Kněžnou. The Company also supported key projects
involving a surveillance CCTV system and public lighting in
Kvasiny and Solnice.
Local community and civic societies in the Kvasiny
region were able to sign up for grants provided by
Občanská společnost (Civic Society) with almost twenty
projects receiving support. The Company also contributed
to the purchase of application chairs for the Oncology
Department and helped equip a vaccination centre as part
of a long-term partnership with the Rychnov nad Kněžnou
Health Endowment Fund. Moreover, it initiated and
financially supported a successful shared bike pilot project.
In the Vrchlabí region, ŠKODA AUTO supported more
than 20 projects in priority areas that develop clubs and
societies, community projects, and conditions for young
families with children. Five natural gardens were created
in collaboration with primary schools, the local Diaconia
Evangelical Church of Czech Brethren, and a retirement
home, in that the gardens are used for therapeutic,
relaxation, and educational purposes and help support the
diversity of plant species. ŠKODA AUTO considers quality
education to be one of the essential conditions for the
onward development of its activities and to the significant
benefit of the Czech Republic as a whole. For this reason, it
contributed to the launch of the American Academy Online
programme at Krkonoše Grammar School and the start of
the Duke of Edinburgh International Award at five schools.
ŠKODA HELPS WHEREVER IT’S NEEDED
ŠKODA AUTO built on the significant projects
implemented in 2020 in the battle against the Covid-19
pandemic in 2021. The Company worked with the
subsidiary ŠKODA AUTO DigiLab to provide ten cars for
hospitals in its production regions to support mobility and
an effective vaccination strategy. It also lent the Czech Food
Bank Federation ten FABIA COMBI cars to help distribute
food to the people in need throughout the Czech Republic.
The destructive tornado in Moravia in June 2021
devastated housing, uprooted fully-grown trees, and
wrecked cars. The Company immediately sent 50 cars to
the worst-affected areas to help the devastated areas get
back on their feet as quickly as possible. Given that bicycles
are a highly-effective form of transport in the emergency
conditions of a disaster zone, the Company donated
100 brand-new, including electric, bikes to the people most
affected at a cost of more than CZK 3 million. Company
management and the KOVO Trade Union announced
an employee collection, with the Company doubling the
money collected. The total amount collected climbed to
CZK 8.5 million thanks to the support of KOVO Mladá
Boleslav, ŠKO-ENERGO, and Digiteq Automotive. The
money was then used to directly support stricken residents
and the renovation of the region.
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A N N U A L R E P O R T 2 0 2 1
EMPLOYEE COLLECTIONS
Company employees are also involved in charity work
through long-term collections with the third round of
collections currently underway (2020-2023). Each
employee can regularly support the work of up to ten
non-profit organisations selected in a Company-wide
vote over the four years of the collections. ŠKODA AUTO
then doubles the funds donated. Four-fifths of the money
that the Company provides is credited to the accounts of
non-profit organisations, the remainder is used for social
responsibility projects in Pune and Aurangabad in India.
Almost 1,600 employees signed up for the collections in
2021 and their donations totalled CZK 4 million. When
including the money added by the Company, donations
reached CZK 8 million.
ŠKODA TREES
The ŠKODA Trees grant programme was launched in
2007 when the Company decided to plant one tree for
every ŠKODA car sold in the Czech Republic. To date,
1.1 million trees have been planted in more than 190 places
throughout the Czech Republic, meaning almost
227 hectares of new forest or the area of 347 football
pitches. A workshop on the topic of the vitality and the
health of trees was organised under the patronage of the
Partnership Foundation to mark the occasion of planting
the millionth tree in Mladá Boleslav within the grant
programme. After reaching the one-million mark, the next
two trees were planted in the Vrchlabí and the Kvasiny
areas. Trees were also planted locally in various places on
World Tree Day, and seminars were held in cooperation
with experts on the topic of arboriculture and the issue of
afforestation.
ŠKODA AUTO ENDOWMENT FUND
With the help of local ambassadors, the ŠKODA AUTO
Endowment Fund again supported strategic projects to
comprehensively develop the Company’s regions and local
civic engagement in 2021.
The Škoda EDU project was launched in autumn.
It builds on a previous project that supported the
development of primary schools in cooperation with towns
and municipalities in the areas around ŠKODA AUTO
production plants. This long-term project aims to provide
the schools involved with support in their development
and transformation into 21st-century education institutes
through educational activities. These focus on developing
leadership and management skills among school
management staff, an innovative approach to teaching, the
development of teachers’ competencies with the emphasis
on IT and STEM subjects and supporting the pupil’s
creativity and initiative. The activities also aim to fortify
cooperation and the know-how sharing between schools in
the Czech Republic and on an international level.
The pandemic badly affected culture in 2021, so the
Fund decided to support this area with two grant calls
within the project The Green Light for Culture. In the
grant call The New Vision for Culture, local artists had the
opportunity to devise a new vision, form of art, or ideas
for how to prepare culture for the modified rules of how
society works now. As part of The Forgotten Stories of the
Mladá Boleslav Region grant call, residents recalled local
history by sharing family, personal and Company memories,
which were collected. Selected stories and artefacts were
put on public display in the historic Pluhárna factory hall,
which, with the contribution of partners from the public
and private spheres, is gradually being transformed from
a warehouse into a living community and culture centre
with shared workshops.
The Endowment Fund also contributed towards the
development of shared bicycles. Interest in shared mobility
among users resulted in the expansion of the service
into other towns in the region and the creation of an
interconnected band of alternative mobility: Mladá Boleslav
– Bakov nad Jizerou – Mnichovo Hradiště.
The fund built on the successful ŠKODA Gaming Day
with the ŠKODA Online Tour project, which aimed to keep
children and young people at home during the lockdown.
The online battle in PC sports games culminated in the
summer with the grand final held in a professional gaming
house.
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A N N U A L R E P O R T 2 0 2 1
GRANT PROGRAMMES
The coronavirus pandemic brought many challenges and
changes to all of us. ŠKODA AUTO once again decided
to support activities that increase the quality of life and
remove barriers in the three regions of the Company’s
Czech plants. However, this time, the grants provided
in support of community life (Here I am Home), limiting
social exclusion (Region Without Barriers), improving the
quality of education (the Edu Programme for Regions),
and increasing traffic safety were announced by the
ŠKODA AUTO Endowment Fund. In 2021, 90 projects
were supported in grant calls.
CORPORATE GOVERNANCE & COMPLIANCE
Corporate Governance and Compliance endeavours to
ensure that the Company is run in a responsible, qualified,
and transparent manner that focuses on achieving the longterm
success of the Company and protecting the interests
of the parties involved.
Corporate Governance is the system used to ensure
that the Company is properly managed and supervised.
It defines the distribution of rights and duties among
the relevant parties, such as shareholders, management,
Company bodies, employees, and business partners.
The Company pays particular attention to its duty
to observe valid legal and internal regulations. The
Company’s voluntary commitments to ethical behaviour
are also an integral part of its corporate culture. These
are comprehensively specified in the Code of Conduct
at ŠKODA AUTO Group, which is regularly updated and
distributed to all Company employees. These principles and
duties apply to all internal and external Company activities.
It is in this manner that ŠKODA AUTO ensures that it fully
complies with the requirements stemming from legal rules
applying to, for example, fair competition, the financial
and tax sector, environmental protection, and employee
relations including the promotion of equal opportunities
and protecting and upholding human rights.
To achieve such compliance, the Company administers
and develops a comprehensive and structured Integrity and
Compliance Management System, which is an aggregate of
all relevant measures, processes, and systems in this area.
Particular emphasis is placed on the processes of business
partner due diligence, preventing money laundering, HR
compliance, and the System for processing concerns in
the Company (so-called whistleblowing system). These
measures include regularly-updated training. For example,
Code of Conduct training, Anti-corruption training,
Personal data protection training, Anti-fraud training,
Money laundering prevention training, and training for
employees involved in the System for processing concerns
in the Company.
Also in 2021, the Company paid considerable attention
to developing its System for processing concerns in the
Company, which provides employees of the Company, the
Group, and external parties, with a discreet and reliable
way of bringing attention to possible violations of valid
legal regulations and/or internal regulations in place at the
Company.
Following on from activities in previous years, the
Company exerted considerable effort in 2021 on activities
connected to applying the principles of integrity in working
practice and all relevant processes at the Company.
These principles have become an integral part of the
priorities, corporate strategy, and sustainability strategy
at the Company and a decision-making criterion at all
management levels.
The further development of corporate culture has been
aided, for example, by targeted development programmes
in which adherence to integrity principles was fully
anchored. Company employees were also motivated to
attend workshops, voluntary activities and participate in
voluntary surveys. This allowed them to openly express
their opinions regarding the application of integrity
principles in their work, in which they were able to share
their experience with colleagues.
As in previous years, the above-mentioned themes
were also implemented at the subsidiaries and affiliate
companies for which the Company is responsible. The
relevant activities were undertaken based on the new
model of governance in place at those companies, meaning
the methodological governance of local organisations, or
by way of Service Level Agreements. The scope of these
activities increased in 2021, as was the circle of relevant
subsidiaries and affiliate companies. In 2021, the Company
also continued in the implementation and application of
the recommendations of the independent Compliance
Monitor, the related development of internal processes,
and systematic verification of the effectiveness of the
measures taken.
1.1 MILLION TREES HAVE BEEN
PLANTED THROUGHOUT THE
CZECH REPUBLIC SINCE 2007
1,100,000
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A N N U A L R E P O R T 2 0 2 1
REPORT ON RISKS
AND OPPORTUNITIES
THE COMPANY IMPLEMENTED A NEW
INTERNAL CONTROL SYSTEM IN 2021,
WHICH COVERS KEY INTERNAL PROCESSES
2021
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A N N U A L R E P O R T 2 0 2 1
It is crucial to ensure long-term success at ŠKODA AUTO
that the Company must be able to recognise, forecast and
manage any potential risks and opportunities that may arise
from its business. To this end, it has built a comprehensive
risk management system and an internal control system
(hereinafter “RMS” and “ICS”). The objective of RMS/ICS
is to identify potential risks at the very outset so the
Company can take appropriate counter-measures in time,
prevent damage and loss, and preclude any risks that could
threaten the very existence of the Company. Given that the
likelihood and impact of future events are accompanied by
a degree of uncertainty, not even the best RMS is able to
predict all possible risk, in the same way that the best ICS
cannot fully prevent any unforeseeable incidents.
STRUCTURE OF THE RISK MANAGEMENT
SYSTEM AND THE INTERNAL CONTROL
SYSTEM
The RMS/ICS structure in place at ŠKODA AUTO
draws on the uniform principle of risk management
at the VOLKSWAGEN Group, which follows on from
the internationally-recognised COSO Enterprise Risk
Management Framework (COSO: Committee of
Sponsoring Organizations of the Treadway Commission).
RMS/ICS is centrally managed by the Governance,
Risk & Compliance Division, in collaboration with the
Controlling Division. The principles, responsibility, and
individual component parts are regulated by the process by
the Group’s Risk Management System guidelines, followed
by the relevant methodological guidelines. The final
responsibility for the risk management system lies with the
Board of Management at ŠKODA AUTO. The day-to-day
in the common Group methodology. Among the main
benefits of the system are the clear determination of
competencies and responsibilities within individual internal
processes, a high level of transparency across hierarchical
structures, and support for understanding the Company as
procedurally-oriented.
ŠKODA AUTO also decided to implement Business
Continuity Management (BCM) to strengthen its
resilience and ability to respond. In general, BCM does not
prevent any disruption to business activity but ensures
the continuation of fundamental business processes and
other processes, which are important in terms of time, at
a pre-defined minimum level in the event of a breakdown
or when resources are unavailable. This measure aims to
have a specific and working “plan B” in place for the most
important business processes.
RISKS AT ŠKODA AUTO
ŠKODA AUTO deals with operative risks and the
assurance of key processes in its internal control system.
Operative risks are primarily considered to be short-term
risks that generally pose a threat within a timescale of
two years. These are the most significant and urgent
situations where counter-measures must be taken. The
Governance, Risk & Compliance Division informs the
Board of Management at the Company of current threats
on a quarterly basis when reporting operative risks. The
existing RICORS system for monitoring systematic risks
was replaced in 2021 with an internal control system
(ICS) that focuses on covering key processes and allocated
management controls.
implementation of the system is a matter of decentralised
responsibility at the Company. Each organisational unit
must, at least once a year, assess and recognise risks,
which are evaluated from the perspective of their potential
negative impact on accomplishing the objectives of the
unit and the Company as a whole. When assessing risks,
consideration must be made of possible financial losses,
possible damage to the Company’s reputation, legal
repercussions and the likelihood that such risks will occur,
as well as any other significant factors. Sub-proposals are
then created, and counter-measures are put into place to
reduce the likelihood that a risk will occur or to moderate
the potential impact. Thereafter, management employees
regularly check and assess such counter-measures on
regular basis. RMS/ICS also involves regular risk reporting
to the Board of Management of the Company and the
management of VOLKSWAGEN AG with the aim to
secure information on the overall picture of a particular risk
situation. The adequacy, effectiveness and transparency
of the whole system are regularly and independently
checked within processes that make up an integrated
part of RMS/ICS. Improvements are currently being
made to the quality of all processes under the supervision
of the VOLKSWAGEN Group, with the emphasis on
documenting activities concerning RMS/ICS.
The Company put a new Internal Control System (ICS)
in place in 2021 to introduce a process of standardised
management controls covering key internal processes. The
ICS ensures the execution of ongoing control activities, the
quality and expertise of which is guaranteed by anchoring
ECONOMIC, POLITICAL, AND LEGISLATIVE
RISKS
From the financial perspective, ŠKODA AUTO is both
an exporter and a local manufacturer and is influenced by
general global and European economic conditions and by
the situation in particular economies. These include the
condition of the economy and the associated economic
cycle, amendments to legislation and changes to the political
situation in those countries where the Company is active; for
example, the current Russian-Ukrainian conflict. This brings
with it a constant threat of risks associated with a high level
of public debt, unemployment and fluctuations in the prices
of precious metals, crude oil and plastics. Other significant
risks that can influence the Company’s commercial activities
on global markets are the uneven economic development in
different states or regions and a vulnerable banking system.
ŠKODA AUTO identifies, in advance, export contracts to
countries with a potential territorial and political risk and
hedges them with approved financial and insurance products
as standard. The Company works in this field with Czech
and international banking institutions, including Export
Guarantee and Insurance Corporation (EGAP). A further
negative influence on the economic activity at the Company
can arise in the form of additional technical development
costs caused by amendments to legal regulations, for
example, stricter legislative requirements on the safety of
cars, fuel consumption or emissions of pollutants, as well
as modifications to the standard specifications of vehicles.
In terms of laws regarding environmental protection,
the Company must count on the fact that EU legislation
regarding exhaust fume emissions will become stricter in
the future.
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A N N U A L R E P O R T 2 0 2 1
LEGISLATION REGARDING EMISSIONS
One significant risk which ŠKODA AUTO faces is the failure
to adhere to the statutory limits for the average values of
CO2 emissions, particularly in the EU Member States, in the
United Kingdom of Great Britain and Northern Ireland, in
Switzerland, in Norway and in Iceland. Sanctions of EUR 95
for each gram exceeded and per vehicle sold in the relevant
calendar year may be imposed by these countries for
exceeding the targets approved by the European Union.
In spite of all planned and approved technical measures,
achieving the required values comes with a high degree of
uncertainty, particularly in 2025 when legislation regarding
CO2 limits will become stricter. Another risk related to CO2
alongside the failure to comply with legislative targets is
the loss of competitiveness, which concerns the required
offer of conventional models favourable to CO2 values and
fully or partially electrified vehicles. The situation is similar
in other countries and regions. An analysis of the current
development of expected CO2 emissions is regularly
presented to the Board of Management as a source of basic
information for decision-making on the future product
portfolio of models and batteries and their planned quantity
in the form of annual or quarterly reports as part of risk
management.
FINANCIAL RISKS
Financial risks and the management of such risks are
among those which are monitored the most frequently at
ŠKODA AUTO. First, in terms of significance, is the risk
associated with the development of foreign exchange
rates and their impacts on cash flow, financing and the
overall economic performance of the Company. The risk
and impact of changes in exchange rates are regularly
monitored, planned and managed using standard hedging
instruments. Members of internal and Group committees
discuss and ensure the approval of the products used and
the strategies applied. In accordance with IFRS, specifically
IFRS 9, the Company maintains hedge accounting for
currency risk hedging instruments. The instruments chosen
meet the requirements of International Financial Reporting
Standards for hedge accounting. Risks arising from
procuring aluminium, copper and lead, materials which are
bought for the manufacture of products at ŠKODA AUTO,
are handled using similar procedures and strategies
although the Company keeps these outside the hedge
accounting regime from the perspective of IFRS.
Another significant risk is liquidity risk, which is
managed using standard procedures and instruments
so that it is possible to sufficiently cover activities and
obligations for the required period of time. The financial
resources in place at ŠKODA AUTO and the resources
from the companies of the VOLKSWAGEN Group are the
base. The Company manages the export risk using standard
hedging instruments, for example, documentary letters of
credit, standby letters of credit, bank guarantees and the
like.
DEMAND RISKS
Rising and escalating competition in the automotive
industry demands ever-increasing sales promotion. This
situation is further affected by the market risks associated
with a change in consumer demand as consumer
purchasing behaviour depends on actual influences such as
real wages, and on psychological influences. ŠKODA AUTO
regularly analyses how customers and competitors behave,
and in doing so minimises these particular risks.
PROCUREMENT RISKS
Extremely close and economically-advantageous
collaboration between vehicle manufacturers and their
suppliers brings with it procurement risks that could disrupt
the fluidity of production or lead to considerable financial
losses. Examples of such risks are a delay in deliveries,
failure to deliver goods or qualitative defects to goods or,
in extreme cases, when suppliers become insolvent and
disappear from the supply chain. Other risks arise from
fiercer competition in the supply industry. Therefore,
ŠKODA AUTO collaborates with a number of suppliers
when taking assembly components to make sure that it
is able to operatively react to any negative developments.
Moreover, preventative measures are taken within the risk
management system to cover cases in which a supplier
is insolvent and regular checks are made regarding the
financial stability of its suppliers. All these preventative and
reactive measures combine to work actively towards the
maximum possible reduction of risks as part of the supplier
relations with the Company.
RESEARCH AND DEVELOPMENT RISKS
For new products, there is a risk that customers will not
accept the product in question. In order to eliminate
this risk, extensive analyses and customer surveys are
conducted, which help the Company to identify trends
and check their relevance to the customers. The risk
associated with a situation where new products are not
launched at the planned time, in the envisaged quality and
at the targeted cost is minimised by regularly checking
the project and comparing it with the desired condition.
The result of this is that the required measures can be
taken when any deviations are found. Key areas of future
activity at the enterprise are electromobility, autonomous
steering and digitalisation, which are all vital for successful
and sustainable development. For the Company to be able
to cope with the forthcoming transformation processes,
support is required for research and development through
targeted support programmes, such as making it possible
to test autonomous vehicles under real conditions and on
test tracks or government support for cars with alternative
propulsion, in particular, electric cars. Other important
steps are the deployment of charging infrastructure and
high-speed Internet coverage on traffic routes. Certain
specific risks come with these steps, risks that must be
assessed on a regular basis. Internal risks include, for
example, the development of new technologies and the
need to change existing processes. External risks include
economic policy, technical legislation and unpopularity
among customers.
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A N N U A L R E P O R T 2 0 2 1
QUALITY RISKS
The Company places huge emphasis on the risk
management system in relation to quality on account of
ever-rising competitive pressure, the increasing complexity
of production technologies, the high number of suppliers
and the use of Group-wide systems. It endeavours to
identify and remove as quickly as possible any problems
regarding quality from the very first stages of product
development to ensure there are no delays in launching
production. It also ensures long-term quality and timely
supplies from the very start of the supply chain using
the risk management system, which helps the Company
meet customer expectations. Alongside the ongoing
digitalisation of products and processes at the Company,
Quality Control continually follows trends in cybernetic
security, reliability and ensures that software is up-to-date;
for example, identifying the risks associated with these
areas on time and minimising these risks in line with
UNECE requirements and in collaboration with the
competent Company and Group specialised workplaces.
The quality of the products, processes and
management system at the Company is audited every
year by an independent, accredited certification company.
The quality management system certificates successfully
retained by ŠKODA AUTO since 1993 guarantee that the
processes work. They are also used as input documents
for the approval of products, which are then subject to
systematic production and operating conformity controls.
INFORMATION TECHNOLOGY RISKS
Information technology (IT) has an increasingly important
role at ŠKODA AUTO, a global company that is focused on
continued growth. IT risks can include unauthorised access
to data or abuse of sensitive electronic data, restricted
access to systems and failure to comply with regulatory
requirements (for example, GDPR). Heightened attention is
paid to the risk of unauthorised access to data and various
measures are implemented in relation to employees and
organisations, as well as applications, systems and data
networks. These can take the form of a firewall, restricting
the allocation of access rights to systems and backing-up
crucial data sources. The Company employs only technical
resources that have been tried and tested on the market
and which comply with internal standards. An Information
Security Management System (ISMS) has been put in place
at ŠKODA AUTO to minimise the risks relating to IT and
their potential impact on Company objectives.
LEGAL RISKS
ŠKODA AUTO conducts its business activities in more
than 100 countries throughout the world and this can lead
to risks associated with lawsuits with suppliers, dealers,
employees, investors and customers, as well as the risk of
administrative proceedings that concern individual areas of
Company business.
To identify deviations in internal procedures and at suppliers
on time, the Company continually develops a qualified
network of auditors and test engineers, while regional
managers regularly update Company management on
the status of tests and measurements. ŠKODA AUTO
is aware of its responsibility for its products and the
Quality Management Division continually monitors
the development of customer satisfaction and collates
information on the current developments in particular
markets. If negative deviations are found, measures are
immediately implemented to ensure that any damage is
kept to the minimum.
HUMAN RESOURCE RISKS
The dynamic development of the automotive industry
and ever-fiercer competition have forced the Company
to secure a competitive advantage into the future in the
form of stable, qualified and flexible personnel in direct
and indirect areas. This is why the area People and Culture
is adopting a long-term strategy, which focuses on the
full HR process, from human resource planning through
recruitment and education to employee motivation. At
the same time, there is the need to correctly analyse and
prevent potential risks, which include losing qualified staff
who ensure key processes in the Company, risks stemming
from amendments to legislation, legal risks and risks
associated with long-term demographic changes.
OTHER OPERATING RISKS
There are influences alongside the risks mentioned above
which are unforeseeable and could potentially affect future
development. These primarily include natural disasters,
epidemics, terrorism and the like.
The Covid-19 pandemic also hit ŠKODA AUTO hard
in the years 2020 and 2021. Not simply in terms of the
risk of a drop in demand on all markets, but also the risk
of a delay in deliveries from suppliers, or deliveries not
being made at all, the risk of staff disruption, and the
problems of ensuring smooth production associated with
this. Even in this difficult situation, however, the Company
was able to respond very quickly and in doing so at least
partially mitigate the impacts and other risks, and indeed
prepare for other possible scenarios for the development
of the pandemic, something which is placing entirely
new demands on the Company. For example, how to
effectively set up work from home, how to set and adhere
to strict hygiene measures, and how to flexibly respond
to unexpected situations that the pandemic brings. Such
a risk cannot be effectively influenced in its entirety, merely
mitigated.
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A N N U A L R E P O R T 2 0 2 1
SHORT-TERM AND LONG-TERM OUTLOOK
The global economy recorded positive growth in the fiscal
year 2021 as it gradually recovered from the disruption
caused by the Covid-19 pandemic. Global demand for
vehicles was up on the previous year. The global economy
is expected to continue growing overall in 2022, albeit
at a somewhat lower level overall. Global demand for
passenger cars will probably vary from region to region and
increase moderately year-on-year. With our broad product
range, technologies and services, we are well prepared for
future challenges in the mobility business.
Our assumptions are based on current estimates
by third-party institutions. These include economic
research institutes, banks, multinational organisations, and
consulting firms.
DEVELOPMENT IN THE GLOBAL ECONOMY
Our planning is based on the assumption that global
economic output will continue to grow in 2022, albeit
at a somewhat lower level overall, after the recovery
observed in the 2021 fiscal year – provided that the
Covid-19 pandemic does not flare up again and that
shortages of intermediates and commodities become less
intense. We continue to believe that risks will arise from
protectionist tendencies, turbulence in the financial markets
and structural deficits in individual countries. In addition,
growth prospects will be negatively impacted by ongoing
geopolitical tensions and conflicts. We assume that both
the advanced economies and the emerging markets will
experience positive momentum. Furthermore, we are
forecasting that the global economy will also continue to
grow in the period from 2023 to 2026.
In Western Europe, we expect comparatively robust
economic growth, exceeding the 2019 pre-crisis level.
The widespread impact of the Covid-19 pandemic and
the uncertain consequences of the United Kingdom’s exit
from the European Union will fundamentally pose major
challenges.
We likewise anticipate relatively robust growth rates in
Central Europe in 2022.
Economic output in Eastern Europe is also expected
to continue growing, though at a somewhat slower pace
- particularly depending on further developments in the
Russian-Ukrainian conflict.
The Chinese economy will probably continue growing
at a relatively high level in 2022.
We expect a relatively high rate of expansion for the
Indian economy in 2022.
TRENDS IN THE GLOBAL MARKET FOR
PASSENGER CARS
We predict that trends in the markets for passenger cars
in the individual regions will be mixed in 2022. Overall,
the global volume of new vehicle sales is expected to
be moderately up on the prior year without reaching
the pre-pandemic level. This prediction assumes that
the Covid-19 pandemic does not flare up again and that
shortages of intermediates, especially semiconductors,
and commodities become less intense. We are forecasting
growing demand for passenger cars worldwide in the
period from 2023 to 2026.
For 2022, we anticipate that the volume of new
passenger car registrations in Western Europe will be
distinctly above that recorded in the reporting period.
At the same time, however, the possible impact of the
pandemic and the still uncertain consequences of the
United Kingdom’s exit from the EU may result in ongoing
uncertainty among consumers and dampen demand.
Limited vehicle availability as a result of the semiconductor
shortage may also continue to weigh on the volume of
new registrations. Nevertheless, we assume a significant
increase for the United Kingdom and Spain in 2022. In
France and Italy, the markets will probably be slightly higher
than the level seen in the reporting period.
Sales of passenger cars in 2022 are expected to exceed
the prior-year figures in markets in Central and Eastern
Europe. Developments in Russia will depend on further
unfolding of the Russian-Ukrainian conflict. In the region’s
other markets, a slight to significant rise in the number of
new registrations is expected.
We estimate that the market volume in China will also
be slightly higher than the comparative figure for 2021.
Attractively priced entry-level models in the SUV segment
in particular should still see strong demand. We anticipate
that the Indian market will perform at the previous year’s
level.
DEVELOPMENT PLANS OF ŠKODA AUTO
ŠKODA AUTO will intensively continue to execute
NEXT LEVEL - ŠKODA STRATEGY2030 and aims to
become one of the top five best-selling brands in Europe by
2030, while expanding and becoming the leading European
brand in the markets of India, Russia* and North Africa.
The Company will strive to comply with the European
Union’s emissions and CO2 standards and the associated
portfolio adjustments, which will be broadened further
to digital business models and mobility services. The
share of electric vehicles in ŠKODA’s European sales will
rise to 50 to 70% by 2030. By 2030, the Company aims
to achieve a CO2-neutral energy balance at its Czech
production sites.
In the coming years, ŠKODA AUTO will continue to
place emphasis on innovation, an open and agile corporate
culture, enhancing employee qualifications and modern
working methods.
SHORT-TERM AND
LONG-TERM OUTLOOK
* The development in Russia will depend on further unfolding of the Russian-Ukrainian conflict.
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FINANCIAL
SECTION
(Translation of a report originally issued in Czech - see Notes to the financial statements.)
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDER OF ŠKODA AUTO a.s.:
In preparing the financial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board
of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Supervisory Board is responsible for overseeing the Company’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit conducted in accordance with above regulations will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with the above law or regulation, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
	■ Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
	■ Obtain an understanding of internal control relevant to the audit 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.
	■ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the Board of Directors.
	■ Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
	■ Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the Board of Directors and the Supervisory Board regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
Ernst & Young Audit, s.r.o.
License No. 401
Milan Kočka, Auditor
License No. 1994
4 March 2022
Prague, Czech Republic
A member firm of Ernst &Young Global Limited
Ernst &Young Audit, s.r.o. with its registered office at Na Florenci 2116/15, 110 00 Prague 1 – Nove Mesto,
has been incorporated in the Commercial Register administered by the Municipal Court in Prague,
Section C, entry no. 88504, under Identification No. 26704153.
OPINION
We have audited the accompanying financial statements of ŠKODA AUTO a.s. (hereinafter also the “Company”) prepared in accordance
with International Financial Reporting Standards as adopted by the European Union, which comprise the balance sheet as at
31 December 2021, and the income statement, statement of other comprehensive income, statement of changes in equity and cash
flows statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies
and other explanatory information. For details of the Company, see notes to the financial statements.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of ŠKODA AUTO a.s. as at
31 December 2021, and of its financial performance and its cash flows for the year then ended in accordance with International Financial
Reporting Standards as adopted by the European Union.
BASIS FOR OPINION
We conducted our audit in accordance with the Act on Auditors and Auditing Standards of the Chamber of Auditors of the Czech
Republic, which are International Standards on Auditing (ISAs), as amended by the related application clauses. Our responsibilities under
this law and regulation are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our
report. We are independent of the Company in accordance with the Act on Auditors and the Code of Ethics adopted by the Chamber of
Auditors of the Czech Republic and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
OTHER INFORMATION
In compliance with Section 2(b) of the Act on Auditors, the other information comprises the information included in the Annual Report
other than the financial statements and auditor’s report thereon. The Board of Directors is responsible for the other information.
Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements,
our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. In addition,
we assess whether the other information has been prepared, in all material respects, in accordance with applicable law or regulation,
in particular, whether the other information complies with law or regulation in terms of formal requirements and procedure for
preparing the other information in the context of materiality, i.e. whether any non-compliance with these requirements could influence
judgments made on the basis of the other information.
Based on the procedures performed, to the extent we are able to assess it, we report that:
	■ The other information describing the facts that are also presented in the financial statements is, in all material respects,
consistent with the financial statements; and
	■ The other information is prepared in compliance with applicable law or regulation.
In addition, our responsibility is to report, based on the knowledge and understanding of the Company obtained in the audit, on
whether the other information contains any material misstatement. Based on the procedures we have performed on the other
information obtained, we have not identified any material misstatement.
RESPONSIBILITIES OF THE COMPANY’S BOARD OF DIRECTORS AND SUPERVISORY BOARD FOR
THE FINANCIAL STATEMENTS
The Board of Directors is responsible for the preparation and fair presentation of the financial statements in accordance with
International Financial Reporting Standards as adopted by the European Union and for such internal control as the Board of Directors
determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
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BALANCE SHEET AS AT 31 DECEMBER 2021
Assets (CZK million) Note 31 December 2021 31 December 2020
Intangible assets 4 48,697 44,600
Property, plant and equipment 5 81,867 85,632
Investments in subsidiaries 6 228 600
Investments in associates 7 2,934 2,356
Other non-current receivables and financial assets 8 10,291 10,196
Deferred tax asset 14 885 1,267
Non-current assets   144,902 144,651
Inventories 9 31,901 24,516
Trade receivables 8 22,784 31,665
Other current receivables and financial assets 8 3,885 2,500
Current non-financial assets 8 5,333 5,982
Prepaid income tax   236 —
Cash and cash equivalents 10 22,422 18,669
Current assets   86,561 83,332
Total assets   231,463 227,983
Equity and liabilities (CZK million) Note 31 December 2021 31 December 2020
Share capital 11 16,709 16,709
Share premium   1,578 1,578
Retained earnings 12 78,612 71,372
Other reserves 12 4,629 5,261
Equity   101,528 94,920
Non-current financial liabilities 13 2,322 2,404
Non-current non-financial liabilities 13 7,017 6,783
Non-current provisions 15 16,757 17,242
Non-current liabilities   26,096 26,429
Trade liabilities 13 58,230 66,153
Other current financial liabilities 13 1,720 1,376
Current non-financial liabilities 13 14,811 12,576
Current income tax liabilities   — 260
Current provisions 15 29,078 26,269
Current liabilities   103,839 106,634
Total equity and liabilities   231,463 227,983
The notes on pages 62 to 107 are an integral part of these financial statements.
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2021
(CZK million) Note 2021 2020
Sales 16 422,607 424,292
Cost of sales 24 380,689 381,221
Gross profit   41,918 43,071
Distribution expenses 24 10,287 12,349
Administrative expenses 24 12,271 13,565
Other operating income 17 13,876 12,508
Other operating expenses 18 7,020 12,349
Operating profit   26,216 17,316
Financial income   2,460 2,842
Financial expenses   1,356 2,295
Net financial result 19 1,104 547
Profit before tax   27,320 17,863
Income tax expense 21 4,910 2,688
Profit for the year   22,410 15,175
STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021
(CZK million) Note 2021 2020
Profit for the year, net of tax   22,410 15,175
Items that will be reclassified to profit or loss:      
Net fair value gain / (loss) net of tax on financial derivatives designated as hedging
instruments
12 (963) 2,297
Items that will not be reclassified to profit or loss:      
Net fair value gain / (loss) net of tax on equity instruments 12 331 (498)
Other comprehensive income / (loss) for the year, net of tax   (632) 1,799
Total comprehensive income for the year   21,778 16,974
The notes on pages 62 to 107 are an integral part of these financial statements.
SEPARATE FINANCIAL STATEMENTS
FOR THEYEAR ENDED 31 DECEMBER 2021
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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2021
(CZK million)
Share
capital
Share
premium
Retained
earnings
Other
reserves* Total equity
Balance as at 1 January 2020 16,709 1,578 87,877 3,462 109,626
Profit for the year — — 15,175 — 15,175
Other comprehensive income / (loss) — — — 1,799 1,799
Total comprehensive income for the year — — 15,175 1,799 16,974
Dividends** — — (31,680) — (31,680)
Balance as at 31 December 2020 16,709 1,578 71,372 5,261 94,920
           
Balance as at 1 January 2021   16,709 1,578 71,372 5,261 94,920
Profit for the year — — 22,410 — 22,410
Other comprehensive income / (loss) — — — (632) (632)
Total comprehensive income for the year — — 22,410 (632) 21,778
Dividends** — — (15,170) — (15,170)
Balance as at 31 December 2021 16,709 1,578 78,612 4,629 101,528
* Explanatory notes on Other reserves are presented in Note 12.
** The detailed information about dividends is presented in Note 11.
The notes on pages 62 to 107 are an integral part of these financial statements.
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2021
(CZK million) Note 2021 2020
Cash and cash equivalents as at 1 January 10 18,669 45,753
Profit before tax   27,320 17,863
Depreciation, amortisation, impairment loss and reversal of impairment loss
of non-current assets
4, 5, 6, 7 26,596 26,251
Change in provisions 15 2,324 8,380
(Gain) / loss of tangible and intangible assets   59 15
Net interest (income) / expense 19 (332) 816
Dividend income 19 (601) (1,289)
Adjustments for non-cash transactions on derivatives and other adjustments
for non-cash transactions
  (1,445) (980)
Change in inventories 9 (7,390) 350
Change in receivables   9,292 (8,794)
Change in liabilities   683 (3,266)
Income tax paid from operating activities   (4,874) (2,442)
Interest paid   (254) (300)
Interest received   586 229
Cash flows from operating activities   51,964 36,833
Purchases of tangible and intangible assets 4, 5 (21,136) (21,009)
Payment for increase in equity of a subsidiary and associates 6, 7 (6) (6)
Purchases of available-for-sale financial assets   — —
Additions to capitalised development costs 4 (12,271) (12,004)
Proceeds from sale of tangible and intangible assets   22 21
Proceeds from dividends and investments   906 1,289
Cash flows from investing activities   (32,485) (31,709)
Net cash flows (operating and investing activities)   19,479 5,124
Dividends paid 11 (15,170) (31,680)
Repayments of lease liabilities - principals   (556) (528)
Cash flows from financing activities   (15,726) (32,208)
Net change in cash and cash equivalents   3,753 (27,084)
Cash and cash equivalents as at 31 December 10 22,422 18,669
Total cash outflow from lease liabilities and from low-value assets leases was CZK 905 million in 2021 (2020: 853 million). For
non-cash transactions from investing activities relating to leases under IFRS 16 refer to Note 5.
The notes on pages 62 to 107 are an integral part of these financial statements.
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The following table shows the changes in liabilities arising from financing activities according to the classification
as cash and non-cash transactions:
(CZK million)
Balance as at
1 January 2021
Cash-effective
changes
Non-cash changes -
additions
Balance as at
31 December 2021
Lease liabilities - interest — (51) 51 —
Lease liabilities - principal 1,839 (556) 197 1,480
Lease liabilities total 1,839 (607) 248 1,480
(CZK million)
Balance as at
1 January 2020
Cash-effective
changes
Non-cash changes -
additions
Balance as at
31 December 2020
Lease liabilities - interest — (63) 63 —
Lease liabilities - principal 2,107 (528) 260 1,839
Lease liabilities total 2,107 (591) 323 1,839
The notes on pages 62 to 107 are an integral part of these financial statements.
COMPANY INFORMATION
Foundation and company enterprises
ŠKODA AUTO a.s. (“the Company”) was incorporated as a joint-stock company on 20 November 1990. The Company’s principal
business activities are the development, production and sale of vehicles and related accessories.
Registered office:			 tř. Václava Klementa 869, 293 01 Mladá Boleslav, Czech Republic
Identification number: 		 00177041
Website: 			www.skoda-auto.cz
The Company is registered in the Commercial Register maintained with the Municipal Court in Prague, Section B, Insert 332,
with File No. Rg. B 332.
The organisational structure of the Company is divided into the following main areas:
	■ Central Management Department
	■ Finance and IT
	■ People & Culture
	■ Procurement
	■ Production and Logistics
	■ Sales and Marketing
	■ Technical Development
The Company has its main production plant in Mladá Boleslav and two other production plants in Vrchlabí and Kvasiny.
ŠKODA AUTO a.s. is a subsidiary of VOLKSWAGEN FINANCE LUXEMBURG S.A. included in the consolidation group of its
ultimate parent company and its ultimate controlling party, VOLKSWAGEN AG (“VOLKSWAGEN Group”), with its registered
office in Wolfsburg, the Federal Republic of Germany (details disclosed in Note 29).
NOTES TO THE SEPARATE
FINANCIAL STATEMENTS 2021
The financial statements have been prepared in Czech and in English. In all matters of interpretation of information, views or opinions, the Czech version of
these financial statements takes precedence over the English version.
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1 SUMMARY OF ACCOUNTING POLICIES AND PRINCIPLES
1.1 COMPLIANCE STATEMENT
These financial statements are separate financial statements of ŠKODA AUTO a.s. for the year ended 31 December 2021.
Financial statements of the Company, its subsidiaries, and associates are included in the consolidated financial statements of
VOLKSWAGEN Group for the year ended 31 December 2021.
The Company as a controlled entity is required to be consolidated by its ultimate parent company VOLKSWAGEN AG in its
financial statements prepared in accordance with the International Financial Reporting Standards as adopted by the European
Union that are available for public use. The Company prepares the separate financial statements in accordance with the
International Financial Reporting Standards as adopted by the European Union (“IFRS”) based on the Company’s sole shareholder’s
decision in accordance with provisions of paragraph 19a Article 7 Act No. 563/1991 Coll., on Accounting.
The Company publishes these separate financial statements as its only financial statements prepared in accordance with IFRS*,
and relied on the exemption from consolidation under paragraph 4(a) of IFRS 10 and exemption from applying the equity
method in accordance with paragraph 17 of IAS 28. The consolidated financial statements of VOLKSWAGEN Group prepared
in accordance with IFRS will be publicly available on the following website after their release at: https://annualreport2021.
volkswagenag.com.
The Company publishes only separate financial statements in Collection of Documents of respective court maintaining the
Commercial Register based on the exemption from consolidation under provisions of paragraph 22aa Article 1 and 2 Act No.
563/1991 Coll., on Accounting (effective as at 31 December 2021). Consolidated financial statements of VOLKSWAGEN AG and
the auditor’s report thereon will be published in the Czech language in the collection of documents in the Commercial Register.
For more information about the Company refer to the preceding Note “Company information”.
For more information about the ultimate parent company VOLKSWAGEN AG refer to Note 29.
1.2 NEW STANDARDS, AMENDMENTS
AND INTERPRETATIONS TO EXISTING STANDARDS
New standards, amendments and interpretations to existing standards mandatory for accounting periods beginning
on 1 January 2021
A summary of new standards, amendments, interpretations, and improvements of existing standards for which the Company
either are not relevant, or which did not have a material impact on its separate financial statements.
IFRS, Interpretation Effective in EU
IFRS 4 – Insurance Contracts
Exemption from Applying IFRS 9.
1 January 2021
Interest Rate Benchmark Reform (IBOR) – Phase 2
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
1 January 2021
IFRS 16 – Leases
Covid-19-Related Rent Concessions after 30 June 2021
An extension of the amendment to IFRS 16 provides an optional practical expedient for lessees from assessing
whether a rent concession related to Covid-19 is a lease modification. Lessees can elect to account for such rent
concessions in the same way as they would if they were not lease modifications.
1 April 2021
*The Company prepares the separate financial statements in accordance with IFRS as adopted by the European Union and as interpreted by the
agenda paper issued by the European Commission Internal Market and Services for the meeting of the Accounting Regulatory Committee (document
ARC/08/2007) about a relationship between the IFRS regulation and the 4th and 7th Company Law Directives, which were subsequently replaced by
Directive 2013/34/EU of the European Parliament and of the Council. The Commission Services Department was of the opinion that, if a company chooses
or is required to prepare its annual separate financial statements in accordance with IFRS as adopted by the European Union, it can prepare and file them
independently from the preparation and filing of consolidated financial statements. At the time of preparation of these separate financial statements, the
approved consolidated financial statements of VOLKSWAGEN Group have not been published.
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New standards, amendments and interpretations to existing standards published not yet effective for accounting
periods beginning on 1 January 2021
The following standards, amendments and interpretations to existing standards will not be relevant for the Company or will have
no material impact on the separate financial statements of the Company. The Company expects their application at the same time
as the effective date in the European Union
IFRS, Interpretation Effective in EU
IAS 16 – Property, Plant and Equipment
Proceeds before Intended Use
Amendments to IAS 16 in part Proceeds before Intended Use amend the standard to prohibit deducting from the cost
of a PPE any proceeds received from selling items produced by the PPE before it is ready for its intended use. The sales
proceeds would have met the revenue definition and therefore should be recognised in profit or loss.
1 January 2022
IAS 37 – Provisions, Contingent Liabilities and Contingent Assets
Onerous Contracts-Cost of Fulfilling a Contract
The changes specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Such
costs can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling
contracts.
1 January 2022
IFRS 3 – Business Combinations
Reference to the Conceptual Framework
Amendments updating the Reference in the standard to the Conceptual Framework for Financial Reporting, without
changing the requirements for Business Combinations.
1 January 2022
IAS 1 – Presentation of Financial Statements
Presentation of Financial Statements
The amendment to clarify that liabilities are classified as either current or non-current, depending on the rights that exist at
the end of the reporting period.
Disclosure of Accounting Policies
Amendments that are intended to help preparers in deciding which accounting policies to disclose in their financial
statements. An entity is required to disclose its material accounting policy information instead of its significant accounting
policies.
1 January 2023*
IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors
Definition of Accounting Estimates
Amendments estimates to help entities to distinguish between accounting policies and accounting estimates. Changes in
accounting policies must be applied retrospectively while changes in accounting estimates are accounted for prospectively.
1 January 2023*
IAS 12 – Income Taxes
Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Amendments provide a further exception from the initial recognition exemption. Under the amendments, an entity does not
apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences.
1 January 2023*
IFRS 17 – Insurance Contracts
The new standard represents a complete overhaul of the accounting for insurance contracts. It establishes principles for
the recognition, measurement, presentation and disclosure of insurance contracts issued, reinsurance contracts held and
investment contracts with discretionary participation features that an entity issues.
1 January 2023
IFRS 17 – Insurance Contracts
Initial Application of IFRS 17 and IFRS 9 — Comparative Information
An amendment that enables companies to improve the usefulness of the comparative information presented on initial
application of IFRS 17 and IFRS 9.
1 January 2023*
* Not adopted by the European Union as at 31 December 2021 (this date represents the effective date under the IASB).
1.3 THE COVID-19 PANDEMIC AND ITS EFFECTS ON REPORTED DATA
The global Covid-19 pandemic adversely affected the Company’s financial condition and performance in last two years. While in
2020, the pandemic resulted mainly in a global decline in demand for new cars and a complete shutdown of production at the
Company’s production plants due to global lockdown, in 2021, the Company’s deterioration in performance was mainly due to
supply chain issues. The performance of the automotive industry was negatively impacted by the lack of supply of semiconductors
and other components in 2021.
To mitigate the effects of the pandemic, the Company’s management has taken several measures since 2020, in particular in the
area of ​​cost savings, capital expenditures and optimizing of working capital. The lack of semiconductor supply caused a significant
reduction in car production at the Company’s manufacturing plants, which caused a decline in sales. The production curtailment
also resulted in an increase in personnel costs which, together with the decline in sales, had a material impact on financial
performance, resulting in the Company experiencing a 0.4% year-on-year decline in sales (2020: 7.6%). Furthermore, the shortage
of semiconductors was reflected in the Company’s current asset structure as a year-on-year decrease in finished goods and
a simultaneous increase in raw materials and work-in-progress inventory (see Note 9), which led to additional storage costs.
At the time of preparation of the financial statements, the Company’s management assumes that the effects of the pandemic
are only temporary and will not have a significant negative impact on the Company’s financial position and performance in future
periods. The medium- and long-term strategic objectives remain valid, the Company will continue the model offensive.
In assessing the entity’s ability to continue as a going concern, the Company’s management assumed the temporary nature of
the pandemic. The output of the assessment is the confirmation of the Company’s ability to continue its activities to the extent
originally planned.
Furthermore, the Company assessed the possible impairment of its assets. The Company’s assumption that the pandemic will
not have permanent negative impact on long-term results has been taken into account in all parameters included in the calculation
when determining the value in use of assets. Details of the tests performed in 2021 and the calculation parameters are disclosed in
Notes 4 and 5.
Fluctuations in exchange rates on global foreign exchange markets due to the ongoing Covid-19 pandemic did not have a negative
impact on the Company’s results of operation unlike in 2020, where significant fluctuations negatively impacted the Company’s
profit of CZK 3,351 million.
The Covid-19 pandemic and supply chain issues also caused an adjustment to the foreign exchange plan with implications for the
Company’s hedge accounting. A part of future planned cash outflows and inflows from forecast transactions was postponed, for
another part of cash flows their realization was assessed as highly unlikely, with the transaction no longer expected. Taking into
account the specific situation, hedge accounting activities were either suspended or cancelled and derivatives were reclassified
as held for trading. Despite the above facts, the effects on hedge accounting were not significant. Due to the ineffectiveness
of the hedging relationship for selected derivative transactions, a net deduction of the gain from other comprehensive income
to other operating income in the amount of CZK 160 million occurred in 2021. (In 2020, there was a one-off loss write-off of
CZK 263 million). Details on the ineffectiveness of hedging are disclosed in Note 12.1.
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Furthermore, the Company assessed the risk of possible losses caused by the pandemic that could result from existing long-term
contracts, while the Company has not identified any significant indicators leading to the creation of a provision for onerous
contracts. In the context of the deterioration of the overall economic situation caused by the pandemic, the global shortage of
semiconductors in the market, the volatility of the production program, the increase in the prices of input materials, energy and
inflation, the Company identified risks that were taken into account by making provisions for purchase risks. Further information is
provided in Note 15.
The Company has also made appropriate amendments to its historical loss rates under the simplified approach to receivables
impairment to reflect both the current economic environment and also forward-looking element. More information on rate
adjustments is provided in Note 2.5.1.2.
In 2021, the Company did not draw any government grant triggered by the Covid-19 pandemic. Due to the measures related to
the pandemic, which led to barriers to work on the part of the employer, the Company received government grants in 2020 under
the “Antivirus program”. For more information refer to Note 22.
1.4 FUNCTIONAL CURRENCY ANALYSIS AND ITS IMPACT ON CURRENCY RISK HEDGING
The Company operates primarily in the economic and legal environment of the Czech Republic, but as a result of its foreign
activities it is also exposed to the influences of other economic environments. The Company is mainly influenced by the economic
and legal environment of the Eurozone which is a source for substantial part of its sales and from which a significant part of
purchases of raw materials and parts to ensure the production of cars is also made.
In 2021, the Company’s management assessed the ratio of currencies that mainly affect and will in the near future affect the
selling prices of goods and services and the currency mix of costs in a regular analysis. The Company’s management took into
account all indications and trends in the primary economic environment that could affect its functional currency in the near future.
The most significant indicator considered were the future purchases of parts denominated in EUR, which are related to the
increasing battery production.
The results of the analysis confirmed CZK as the functional currency for the accounting period ended 31 December 2021. The
evaluation of the time series of significant indicators (especially the mutual ratio of individual currencies represented in sales and
purchases) showed that the Company is gradually moving towards the functional currency EUR. It is highly probable that the
gradually increasing volume of purchases of battery modules denominated in EUR will already significantly affect the ratio of
currencies on the cost side in favour of the EUR in 2023. Based on the above results of the analysis, the Company’s management
considered a possible change in the functional currency and made a decision on 24 August 2020 to change it on 1 January 2023.
This decision was based on the best possible estimate of future development of all assessed indicators linked to the primary
economic environment on the date of its adoption. The development of indicators is closely monitored by the Company and the
decision is reviewed at regular intervals.
Adjustment of the currency risk hedging strategy
Following the above decision to change the functional currency, the Company’s management has also identified a change in the
definition of currency risk for the accounting periods beginning from 1 January 2023 onwards. Currency risk was newly defined
after this date as the risk arising from changes in exchange rates against the EUR.
In 2020, the Company started to hedge its future foreign currency sales and purchases for the accounting periods beginning
1 January 2023 onwards using derivative transactions contracted in EUR and continued to hedge risk of foreign currency
movements against EUR also in 2021. In 2020, the Company performed a close out of a part of the existing hedges, namely
derivative transactions contracted in CZK with a maturity date after 1 January 2023. The accounting policy for the “close out”
is set out in Note 2.5.3. Early termination of derivative transactions led in 2020 to the recognition of the losses from financial
instruments in the Company’s other operating income in the amount of CZK 29 million and net gains in the other comprehensive
income in the amount of CZK 96 million.
For newly contracted derivatives to hedge the risk of changes in exchange rates against the EUR, the Company applies hedge
accounting, except for foreign exchange forwards relating to commodity swaps that are recorded in the trading regime. In the tax
area, all financial derivatives hedged against changes in exchange rates against the euro are recorded in the trading regime, which
leads to temporary differences and effects on deferred tax.
2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These separate financial statements have been prepared under the historical cost convention, except for fair value measurement
of equity instruments measured at fair value through other comprehensive income, of financial assets and financial liabilities at fair
value through profit or loss, and of all derivative contracts.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also
requires management to exercise their judgment in the process of applying the Company’s accounting policies. Amounts in the
financial statements including the notes are disclosed in millions of Czech crowns (CZK million), unless stated otherwise.
2.1 FOREIGN CURRENCY TRANSLATION
Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment
in which the Company operates (‘the functional currency’). The financial statements are presented in Czech crowns (CZK), which is
the Company’s functional and presentation currency in the accounting period ended 31 December 2021 (31 December 2020).
Foreign currency transactions are translated into the functional currency using the exchange rates published by the Czech
National Bank prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange
rates published by the Czech National Bank are recognised in the income statement.
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2.2 INTANGIBLE ASSETS
Purchased intangible assets are recorded at cost less cumulative amortisation and impairment losses. All research costs are
recognised as expenses within the income statement when incurred. In accordance with IAS 38, all development costs of new
ŠKODA models and other products are recognised as intangible assets when it is probable that the project will be a success
considering its commercial and technical feasibility, and costs can be measured reliably and unless the cash-generating unit (see
Note 2.4) to which the relevant intangible assets can be allocated is fully amortized. Capitalised development costs and other
internally generated intangible assets are carried at cost less accumulated amortisation and impairment losses. If the criteria for
recognition as an asset are not met, the costs are recognised in the income statement in the year in which they are incurred.
Tooling rights are capitalised as intangible assets. These are rights to use “common tools” (various specific machines, tools, moulds
for casting or shaping, dies, etc.), which are used for the production of parts for cars of VOLKSWAGEN Group. Capitalised costs
include all direct costs as well as an appropriate portion of development-related overheads.
The cost of qualifying intangible assets also includes borrowing costs represented by interest and other costs that an entity incurs
in connection with borrowing funds. A qualifying asset is an asset that necessarily takes at least one year to get ready for its
intended use. The Company ceases capitalising borrowing costs when the qualifying asset is ready for its intended use or sale.
The development costs are amortised using the straight-line method from the start of production over the expected life cycle
of the models or components. Amortisation recognised during the year is allocated to the relevant functions in the income
statement.
Intangible assets are amortised applying the straight-line method over their estimated useful lives as follows:
	■ Capitalised development costs		 2–9 years according to the product life cycle
	■ Software				3–5 years
	■ Tooling rights				 2–8 years according to the product life cycle
	■ Other intangible fixed assets		 3–8 years
Estimated useful lives and amortization method are reviewed on a regular basis, the effect of any changes in estimates are
accounted for prospectively.
Intangible assets not yet available for use and intangible assets with indefinite useful lives are tested annually for possible
impairment and are carried at cost less accumulated impairment losses. To determine the return on these intangible assets, the
higher of their value in use and fair value less costs to sell the cash-generating unit to which the relevant intangible assets can be
allocated is used (see Note 2.4). Intangible assets are derecognised on sale or when no future economic benefits from individual
intangible assets are expected from their use or sale. The gains or losses arising from derecognition of an intangible asset, which
are determined as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the
profit or loss when the assets are derecognised.
2.3 PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment are stated at historical cost less cumulative depreciation and impairment losses. Historical cost
includes expenditure that is directly attributable to the acquisition of the assets.
All repairs and maintenance costs are charged to the income statement during the reporting period in which they are incurred.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be
measured reliably.
The cost of qualifying tangible assets also includes borrowing costs represented by interest and other costs that an entity incurs
in connection with borrowing of funds. A qualifying asset is an asset that necessarily takes at least one year to get ready for its
intended use. The Company ceases capitalising of borrowing costs when the qualifying asset is ready for its intended use or sale.
Land is not depreciated. Depreciation of other assets is calculated using the straight-line method over their estimated useful lives
as follows:
	■ Buildings							9–50 years
	■ Technical equipment and machinery
(incl. special tooling according to the product life cycle)		 3–18 years
	■ Other equipment, operating and office equipment	 		 3–23 years
	■ Means of transport						5–25 years
Estimated useful lives and depreciation method are reviewed on a regular basis, the effect of any changes in estimates are
accounted for prospectively.
Items of property, plant and equipment are derecognised on sale or when no future economic benefits are expected from their
use. The gains or losses arising from the derecognition of items of property, plant and equipment, which are determined as the
difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the profit or loss when the
assets are derecognised.
Property, plant and equipment also includes right of use assets arising from leases, see Note 2.13.
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2.4 IMPAIRMENT OF ASSETS
Assets that are subject to amortisation and depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use.
Assets are grouped at the lowest levels for which are separately identifiable cash inflows (cash-generating units) for purpose of
impairment assessment. Due to the regulation of performance standards of emission limits, the individual models of the Company
are to a large extent interdependent and the cash-generating unit is established at the level of tangible and intangible assets used
for the automotive-related business of the Company at the brand level.
2.5 FINANCIAL INSTRUMENTS
2.5.1 FINANCIAL ASSETS
2.5.1.1 CLASSIFICATION AND MEASUREMENT
The Company classifies financial assets at the time of acquisition at initial recognition of financial asset. The Company classifies its
financial assets into two primary groups, which are debt and equity instruments.
Separate group of financial assets are financial derivatives with positive fair value.
Debt financial instruments
Debt instrument is any contract that gives rise to a financial asset of one entity and a financial liability of another entity. Financial
assets are classified based on entity’s business model and the contractual cash flow characteristics of the financial instrument. As
a part of the business model test, the Company verifies that the goal of holding of a financial asset is to collect all cash flows from
it (the “hold to maturity” model) or whether the goal is to hold a financial asset and sell it (the “hold and sell” model). Furthermore,
the Company examines and determines whether the contractual characteristics related to the right to cash flows have only the
character of principal and interest i. e. whether the debt instrument has only “basic loan features”. Interest is compensation for the
time value of money and credit risk associated with granting a loan for a given period in accordance with IFRS 9.
Within debt instruments, the Company classifies financial assets into the following categories:
(a) Financial assets subsequently measured at amortised cost determined using the effective interest method
(Financial assets at amortised costs);
(b) Financial assets measured at fair value with changes in fair value included in other comprehensive income
(Financial assets at fair value through other comprehensive income);
(c) The financial assets measured at fair value with change in fair value included in profit or loss
(Financial assets at fair value through profit or loss).
Financial assets at amortised cost (portfolio AC)
In this category, the Company presents debt instruments, which are held under a business model, which aim is to collect all
contractual cash flows and which also have contractual cash flows representing solely principal and interest on the outstanding
principal. Subsequently, they are measured at amortised cost, as determined by the effective interest rate method (hereinafter
the amortised cost). During the accounting period 2021 (2020), the Company had in this category other receivables and financial
assets (refer to Note 8.1), trade receivables (refer to Note 8.2), deposits in VOLKSWAGEN Group companies and cash. Deposits in
VOLKSWAGEN Group companies are included in cash equivalents (refer to Note 10).
Financial assets at fair value through other comprehensive income (portfolio FVOCI)
In this category, the Company presents debt financial instruments if they meet both of the following conditions: (a) they are held
within a business model aimed at both to collect contractual cash flows and to sell financial assets (b) which have contractual
cash flows representing solely principal and interest on the outstanding principal. They are measured at fair value through other
comprehensive income. During the accounting period 2021 (2020) the Company had in this category investments in the equity
instruments of other entities (refer to Note 8.1).
Financial assets at fair value through profit or loss (portfolio FVPL)
Within this category, the Company classifies all other debt instruments, which cannot be classified in the above-mentioned
categories. These financial assets are held for trading purposes or their contractual cash flows do not represent solely payments of
principal and interest on the principal amount outstanding. Subsequently, they are measured at the fair value through profit or loss.
Within the debt instruments, the Company had only trade receivables in this category that were held for sale through factoring
arrangement during the 2021 (2020) accounting period (refer to Note 2.18). The realised and unrealised losses from the changes
in the fair value of these receivables were included in the financial expenses in 2021 (2020).
Derivatives are classified in category FVPL, provided that they do not meet the conditions of hedge accounting. During the
accounting period 2021 (2020), the Company had receivables from trading derivatives in this category (refer to Note 2.5.3). The
realised and unrealised gains and losses from changes in the fair value of financial derivatives held for trading were included in other
operating income or other operating expenses in 2021 (2020).
Equity instruments
Equity instrument is a contract evidencing a residual interest in the assets after deducting all of its liabilities. The Company
subsequently measures equity investments in other entities that are in the scope of IFRS 9 at fair value. Gains and losses arising
from the equity instruments are always included in profit or loss, with the exception of equity instruments which are not held for
trading. When these equity instruments were initially recognised, the Company opted that the realised and unrealised gains and
losses resulting from the investments in the equity instruments would be reported in other comprehensive income. Realised gains
or losses on these equity investments are reclassified between the revaluation reserve and retained earnings directly in equity.
Dividends are included in profit or loss only if they represent return on the investment.
In this category, the Company only held investments in equity instruments (refer to Note 8.1) that did not have an observable price
in an active market in 2021 (2020).
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2.5.1.2 IMPAIRMENT
The Company applies a model for the impairment which reflects expected credit loss (ECL). The expected loss model requires
recognising an allowance before a credit loss is incurred. With the exception of trade receivables, the Company applies a general
approach for impairment to the relevant financial assets (the debt instruments reported at the amortised cost in the portfolio
AC and debt instruments in the portfolio FVOCI), i.e. general approach for impairment. The Company used the option to apply
a simplified approach using an impairment matrix for trade receivables.
General approach to impairment
Under the general approach, an entity recognises an allowance for the life-time expected credit loss (ECL) of the financial
instrument if there is a significant increase in a credit risk (determined by a probability of default) since initial recognition of
a financial asset. If a credit risk of a financial instrument has not significantly increased since the initial recognition at the date of the
financial statements, the entity reports an allowance based on 12-month expected credit loss. The life-time expected credit loss
indicates the expected credit loss arising from all potential defaults till the expected maturity of the financial instrument. 12-month
expected credit loss is a part of life-time expected credit which arises as a result of the financial instrument default which may
occur within next 12 months after the balance sheet date.
The Company uses the three stages ECL model. When a financial asset is initially recognised, if there is no evidence of default,
the Company will include the financial asset in stage 1 and will report an allowance corresponding to the 12-month expected loss.
If a credit risk related to a financial instrument has not increased significantly since the initial recognition date, the financial asset
will remain at stage 1 and an allowance at the balance sheet date will be quantified at the amount of 12-month expected loss. If
there has been a significant increase in credit risk since the date of initial recognition, the Company will include the financial asset
in stage 2 and will report the allowance at the balance sheet date at the amount of life-time expected credit loss of financial asset.
If a financial asset is in default, the Company will move it to stage 3 and continues reports allowances at the amount of life-time
expected credit loss of the financial asset.
The Company defines potential default cases when it will not be able to collect all amounts due according to the originally agreed
conditions. The indicators of default are considered by the Company to be significant financial difficulties of a debtor, a likelihood of
the debtor entering bankruptcy or financial restructuring, failure to comply with the maturity or being past due of the debt.
The Company calculates the expected credit loss as the probability-weighted results using the following formula for selected future
scenarios of possible development:
Expected credit loss (ECL) = probability of default (PD) x loss given default (LGD) x exposure at default (EAD)
Simplified approach to impairment
The simplified approach allows the Company to report the life-time expected credit loss without the need to identify a significant
increase in credit risk. For trade receivables and contract assets that do not contain a significant financial element, an entity
recognises allowances for life-time expected credit loss (i.e. an entity must always apply the so-called simplified approach).
Simplified approach using provision matrix
The Company determines the amount of allowances using provision matrix for trade receivables without a significant financing
element. The provision matrix is based on the application of the appropriate loss rate to the outstanding balances of trade
receivables (i.e. the aging analysis of receivables).
The Company applies the following steps to estimate impairment allowances using the simplified approach. The Company first
divides its individual trade receivables into groups of receivables with similar credit risk characteristics. The Company identifies the
most important factors driving the credit risk of each group. In the second step, the Company establishes a historical loss rate for
each group with similar credit risk characteristics. This rate is based on past 3 consecutive accounting periods. In the next step,
the Company determines the expected loss rate for each group of receivables, which is further divided into subcategories based
on the number of days past due (e.g. the loss rate for receivables that are not due, the loss rate for receivables 1–30 days past due,
loss rate for receivables 31–60 days past due, etc.). When determining the expected loss rate, the Company takes into account
whether the historical loss rates were incurred under economic conditions that correspond to the expected conditions during
the exposure period of the given portfolio of receivables at the balance sheet date. In 2021, the Company adjusted its historical
loss rates by an expert estimate to more faithfully reflect current and future reality, namely the increased level of credit risk of
receivables in the economic environment affected by the global pandemic.
In the last step, the Company calculates the amount of impairment allowances based on the current gross amount of receivables
multiplied by the expected loss rate.
If a trade receivable is categorised as irrecoverable, the allowance is set for 100% of amount of trade receivable. A creation of
allowances is recognised in other operating expenses in profit or loss. In cases where a receivable can no longer be subject to
enforcement activity (e.g. the receivable ceases to exist, as a result of court resolution due to the lack of assets in the bankruptcy,
the debtor perished without a legal successor, etc.), the receivables are written off against the impairment allowances.
2.5.1.3 DERECOGNITION
Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred and
the Company has transferred substantially all risks and rewards of ownership of the Company neither transferred nor retained
substantially all risks and rewards but transferred control.
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2.5.2 FINANCIAL LIABILITIES
CLASSIFICATION
The classification depends on the nature and purpose of financial liabilities. The Company’s management determines appropriate
classification of financial liabilities on initial recognition.
The Company classifies financial liabilities into the following categories:
a) Financial liabilities measured at fair value through profit or loss
Financial liabilities at fair value through profit or loss are financial liabilities held for trading or so designated by management.
Derivatives are also categorised as held for trading unless they are designated as hedging instruments. Realised and unrealised
gains and losses from changes in the fair value of financial liabilities at fair value through profit or loss were included in the other
operating income in 2021 or in the other operating expenses. During the accounting period 2021 (2020), the Company only had
financial derivatives in this category (Note 2.5.3).
b) Financial liabilities measured at amortised cost
Financial liabilities are measured at fair value net of transaction costs at initial recognition. Subsequent measurement is at
amortised cost by applying the effective interest rate method. In this category, the Company recognizes lease liabilities, for which
specific valuation procedures apply at initial recognition. Such procedures are described in Note 2.13.
DERECOGNITION
The Company derecognises financial liabilities only when the contractual liabilities of the Company are discharged, cancelled or
expired. The difference between the carrying amount of a derecognised financial liability and the consideration paid is recognised in
profit or loss.
2.5.3 FINANCIAL DERIVATIVES
The Company uses derivatives to hedge currency and price risks. Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting
gain or loss depends on whether the derivative is designated as a hedging instrument or instrument held for trading. The Company
designates as hedging instruments only those which fulfil the requirements of hedge accounting. The Company uses derivatives to
hedge future cash flows. The hedged items in this case are highly probable future transactions.
The Company hedges against changes in cash flows from highly probable future transactions caused by changes in foreign
exchange spot rates. The Company is using foreign currency forwards and swaps to hedge this risk. Based on the foreign currency
plan, the Company determines the amount that is intended to hedge for a foreign currency risk (the so-called nominal value) and
hedges 100% of its value. (The nominal value of a financial derivative corresponds to the nominal amount of the hedge item).
The established hedge ratio is therefore 100%.
The main sources of ineffectiveness are:
	■ reduction in the total amount or price of the hedged item;
	■ significant change in the credit risk of either party to the hedging relationship;
	■ different discounting of the spot component of the hypothetical derivative and the hedging instrument;
	■ different maturities of hedged item and hedging instruments;
The Group Treasury monitors companies’ and the banks’ credit risk so the effect of credit risk does not dominate the value
changes that result from the economic relationship between hedged item and hedging instrument at reporting date.
The changes in the spot component and the changes in the forward component of currency financial derivatives that qualify as
effective cash-flow hedging instruments are recognised in other comprehensive income. Hedge ineffectiveness is recognised in
profit or loss.
When a hedged forecast transaction subsequently results in the recognition of a non-financial asset (such as inventory), the
Company transfers the amount from the cash flow hedge reserve in equity and includes it directly in the initial cost of the nonfinancial
asset. The cumulative balance recognised in other comprehensive income is recycled into the income statement as a gain
or loss in the period when the hedged item affects the income statement for other hedges (such as hedges of future sales).
If the timing of the hedged cash flow is deferred, in compliance with its hedging strategy the Company prolongs the maturity of
the original hedging instrument only for hedges where a hedge item does not result in recognition of a non-financial asset. The
Company transfers the amount from the cash flow hedge reserve in equity and includes it directly in the initial cost of the nonfinancial
asset when a non-financial asset is recognised.
When a hedging instrument expires or is sold, or is early terminated (closed out) or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss arising on the hedging instrument previously recognised in other comprehensive
income from the effective part of the hedging instrument remains there until the original forecasted transaction is ultimately
recognised. The Company then proceeds according to the rules defined above. When a forecasted transaction is no longer
expected to occur, the cumulative gain or loss that was reported in other comprehensive income is immediately transferred to the
income statement. The Company economically hedges a commodity risk using commodity swaps, however, its hedge accounting
is not used. The changes in fair value of commodity swaps that do not qualify as effective cash-flow hedging instruments are
recognised in the income statement and classified as a gain or loss.
If a trading derivative is early terminated (closed out), the value from the settlement is recognized immediately in the income
statement and classified as income or expense for the period. The fair value of financial instruments that are not traded in an active
market is determined by using valuation techniques, such as the net present value of future cash flows. The fair value of currency
forwards and swaps is determined as the present value of future cash flows based on forward exchange market rates as at the
balance sheet date. The fair value of commodity swaps is calculated as the present value of future cash flows based on the rates of
LME (London Metal Exchange).
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2.5.4 OFFSETTING OF FINANCIAL INSTRUMENTS
The Company presents financial assets and financial liabilities offset in statement of financial position in net amount only when it
has currently a legally enforceable right to set off the recognised financial asset and liability and intends to settle on net basis or to
realise the asset and settle the liability simultaneously. Legal right must be enforceable both in the normal course of business, but
also in the event of default, insolvency or bankruptcy of any contractual counterparty.
2.6 INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES
Subsidiaries are investees (including structured entities, if any) that are controlled by the Company.
The Company controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee.
The subsidiaries directly controlled by the Company as at 31 December 2021 (2020) (see Note 6):
	■ ŠKODA AUTO Slovensko s.r.o. (100%);
	■ ŠKODA AUTO DigiLab s.r.o. (100%);
	■ UMI Urban Mobility International Česká republika s.r.o. (100%);
	■ ŠKODA AUTO DigiServices s.r.o. (100%).
Associates are all entities in which the Company has significant influence, which is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control over these policies. This significant influence is generally
connected with ownership of 20 to 50 per cent of the voting power or is usually evidenced in one or more of the following ways:
(a) representation on the Board of Management or equivalent governing body of the investee;
(b) participation in policy-making processes, including participation in decisions about dividend or other distributions;
(c) material transactions between the investor and the investee;
(d) interchange of managerial personnel; or
(e) provision of essential technical information.
The Company had significant influence as at 31 December 2021 (2020) in the following associates (see Note 7):
	■ OOO Volkswagen Group Rus;
	■ ŠKO-ENERGO FIN, s.r.o.;
	■ ŠKO-ENERGO s.r.o.;
	■ Digiteq Automotive s.r.o.;
	■ SKODA AUTO Volkswagen India Private Limited.
Recognition, measurement and derecognition
Investments in subsidiaries and associates are carried in the separate financial statements at cost less any impairment loss.
The Company recognises a dividend from a subsidiary or associate in financial income when its right to receive the dividend is
established.
Impairment
The Company determines at each reporting date whether there is objective evidence that the value of share on equity of
subsidiaries and associates is impaired. In the event of impairment (or reversal of impairment) of investments in subsidiaries and
associates, the impairment loss (or gain on reversal of impairment) is presented in the income statement in financial result.
2.7 CURRENT AND DEFERRED INCOME TAX
The income tax expense consists of current income tax and deferred income tax. The tax expense is recognised in the income
statement with the exception of cases when it relates to items recognised in other comprehensive income or directly in equity. In
such cases the current income tax and deferred income tax are recognised in other comprehensive income or directly in equity.
2.7.1 CURRENT INCOME TAX
Current tax liabilities (receivables) for the current period and preceding periods are recognised in the amount of expected payments
to or claims from tax offices, using the tax rates (and tax laws) valid in the respective period. Current income tax relating to the
current accounting period and to preceding periods reduced by the amount already paid is recorded as a liability. If the amount
already paid in the current and in preceding periods exceeds current income tax related to these periods, the difference is recorded
as a receivable (prepaid income tax).
The situations, in which the expected amount of payment to the tax authorities (or expected receipt from them) is based on the
interpretation of tax laws, are regularly reassessed and the expected payments to tax authorities (or expected receipt from them)
are adjusted accordingly to reflect the best estimate of the amount to be paid to tax authorities (or to be received from them)
based on legislation enacted or substantially enacted by the balance sheet date.
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2.7.2 DEFERRED INCOME TAX
Deferred income tax is determined using the balance-sheet liability method, based on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferred income tax arises
from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss, it is not accounted for.
Deferred income tax is determined using tax rates and tax laws, that have been enacted by the balance sheet date and are expected
to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income
tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.
In accordance with IAS 12, deferred tax assets and liabilities are offset, where the Company has the enforceable right to offset the
current tax assets and liabilities and if the deferred tax assets and liabilities relate to income taxes levied by the same tax authority.
Deferred tax assets and deferred tax liabilities from lease transactions are initially recognised on gross basis refer to Note 14 and
offset later at balance sheet level.
Deferred tax relating to items recognised in other comprehensive income (for example the effective portion of changes in the fair
value of financial derivatives that are designated and qualify as cash flow hedges) is also recognised in other comprehensive income.
The Company recognises deferred income tax assets relating to unused tax credits from investment incentives against deferred
tax income in the income statement to the extent that it is probable that future taxable profits will be available against which the
unused tax credits can be utilised.
2.8 INVENTORIES
Purchased inventories (raw materials, consumables, supplies and materials used in production, goods) are stated at the lower of
cost and net realisable value. Costs include purchase costs and other acquisition costs (e.g. transport and packaging) and hedging
effects (see Note 2.5.3).
Inventories generated from own production, i.e. work in progress and finished goods, are stated at lower of own production costs
or net realisable value. Own production costs include direct material, direct wages and production overheads. The administration
overhead expenses are not included in the valuation of work in progress and finished goods.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion less
applicable variable selling expenses. Net realisable value reflects all risks of obsolete and redundant raw materials and excessive
original parts.
A weighted-average calculation is used to account for the consumption of materials.
2.9 CASH AND CASH EQUIVALENTS AND CASH FLOW STATEMENT
The cash and cash equivalents disclosed in the cash flow statement also comprise, in addition to cash and short-term deposits
in banks, short-term deposits in VOLKSWAGEN Group companies (mainly in Volkswagen International Belgium SA (VIB), the
Regional Treasury Center) with original maturity of less than three months, which are readily convertible to known amounts of
cash, the risk of changes in value is not significant and are held to meet short-term financial liabilities rather than for investment or
other purposes. When classifying Group deposits as cash equivalents, the Company also assesses the creditworthiness of Group
companies in which free liquidity is deposited and takes into account the overall performance of the VOLKSWAGEN Group.
Detailed information relating to cash and cash equivalents is disclosed in Note 10.
Cash flows are presented in the cash flow statement and are classified into cash flows from operating activities, investing activities
and financing activities.
Cash flows from operating activities are derived indirectly from profit before tax. Profit before tax is adjusted to eliminate non-cash
expenses (mainly depreciation and amortisation) and income and changes in working capital. Investing activities include additions
to property, plant and equipment, financial assets, as well as to capitalised development cost. Financing activities include in addition
to the outflows of cash from dividend payments, redemption of liabilities from financing, also outflows and inflows from other
borrowings.
2.10 PROVISIONS FOR EMPLOYEE BENEFITS
PROVISIONS FOR OTHER LONG-TERM EMPLOYEE BENEFITS
The following types of long-term employee benefits are included in the provision for other long-term employee benefits:
	■ service jubilee benefits;
	■ termination gratuity benefit payable before retirement from the Company.
The entitlement to these benefits is usually conditional on the employee remaining in service for a certain service period or up
to the moment of a certain work anniversary of the employee. The amount of provision corresponds to the present value of
long-term employee benefits for past service at the balance sheet date determined using the projected unit credit method.
These obligations are valued annually by independent qualified actuaries. Actuarial remeasurements arising from changes in
actuarial assumptions and experience adjustments are charged or credited to the income statement.
The present value of other long-term employee benefits is determined by discounting the estimated future cash outflows arising
from their settlement using interest rates equal to market yields of Czech government bonds because there is no deep market of
high-quality corporate bonds denominated in CZK. The term and currency of these bonds are consistent with the currency and
term of the respective other long-term employee benefits.
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2.11 OTHER PROVISIONS
In accordance with IAS 37, provisions are recognised where a present obligation exists to third parties as a result of a past event;
where a future outflow of resources is probable; and where a reliable estimate of that outflow can be made. Future outflows
are estimated with respect to particular specific risks. Provisions not resulting in an outflow of resources within one year are
recognised at their settlement value discounted to the balance sheet date. Discount rates reflect the current market interest rates,
inflation and the specific risks of the respective liabilities.
Where there is a number of similar obligations, the likelihood that an outflow occurs upon the settlement is determined by
considering the class of obligations as a whole.
2.12 REVENUE AND EXPENSE RECOGNITION
Revenue recognition
At first, all contracts with customers are analysed to identify all performance obligations to a customer. Subsequently, the
transaction price is determined which is, in case of identified multiple performance obligations, allocated according to a relevant
key. Consequently, the revenue is recognised for the particular performance obligation in the appropriate amount either at a certain
point in time or the revenue is deferred as a contract liability and afterwards allocated over certain time.
Revenue from the sale of cars, spare parts and car components is recognised when the control is transferred to the customer
depending on the particular contractual terms where the amount of the revenue is agreed or can be reliably determined and the
collection of the consideration is probable. This generally corresponds to the point when products are transferred to resellers or
when they are transferred to final customers in case of direct sales.
If discounts are granted for sold cars (typically as sales support), the discount amount is estimated as reliably as possible already
at the time of the sale of the car and thus the revenue from the sale of the cars is reduced by this amount. The consideration
received (or receivable) from customer arising from the sold car, which represents an uninvoiced sales support for the Company
(i.e. amounts not included in the transaction price) is recognised as a refund liability within trade liabilities.
The Company provides to other car manufacturers licences for the production of ŠKODA cars. These are divided into two main
groups: one-off licences and per-piece licences. Because the transfer of the licence can be determined and the licence provides the
right to use intellectual property, the performance obligation is fulfilled at a certain point in time.
Revenue from one-off licences is recognised only when the intellectual rights are transferred i.e. when the intellectual property is
transferred or when partial delivery has been completed (e.g. delivery of technical documentation, technical support, etc.). Revenue
from per-piece licences is recognised based on the number of cars produced in the respective reporting period.
Based on licence agreements with certain contractual parties, the royalties may be returned if licence is not utilised by the
counterparty. This royalty revenue is recognised in the expected amount taking into account the estimate of the risk of a royalty
refund.
Revenue arising from separate rendering of services (e.g. revenues from the sale of the prolongation of ŠKODA Connect services)
is recognised when the services are rendered or on a straight-line basis over the period of time when the services are provided via
an indeterminate number of acts over a specific time period. At first, the received consideration is recognised as a contract liability
from the considerations received and subsequently the respective revenue is recognised on a straight-line basis depending on the
duration of the service contract.
Revenue arising from rendering of services, which are sold together with a car but are separable from it (e.g. revenue from the
sale of extended guarantee or of ŠKODA Connect services) which will be provided in future periods is identified as distinct
performance obligation including the duration period. Subsequently, the transaction price is determined which is allocated
between the car and other services. The transaction price attributable to the services is derived from the market prices at which
these services can be purchased separately. Subsequently, a contract liability from the consideration received is recognised and the
respective revenue is recognised depending on the way of consuming of the services by customers.
Expense recognition
Costs of sales include production costs, costs of goods purchased for resale, and additions to warranty provisions and purchase risk
provisions. Research and development costs not eligible for capitalisation in the period, depreciation and impairment charges for
capitalised development costs and production equipment are likewise presented as cost of sales.
Distribution expenses include personnel and material costs, and depreciation and amortisation applicable to the distribution
function, as well as the costs of shipping, advertising, sales promotion, market research and customer service.
Administrative expenses include personnel costs and overheads as well as depreciation and amortisation applicable to
administrative functions.
2.13 LEASES
The Company rents office space, storage facilities, transport equipment, transport pallets, office technical equipment
(e.g. computers, multifunctional equipment, etc.) and other assets which are needed to operate its business activities.
The Company assesses from the lessee’s perspective whether a contract is in a substance a lease or is a contract for a provision of
services at lease inception. A contract is in substance a lease if the Company controls the use of an identifiable asset. The Company
reassesses, whether a contract is a lease in substance; only when the terms and conditions of the contract change.
For a contract that contains more than one component, the consideration is allocated to the both a lease and a non-lease
components on the basis of their relative standalone prices.
Short-term leases (leases for which the lease term is less than 12 months and cannot be extended) and leases of low-value assets
are charged to profit or loss on a straight-line basis over the lease term (see Note 24). Assets with an acquisition cost of less
than EUR 5,000 (i.e. translated as at 31 December 2021: CZK 124,300) when new are considered to be low-value assets by the
Company.
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For other leases, the Company reports a right of use asset and a lease liability.
Lease liability
At the date of commencement of the lease, the Company recognises a lease liability at a present value of future lease payments
not settled at that date and which include:
a)	 fixed payments less any lease incentives receivable;
b)	 variable lease payments depending on an index or a rate;
c)	 amounts expected to be paid by the Company under residual value guarantees;
d)	 the exercise price of a purchase option if it is reasonably certain that the Company will exercise the option;
e)	penalties for the termination of a lease, provided that the lease term reflects the fact that the Company will exercise the option
to terminate the lease.
Subsequently, the Company reports a lease liability using the effective interest method. Interest is included in profit or loss within
finance costs.
The Company discounts lease payments over the lease term using incremental borrowing rate. The Company considers the
maximum enforceable period of time, which is reasonably certain, as the lease term.
Refer to Note 13.1 for further information on lease commitments.
Right of use assets
At the date of commencement of a lease, the Company recognised a right of use asset at acquisition cost. The acquisition cost
includes the amount lease liability at lease commencement date, any lease payments made at or before the lease commencement
date, less any lease incentives received, including any initial direct costs and an estimate of costs of restoring the underlying asset
to the condition required by the terms of the lease contract.
Subsequently, the Company reports the right of use asset at cost less accumulated depreciation and impairment losses and
adjusted for effects of remeasurements of lease liability upon lease modifications. The right of use asset is generally depreciated
straight line over a shorter of useful life of the asset and the lease term. If the Company is reasonably certain to exercise the
purchase option, the right of use the asset is depreciated over the useful life of the underlying asset.
Depreciation rates are determined based on estimated useful life. The estimated useful lives are as follows:
	■ Buildings 						33 years
	■ Other equipment, operating and office equipment		 5 years
	■ Means of transport 					 5 years
Right of use assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount
may not be recoverable. Refer to Note 2.4. Further information on the rights of use assets can be found in Notes 5 and 24.
2.14 SUBSIDIES AND GOVERNMENT GRANTS
Subsidies of entrepreneurial activities, employee training, retraining costs and extraordinary government grants are recognised as
a reduction of the costs for which they were intended to compensate. Government grants, including non-monetary grants related
to the purchase of tangible and intangible assets, are recognised at fair value as reduction in the value of tangible and intangible
assets. The Company recognizes a grant when it has an undisputable entitlement to the grant under the specific terms of each
grant.
2.15 RELATED PARTIES
A related party is a person that has control or joint control over the reporting entity; has significant influence over the reporting
entity; or is member of the key management personnel of the reporting entity or of a parent of the reporting entity. A related party
is also an entity which is a member of the same group as the reporting entity and other entities as defined by IAS 24 article 9 par. b.
2.16 EQUITY
The substance of a financial instrument, rather than its legal form, governs its classification in the Company’s statement of financial
position. Ordinary shares are classified as share capital. The Company typically incurs various costs in issuing or acquiring its own
equity instruments. Those costs might include registration and other regulatory fees, amounts paid to legal, accounting and
other professional advisers, printing costs and stamp duties. The transaction costs of an equity transaction are accounted for as
a deduction from equity (net of related income tax deduction) to the extent they are incremental costs directly attributable to the
equity transaction that otherwise would have been avoided. The costs of an equity transaction that is abandoned are recognised
as an expense.Share premium is represented by the difference between the nominal value of shares issued on share capital increase
and the market price of shares and is recognised within equity.
2.17 SHARE-BASED PAYMENTS
Top management
Share-based payments consist of performance shares. At a time of granting, an annual target amount is converted on a basis
of an initial reference price of preference shares of VOLKSWAGEN AG into performance shares that are allocated to a relevant
beneficiary for calculation purposes only. The resulting payment amount corresponds to the final number of performance shares
multiplied by the closing reference share price at the end of a three-year period plus the dividend return equivalent for the relevant
period. The payment amount under the Performance Shares Plan is capped at 200% of the target amount. Each Performance
Period of the Performance Shares Plan lasts three years. Cash settlement is done at the end of the three-year period of the
Performance Shares Plan.
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Obligations arising from the share-based payment transactions are accounted for as cash-settled share-based payments in
accordance with IFRS 2. Cash-settled share-based payment transactions are recognised as liabilities carried at a fair value until they
are settled. The fair value is determined using recognised valuation methods. The costs are attributed to the period when service
is rendered by the employee and are reported in administrative expenses in the income statement and as personnel costs in the
analysis by nature of expenses in Note 24.
Middle management
Share-based payments consist of an annual target amount (so called “bonus base”) adjusted for the effects of the performance of
VOLKSWAGEN AG’s preferred shares. Each manager is assigned an annual target amount (so called “bonus base”). The resulting
payment amount corresponds to the value of bonus base multiplied by the average EPS* for previous three accounting periods
and share price development over three years including dividends. The value of the performance of shares is calculated as the ratio
of the share price at the end of the period plus dividends and the share price at the beginning of the period. Each performance
period lasts for three years. The bonus payouts are capped to 200% of the target amount. Cash settlement is performed once
a year in the period following the accounting period for which the bonus is granted.
Share-based payments settled by cash are recognized as liabilities until the payout. In accordance with IFRS 2, Share-based
payment liabilities are accounted for as cash-settled shares. Costs are allocated to the period of performance and are recognized in
the income statement in administrative expenses and detail is disclosed in Expenses by nature – additional information (Note 24) in
the line Personnel costs.
*EPS Earnings per share
2.18 FACTORING
The Company had contractual arrangements in place in 2021 (2020) which may be referred to as customer financing or
receivables financing arrangements. Selected receivables from foreign customers are assigned by the Company under
a non-recourse factoring agreement to the factoring companies of the VOLKSWAGEN Group, namely Volkswagen International
Belgium SA (VIB) and Volkswagen Finance Belgium S.A. The factoring companies assume the full risk of insolvency of the original
customer/debtor. The Company derecognises the receivables at the time of assignment. The factoring fees, which consist of a fee
for the receivables management service including a margin, the assumption of the risk of default and for financing (interest), are
included in the Company’s financial result at the time of assignment. Outstanding assigned receivables are recognised in Trade
receivables.
The Company assigns receivables from domestic customers who are not part of the VOLKSWAGEN Group to the Group
company ŠkoFIN s.r.o. under a non-recourse factoring agreement, but at the same time, based on the “delcredere risk” agreement,
which defines the principle of risk sharing between the Company and the factor, the Company is exposed to partial risk due to
non-payment of the receivable by the original debtor. The Company derecognises the receivables at the time of assignment,
disclosing in Notes to the separate financial statements qualitative and quantitative information on its continuing exposure, see
section 3.1.6. The factoring company’s commissions are included in the Company’s financial result at the time of their settlement
by the factor. Outstanding assigned receivables are recognised in Trade receivables.
In 2021 (2020), the Company did not have any contractual arrangements that can be classified as vendor financing
(reverse factoring).
2.19 CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions are continuously assessed by management. The estimates
and assumptions are based on historical experience and other factors, including the realistic assessment of future developments.
As a result of the global Covid-19 pandemic, the Company’s management had to make significantly more judgments in 2021
(2020), while also working with a higher degree of uncertainty than in the previous accounting period. The basic premises on
which the Company’s management based its estimates and assumptions in 2021 (2020) concerning the future are set out in
Note 1.3.
Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
GOING CONCERN ASSUMPTION
With regard to the global impact of the Covid-19 pandemic on the economic environment, the Company’s management assessed
in 2021 (2020) its ability to continue as a going concern. In making this assessment, the management has taken into account all
current and expected effects of the pandemic on the entity’s activities, including the expected impact on liquidity and profitability.
The management has considered all information available about the future that has been obtained at and after the reporting date
up to the date of preparation of these financial statements. The results of this assessment are set out in Note 1.3.
IMPAIRMENT OF NON-CURRENT ASSETS
In the course of the product life cycle and in exceptional situations also before its commencement, there may be circumstances
which indicate that “cash-generating units” (see Note 2.4) might have suffered impairment. To determine any possible impairment,
the Company estimates value in use of the cash-generating units which is calculated as discounted expected future cash flows
generated by the business attributable to each cash- generating unit. For determination of the estimated future cash flows, the
Company applies estimates and assumptions regarding future sales of its products, economic development of the individual
markets and development of the automotive industry during the next five or more years.
Although the Company estimates the value in use of the cash-generating units based on the best information and data currently
available to the Company, the risk of future changes and uncertainty with respect to the future development of the applied
assumptions in the following years remains significant. More detailed information about impairment losses is included in
Note 4 and Note 5 in the section Impairment reviews.
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VALUATION OF INVESTMENT AT FAIRVALUE
The Company holds equity instruments of another entity that fall within the scope of IFRS 9. The investment is measured at the
fair value at the balance sheet date. The Company intends to hold it as the long term investment, therefore the Company classifies
it as fair value through the other comprehensive income and reports unrealized gains and losses from its revaluation in other
comprehensive income. The fair value of the investment is determined as the present value of future free cash flow (FCF) using
a discount rate derived from the weighted average cost of capital of the Company (WACC). In determining the fair value of an
investment, the Company considers the following significant unobservable inputs: business planning assumptions (e.g., cash flows
from operating activities); the growth rate of the industry used to estimate free cash flows after the end of the planning period and
the discount rate. In estimating the future cash flows of an entity in which equity instruments have been invested, the Company
works primarily with expectations and assumptions about future sales of its products and the future development of the economic
environment in which the entity operates.
Although the Company prepares an estimate of the fair value of the investment based on the best available information and data
currently available, the risk of future changes and uncertainty about the further development of the assumptions used in the
coming years remain significant. More detailed information on measuring this investment at fair value refer to Note 8.
VALUATION OF INVESTMMENT AT COST
Investments in subsidiaries and associates are carried in the separate financial statements at cost less impairment loss. The
Company tests subsidiaries and associates for which projected performance indicates a possible impairment loss. The carrying
amount of the investment in the tested subsidiary or associate is compared against its recoverable amount. In determining the
recoverable amount of the financial investment, the Company considers the following significant unobservable inputs: assumptions
relating to corporate planning (e.g. cash flows from operating activities); the industry growth rate used to estimate free cash
flows after the end of the planning period; and the discount rate. Although the Company prepares its estimate of the recoverable
amount of the financial investment based on the best information and data available to it at the time, the risk of future changes and
uncertainty regarding the future development of the assumptions used in subsequent years remains significant.
PROVISION FOR WARRANTY CLAIMS
The Company recognises provisions for warranty claims for future expenses connected with the basic guarantee (2 or 3 years),
with the guarantee for corrosion (dependent on the model for 10 or 12 years) and other guarantees beyond the scope of basic
guarantee, especially good-will repairs and service actions. The Company recognises the provisions for warranty claims at the
moment of sale on the basis of the number of sold cars and in advance determined rates for individual model line. Provision for
extraordinary service actions is recognized at the time of identification of a technical defect in relation to the number of cars sold
and the respective estimated rates set for the elimination of defect.
The rates for the basic guarantee are determined on the basis of a management estimate of the average number of failures in
the guarantee period and average single failure costs with regard to the specifics of individual countries and on the basis of other
specific assumptions (inflation, customers groups development, etc.). The amount of the provision for corrosion is determined on
the basis of the development of the guarantee costs for corrosion and the extrapolation of these costs for the relevant period.
The amount of the provision for good-will repairs is determined on the basis of a management estimate of existing good-will repair
costs and defined strategy of the good-will repair trademark policy with regard to specifics of individual countries. The amount
of the provision for service actions is determined on the basis of a management estimate, particularly of material, personnel and
possible other expenses necessary for eliminating the defects. The estimates of the rates are continuously revised with the use
of the most recent historical data about the number of failures and their repair costs. Changes in these estimates can significantly
influence the total amount of the provision. The detailed analysis of the provision according to the single types, production years,
guarantee types and the sales regions is prepared at the year end. More detailed information about the provision for warranty
claims is included in Note 15.
PROVISION FOR LITIGATION RISKS
Certain events relating to the economic activities of the Company might result in disputes resolved in court and out-of-court
proceedings. The risk that future cash outflows will be required to settle the claim (damages, court fees, etc.) is assessed by
the Company once it becomes involved in any court or out-of-court proceedings. The risk is assessed based on the Company’s
experience with similar legal actions, reflecting the latest developments in the proceedings. A provision is recognised if it is more
likely than not that an outflow of economic benefits will occur in the future (the risk is assessed as medium or high). The provision
is measured based on the best estimate of the expected future cash outflows. Please refer to Note 15 for additional information.
If the risk is assessed to be low (possible but not remote), the Company discloses further information on litigation risks under
contingent liabilities. Information on contingent liabilities is disclosed in Note 27.
PROVISION FOR PURCHASE RISKS
The provision for purchase risks is recognized for future probable expenses from open business negotiations, which are mainly
caused by the global economic situation in the supply chain related to input prices, material supply disruptions and volatility of
the production programme. The estimate of the provision is updated on an ongoing basis taking into account model and special
equipment production limitations, input price increases, energy price developments and inflation.
PROVISION FOR COVERING EMISSION EXPENDITURES
The risk of future expenditure on fees for exceeding the permitted emission limits arose from the adoption of Regulation
2019/631 of the European Parliament and of the Commission of 17 April 2019 setting CO2 emission performance standards
for new passenger cars and new light commercial vehicles (hereinafter EU Regulation). With effect from 1 January 2020, this EU
Regulation sets the mass-dependent target of average emissions to 95 g CO2/km for new passenger cars registered in the EU.
This mass-dependent target is converted to the new WLTP* emission cycle from 2021. This target will be gradually reduced in the
following years, by 15% from 2025 and by 37.5% from 2030. Under the current proposal for an EU-wide agreement on climate
targets (Green Deal), the target for average emissions from new passenger cars registered in the EU is to be tightened to 55%
from 2030 compared to 2021.
*WLTP =Worldwide Harmonized Light-Duty Vehicles Test Procedure is a globally agreed test standard for the measurement of light-duty vehicles and
describes new rules for determining the fuel consumption of cars
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Car manufacturers whose average emissions will exceed the set limits will be subject to an excess emissions fee. In Europe, the
amount of the fee was set at EUR 95 for each gram that exceeded the permitted emission limit, multiplied by the number of
vehicles sold in the EU from 1 January to 31 December of the given year.
VOLKSWAGEN Group companies, which had to comply with the above-mentioned EU regulation, concluded an association
agreement (so-called emission pool) in 2020, which allows for the sharing of emission targets in order to achieve synergies from
excess emissions fees savings. The emission pool has a commitment to meet the EU targets directly to the EU institutions. Based
on the act of concluding the contract, the Company became a part of the above-mentioned emission pool and has a contractual
obligation to it. Within the emission pool, the external CO2 target of the whole emission pool is monitored separately with respect
to the commitments to the EU and the internal commitments and claims among the individual pool members. The internal
settlement between the individual members of the emission pool is done at a reduced rate per gram corresponding to the actual
cost structure of the potential CO2 reduction measures.
The Company recognises a provision for covering emission expenditures based on registered sales of new cars in the EU at the
moment when the expenditure is probable and the Company will realize the outflow of economic benefit due to the settlement
of the obligation to the emission pool. The Company recognises a provision in the amount of the best possible estimate of future
expenses due to exceeding the permitted emission limits monitored at the level of the emission pool, which are allocated to the
Company. In estimating the amount of the provision, the Company considers not only expected assumptions regarding registered
sales of its own products, but also expected assumptions regarding registered sales of products of other manufacturers associated
in the emission pool, which brings a higher degree of uncertainty in estimating the provision amount.
Further information on this provision is disclosed in Note 15.
OTHER PROVISIONS
Due to own economic activities in various countries, the Company is mainly affected by the impacts of the transnational tax
customs environment, which brings tax and customs risks and uncertainty resulting from different interpretations and applications
of tax and customs legislation. The risk is assessed based on the Company’s experience with similar cases, reflecting the actual
circumstances. A provision is recognised if it is more likely than not that an outflow of economic benefits will occur in the future.
The provision is measured based on the best estimate of the expected future cash outflows. Please refer to Note 15 for additional
information.
USEFUL LIVES
The estimated useful lives of individual tangible and intangible assets or classes of assets are determined based on the Company’s
experience with similar assets and in accordance with the expected future economic benefits of the assets, taking into account also
changes in production plan and expected utilisation of these assets.
Intangible assets show the highest uncertainty in estimating the useful life. Net book value of intangible assets was
CZK 48,697 million as at 31 December 2021 (as at 31 December 2020: CZK 44,600 million). Average useful life of intangible
assets was 6 years in 2021 (in 2020: 6 years).
FUNCTIONAL CURRENCY
Items included in the Company’s financial statements are measured in accordance with IAS 21 using the functional currency.
The functional currency means the currency of the primary economic environment in which the entity operates. The Company
operates primarily in the economic environment of the Czech Republic, but as a result of its foreign activities it is exposed also
to other economic environments. The Company regularly performs analyses of the functional currency criteria in accordance
with IAS 21. When determining the functional currency, the Company’s management follows the general definition and other
supporting criteria. In particular, it monitors the proportion of currencies that have a major impact on the selling prices of goods
and services and evaluates the currency mix of costs. In determining the functional currency, the Company’s management
also takes into account the currency, in which sources of financing are generated and in which the operating income from the
Company’s activities is retained. The Company also regularly monitors and evaluates all indications and trends in the primary
economic environment that could affect functional currency in the future. Detailed information on the results of the analysis carried
out in 2021 (2020) is disclosed in Note 1.4.
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3 FINANCIAL RISK MANAGEMENT
The Company operates in the automotive industry, sells its products in many countries around the world and therefore performs
transactions connected with a variety of financial risks. The objective of the Company is to manage these risks through application
of a flexible hedging strategy with utilisation of various instruments. The structure of financial risk management in the Company
is based on the unified principle of risk management applied in the VOLKSWAGEN Group. The VOLKSWAGEN Group’s risk
management principles are in compliance with the requirements of the German Act on Control and Transparency in Enterprises
(KonTraG).
In compliance with the VOLKSWAGEN Group policy all hedging operations are agreed and implemented in cooperation with the
Treasury department of the VOLKSWAGEN Group.
Management of the Company is regularly informed of current financial and other related risks (liquidity, foreign exchange rates,
interest rates, prices of commodities, invoice currencies, payment conditions, etc.), which is achieved through regular “liquidity
meeting” attended by member of the Board of Management for Finance and IT (CFO) and representatives from Treasury,
Controlling, Accounting. Inputs for meetings and decision making are discussed with VOLKSWAGEN Group Treasury, especially
such that concerns FX hedging and commodity risks. These meetings have predefined agenda, which includes also information on
the macroeconomic indicators. Meetings have a formalised structure and all minutes including the decisions are recorded and their
fulfilment is periodically evaluated.
3.1 CREDIT RISK
Credit risk is a risk that one party to a financial instrument will cause a financial loss to other party by failing to discharge an
obligation. Credit risk arises in the normal course of the Company’s operations, as well as through activities connected with
financial market transactions (money market, currency conversion, derivatives transactions, etc.). Credit risk arising from
operations on the financial market is managed by VOLKSWAGEN Group Treasury through determination of maximal limits for
individual counterparties.
The quantification of credit risks is based on several different primary criteria, of which the most significant are the country risk and
the counterparty risk. The counterparty risk is monitored at the VOLKSWAGEN Group level.
The acceptance of new business partners is reliant on standard approval procedures. The Company’s involvement with
counterparties is managed by means of credit limits that are monitored and reassessed on a regular basis. A utilization of these
limits is monitored and evaluated on a regular basis.
Active administration and management of receivables is incorporated into the credit risk management process. In respect of the
trade receivables security strategy, trade receivables are divided into receivables from domestic customers, foreign customers and
VOLKSWAGEN Group entities. Receivables are secured by preventative and supplemental instruments.
Preventive instruments for securing receivables are mainly used at the time of conclusion of the commercial contract. The
mandatory securing instrument in a written contractual relationship is a penalty interest and furthermore chosen trade receivables
are secured by an ownership title to the sold goods until full settlement of the purchase price. An integral part of the prepared
contract is the determination and approval of payment terms, which is done by the Treasury Department.
Trade receivables from VOLKSWAGEN Group companies and from associates are considered to bear the least risk. Therefore, the
supplies of goods are performed on credit terms or the receivables are transferred through factoring to factoring companies within
the VOLKSWAGEN Group.
Trade receivables from customers located abroad include receivables from importers and other foreign customers. The receivables
from importers are secured by the following financial security instruments: prepayments, payments in advance, standby letters of
credit, documentary letters of credit, buyers credit, importer guarantees, bank guarantees and transfer of receivables to factoring
without recourse or with partial recourse. For some domestic and foreign customers (scrap collection, motorsport) is also used
proforma invoicing tool. Only an immaterial part of receivables from other customers arises on credit terms. The usual invoice
maturity date for the sale of goods in this country is 14 or 30 days. For foreign sales, the maturity period ranges from 30 to
180 days depending on the type of goods, the country of the customer and the contractual payment terms. Interest on arrears is
charged on unpaid trade receivables according to the contractual conditions.
Receivables from domestic customers are divided into two groups: receivables from contractual partners bound by sales or service
agreements, and from other domestic customers. The receivables arising from sales of new and used vehicles to contractual
partners are transferred to factoring without recourse or with partial recourse. The securing instrument for contractual partners
with a lower creditworthiness is the deposit of technical licences at a banking institution until the purchase price is paid.
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Credit limits are set up for the supplies of new and used vehicles, original parts and accessories. The new orders of goods are
automatically blocked in case the customer fails to settle due balances when the credit limit is exceeded. Supplies to other
domestic customers are realised on credit terms. If the receivable is not paid by the due date, reminders are sent to customers at
regular intervals. In case of unsuccessful reminders, legal enforcement is initiated.
Different combinations of the following instruments are used as an additional security of high-risk receivables: confirmation of debt
prolonging the statute of limitation, payment schedules, bills of exchange, pledges, or executory note. Loans to employees are
secured by other employee guarantees.
As at 31 December 2021 (as at 31 December 2020), the Company did not hold any collateral for loans given.
In the following table, the reported figures represent either the carrying value of secured trade receivables, or the collateral value if
this value is lower, determined individually for each instrument (both to third parties and related parties) presented in Note 8.2:
(CZK million) 2021 2020
Retention of legal ownership title to sold cars 816 719
Bank guarantee 877 1,051
Letters of credit 634 1,270
Documentary collection 82 68
Total 2,409 3,108
As at 31 December 2021, the Company recorded bank guarantees securing advance payments from suppliers in the amount of
CZK 5 963 million (as at 31 December 2020: CZK 2,247 million).
3.1.1 MAXIMUM EXPOSURE TO CREDIT RISK
The maximum exposure to credit risk in case of activities connected to business operations, granting of loans, supplier credits
provided to customers and deposits in companies within VOLKSWAGEN Group and bank deposits is calculated as the gross
carrying amount of the above mentioned financial assets less any impairment provisions and the value of guarantees unrecognised
in the balance sheet. The exposure to credit risk of derivatives is measured at fair value of the derivative.
The amount of guarantee provided by the Company is CZK 75 million as at 31 December 2021
(as at 31 December 2020: CZK 75 million). Detailed information on the guarantee is listed in Note 3.1.6.
3.1.2 RISK CONCENTRATION
The Company monitors concentration of credit risk by distribution regions and denomination currency. The sensitivity of the
Company to foreign exchange risk is disclosed in Note 3.4.1. During the global pandemic in 2021 (2020), the Company did not
experience any significant concentration of risk by sales region, which would lead to the need to take adequate measures to reduce
credit risk.
A significant portion of financial assets is of an intra-group nature. The Company deposited free cash only in
VOLKSWAGEN Group companies.
The total volume of deposits in VOLKSWAGEN Group companies amounted to CZK 22,417 million as at 31 December 2021
(as at 31 December 2020: CZK 18,666 million), out of which:
	■ deposits with original maturity less than three months included in balance sheet in the line Cash and cash equivalents
(see Note 10) in total amount of CZK 19,700 million (as at 31 December 2020: CZK 12,500 million);
	■ overnight deposits from cash pooling included in balance sheet in the line Cash and cash equivalents (see Note 10) in total
amount of CZK 2,717 million (as at 31 December 2020: CZK 6,166 million);
The Company did not consider probable that a default could occur in connection with the free cash deposited in 2021 (2020).
Expected credit loss for any potential default is immaterial.
Possible risk of unpaid receivables from third parties was individually not significant (spread between various debtors and regions).
3.1.3 CREDIT QUALITY OF FINANCIAL ASSETS
The following table shows the gross values of financial assets classified as financial assets at amortized costs (see classification in
Section 2.5.1.1), which are classified according to credibility.
Solvency class 1 includes receivables and deposits in VOLKSWAGEN Group companies, secured receivables from third parties
and receivables that will be subject to factoring without recourse. There is no objective evidence indicating a default of these
receivables. Solvency class 2 includes unsecured trade receivables from third parties for which there is no objective evidence
indicating a default. Solvency class 3 includes unsecured trade receivables for which there is an objective evidence of a default and
for which there are individual valuation allowances.
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Credit quality of financial assets classified as financial assets at amortised cost
General approach to impairment Simplified approach to impairment
(CZK million)
Stage 1
12-month
ECL*
Stage 3 lifetime
ECL* - individually
impaired
Lifetime ECL*
based on
provision matrix
Lifetime ECL* -
individually
impaired Total
Balance as at 31 December 2021
Solvency class 1, of which: 23,347 — 19,934 — 43,281
Trade receivables — — 19,934 — 19,934
Cash equivalents 19,705 — — — 19,705
Cash pooling 2,717 — — — 2,717
Other 925 — — — 925
Solvency class 2, of which: — — 408 — 408
Trade receivables — — 408 — 408
Solvency class 3, of which: — 107 — 140 247
Trade receivables — — — 140 140
Other — 107 — — 107
Total 23,347 107 20,342 140 43,936
* ECL – expected credit losses
General approach to impairment Simplified approach to impairment
(CZK million)
Stage 1
12-month
ECL*
Stage 3 lifetime
ECL* - individually
impaired
Lifetime ECL*
based on
provision matrix
Lifetime ECL* -
individually
impaired Total
Balance as at 31 December 2020
Solvency class 1, of which: 19,279 — 25,017 — 44,296
Trade receivables — — 25,017 — 25,017
Cash equivalents 12,503 — — — 12,503
Cash pooling 6,166 — — — 6,166
Other 610 — — — 610
Solvency class 2, of which: — — 360 — 360
Trade receivables — — 360 — 360
Solvency class 3, of which: — 107 — 139 246
Trade receivables — — — 139 139
Other — 107 — — 107
Total 19,279 107 25,377 139 44,902
* ECL – expected credit losses
In stage 2 of ECL model the Company included no financial assets in 2021 (2020). Besides the amounts presented above in
the table Credit quality of financial assets classified as financial assets at amortised cost, the Company included in Solvency
class 1 also receivables that will be subject to factoring without recourse (portfolio FVPL) in the amount of CZK 2,712 million
(as at 31 December 2020: CZK 6,660 million).
3.1.4 CREDIT RISK ANALYSIS
Gross carrying amount of financial assets at amortised cost
  General approach to impairment Simplified approach to impairment  
(CZK million)
Stage 1
12-month
ECL*
Stage 3 lifetime
ECL* - individually
impaired
Lifetime ECL*
based on
provision matrix
Lifetime ECL* -
individually
impaired Total
Trade receivables
Balance as at 1 January 2021 — — 25,377 139 25,516
Collected — — (25,294) (10) (25,304)
Additions — — 20,259 11 20,270
Balance as at 31 December 2021 — — 20,342 140 20,482
Cash equivalents and cash pooling
Balance as at 1 January 2021 18,669 — — — 18,669
Collected (18,669) — — — (18,669)
Additions 22,422 — — — 22,422
Balance as at 31 December 2021 22,422 — — — 22,422
Other receivables and financial assets
Balance as at 1 January 2021 610 107 — — 717
Collected (203) — — — (203)
Additions 518 — — — 518
Balance as at 31 December 2021 925 107 — — 1,032
* ECL – expected credit losses
  General approach to impairment Simplified approach to impairment  
(CZK million)
Stage 1
12-month
ECL*
Stage 3 lifetime
ECL* - individually
impaired
Lifetime ECL*
based on
provision matrix
Lifetime ECL* -
individually
impaired Total
Trade receivables
Balance as at 1 January 2020 — — 19,068 1,066 20,134
Collected — — (18,949) (930) (19,879)
Additions — — 25,258 3 25,261
Balance as at 31 December 2020 — — 25,377 139 25,516
Cash equivalents and cash pooling
Balance as at 1 January 2020 45,753 — — — 45,753
Collected (45,753) — — — (45,753)
Additions 18,669 — — — 18,669
Balance as at 31 December 2020 18,669 — — — 18,669
Other receivables and financial assets
Balance as at 1 January 2020 598 111 — — 709
Collected (170) (4) — — (174)
Additions 182 — — — 182
Balance as at 31 December 2020 610 107 — — 717
* ECL – expected credit losses
In stage 2 of ECL model the Company included no financial assets in 2021 (2020).
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3.1.5 IMPAIRMENT OF FINANCIAL ASSETS
Allowances for trade receivables
(CZK million)
Lifetime ECL*
based on provision matrix
Lifetime ECL* individually
impaired Total
Allowances for trade receivables
Balance as at 1 January 2021 (372) (139) (511)
Additions (148) (11) (159)
Reversals 250 10 260
Balance as at 31 December 2021 (270) (140) (410)
(CZK million)
Lifetime ECL*
based on provision matrix
Lifetime ECL* individually
impaired Total
Allowances for trade receivables
Balance as at 1 January 2020 (197) (504) (701)
Additions (250) (3) (253)
Reversals 75 368 443
Balance as at 31 December 2020 (372) (139) (511)
* ECL – expected credit losses
The Company applies a simplified approach to impairment for trade receivables, therefore the 12-month ECL is not disclosed, see
section 2.5.1.2 for further information.
Impairment matrix for trade receivables
Months past due
(CZK million) Not due
Less than
1 month 1–3 months
More than
3 months Total
Balance as at 31 December 2021  
Expected loss rate (%) 1.25 1.50 2.50 3.75 —
Gross carrying amount 18,928 762 183 469 20,342
Loss allowance provision (237) (11) (5) (17) (270)
Months past due
(CZK million) Not due
Less than
1 month 1–3 months
More than
3 months Total
Balance as at 31 December 2020  
Expected loss rate (%) 1.25 3.25 4.50 5.50 —
Gross carrying amount 23,179 1,581 307 310 25,377
Loss allowance provision (290) (51) (14) (17) (372)
Allowances for lifetime expected credit loss for other receivables and financial assets were CZK 4 million
in stage 1 (as at 31 December 2020: CZK 4 million) and CZK 107 million in stage 3 (as at 31 December 2020: CZK 107 million).
During the accounting period 2021 (2020) the Company had valuation allowances only on financial assets included in the category
of financial assets at amortised cost.
3.1.6 TRANSFERRED FINANCIAL ASSETS WHERE THE COMPANY HAS CONTINUING INVOLVEMENT
The Company has concluded a factoring contract with the company ŠkoFIN s.r.o., under which the majority of risks and
rewards relating to ownership of receivables arising from sale of new or used cars are transferred to ŠkoFIN s.r.o. Under certain
conditions, the company ŠkoFIN s.r.o. can claim compensation relating to realised credit loss up to 2% of the total amount of
transferred receivables during the year, however, not more than 49% of these losses and not more than CZK 75 million in 2021
(in 2020: CZK 75 million). This amount represents carrying amount and fair value of the recognised continuing involvement in
these receivables, and related financial liabilities. At the same time, this amount represents the maximum exposure to credit risk.
The loss from the transfer of the assets was CZK 70 million in 2021 (in 2020: CZK 110 million). This loss concerns the obligation
to compensate for realised credit loss incurred by ŠkoFIN s.r.o.
3.1.7 OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Balance as at 31 December 2021
(CZK million)
Gross amount
of financial
assets / liabilities
recognised in the
balance sheet
Gross amount
of financial
assets / liabilities
set off in the
balance sheet
Net amount
of financial
assets / liabilities
recognised in the
balance sheet
Related amount
not set off in the
balance sheet*
Net amount
of financial
assets /
liabilities**
Receivables from financial derivatives 4,986 — 4,986 (2,276) 2,710
Liabilities from financial derivatives 2,469 — 2,469 (2,276) 193
Balance as at 31 December 2020
(CZK million)
Gross amount
of financial
assets / liabilities
recognised in the
balance sheet
Gross amount
of financial
assets / liabilities
set off in the
balance sheet
Net amount
of financial
assets / liabilities
recognised in the
balance sheet
Related amount
not set off in the
balance sheet*
Net amount
of financial
assets /
liabilities**
Receivables from financial derivatives 4,230 — 4,230 (1,575) 2,655
Liabilities from financial derivatives 1,897 — 1,897 (1,575) 322
*	Comprises the financial assets / liabilities (other than cash collateral) that are the subject of an enforceable master netting agreement or similar
agreement, and which were not recognised in the balance sheet as offset because the conditions for their offsetting were not met.
**	This is the net value of financial assets / liabilities recognised in the statement of financial position decreased by the value of related financial
liabilities / assets that were not recognised on a net basis in the statement of financial position.
As at 31 December 2021 (as at 31 December 2020) the Company did not offset any trade receivables and trade liabilities in
balance sheet because none of the trade receivables and trade liabilities fulfilled criteria for offsetting according to amendment to
IAS 32.
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There was no collateral held or given in respect of derivative financial assets / liabilities as at 31 December 2021
(as at 31 December 2020). The total amount of collateral value of trade receivables was CZK 2,409 million as at
31 December 2021 (as at 31 December 2020: CZK 3,108 million). Details related to types of collateral are presented in Note 3.1.
3.2 LIQUIDITY RISK
Liquidity risk is a risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
The objective of liquidity risk management is to ensure the balance between the funding of operating activities and financial
flexibility in order to ensure that all claims of the Company’s suppliers and creditors are settled timely.
Management of the Company monitors the liquidity and its development at regular monthly Liquidity Meetings attended by
member of the Board for Finance and IT (CFO) and representatives of the Treasury, Controlling and Accounting departments.
The predetermined agenda generally includes the information about development of liquidity and its structure. The Company’s
management is also presented with the short-term forecasts of the liquidity development.
CASH MANAGEMENT
The Company is integrated into the “Global Treasury Platform” (GTP) of VOLKSWAGEN Group which is operated by Volkswagen
International Belgium SA (VIB), the Regional Treasury Center, located in Brussels. Centralisation and optimisation of processes is
ensured within the VOLKSWAGEN Group in the areas of cash management, payments system and liquidity management.
In the GTP, the outgoing payments are processed on behalf of the Company by VIB, based on payment orders placed by the
Company and are transferred from a bank accounts held by VIB. The incoming payments are credited to Company’s bank
accounts and subsequently at the end of each working day they are automatically transferred to VIB’s bank accounts (master
account) where the difference between debit and credit balances of the collected financial resources are netted off. Terms of such
transactions are defined within the cash pooling concept agreed upon between the Company, the bank and VIB.
Major instruments used to maintain sufficient liquidity resources are represented by short-term and long-term financial plans,
coordination of free liquidity management within the GTP, active cooperation with banks and monitoring of the situation at money
market and capital market. Sufficient resources of liquidity are ensured through resources from other VOLKSWAGEN Group
companies integrated into the GTP.
The Company has not drawn any credit line from the VOLKSWAGEN Group as at 31 December 2021 (as at 31 December 2020).
The Company has not drawn any credit line from the external banks as at 31 December 2021 (as at 31 December 2020).
ANALYSIS OF CONTRACTUAL MATURITY UNDISCOUNTED CASH FLOWS
The maturity analysis of contractual undiscounted cash flows shows the residual maturity of the Company’s non-derivative and
derivative financial liabilities with an agreed payment date. The contractual maturity is based on the earliest possible dates when
the Company may be required to repay financial liabilities and guarantees.
The values in the analysis represent undiscounted cash outflows that results from the settlement of non-derivative and derivative
financial liabilities in the future. Derivative financial liabilities that will be settled on a net basis are undiscounted net cash outflows.
For derivative financial liabilities that will be settled on a gross basis, only undiscounted gross cash outflows are present (existing
inflows against these outflows that are not present in the analysis).
The values presented in the item of the Financial Guarantee Agreement are the maximum amounts that the Company may be
forced to settle in the event that the counterparty claims the full amount of the guaranteed value (see Note 3.1.6).
Contractual maturity analysis
(CZK million)
Less than
3 months 3 months–1 year 1–5 years
More than
5 years Total
Balance as at 31 December 2021
Trade liabilities (49,109) (9,121) — — (58,230)
Leasing liabilities — (557) (860) (163) (1,580)
Derivatives:
Currency forwards and swaps gross
cash outflows
(24,441) (65,918) (83,807) — (174,166)
Commodity swaps - net cash outflows — — — — —
Financial guarantee contracts — — (75) — (75)
Other financial liabilities — (93) — — (93)
Total (73,550) (75,689) (84,742) (163) (234,144)
(CZK million)
Less than
3 months 3 months–1 year 1–5 years
More than
5 years Total
Balance as at 31 December 2020
Trade liabilities (49,589) (16,564) — — (66,153)
Leasing liabilities — (569) (1,173) (236) (1,978)
Derivatives:
Currency forwards and swaps gross
cash outflows
(23,014) (58,839) (95,994) — (177,847)
Commodity swaps - net cash outflows (8) (26) (34) — (68)
Financial guarantee contracts — — (75) — (75)
Other financial liabilities (44) — — — (44)
Total (72,655) (75,998) (97,276) (236) (246,165)
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3.3 MARKET RISK
Market risk is a risk that the fair value of future cash flows will fluctuate because of changes in market prices. Market risk includes
three types of risks: currency risk, interest rate risk and price risk. Developments on the financial markets are considered to be the
most significant risk factor, especially the fluctuation of exchange rates.
3.3.1 CURRENCY RISK
Currency risk is a risk that the fair value of future cash flows will fluctuate because of changes in foreign exchange rates.
The fluctuation of exchange rates represents significant risk in that the Company sells its products, and purchases material, parts
and services concurrently in various foreign currencies. The Company actively manages this risk through continually updated
market analysis, worldwide procurement of material and equipment and production of its products in some sales regions. Standard
derivative hedging instruments are used by the Company to manage the currency risk.
The risk exposure, as determined by the analysis of income and expense structures by foreign currency, is hedged on the basis of
expected future foreign currency cash flows. These expected cash flows are planned in the form of monthly foreign currency plans
(FX plan), which are being updated regularly and they stretch over a time horizon up to 5 years.
The Company’s management is regularly being updated about the currency risk status by means of the liquidity meeting,
attended by member of the Board of Management for Finance and IT (CFO) and representatives of the Treasury, Controlling and
Accounting. Inputs for meetings and decision making are discussed with VOLKSWAGEN Group Treasury, especially such that
concerns FX hedging and commodity risks. In addition to the update of foreign currency plans, actual development of foreign
currency cash flows and exchange rates fluctuations against CZK and against EUR*, suggestions for additional hedging are
presented and agreed during these meetings.
Forward exchange contracts and currency swaps are used as hedging instruments for elimination of currency risk. The basic
parameters of the hedging policy are defined by the hedging directive valid for the entire VOLKSWAGEN Group, which includes
also the list of permitted financial products (derivatives). The risk resulting from changes in exchange rates against CZK is hedged
for a total of 14 currencies. The most important currencies hedged against the risk of changes in exchange rates against the CZK
are EUR, GBP, PLN and CHF. The risk arising from changes in exchange rates against EUR* is hedged for the same basket of
currencies with the additional currency CZK and no longer against EUR.
The Company also applies hedge accounting for currency risk. For the analysis of sensitivity to exchange rates please refer
to Note 3.4.1.
*See Note 1.4. – Amendment of the currency risk hedging strategy
3.3.2 INTEREST RATE RISK
Interest rate risk is a risk that the value of future cash flows of a financial instrument will fluctuate because of changes in market
interest rates.
The objective of the interest rate risk management is to eliminate the risk arising from fluctuations of interest rates of financial
liabilities and receivables with floating interest rates by maintaining an appropriate structure of financial liabilities and receivables.
The management of the Company monitors the interest rate risk at regular monthly meetings attended by member of the
Board of Management for Finance and IT and representatives of the Treasury, Controlling and Accounting departments. The
meetings have a predetermined agenda that includes the information about current development of interest rates. The Company’s
management is also presented with forecasts of the interest rates development.
The exposure to interest rate risk arises from cash deposits at VOLKSWAGEN Group companies and factoring transactions with
receivables.
For the analysis of sensitivity to interest rates please refer to Note 3.4.2.
3.3.3 PRICE RISK
Price risk is a risk of changes in market prices, especially commodity prices (apart from that which results from currency and
interest risk).
Due to continuous volatility in the prices of raw material commodities and limited accessibility to specific commodities,
management has aimed to reduce these risks through target risk management strategies. In this regard, utilisation of alternative
production materials and procedures as well as utilisation of recycled material is being examined. In addition, emphasis is placed
on extending the international supply chain in co-operation with the VOLKSWAGEN Group. High price risk commodities
include primarily aluminium, copper, palladium, lead, nickel, platinum and rhodium. Those price risks are mitigated at the
VOLKSWAGEN Group level through long-term contracts with suppliers.
The Company hedges against price risks in general (as a consequence of changes in particular commodity prices and foreign
exchange rates) using commodity swaps (for copper, lead and aluminium) and currency forwards. The sensitivity analysis to
changes in other price risks is disclosed in Note 3.4.3.
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3.3.4 DERIVATIVE FINANCIAL INSTRUMENTS
Nominal and fair value of derivatives
Nominal value of derivatives Fair value of derivatives
(CZK million)
Balance as at
31 December 2021
Balance as at
31 December 2020
Balance as at
31 December 2021
Balance as at
31 December 2020
With positive and
negative fair value
With positive and
negative fair value Positive Negative Positive Negative
Currency instruments
Currency forwards and swaps
for trading
5,262 8,286 146 128 4 576
Currency forwards and swaps
— cash flow hedging
173,582 169,190 2,933 2,340 3,230 1,254
Commodity instruments            
Commodity swaps for trading 5,045 7,698 1,907 1 996 67
Total 183,889 185,174 4,986 2,469 4,230 1,897
The fair values of financial derivatives fulfil the criteria of level 2 in compliance with the IFRS 13 hierarchy (the fair values are
derived from market quotations of forward exchange rates, commodity prices and yield curves, however the financial derivatives
are not directly traded in active financial markets). For additional information on derivative financial instruments and their valuation
methods refer to Note 2.5.3.
Nominal amount of derivatives contracted in CZK in detail per currencies
Balance as at 31 December 2021
(CZK million)
Due date
Within
1 year 1–2 years 2–3 years 3–4 years 4–5 years Total
Currency instruments
Currency forwards and swaps – cash flow hedging
EUR 24,216 — — — — 24,216
AUD 2,577 — — — — 2,577
GBP 21,215 — — — — 21,215
CHF 8,324 — — — — 8,324
JPY 1,938 — — — — 1,938
NOK 5,894 — — — — 5,894
PLN 14,230 — — — — 14,230
SEK 7,582 — — — — 7,582
TWD 1,693 — — — — 1,693
Total 87,669 — — — — 87,669
Balance as at 31 December 2020
(CZK million)
Due date
Within
1 year 1–2 years 2–3 years 3–4 years 4–5 years Total
Currency instruments
Currency forwards and swaps – cash flow hedging
EUR 13,713 — — — — 13,713
AUD 2,554 2,673 — — — 5,227
GBP 21,531 19,397 — — — 40,928
CHF 8,529 8,405 — — — 16,934
JPY 1,010 1,149 — — — 2,159
NOK 4,934 3,556 — — — 8,490
PLN 16,877 15,143 — — — 32,020
SEK 6,973 8,173 — — — 15,146
TWD 1,824 1,474 — — — 3,298
Total 77,945 59,970 — — — 137,915
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Nominal amount of derivatives contracted in EUR in detail per currencies
Balance as at 31 December 2021
(CZK million)
Due date
Within
1 year 1–2 years 2–3 years 3–4 years 4–5 years Total
Currency instruments
Currency forwards and swaps – cash flow hedging
CZK — — — 1,215 1,605 2,820
AUD — 1,433 1,228 261 — 2,922
GBP — 16,505 11,622 583 — 28,710
CHF — 6,453 5,209 3,734 2,519 17,915
JPY — 1,216 964 584 — 2,764
NOK — 3,134 1,911 725 — 5,770
PLN — 6,529 2,418 — — 8,947
SEK — 5,205 4,351 2,635 — 12,191
TWD — 1,662 1,146 810 256 3,874
Total — 42,137 28,849 10,547 4,380 85,913
Balance as at 31 December 2020
(CZK million)
Due date
Within
1 year 1–2 years 2–3 years 3–4 years 4–5 years Total
Currency instruments
Currency forwards and swaps – cash flow hedging
AUD — — 1,024 1,273 271 2,568
GBP — — 1,807 — — 1,807
CHF — — 3,550 2,257 746 6,553
JPY — — 945 629 211 1,785
NOK — — 1,491 331 — 1,822
PLN — — 5,555 2,082 — 7,637
SEK — — 4,219 3,154 871 8,244
TWD — — 564 295 — 859
Total — — 19,155 10,021 2,099 31,275
For additional information on hedging of currency risk exposure refer to Note 2.5.3 and for information about movement in reserve
for cash flow hedges refer to Note 12.1.
3.4 SENSITIVITY ANALYSIS
3.4.1 SENSITIVITY TO EXCHANGE RATES
The Company is exposed to the foreign currency risk arising mainly from transactions denominated in foreign currencies
(especially EUR, GBP, CHF, SEK and PLN) and with transaction with business partners using USD as transaction currency.
Sensitivity to exchange rates of foreign currencies against CZK
The foreign currency risk is measured against the functional currency (CZK) at the balance sheet date, when the financial assets
and liabilities denominated in foreign currencies are recalculated to CZK by applying the Czech National Bank exchange rate.
The sensitivity analysis includes analysis of exposure arising from derivative financial assets and liabilities and unpaid financial assets
and liabilities denominated in foreign currencies and measures the impact from recalculation of these items as at balance sheet
date by using adjusted exchange rates compared to those published by Czech National Bank. The sensitivity analysis is based on
assumed possible exchange rate movements.
As at 31 December 2021 (2020) the Company considers as reasonably possible the movements of exchange rates EUR, USD,
CHF, GBP, SEK and PLN against CZK in the following period of +10% (appreciation of CZK) and -10% (depreciation of CZK).
The following tables present impact on profit before tax and on other comprehensive income before tax of expected possible
appreciation or depreciation of CZK to foreign currencies:
CZK appreciation by 10%
2021
(CZK million) EUR USD CHF GBP SEK PLN
Other
currencies
Profit before tax
Non-derivative financial instruments 828 (262) (10) 1 2 — 89
Derivative financial instruments — (448) — — — — —
Other comprehensive income before tax
Derivative financial instruments (2,427) — 835 2,113 758 1,394 816
CZK depreciation by 10%
2021
(CZK million) EUR USD CHF GBP SEK PLN
Other
currencies
Profit before tax
Non-derivative financial instruments (828) 262 10 (1) (2) — (89)
Derivative financial instruments — 448 — — — — —
Other comprehensive income before tax
Derivative financial instruments 2,427 — (835) (2,113) (758) (1,394) (816)
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The following tables present impact on profit before tax and on other comprehensive income before tax of expected possible
appreciation or depreciation of CZK to foreign currencies:
CZK appreciation by 10%
2020
(CZK million) EUR USD CHF GBP SEK PLN
Other
currencies
Profit before tax
Non-derivative financial instruments 381 76 (3) (30) (33) (103) (89)
Derivative financial instruments — (644) — — — — —
Other comprehensive income before tax
Derivative financial instruments (1,374) — 1,703 4,081 1,511 3,187 1,474
CZK depreciation by 10%
2020
(CZK million) EUR USD CHF GBP SEK PLN
Other
currencies
Profit before tax
Non-derivative financial instruments (381) (76) 3 30 33 103 89
Derivative financial instruments — 644 — — — — —
Other comprehensive income before tax
Derivative financial instruments 1,374 — (1,703) (4,081) (1,511) (3,187) (1,474)
Sensitivity to exchange rates of foreign currencies against EUR
The foreign currency risk against the future highly probable functional currency (EUR*) for a portfolio of derivatives with a maturity
date after 1 January 2023 is measured at the balance sheet date when the financial assets and financial liabilities denominated in
foreign currencies are translated by applying the European Central Bank (ECB) exchange rate into EUR and subsequently translated
at the Czech National Bank exchange rate into CZK.
*See Note 1.4. – Amendment of the currency risk hedging strategy
The sensitivity analysis includes analysis of exposure arising from derivative financial assets and liabilities and unpaid financial assets
and liabilities denominated in foreign currencies, and measures the impact from recalculation of these items as at balance sheet
date by using adjusted exchange rates compared to those published by ECB.
As at 31 December 2021, the Company considers as reasonably possible the movements of exchange rates AUD, USD, CHF,
GBP, SEK, PLN against EUR in the following period of +10% (appreciation of EUR) and -10% (depreciation of EUR).
The following tables present impact on profit before tax and on other comprehensive income before tax of expected possible
appreciation or depreciation of EUR to foreign currencies:
EUR appreciation by 10%
2021
(CZK million) AUD USD CHF GBP SEK PLN
Other
currencies
Profit before tax
Derivative financial instruments — (219) — — — — —
Other comprehensive income before tax
Derivative financial instruments 285 — 1,815 2,814 1,210 834 415
EUR depreciation by 10%
2021
(CZK million) AUD USD CHF GBP SEK PLN
Other
currencies
Profit before tax
Derivative financial instruments — 219 — — — — —
Other comprehensive income before tax
Derivative financial instruments (285) — (1,815) (2,814) (1,210) (834) (415)
EUR appreciation by 10%
2020
(CZK million) AUD USD CHF GBP SEK PLN
Other
currencies
Profit before tax
Derivative financial instruments — (199) — — — — —
Other comprehensive income before tax
Derivative financial instruments 257 — 672 181 827 758 84
EUR depreciation by 10%
2020
(CZK million) AUD USD CHF GBP SEK PLN
Other
currencies
Profit before tax
Derivative financial instruments — 199 — — — — —
Other comprehensive income before tax
Derivative financial instruments (257) — (672) (181) (827) (758) (84)
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3.4.2 SENSITIVITY TO INTEREST RATES
The Company is exposed to interest risk mainly in relation to current deposits provided to VOLKSWAGEN Group companies.
The analysis of sensitivity to changes in interest rates was based on exposure to derivative financial assets and liabilities as at
balance sheet date in the same way as for the non-derivative financial assets and liabilities.
For current deposits provided to VOLKSWAGEN Group companies, bank deposits and currency derivatives the Company
assumed reasonably possible increase by 100 basis points of the yield curve and reasonably possible decrease by 100 basis points
of the yield curve in 2021 (2020: +100/ -100 basis points). Currencies for which interest rates were 0% or negative only the
increase of the yield curve was considered in 2021 (2020). If the calculated interest rates for the sensitivity analysis are negative,
the interest rate 0% is used for calculation. Profit of the Company is most sensitive to movements of the CZK yield curve.
In the case of derivative financial instruments, the Company measures the impact on the change in fair value of these derivatives
that results from the change in the yield curve. For non-derivative financial instruments, the impact on profit or loss is determined
on the basis of defined change in the interest rate, which would arise at the beginning of the next accounting period and based on
the assumption that no other changes in the interest rate would occur during the entire accounting period.
The following tables present impact on profit before tax of expected increase or decrease of interest rates:
2021 (CZK million) Interest rate increased by 100 basis points Interest rate decreased by 100 basis points
Profit before tax
Non-derivative financial instruments 227 (227)
Other comprehensive income before tax
Derivative financial instruments 4 (5)
2020 (CZK million) Interest rate increased by 100 basis points Interest rate decreased by 100 basis points
Profit before tax
Non-derivative financial instruments 189 —
Other comprehensive income before tax
Derivative financial instruments (13) 10
3.4.3 SENSITIVITY TO CHANGES IN OTHER PRICE RISKS
The Company is exposed to a combination of commodity and currency risks due to volatility in prices of particular commodities
traded in foreign currencies. This risk is hedged by a combination of commodity swaps and currency forwards. The sensitivity
analysis to changes in commodity prices was determined based on the exposure to derivative financial assets and liabilities as at the
balance sheet date.
In 2021 the Company assumes reasonably possible movements in prices of particular commodities in the following period
of +/-10% (2020: +/-10%).
The Company considers changes in the fair values of derivative financial instruments due to changes in spot commodity prices.
Other non-derivative financial assets and liabilities are deemed not to be sensitive to changes in commodity prices since the prices
are fixed at the time of recognition of the financial liability or asset.
The following tables represent impact on profit before tax of expected increase or decrease of copper, aluminium and lead prices:
2021
(CZK million)
Increase of
copper prices
+10%
Decrease of
copper prices
(10%)
Increase of
aluminium
prices +10%
Decrease of
aluminium
prices (10%)
Increase of
lead prices
+10%
Decrease of
lead prices
(10%)
Profit before tax
Derivative financial instruments 158 (158) 486 (486) 47 (47)
2020
(CZK million)
Increase of
copper prices
+10%
Decrease of
copper prices
(10%)
Increase of
aluminium
prices +10%
Decrease of
aluminium
prices (10%)
Increase of
lead prices
+10%
Decrease of
lead prices
(10%)
Profit before tax
Derivative financial instruments 227 (227) 568 (568) 67 (67)
3.5 CAPITAL MANAGEMENT
The Company’s capital is controlled at the VOLKSWAGEN Group level. The objective of the capital management is to maintain
the continuous Company’s value growth for the shareholders. Management of the Company defines the capital as the equity
presented in these financial statements.
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4 INTANGIBLE ASSETS
(CZK million)
Capitalised
development costs
for products
currently in use
Capitalised
development costs
for products
under development
Other
intangible
assets Total
Costs
Balance as at 1 January 2021   59,054 7,389 22,097 88,540
Additions 1,891 10,380 1,177 13,448
Disposals (11,525) (186) (6,735) (18,446)
Transfers 5,616 (5,616) — —
Balance as at 31 December 2021 55,036 11,967 16,539 83,542
Cumulative amortisation and impairment losses        
Balance as at 1 January 2021   (29,001) — (14,939) (43,940)
Amortisation (6,788) — (2,377) (9,165)
Impairment losses — (186) — (186)
Disposals 11,525 186 6,735 18,446
Balance as at 31 December 2021 (24,264) — (10,581) (34,845)
Carrying amount as at 31 December 2021 30,772 11,967 5,958 48,697
(CZK million)
Capitalised
development costs
for products
currently in use
Capitalised
development costs
for products
under development
Other
intangible
assets Total
Costs
Balance as at 1 January 2020 44,612 9,827 19,955 74,394
Additions 7,714 4,290 2,168 14,172
Disposals — — (26) (26)
Transfers 6,728 (6,728) — —
Balance as at 31 December 2020 59,054 7,389 22,097 88,540
Cumulative amortisation and impairment losses        
Balance as at 1 January 2020 (22,411) — (12,561) (34,972)
Amortisation (6,590) — (2,404) (8,994)
Disposals — — 26 26
Balance as at 31 December 2020 (29,001) — (14,939) (43,940)
Carrying amount as at 31 December 2020 30,053 7,389 7,158 44,600
Category Other intangible assets includes mainly tooling rights, software and licences.
Purchased development costs capitalized as part of the additions to capitalized development costs of products manufactured and
under development in 2021 amounted to CZK 8,705 million (2020: CZK 7,189 million).
Amortisation of intangible assets of CZK 9,026 million (2020: CZK 8,712 million) are included in the cost of sales, CZK 167 million
(CZK 2020: 168 million) in distribution expenses, and CZK 158 million (2020: CZK 114 million) in administrative expenses.
IMPAIRMENT REVIEWS
In connection with the Covid-19 pandemic, which resulted in significant changes in the economic environment of entities
operating in the automotive industry, the Company tested the assets of a defined cash-generating unit* (the Company’s
automotive business) for impairment. A comparison of the carrying amount and recoverable amount of the defined
cash-generating unit did not result in 2021 (2020) in the identification of any impairment loss for intangible assets. The
recoverable amount was determined based on a cash-based calculation budgets approved by the Company’s management, which
cover a period of 5 years and an estimate of cash flows after the end of the planning period using a growth rate 1.0% (2020: 1.0%).
The WACC rate 4.8% (2020: 5.3%) was used to discount cash flows in 2021. This rate reflects the specific risks associated with
the industry in which the Company operates.
* An intangible asset that was not ready for use at the balance sheet date and intangible assets with indefinite useful lives were also included in the test at
the level of the defined cash-generating unit.
CAPITALISATION OF BORROWING COSTS
No borrowing costs have been capitalised in the cost of intangible assets in 2021 or 2020 as they were not material.
The following amounts were recognised in the income statement as research and development expenses
(CZK million) 2021 2020
Research and development costs expensed 9,224 6,473
Amortisation and impairment losses of development costs 6,974 6,590
Research and development costs recognised in profit or loss 16,198 13,063
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5 PROPERTY, PLANT AND EQUIPMENT
(CZK million)
Land
and buildings
Technical
equipment
and machinery
Tooling, office
and other
equipment Leases
Advances paid
and assets under
construction* Total
Costs
Balance as at 1 January 2021   53,362 99,302 102,370 2,679 11,866 269,579
Additions 1,405 4,196 6,802 254 1,466 14,123
Disposals (272) (912) (1,425) (141) — (2,750)
Transfers 1,909 593 355 — (2,857) —
Balance as at 31 December 2021 56,404 103,179 108,102 2,792 10,475 280,952
Accumulated depreciation and impairment losses
Balance as at 1 January 2021   (25,965) (76,437) (80,664) (881) — (183,947)
Depreciation (2,150) (6,620) (8,435) (546) — (17,751)
Disposals 220 894 1,413 86 — 2,613
Balance as at 31 December 2021 (27,895) (82,163) (87,686) (1,341) — (199,085)
Carrying amount as
at 31 December 2021
28,509 21,016 20,416 1,451 10,475 81,867
(CZK million)
Land
and buildings
Technical
equipment
and machinery
Tooling, office
and other
equipment Leases
Advances paid
and assets under
construction* Total
Costs
Balance as at 1 January 2020 49,761 95,620 95,921 2,539 14,919 258,760
Additions 792 4,572 7,902 333 2,082 15,681
Disposals (35) (2,871) (1,763) (193) — (4,862)
Transfers 2,844 1,981 310 — (5,135) —
Balance as at 31 December 2020 53,362 99,302 102,370 2,679 11,866 269,579
Accumulated depreciation and impairment losses
Balance as at 1 January 2020 (23,997) (72,671) (74,313) (463) — (171,444)
Depreciation (2,001) (6,612) (8,105) (539) — (17,257)
Disposals 33 2,848 1,752 121 — 4,754
Transfers — (2) 2 — — —
Balance as at 31 December 2020 (25,965) (76,437) (80,664) (881) — (183,947)
Carrying amount as
at 31 December 2020
27,397 22,865 21,706 1,798 11,866 85,632
* As at 31 December 2021 advances paid amount to CZK 4,817 million (as at 31 December 2020: CZK 2,662 million) from the total amount of Advances
paid and assets under construction.
Right-of-use assets (by class of assets)
(CZK million)
Land
and buildings
Tooling, office
and other equipment Total
Costs  
Balance as at 1 January 2021   1,623 1,056 2,679
Additions 136 118 254
Disposals (108) (33) (141)
Balance as at 31 December 2021 1,651 1,141 2,792
Accumulated depreciation and impairment losses
Balance as at 1 January 2021   (484) (397) (881)
Depreciation (291) (255) (546)
Disposals 57 29 86
Balance as at 31 December 2021 (718) (623) (1,341)
Carrying amount as at 31 December 2021 933 518 1,451
(CZK million)
Land
and buildings
Tooling, office
and other equipment Total
Costs  
Balance as at 1 January 2020 1,561 978 2,539
Additions 132 201 333
Disposals (70) (123) (193)
Balance as at 31 December 2020 1,623 1,056 2,679
Accumulated depreciation and impairment losses
Balance as at 1 January 2020 (256) (207) (463)
Depreciation (277) (262) (539)
Disposals 49 72 121
Balance as at 31 December 2020 (484) (397) (881)
Carrying amount as at 31 December 2020 1,139 659 1,798
IMPAIRMENT REVIEWS
In connection with the global Covid-19 pandemic, which resulted in significant changes in the economic environment of
entities operating in the automotive industry, the Company tested the assets of a defined cash-generating unit (the Company’s
automotive business) for impairment. A comparison of the carrying amount and the recoverable amount of the defined
cash-generating unit did not result in the identification of any impairment loss for property, plant and equipment in 2021 (2020).
The recoverable amount was determined based on a calculation of the value in use of this cash-generating unit using cash flow
projections based on financial budgets approved by the Company’s management covering a period of 5 years and an estimate of
cash flows after the end of the planning period using growth rate 1.0% (2020: 1.0%). The WACC rate 4.8% (2020: 5.3%) was used
to discount cash flows in 2021. This rate reflects the specific risks associated with the industry in which the Company operates.
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CAPITALISATION OF BORROWING COSTS
No borrowing costs have been capitalised in the cost of property, plant and equipment in 2021 or in 2020 as they were not
material.
6 INVESTMENTS IN SUBSIDIARIES
Shareholding %
Value of ownership interest
(CZK million)
Subsidiaries
Country of
incorporation 2021 2020 2021 2020
ŠKODA AUTO Slovensko s.r.o. Slovakia 100 100 49 49
ŠKODA AUTO DigiLab s.r.o. Czech Republic 100 100 176 176
UMI Urban Mobility International
Česká republika s.r.o.
Czech Republic 100 100 — 217
ŠKODA AUTO DigiServices s.r.o. Czech Republic 100 100 3 158
The subsidiaries in which the Company holds an equity interest paid dividends to the Company in the total amount of
CZK 61 million in 2021 (2020: CZK 81 million).
In 2020, the Company made a capital contribution to its subsidiary ŠKODA AUTO DigiLab s.r.o. with a contribution outside the
registered capital in the amount of CZK 6 million.
UMI Urban Mobility International Česká republika s.r.o. returned to the Company the contribution outside the registered capital in
the amount of CZK 150 million in 2021. Subsequently the associated company was tested for a possible impairment loss in 2021,
details in Impairment reviews below.
On 16 December 2021, the Company decided to dissolve and liquidate ŠKODA AUTO DigiServices s.r.o. without a legal
successor. ŠKODA AUTO DigiServices s.r.o. entered into liquidation on 1 January 2022. In connection with the planned liquidation,
ŠKODA AUTO DigiServices s.r.o. returned to the Company the contribution outside the registered capital of CZK 155 million in
2021.
IMPAIRMENT REVIEWS
The Company has performed an impairment review of the cash-generating unit UMI Urban Mobility International Česká republika
s.r.o, for which the development and planned volumes of the provided services indicated a possible impairment loss. Carrying value
of the financial investment in the associated company has been compared with the relevant recoverable amount. The recoverable
amount has been determined based on the calculation of the value in use applying cash flow projections over the following five
years, reflecting financial plans approved by the Company’s management. Cash flows beyond the five years period have been
extrapolated with an estimated growth rate which is not higher than expected long-term average growth rate in the sector and
the region in which the reviewed company operates. For determination of the value in use of the financial investment in 2021
estimated growth rate of 1% has been applied. In 2021, a discount rate of 4.8% has been applied. The carrying amount of financial
investment has been compared with its recoverable amount as at 31 December 2021 and was identified the impairment losses.
7 INVESTMENTS IN ASSOCIATES
The Company’s share in the registered capital of the company OOO Volkswagen Group Rus as at 31 December 2021 was
16.8% (31 December 2020: 16.8%). The Company exercises significant influence in the company OOO Volkswagen Group Rus
based on the following factors: the Company is participating in policy-making processes, including participation in decisions about
distribution of profit; material transactions are conducted between both companies; an interchange of managerial personnel takes
places between both companies and the Company is providing essential technical information to the company OOO Volkswagen
Group Rus.
The carrying amount of the Company’s share totalled CZK 1,823 million as at 31 December 2021 (as at 31 December
2020: CZK 1,823 million). The recoverable amount of the associate is significantly higher than its carrying amount as at
31 December 2021 (as at 31 December 2020). OOO Volkswagen Group Rus paid dividends to the Company in the amount of
CZK 0 million (2020: CZK 448 million).
The Company’s share in the registered capital of the company ŠKO-ENERGO FIN, s.r.o. as at 31 December 2021 was
31.25% (as at 31 December 2020: 31.25%). The carrying amount of the Company’s share totalled CZK 4 million as at
31 December 2021 (as at 31 December 2020: CZK 529 million). ŠKO-ENERGO FIN, s.r.o. paid dividends to the Company in
the amount of CZK 0 million (2020: CZK 20 million). On 15 December 2021, the General Meeting of ŠKO-ENERGO FIN s.r.o.
decided to dissolve and liquidate the Company without a legal successor. ŠKO-ENERGO FIN. s.r.o. entered into liquidation on
1 January 2022. The subsidiary was tested for possible impairment loss, details in Impairment tests below.
The Company’s share in the registered capital of the company ŠKO-ENERGO s.r.o. as at 31 December 2021 was 44.5%
(as at 31 December 2020: 44.5%). The carrying amount of the Company’s share totalled CZK 4 million as at 31 December 2021
(as at 31 December 2020: CZK 4 million). ŠKO-ENERGO s.r.o. paid dividends to the Company in the amount of CZK 1 million
(2020: CZK 1 million).
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The Company’s share in the registered capital of the company Digiteq Automotive s.r.o. as at 31 December 2021 was
49% (as at 31 December 2020: 49%). The carrying amount of the Company’s share totalled CZK 98 thousand as at
31 December 2021 (as at 31 December 2020: CZK 98 thousand). Digiteq Automotive s.r.o. paid dividends to the Company in the
amount of CZK 32 million (2020: CZK 34 million).
The interest of the Company on registered capital of SKODA AUTO Volkswagen India Private Ltd. was 3.47% as at
31 December 2021 (31 December 2020: 3.47%). Excluding preference shares, the share was 8.13% as at 31 December 2021
(31 December 2020: 8.13%). The Company exercises significant influence over SKODA AUTO Volkswagen India Private Ltd. on
the basis of its share of voting rights, which was 26.46% as at 31 December 2021 (31 December 2020: 26.46%). The carrying
amount of the Company’s share totalled CZK 1,098 million as at 31 December 2021 (as at 31 December 2020: CZK 0 million).
In December 2021, the Company made a capital contribution of CZK 319 thousand to the registered capital of Green:Code s.r.o.,
which was established on 4 January 2022 representing a 49% share in the registered capital. In 2021 the Company made
a contribution outside the registered capital in the associate in the amount of CZK 5.1 million.
IMPAIRMENT REVIEWS
In 2021 and 2020, the Company tested the cash-generating unit SKODA AUTO Volkswagen India Private Ltd. for which the
projected vehicle volumes indicated a possible reversal of the impairment loss. The carrying amount of the financial investment
of the tested associate was compared against its recoverable amount. The recoverable amount was determined based on
a value in use calculation using cash flow projections over a 5-year period based on financial budgets approved by the Company’s
management. Cash flows beyond the 5-year period were extrapolated using growth rate estimates that are no higher than the
expected long-term average growth rate for the automotive industry. In determining the value in use of the financial investment
in 2021, a growth rate of 1% (2020: 1%) was estimated. The discount rate used is pre-tax and reflects the specific risks relating
to the industry segment and region in which the company operates. For 2021, a discount rate of 5.8% (2020: 7.2%) was used.
A comparison of the carrying amount of the associate SKODA AUTO Volkswagen India Private Ltd. and its recoverable amount
as at 31 December 2021 resulted in the reversal of the impairment loss generated in previous accounting periods in favour of
financial income of CZK 1,098 million.
The Company tested in 2021 the cash-generating unit ŠKO-ENERGO FIN s.r.o. for which the decision to liquidate indicated
a possible impairment. Due to liquidation of the company valuation techniques based on the going concern assumption were
not used to determine recoverable amount. The recoverable amount was determined on the basis of the adjusted liquidation
value, where the adjusted liquidation value represents the sum of the selling prices of the individual assets less the liquidator’s
remuneration and the settlement of other liabilities. Due to the difference between the carrying amount of the financial investment
and its recoverable amount, an impairment loss of CZK 525 million was identified in 2021which was recognized in financial
expenses.
8 OTHER RECEIVABLES, FINANCIAL ASSETS, TRADE RECEIVABLES AND
AVAILABLE-FOR-SALE FINANCIAL ASSETS
8.1 OTHER RECEIVABLES AND FINANCIAL ASSETS
Balance as at 31 December 2021
(CZK million)
Financial assets
at fair value
through profit
or loss
Financial
assets at
amortised
cost
Financial assets
at fair value
through other
comprehensive
income
Financial
instruments
designated
as hedging
instruments Total
Other non-current receivables and financial assets
Loans to employees — 407 — — 407
Positive fair value of financial derivatives 708 — — 907 1,615
Investments in equity instruments — — 8,269 — 8,269
Other non-current receivables and financial assets in total 708 407 8,269 907 10,291
Other current receivables and financial assets      
Loans to employees — 58 — — 58
Positive fair value of financial derivatives 1,270 — — 2,101 3,371
Other — 456 — — 456
Other current receivables and financial assets in total 1,270 514 — 2,101 3,885
Total 1,978 921 8,269 3,008 14,176
Balance as at 31 December 2020
(CZK million)
Financial assets
at fair value
through profit
or loss
Financial
assets at
amortised
cost
Financial assets
at fair value
through other
comprehensive
income
Financial
instruments
designated
as hedging
instruments Total
Other non-current receivables and financial assets
Loans to employees — 428 — — 428
Positive fair value of financial derivatives 368 — — 1,540 1,908
Investments in equity instruments — — 7,860 — 7,860
Other non-current receivables and financial assets in total 368 428 7,860 1,540 10,196
Other current receivables and financial assets      
Loans to employees — 58 — — 58
Positive fair value of financial derivatives 557 — — 1,765 2,322
Other — 120 — — 120
Other current receivables and financial assets in total 557 178 — 1,765 2,500
Total 925 606 7,860 3,305 12,696
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There are not any significant restrictions regarding the rights of use imposed on financial assets. Potential risks of delay or default
are taken into account through accumulated impairment losses except for those financial assets that are carried at fair value.
In 2020, a forward component of hedging derivatives fixed as at 31 December 2017 was recognised in retained earnings and
was disclosed in the portfolio Financial assets at fair value through profit or loss and fair value of derivatives held for trading see
Note 3.3.4.
Loans to employees and other financial assets are disclosed in the portfolio Financial assets at amortised cost. The carrying value
of the loans to employees approximates their fair value. The fair value of the loans to employees was determined as the present
value of future cash flows based on market interest rates at the balance sheet date. The fair value of loans to employees qualifies
for Level 3 in accordance with IFRS 13.
In 2021 (2020), in the column Financial derivatives designated as hedging instruments there is the spot component and change in
the forward component from 1 January 2018 to 31 December 2021 (2020) relating to the derivatives for currency risk hedging.
For detailed information on financial derivatives, including information relating to their fair value in accordance with IFRS 13, refer
to Note 3.3.4.
Under the “Financial assets at fair value through other comprehensive income”, investments in the equity instruments of other
entities are recognised.
Within these equity instruments, the Company holds 1% share in the company SAIC VOLKSWAGEN AUTOMOTIVE COMPANY
LIMITED (hereinafter referred to as SAIC), which is related party (as a joint venture of VOLKSWAGEN Group and a third party).
The Company plans to hold this investment for the foreseeable future and does not consider its sale, therefore, the Company
opted that the relating realised and unrealised gains and losses would be recognised in other comprehensive income.
The fair value of the investment amounted to CZK 8,269 million as at 31 December 2021 (as at 31 December 2020:
CZK 7,860 million). The fair value of the investment to SAIC was determined as the present value of future free cash flows (FCF)
based on discount rate derived from weighted average cost of capital of SAIC (WACC). The fair value of the investment qualifies
for Level 3 in accordance with IFRS 13.
As significant unobservable inputs, the assumptions regarding corporate planning (for example operating cash flows), the
growth rates used to estimate cash flow after the end of the planning period, and the discount rate are taken into account when
determining the fair value. In 2021 (2020) FCF have been extrapolated with a growth rate of 1.0% (1.0%). For discounting free
cash flows, the WACC of 11.1% (11.3%) has been applied in 2021 (2020).
The following table shows the change of investments in equity instruments measured at fair value in Level 3:
(CZK million)
Balance as at 1 January 2021 7,860
Total change in fair value in the period 409
Balance as at 31 December 2021 8,269
(CZK million)
Balance as at 1 January 2020 8,475
Total change in fair value in the period (615)
Balance as at 31 December 2020 7,860
The effect of the fair value measurement of the investment was recognised in other comprehensive income.
SENSITIVITY OF THE FAIRVALUE OF THE INVESTMENT TO THE CHANGE IN THE LONG-TERM GROWTH RATE
In 2021, the Company expects as reasonably possible the movement of long-term growth rate in the following period
of +/- 0.5 percentage point (2020: +/- 0.5 percentage point).
The following tables present an impact on the balance sheet items at the expected increase or decrease in the
long-term growth rate:
2021 (CZK million) Increase by 0.5% Decrease by 0.5%
Increase / (decrease) of the fair value of the investment 282 (255)
Increase / (decrease) of the other comprehensive income before tax 282 (255)
2020 (CZK million) Increase by 0.5% Decrease by 0.5%
Increase / (decrease) of the fair value of the investment 246 (223)
Increase / (decrease) of the other comprehensive income before tax 246 (223)
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SENSITIVITY OF THE FAIRVALUE OF THE INVESTMENT TO THE CHANGE IN WACC
In 2021, the Company expects as reasonably possible the movement of WACC in the following period of +/- 0.5 percentage point
(2020: +/- 0.5 percentage point).
The following tables present an impact on the balance sheet items at the expected increase or decrease of the WACC:
2021 (CZK million) Increase by 0.5% Decrease by 0.5%
Increase / (decrease) of the fair value of the investment (440) 487
Increase / (decrease) of the other comprehensive income before tax (440) 487
2020 (CZK million) Increase by 0.5% Decrease by 0.5%
Increase / (decrease) of the fair value of the investment (395) 436
Increase / (decrease) of the other comprehensive income before tax (395) 436
There are no significant interrelationships between significant unobservable inputs.
8.2 TRADE RECEIVABLES
Balance as at 31 December 2021
(CZK million)
Financial assets
at amortised cost
Financial assets at fair value
through profit or loss Total
Trade receivables
Third parties 2,170 18 2,188
Subsidiaries 435 — 435
Other related parties 17,467 2,694 20,161
Total 20,072 2,712 22,784
Balance as at 31 December 2020
(CZK million)
Financial assets
at amortised cost
Financial assets at fair value
through profit or loss Total
Trade receivables
Third parties 2,120 — 2,120
Subsidiaries 653 — 653
Other related parties 22,232 6,660 28,892
Total 25,005 6,660 31,665
Only trade receivable held to sell through factoring are disclosed in the portfolio Financial assets at fair value through profit or loss.
The fair value of these receivables was determined as the present value of future cash flows based on market interest rates at the
balance sheet date. The fair value of trade receivables held to sell through factoring qualifies for Level 2 in accordance with IFRS 13.
Other trade receivables held in order to collect contractual cash flows are disclosed in the portfolio Financial assets at amortised
cost. Due to their current nature the carrying amount of these receivables after a deduction of allowance for impairment (if any)
approximates their fair value. Allowances for trade receivables in amount of CZK 410 million (2020: CZK 511 million) are already
included in these amounts. For detailed information on allowances for these receivables refer to Note 3.1.5.
8.3 NON-FINANCIAL ASSETS
(CZK million) 2021 2020
Current non-financial assets    
Tax receivables (excl. income tax) 4,188 5,220
Other 1,145 762
Total 5,333 5,982
The line “Other” includes in particular receivables from employees, advances paid and other receivables which do not meet the
definition of a financial instrument.
9 INVENTORIES
(CZK million)
Carrying value as at
31 December 2021
Carrying value as at
31 December 2020
Structure of the inventories
Raw materials, consumables and supplies 10,441 10,850
Work in progress 13,419 5,569
Finished products and goods 7,983 8,151
Hedges on inventories 58 (54)
Total 31,901 24,516
(CZK million) 2021 2020
Loss allowance inventories
Balance as at 1 January (1,565) (1,478)
Additions / reversals allowance provisions for inventories:    
Raw materials, consumables and supplies (137) (105)
Work in progress (16) (1)
Finished products and goods 36 19
Balance as at 31 December (1,682) (1,565)
The amount of inventories (including production related personnel costs and overheads capitalised into inventories) recognised as
an expense during 2021 was CZK 372,370 million (2020: CZK 365,984 million).
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10 CASH AND CASH EQUIVALENTS
(CZK million) 2021 2020
Cash in hand 1 1
Cash pooling 2,717 6,166
Bank accounts 4 2
Cash equivalents 19,700 12,500
Total 22,422 18,669
The weighted average effective interest rate based on the carrying amount of bank accounts as at 31 December 2021 was 1.53%
(as at 31 December 2020: 0%).
The line Cash pooling includes overnight deposits from the use of cash pooling (see Note 3.2). The line Cash equivalents includes
other current deposits in VOLKSWAGEN Group companies with original maturity less than three months. These deposits
including cash pooling deposits are included in portfolio Financial assets at amortised cost in accordance with IFRS 9.
The weighted average effective interest rate on current cash equivalents including cash pooling based on the carrying amount
as of 31 December 2021 was 1.62% (31 December 2020: 0%). The carrying amount of cash equivalents including cash
pooling approximates their fair value. Out of the total value of cash equivalents including cash pooling was denominated in CZK:
CZK 21,684 million (31 December 2020: CZK 17,322 million) and in EUR: CZK 733 million (31 December 2020: CZK 1,344
million).
11 SHARE CAPITAL
The issued share capital consists of 1,670,885 ordinary shares at a par value of CZK 10,000 per share.
The sole shareholder of the Company is VOLKSWAGEN FINANCE LUXEMBURG S.A. based in Strassen, Grand Duchy of
Luxembourg. VOLKSWAGEN FINANCE LUXEMBURG S.A. is directly a 100% subsidiary of VOLKSWAGEN AG. Rights to vote
on the Company’s general meetings and rights to receive dividends are attached to the ordinary shares.
The shareholder has the right for a share on liquidation balance upon a cancellation of the Company with liquidation. The liquidation
balance is distributed among shareholders based on the ratio of the nominal value of their shares. The shareholder has the right
for a share on profit (a dividend) which has been approved for distribution at the general meeting based on results of operations
and in line with the respective stipulations of the Business Corporations Act. The shareholders do not have any right to claim their
contribution back during the Company’s existence even in case of its cancellation.
There was no movement in the Company’s share capital during the accounting period 2021 (2020).
In 2021, the Company paid dividend in the amount of CZK 15,170 million from profit for the year 2020
(2020: CZK 31,680 million).
The dividend per share was CZK 9,079 in 2021 (2020: CZK 18,960).
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12 OTHER RESERVES AND RETAINED EARNINGS
12.1 OTHER RESERVES
(CZK million) 2021 2020
Revaluation reserve from equity instruments* 548 217
Reserves for cash flow hedges* 715 1,678
Statutory reserve fund 3,366 3,366
Total 4,629 5,261
* Net of deferred tax of 19%.
The Company has adopted the Business Corporations Act as a whole and has retained the rules for creation of statutory reserve
fund. The statutory reserve fund may be used only to offset losses.
Movement in equity instruments revaluation reserve:
(CZK million)
Balance as at 1 January 2021 217
Total change in fair value in the period 409
Deferred tax on change in fair value (78)
Balance as at 31 December 2021 548
(CZK million)
Balance as at 1 January 2020 715
Total change in fair value in the period (615)
Deferred tax on change in fair value 117
Balance as at 31 December 2020 217
Movement in reserve for cash flow hedges – currency risk exposure in accordance:
(CZK million)
Spot component
designated for
hedging
Term component
designated for
hedging Total
Balance as at 1 January 2021 1,492 186 1,678
Total change in fair value in the period (399) 41 (358)
Deferred tax on change in fair value 76 (8) 68
Total transfers to net profit in the period – effective hedging (852) 123 (729)
Total transfers to net profit in the period – hedge ineffectiveness (153) (7) (160)
Deferred tax on transfers to profit or loss – effective hedging 162 (23) 139
Deferred tax on transfers to profit or loss – hedge ineffectiveness 29 1 30
Basis adjustments to inventories carrying value – effective hedge 38 20 58
Deferred tax on transfers to inventories (7) (4) (11)
Balance as at 31 December 2021 386 329 715
(CZK million)
Spot component
designated for
hedging
Term component
designated for
hedging Total
Balance as at 1 January 2020 (212) (407) (619)
Total change in fair value in the period 3,079 316 3,395
Deferred tax on change in fair value (585) (60) (645)
Total transfers to net profit in the period – effective hedging (1,141) 371 (770)
Total transfers to net profit in the period – hedge ineffectiveness 274 (11) 263
Deferred tax on transfers to profit or loss – effective hedging 217 (70) 147
Deferred tax on transfers to profit or loss – hedge ineffectiveness (52) 2 (50)
Basis adjustments to inventories carrying value – effective hedge (109) 55 (54)
Deferred tax on transfers to inventories 21 (10) 11
Balance as at 31 December 2020 1,492 186 1,678
Transfers to profit or loss for the period – effective hedging:
(CZK million) 2021 2020
Sales (1,411) (7)
Cost of sales 465 (778)
Other operating income (119) (358)
Other operating expense 336 374
Total transfers to profit or loss in the period – effective hedging (729) (770)
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12.2 RETAINED EARNINGS
From the total amount of retained earnings of CZK 78,612 million (as at 31 December 2020: CZK 71,372 million) profit for the
year 2021, net of tax, amounts to CZK 22,410 million (2020: CZK 15,175 million).
In compliance with the relevant regulation of the Business Corporations Act, the profit of the Company for the year 2021
(determined in accordance with IFRS) is going to be allocated based on the decision of the Company’s annual general meeting.
At the date of preparation of these financial statements, no dividend payments have been proposed, and the distribution of the
Company’s result for the year ended 31 December 2021 has not been approved.
13 FINANCIAL, OTHER AND TRADE LIABILITIES
13.1 FINANCIAL LIABILITIES
Balance as at 31 December 2021
(CZK million)
Financial
liabilities at fair
value through
profit or loss
Financial
liabilities carried
at amortised cost
Financial
instruments
designated
as hedging
instruments Total
Financial non-current liabilities
Negative fair value of financial derivatives 1 — 1,361 1,362
Leasing liabilities — 960 — 960
Financial non-current liabilities in total 1 960 1,361 2,322
Financial current liabilities
Negative fair value of financial derivatives 128 — 979 1,107
Leasing liabilities — 520 — 520
Other — 93 — 93
Financial current liabilities in total 128 613 979 1,720
Total 129 1,573 2,340 4,042
Balance as at 31 December 2020
(CZK million)
Financial
liabilities at fair
value through
profit or loss
Financial
liabilities carried
at amortised cost
Financial
instruments
designated
as hedging
instruments Total
Financial non-current liabilities
Negative fair value of financial derivatives 307 — 780 1,087
Leasing liabilities — 1,317 — 1,317
Financial non-current liabilities in total 307 1,317 780 2,404
Financial current liabilities
Negative fair value of financial derivatives 335 — 475 810
Leasing liabilities — 522 — 522
Other — 44 — 44
Financial current liabilities in total 335 566 475 1,376
Total 642 1,883 1,255 3,780
In 2021 (2020), a forward component of hedging derivatives recognised in retained earnings as at 31 December 2017 and fair
value of derivatives held for trading are disclosed in the portfolio Financial liabilities at fair value through profit or loss (see also
Note 3.3.4). In the column Financial liabilities carried at amortised cost are reported lease liabilities in 2021 (2020). In the column
Financial derivatives designated as hedging instruments there is the spot component and change in the forward component from
1 January 2018 to 31 December 2021 (2020) relating to the derivatives for currency risk hedging. For detailed information on
financial derivatives, including information relating to their fair value in accordance with IFRS 13, refer to Note 3.3.4. None of the
financial liabilities are secured by a lien.
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13.2 TRADE LIABILITIES
All trade liabilities are current in nature.
Balance as at 31 December 2021
(CZK million)
Financial liabilities carried
at amortised cost
Trade liabilities
Third parties 28,499
Subsidiaries 65
Other related parties 29,666
Total 58,230
Balance as at 31 December 2020
(CZK million)
Financial liabilities carried
at amortised cost
Trade liabilities
Third parties 38,072
Subsidiaries 210
Other related parties 27,871
Total 66,153
Liabilities to a factoring company within the VOLKSWAGEN Group in amount of CZK 2,004 million as at 31 December 2021
(as at 31 December 2020: CZK 2,191 million) are disclosed in line Trade liabilities to other related parties. These liabilities
originated in the ordinary course of business and credit terms and maturity of the liabilities have not changed upon transfer to the
factoring company.
Due to the short term nature of trade liabilities, the carrying amount approximates the fair value. None of the trade liabilities are
secured by a lien.
As part of trade liabilities there are advanced payments from customer contracts recognised as at 31 December 2021 in amount
of CZK 8,390 million (as at 31 December 2020: CZK 15,624 million) which represents expected future payments to customers
for sale bonuses.
13.3 NON-FINANCIAL LIABILITIES
(CZK million) 2021 2020
Non-current non-financial liabilities
Contract liabilities from considerations received 7,017 6,783
Non-current non-financial liabilities from customer contracts in total 7,017 6,783
Current non-financial liabilities
Contract liabilities from considerations received 3,334 3,575
Advances received 3,557 1,832
Other 744 548
Current non-financial liabilities from customer contracts in total 7,635 5,955
Liabilities to employees 6,322 5,775
Social security 848 838
Tax liabilities 6 8
Current non-financial liabilities in total 14,811 12,576
Total 21,828 19,359
In 2021 (2020), contract liabilities from considerations received include mainly consideration received from extended warranty
and ŠKODA Connect services which will be rendered in future periods.
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14 DEFERRED TAX LIABILITIES AND ASSETS
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset the current tax assets against
current tax liabilities, and when the deferred income taxes relate to income taxes charged by the same fiscal authority.
The movements in deferred tax liabilities and assets during the year, without taking into consideration the offsetting, are as follows:
(CZK million) Depreciation
Right-of-use
assets
Financial
derivatives*
Provisions and
refundable
considerations
Equity
instruments Other** Total
Deferred tax liabilities
Balance as at 1 January 2020 (6,093) (394) (157) — (168) — (6,812)
Credited / (debited) to the income statement (1,114) 52 85 — — (234) (1,211)
Charged to other comprehensive income — — (396) — 117 — (279)
Balance as at 31 December 2020 (7,207) (342) (468) — (51) (234) (8,302)
Credited / (debited) to the income statement (459) 66 (234) — — 154 (473)
Charged to other comprehensive income — — (11) — (78) — (89)
Balance as at 31 December 2021 (7,666) (276) (713) — (129) (80) (8,864)
(CZK million) Depreciation
Lease
liabilities
Financial
derivatives*
Provisions and
refundable
considerations
Equity
instruments Other** Total
Deferred tax assets
Balance as at 1 January 2020 — 400 205 7,495 — 1,075 9,175
Credited / (debited) to the income statement — (50) 33 265 — 287 535
Charged to other comprehensive income — — (141) — — — (141)
Balance as at 31 December 2020 — 350 97 7,760 — 1,362 9,569
Credited / (debited) to the income statement — (69) 74 (98) — 36 (57)
Charged to other comprehensive income — — 237 — — — 237
Balance as at 31 December 2021 — 281 408 7,662 — 1,398 9,749
(CZK million) Depreciation
Leases
under
IFRS 16
Financial
derivatives*
Provisions and
refundable
considerations
Equity
instruments Other** Total
Deferred tax liabilities and assets net
Balance as at 31 December 2020 (7,207) 8 (371) 7,760 (51) 1,128 1,267
Balance as at 31 December 2021 (7,666) 5 (305) 7,662 (129) 1,318 885
* Further information on financial derivatives is disclosed in Note 2.5.3.
** The category Other includes mainly valuation allowances, temporary differences from accrued liabilities and deferred tax asset from investment incentives.
15 NON-CURRENT AND CURRENT PROVISIONS
Provisions
(CZK million)
Warranty
claims and
recycling
Emission
risks
Employee benefits
and share-based
payment
Litigation
risks
Purchase
risks
Other
business
risks Total
Balance as at 1 January 2020 20,883 — 4,746 1,094 3,657 4,006 34,386
Utilised (2,892) — (414) (11) (737) (15) (4,069)
Additions 5,905 8,097 794 92 1,421 468 16,777
Interest expense 745 — — — — — 745
Reversals (1,840) — (121) (56) (1,984) (327) (4,328)
Balance as at 1 January 2021 22,801 8,097 5,005 1,119 2,357 4,132 43,511
Utilised (3,236) (805) (435) — (541) (1) (5,018)
Additions 5,075 45 519 222 3,984 1,811 11,656
Interest expense (491) — — — — — (491)
Reversals (2,322) (406) (517) (37) (159) (382) (3,823)
Balance as at 31 December 2021 21,827 6,931 4,572 1,304 5,641 5,560 45,835
Non-current and current provisions according to the time of expected use of resources:
(CZK million) < 1 year 1–5 years > 5 years Total
Balance as at 31 December 2021
Provisions for warranty claims and recycling 8,967 8,855 4,005 21,827
Provisions for emission risks 6,931 — — 6,931
Provisions for employee benefits and share-based payment 675 387 3,510 4,572
Provisions for litigation risks 1,304 — — 1,304
Provisions for purchase risks 5,641 — — 5,641
Provisions for other business risks 5,560 — — 5,560
Total 29,078 9,242 7,515 45,835
(CZK million) < 1 year 1–5 years > 5 years Total
Balance as at 31 December 2020
Provisions for warranty claims and recycling 9,961 9,878 2,962 22,801
Provisions for emission risks 8,097 — — 8,097
Provisions for employee benefits and share-based payment 603 734 3,668 5,005
Provisions for litigation risks 1,119 — — 1,119
Provisions for purchase risks 2,357 — — 2,357
Provisions for other business risks 4,132 — — 4,132
Total 26,269 10,612 6,630 43,511
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The provision for warranty claims and recycling includes mainly provision for basic guarantees (2-3 years), provision for corrosion
guarantees (dependent on the model for 10 or 12 years) and other guarantees beyond the scope of basic warranty (except for
extended warranty), especially good-will repairs. Furthermore, this provision includes expenses related to the ecological disposal
of cars and batteries. This provision also includes expenses related to the ecological disposal of cars and batteries. The Company
recognises the provisions for warranty claims at the moment of sale on the basis of the number of sold cars and in advance
determined rates for individual model lines. Provision for extraordinary service actions is recognized at the time of identification
of a technical defect in relation to the number of cars sold and the respective estimated rates set for the elimination of defect.
Following emissions irregularities discovered at VOLKSWAGEN AG, provisions for warranty repairs include also provision for
service action and other expenditures related to technical measures for cars equipped with EA189 engines. The total balance
of the provision related to EA189 issue amounted to CZK 940 million in 2021 (as at 31 December 2020: CZK 1,299 million).
Expenditures which relate to potential claim settlement will be partly reimbursed to the Company and in connection with the
fact stated above, amount receivable from VOLKSWAGEN AG of CZK 208 million was reported in other receivables as at
31 December 2021 (as at 31 December 2020: CZK 195 million).
The provision for covering emission expenditures includes in particular the provision created on the basis of the Company’s
contractual obligation to the emission pool of the VOLKSWAGEN Group for the EU and UK markets and to the emissions pool
of Swiss importers. The Company recognizes a provision for covering emission expenditures based on registered sales of new cars
in the EU, Switzerland and UK at the time when the expense is probable and the Company will realize the outflow of economic
benefits due to the settlement of the obligation to the relevant emission pool. The Company recognizes a provision in the amount
of the best possible estimate of future expenses due to exceeding the permitted emission limits monitored at the level of the
emission pool, which are allocated to the Company.
Provisions for employee benefits consist mainly of provision for other long-term employee benefits, provision for termination
benefits and provision for share-based payments.
Provisions for litigation risks relate mainly to provision for risks arising from legal disputes, legal fees, penalty interest and other
litigation risks. The Company provides for the probable cash outflows for existing legal, arbitration or other proceedings by means
of a relevant provision. The Company is not involved in any legal cases, arbitration or other proceedings for which no provision has
been created and which could have a material impact on the financial position and the financial results (financial statements) of the
Company and there are no such proceedings expected in the near future.
The provision for purchase risks is made for future probable expenses from open business negotiations with suppliers, which in
2021 were triggered mainly by the deterioration of the overall economic situation caused by the Covid-19 pandemic, the global
shortage of semiconductors on the market, related production volume, the rise in prices of input materials, energy and inflation.
Other provisions include mainly provision for tax risks (other than income taxes) and customs risks in countries where the
Company operates and other business risks related to project feasibility.
16 SALES
(CZK million) 2021 2020
Cars 327,656 343,502
Spare parts and accessories 23,940 21,356
Supplies of components within VOLKSWAGEN Group 50,999 44,847
Income from licence fees within VOLKSWAGEN Group 2,215 3,127
Revenues from services 9,493 7,264
Other 6,893 4,189
Revenue from contracts with customers in total 421,196 424,285
Gains from derivative transactions - hedging of future sales 1,411 7
Total 422,607 424,292
In 2021 (2020) line Other relates mainly to sales of used cars, scrap and tooling.
The item Gains from derivative transactions - hedges of receivables includes effect from settlement of currency-risk hedging
financial instruments upon selling of foreign currencies.
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Revenue from contracts with customers by geographical regions
2021
(CZK million) Cars
Spare parts
and accessories
Supplies
of components
within
VOLKSWAGEN
Group
Income
from licence
fees within
VOLKSWAGEN
Group
Revenues
from
services Other Total
Main geographical regions
Central and Eastern Europe 77,180 10,543 25,829 1,674 2,073 3,187 120,486
Western Europe 220,380 12,771 16,326 53 6,501 3,302 259,333
Overseas /Asia 30,096 626 8,844 488 919 404 41,377
Total 327,656 23,940 50,999 2,215 9,493 6,893 421,196
Timing of revenue recognition
At a point in time 327,656 23,940 50,999 2,215 5,417 6,893 417,120
Over time — — — — 4,076 — 4,076
Total 327,656 23,940 50,999 2,215 9,493 6,893 421,196
2020
(CZK million) Cars
Spare parts
and accessories
Supplies
of components
within
VOLKSWAGEN
Group
Income
from licence
fees within
VOLKSWAGEN
Group
Revenues
from
services Other Total
Main geographical regions
Central and Eastern Europe 82,870 9,346 23,826 501 1,822 2,366 120,731
Western Europe 230,987 11,503 15,210 (24) 4,865 1,385 263,926
Overseas /Asia 29,645 507 5,811 2,650 577 438 39,628
Total 343,502 21,356 44,847 3,127 7,264 4,189 424,285
Timing of revenue recognition
At a point in time 343,502 21,356 44,847 3,127 4,438 4,189 421,459
Over time — — — — 2,826 — 2,826
Total 343,502 21,356 44,847 3,127 7,264 4,189 424,285
The following table shows how much revenue recognised in current accounting period relates to transferred contract liabilities and
how much relates to the performance obligations satisfied in prior periods:
(CZK million) 2021 2020
Revenue classified as contract liabilities at the beginning of the period 3,267 2,645
of which:    
Extended warranty 2,252 1,330
Services 862 828
Licence fees 153 487
Revenue recognised from the performance obligations satisfied in prior periods –
release of provisions and accruals relating to change in transaction price
2,920 1,375
The amount of the transaction price which has not yet been recognised as revenue at 31 December 2021 (31 December 2020)
in relation to extended warranty, licences and services for which the realisation timing is more than one year is disclosed in the
following table:
(CZK million) 2022 2023 − 2026
Revenue arising from contract liability expected to be satisfied in the following periods
Extended warranty 2,466 6,052
Services 868 965
Licence fees — —
Total revenue 3,334 7,017
(CZK million) 2021 2022 − 2025
Revenue arising from contract liability expected to be satisfied in the following periods
Extended warranty 2,560 5,963
Services 862 820
Licence fees 153 —
Total revenue 3,575 6,783
In addition to Revenue arising from contract liability expected to be satisfied in the following periods the Company had in 2021
(2020) contract liabilities for cars. The Company did not use any practical expedient for revenue disclosures and did not incur any
costs to obtain contracts with customers.
17 OTHER OPERATING INCOME
(CZK million) 2021 2020
Income from licence fees not relating to the ordinary activities 235 262
Foreign exchange gains 7,597 8,021
Gains from derivative transactions 3,757 2,388
Gains on non-current assets disposal 11 20
Reversal of provisions 37 229
Reversal of loss allowance provision for receivables 260 447
Other 1,979 1,141
Total 13,876 12,508
Other in 2021 (2020) includes mostly re-invoicing of expenses.
Foreign exchange gains include mainly gains from differences in exchange rates between the dates of recognition and payment
of receivables and payables denominated in foreign currencies, as well as exchange rate gains resulting from translation as at the
balance sheet date of these receivables and payables. Foreign exchange losses from these items are included in other operating
expenses.
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18 OTHER OPERATING EXPENSES
(CZK million) 2021 2020
Foreign exchange losses 4,277 9,084
Losses from derivative transactions 1,257 2,434
Receivables write-offs and impairments 163 261
Additions to provisions for litigation risks and provisions for other business risks 239 560
Other 1,084 10
Total 7,020 12,349
19 FINANCIAL RESULT
(CZK million) 2021 2020
Interest income 586 229
Foreign exchange gains from cash 131 1,248
Foreign exchange gains from spot operations 43 74
Dividend income 601 1,289
Other financial income 1,099 2
Total financial income 2,460 2,842
Interest expense of lease liabilities 51 63
Other interest expense 15 745
Foreign exchange losses from cash 430 1,131
Foreign exchange losses from spot operations 49 89
Factoring fees 188 237
Other financial expenses 623 30
Total financial expenses 1,356 2,295
Net financial result 1,104 547
Dividend income in 2021 includes mainly dividend income of CZK 507 million from the investment in SAIC
(2020: CZK 705 million).
20 NET GAINS AND LOSSES FROM FINANCIAL INSTRUMENTS
(CZK million) 2021 2020
Financial instruments at fair value through profit or loss 2,717 (30)
Financial assets at amortised cost (1,561) 428
Financial assets at fair value through other comprehensive income 507 705
Financial liabilities carried at amortised cost 2,063 (1,172)
Financial instruments designated as hedging instruments 783 770
Net gains / (losses) in profit or loss 4,509 701
Financial instruments designated as hedging instruments (1,189) 2,834
Financial assets at fair value through other comprehensive income 409 (615)
Net gains / (losses) in profit or loss through other comprehensive income (780) 2,219
Total net gains / (losses) 3,729 2,920
Gains less losses from financial derivatives held for trading are recognized in Financial instruments at fair value through profit or loss
in 2021 (2020).
Unrealized and realized foreign exchange gains / losses on receivables, foreign exchange gains / losses on bank deposits,
impairment losses on financial assets and losses on derecognition of financial assets at amortized cost are recognized in Financial
assets at amortized cost in 2021 (2020). In 2021, the gain/loss on derecognized financial assets at amortized cost amounted to
CZK 192 million (2020: CZK 244 million).
Unrealized and realized foreign exchange gains / losses from liabilities are mainly recognized in Financial liabilities carried at
amortised cost in 2021 (2020).
In 2021 (2020), Financial assets at fair value through other comprehensive income include income from dividends from
investments in equity instruments recognized in the income statement and gains / losses from revaluation of equity investments
carried at fair value in other comprehensive income.
Financial instruments designated as hedging instruments include in 2021 (2020) gains and losses from financial instruments
designated as hedging instruments recognized in the income statement and revaluation gain sand losses on Financial instruments
designated as hedging instruments recognized in other comprehensive income.
Further information on net gains and losses on financial instruments recognized in other comprehensive income is disclosed in
Note 12.
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21 INCOME TAX
(CZK million) 2021 2020
Current tax expense 4,380 2,012
of which: adjustment in respect of prior years (7) (153)
Deferred tax 530 676
Income tax total 4,910 2,688
Statutory income tax rate in the Czech Republic for the 2021 assessment period was 19% (2020: 19%).
As at 31 December 2021 and 31 December 2020, deferred income taxes attributable to the Czech tax jurisdiction were measured
at a tax rate of 19% that corresponds with the statutory tax rates enacted for the future periods when realisation of deferred tax
assets and liabilities is expected.
Reconciliation of expected to effective income tax expense
(CZK million) 2021 2020
Profit before tax 27,320 17,863
Expected income tax expense 5,191 3,394
Proportion of taxation relating to:    
Permanent differences resulting from:    
Tax exempt income (341) (300)
Expenses not deductible for tax purposes 267 363
Tax allowances and other tax credits* (269) (329)
Adjustment to current tax expense relating to prior periods (7) (153)
Recognition of deferred tax assets from unused tax credits from investment incentives (8) (393)
Other taxation effects 77 107
Income tax expense 4,910 2,688
Effective income tax rate 18% 15%
* Tax allowances and other tax credits represent mainly tax credits from double deduction of research and development costs.
22 SUBSIDIES, GOVERNMENT GRANTS AND INVESTMENT INCENTIVES
In 2021, the Company recognised income from subsidies for non-investment projects in research and development, increased
qualifications of employees and mobility of students and teachers from high schools (ŠKODA AUTO a.s., Střední odborné učiliště
strojírenské, odštěpný závod) in the total amount of CZK 83 million (2020: CZK 76 million).
In 2021, the Company did not receive contributions from the government’s “Antivirus program” or any other programs. In 2020,
the Company received a contribution to full or partial wage compensation under the government’s “Antivirus program” in the
total amount of CZK 1,237 million during the period of shutdown and production restrictions). For more information on this
contribution refer to Notes 1.3 and 2.14.
Investment incentives
To be granted the investment incentives, the Company has to meet the General conditions of paragraph 2 art. 2 of the
Act No. 72/2000 Coll., on Investment Incentives, as amended and conditions of paragraph 6a art. 2 and 5 of the same act and
Special conditions paragraph 35b of the Act No. 586/1992 Coll., on Income Tax as amended. For the investment incentives
granted to the Company, the total amount of the incentive is always dependent on the amount invested.
The following table summarises granted investment incentives and their use in 2021:
Investment incentive
(CZK million)
Maximum amount
of the investment
incentive
Recognised deferred
tax asset from
investment incentives
Utilisation of tax
credits from
investment incentives
Enlargement of the production assortment for the production
of electric vehicles
401 401 —
Total 401 401 —
The following table summarises granted investment incentives and their use in 2020:
Investment incentive
(CZK million)
Maximum amount
of the investment
incentive
Recognised deferred
tax asset from
investment incentives
Utilisation of tax
credits from
investment incentives
Enlargement of the production assortment for the production
of electric vehicles
401 393 —
Total 401 393 —
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23 COMMITMENTS AND CONTINGENCIES
Capital expenditure and lease commitments as at balance sheet date are as follows:
(CZK million) Payable until year 2022 Payable 2023–2026 31 December 2021
Capital commitments – property, plant and equipment 4,790 1,478 6,268
Capital commitments – intangible assets 14,774 11,865 26,639
Future lease payments for short-term and low-value leases 212 706 918
(CZK million) Payable until year 2021 Payable 2022–2025 31 December 2020
Capital commitments – property, plant and equipment 3,852 354 4,206
Capital commitments – intangible assets 12,615 5,515 18,130
Future lease payments for short-term and low-value leases 222 744 966
In 2021 (2020), the Company leased especially office equipment and pallets for transport based on the short-term and low-value
lease agreements. Cash outflows from the options to extend leases were CZK 201 million (2020: CZK 320 million) in 2021
(2020) and cash flows from options for lease terminations were CZK 1 million (2020: CZK 1 million).
The Company is committed to ensure the availability of spare parts for ŠKODA vehicles for a period of at least 10 years after the
end of production of individual models or their import. Given the nature and substance of this commitment, it cannot be reliably
measured.
24 EXPENSES BY NATURE
(CZK million) 2021 2020
Material costs – raw materials and other supplies, goods 294,388 295,752
Production related services 10,027 5,988
Personnel costs 39,746 37,091
Wages 30,162 27,285
Pension benefit costs (defined contribution plans) incl. employer‘s contribution 6,043 5,914
Social insurance and other personnel costs 3,541 3,892
Depreciation, amortisation, impairment losses and reversal of impairment losses 26,556 25,712
Depreciation, amortisation lease and impairment losses 546 539
Low-value leases expense 94 165
Short-term lease expense 93 96
Other services 31,797 41,793
Total cost of sales, distribution and administrative expenses 403,247 407,135
Number of employees
Number of employees* 38,716 37,728
* Average number of employees including temporary employees and without apprentices
The item other services mainly includes costs for advertising services and transport.
25 RELATED PARTY TRANSACTIONS
The sole shareholder of the Company was VOLKSWAGEN FINANCE LUXEMBURG S.A. during the whole accounting period
ended 31 December 2021 (31 December 2020).
VOLKSWAGEN AG was the ultimate parent company and the ultimate controlling party during the whole accounting period
ended 31 December 2021 (31 December 2020).
Items in category Other related parties are companies under joint control of VOLKSWAGEN AG, however, for the purposes of
compiling the Report on relations they do not meet the definition of an entity controlled by the same controlling entity pursuant to
paragraph 74 of the Act No. 90/2012 Coll., Business Corporations Act, as amended.
Capital transactions with subsidiaries and associates are disclosed in Notes 6 and 7.
THE COMPANY PARTICIPATED IN THE FOLLOWING TRANSACTIONS WITH RELATED PARTIES
Sales to related parties
(CZK million) 2021 2020
Parent company
VOLKSWAGEN FINANCE LUXEMBURG S.A. — —
Ultimate parent company
VOLKSWAGEN AG 12,776 10,249
Subsidiaries
ŠKODA AUTO Slovensko s.r.o. 6,581 7,916
ŠKODA AUTO DigiLab s.r.o. — 10
ŠKODA AUTO DigiServices s.r.o. — —
UMI Urban Mobility International Česká republika s.r.o. — 3
Associates
OOO Volkswagen Group Rus 22,200 21,808
SKODA AUTO Volkswagen India Private Ltd. 5,570 2,427
ŠKO-ENERGO s.r.o. — 15
ŠKO-ENERGO FIN s.r.o. — —
Digiteq Automotive s.r.o. — 2
Companies controlled by ultimate parent company 246,027 279,205
Other related parties 607 899
Total 293,761 322,534
The above table Sales to related parties comprises only revenue from sales of vehicles and spare parts, services including services
related to custom development and supplies of vehicle components.
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In addition to revenue specified in the table Sales to related parties, in 2021 (2020) the Company also earned income from licence
fees:
(CZK million) 2021 2020
Income from licence fees withinVOLKSWAGEN Group    
Ultimate parent company — —
Subsidiaries — —
Associates 1,689 511
Other related parties 526 2,616
Total 2,215 3,127
In addition to the revenue specified in the table Sales to related parties, in 2021 (2020) the Company also earned income from
related parties transactions relating to interest from intercompany loans and deposits:
(CZK million) 2021 2020
Interest income from loans and deposits    
Ultimate parent company — —
Companies controlled by ultimate parent company 74 206
Total 74 206
Dividends received from subsidiaries are disclosed in Note 6. Dividends received from associates are disclosed in Note 7.
Dividends paid from other equity instruments are disclosed in Note 19.
Purchases from related parties
(CZK million) 2021 2020
Parent company
VOLKSWAGEN FINANCE LUXEMBURG S.A. — —
Ultimate parent company
VOLKSWAGEN AG 75,441 68,796
Subsidiaries
ŠKODA AUTO Slovensko s.r.o. 127 115
ŠKODA AUTO DigiLab s.r.o. 232 219
ŠKODA AUTO DigiServices s.r.o. 8 —
UMI Urban Mobility International Česká republika s.r.o. — —
Associates
OOO Volkswagen Group Rus 12 30
SKODA AUTO Volkswagen India Private Ltd. 2,146 1,648
ŠKO-ENERGO s.r.o. 2,452 2,130
ŠKO-ENERGO FIN s.r.o. — —
Digiteq Automotive s.r.o. 719 450
Companies controlled by ultimate parent company 30,005 35,719
Other related parties 16 955
Total 111,158 110,062
Purchases related to activities connected to business operations are included in the table “Purchases from related parties”, in
particular costs for acquisition of raw materials, goods and services.
The amount of approved and paid dividends to the parent company is presented in Note 11.
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Receivables from related parties
The receivables listed in the following table include only trade receivables and, where applicable, receivables from licenses for all
listed categories of related parties.
(CZK million) 31 December 2021 31 December 2020
Parent company
VOLKSWAGEN FINANCE LUXEMBURG S.A. — —
Ultimate parent company
VOLKSWAGEN AG 3,010 3,936
Subsidiaries
ŠKODA AUTO Slovensko s.r.o. 429 638
ŠKODA AUTO DigiLab s.r.o. 6 6
ŠKODA AUTO DigiServices s.r.o. — 1
UMI Urban Mobility International Česká republika s.r.o. — 8
Associates
OOO Volkswagen Group Rus 2,218 6,747
SKODA AUTO Volkswagen India Private Ltd. 2,688 915
ŠKO-ENERGO s.r.o. 21 53
ŠKO-ENERGO FIN s.r.o. — —
Digiteq Automotive s.r.o. 5 —
Companies controlled by ultimate parent company 10,619 15,207
Other related parties 1,600 2,034
Total 20,596 29,545
Receivables from licence fees are specified below.
(CZK million) 31 December 2021 31 December 2020
Receivables licence fees
Ultimate parent company — —
Subsidiaries — —
Associates 347 518
Other related parties 1,287 1,420
Total 1,634 1,938
In addition to trade receivables and receivables from licence fees, the Company as at 31 December 2021 also had deposits
including cash pooling in companies controlled by ultimate parent company in the nominal amount of CZK 22,417 million
(as at 31 December 2020: CZK 18,666 million). Receivables from interest from the loans as at 31 December 2021 amounted to
CZK 27 million (as at 31 December 2020: CZK 0 million). The weighted average effective interest rate on current deposits with
original maturity less than three months (including cash pooling) is disclosed in Note 10. In addition to that, the Company also
had receivable from its ultimate parent company VOLKSWAGEN AG amounting to CZK 310 million as at 31 December 2021
relating mainly to the claim refund necessary for settlement of the provision described in Note 15 (as at 31 December 2020:
CZK 297 million). Receivables from related parties are considered by the Company to be of the least risk. The products delivered
to the related parties are supplied on credit terms or the resulting receivables are transferred to factoring companies. Amount
of allowances for receivables due as stated in credit terms is determined according to simplified approach using provision matrix
described in Note 3.1.5. No impairment loss was identified for any of the receivables transferred to factoring companies. The
value of receivables from related parties that will be subject to factoring is stated in Note 8.2. Further information on these
receivables classified in the FVPL portfolio is provided in Notes 2.5.1 and 3.1.3. As at 31 December 2021, the Company had open
receivables from the factoring companies of the VOLKSWAGEN Group in the amount of CZK 0 million (as at 31 December 2020:
CZK 572 million). Furthermore, in 2021, the Company assigned its trade receivables to these factoring companies in the amount
of CZK 237 813 million (2020: CZK 231 618 million).
Liabilities to related parties
The liabilities listed in the following table include only trade payables for all listed categories of related parties.
(CZK million) 31 December 2021 31 December 2020
Parent company
VOLKSWAGEN FINANCE LUXEMBURG S.A. — —
Ultimate parent company
VOLKSWAGEN AG 14,034 7,156
Subsidiaries
ŠKODA AUTO Slovensko s.r.o. 8 147
ŠKODA AUTO DigiLab s.r.o. 55 62
ŠKODA AUTO DigiServices s.r.o. 2 —
UMI Urban Mobility International Česká republika s.r.o. — —
Associates
OOO Volkswagen Group Rus 188 87
SKODA AUTO Volkswagen India Private Ltd. 874 1,101
ŠKO-ENERGO s.r.o. 226 157
ŠKO-ENERGO FIN s.r.o. — —
Digiteq Automotive s.r.o. 134 101
Companies controlled by ultimate parent company 12,620 15,225
Other related parties 1,590 4,045
Total 29,731 28,081
Trade payables also include payables to a factoring company within the VOLKSWAGEN Group in the amount of CZK 2,004 million
as at 31 December 2021 (31 December 2020: CZK 2,191 million). For more information on these payables refer to Note 13.2.
The Company has a factoring agreement with ŠkoFIN s.r.o., according to which ŠkoFIN s.r.o. can claim compensation for realized
credit losses under certain conditions. Detailed information on this financial guarantee is disclosed in Note 3.1.6.
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Other related party transactions
In 2021 and 2020, the Company entered into internal derivative contracts directly with the ultimate parent company
VOLKSWAGEN AG to hedge currency and price risk. As at 31 December 2021, the fair value of receivables from internal
derivative contracts was CZK 1,312 million (31 December 2020: CZK 268 million). The fair value of liabilities from internal
derivative contracts amounted to CZK 1,361 million as at 31 December 2021 (31 December 2020: CZK 409 million). Further
information on internal derivatives for currency risk hedging is disclosed in Note 3.3.4. Information on Investments in subsidiaries
is disclosed in Note 6, information on Investments in associates is disclosed in Note 7 and information on Investments in equity
instruments issued by related parties is disclosed in Note 8.1. Based on the contractual obligation arising from the membership
in the emission pool of the companies of the VOLKSWAGEN Group, the Company recognized a provision for covering emission
expenditures in 2021. As at 31 December 2021, the total amount of the provision for covering emission expenditures in EU and
UK was CZK 6,931 million (as at 31 December 2020: CZK 7,283 million). Further information on this provision is disclosed in
Note 15.
(CZK million) 31 December 2021 31 December 2020
Contractual obligations and other future commitments  
Ultimate parent company 26,663 17,513
Subsidiaries — —
Associates — —
Companies controlled by ultimate parent company 745 1,647
Total 27,408 19,160
Contractual obligations to related parties include mainly commitments in respect of research and development costs and tooling
rights.
Information on key management personnel remuneration
(CZK million) 2021 2020
Salaries and other short-term employee benefits* 757 713
Pension benefit costs (defined contribution plans) 22 22
Share-based payment 126 250
Total 905 985
* Salaries and other short-term employee benefits include besides wages, salaries, bonuses and non-monetary remuneration also health and social insurance
paid by employer for employees.
Key management personnel include members of the Board of Management, the Supervisory Board and managers of the
Company having authority and responsibility for planning, directing and controlling the activities of the Company.
CZK 391 million out of the total amount disclosed in the line Salaries and other short-term employee benefits was outstanding as
at 31 December 2021 (31 December 2020: CZK 488 million).
The remuneration system for key management members consists of a fixed and variable part. Variable remuneration consists of
an annual bonus dependent on the ROI and ROS result for ŠKODA AUTO including its subsidiaries and for the VOLKSWAGEN
Group within the one-year evaluation period and from long-term incentives in the form of so-called Performance Shares Plan with
three-year period tied to the future development of priority shares of the company VOKLSWAGEN AG (share-based payments).
For more details refer to Note 2.17. A total of 26,255 performance shares were allocated to key management members in 2021
(2020: 31,116 performance shares).
The total target amounts for certain key members of the Company’s management for the 2021-2023 performance period
amounted as of grant date 1 January 2021 to CZK 117 million (for the 2020 – 2022 period as of grant date 1 January 2020
amounted to CZK 141 million). The corresponding costs of CZK 146 million (2020: CZK 261 million) were reported as personnel
costs (Note 24). Should the beneficiaries of the Performance Shares Plan leave the Company as of 31 December 2021, the
intrinsic value of the vested share-based payments would amount to a total of CZK 99 million (2020: CZK 124 million).
The remuneration system was modified also for other key members of the Company’s management at the end of 2019 effective
from 1 January 2020. The new system of remuneration of these additional key management members consists of a fixed and
variable part. Variable remuneration consists of an annual bonus dependent on the ROI and ROS result for ŠKODA AUTO including
its subsidiaries and also for the VOLKSWAGEN Group within the one-year evaluation period and from long-term bonus dependent
on the price development of VOLKSWAGEN AG’s preference shares (including dividend and EPS*) for the past three years. For
more details refer to Note 2.17.
*EPS Earnings per share
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26 OTHER INFORMATION
The compensation paid to the Company’s auditors for the accounting period 2021 was CZK 94 million (2020: CZK 94 million)
and covered the following services:
(CZK million) 2021 2020
Audit of annual financial statements 18 15
Other assurance services 8 8
Tax and related services 1 2
Other advisory services 67 69
Total 94 94
27 CONTINGENT LIABILITIES
The Company has noted contingent liabilities in connection with the EA189 issue representing claims made through lawsuits
against the Company. These claims meet the criteria of a contingent liability, but their value could not be disclosed, because it is
not possible to reliably quantify the potential settlement conditions of such claims. Currently, these proceedings are at various
stages and in number of them the claimants still have not specified the value of their claims. Chances of success of such claims
may be currently assessed as generally less than 50%. The courts give the prosecutors and defendants room to find a settlement
of disputes by dead of arrangement.
In some countries (especially in Belgium, the Netherlands, the Czech Republic and the United Kingdom), there are judicial
proceedings conducted on the basis of collective actions or legal instruments of similar nature against the Company and other
companies of the VOLKSWAGEN Group or also against other persons, which assert, inter alia, claims for monetary compensation.
Given that in many cases the proceedings are not yet at a later stage, or the actions filed are seeking declaratory decisions,
the amount of the claims asserted cannot yet be quantified with certainty. The last year has not brought any significant new
knowledge, which would enable reliable specification of the claims.
In addition to the above, individual actions were filed in some countries against the Company, in which the claimants mostly seek
compensation for alleged damage or replacement of allegedly defective vehicles with defect-free vehicles.
Currently, it is impossible to reliably estimate the number of customers who will use the possibility to bring their alleged claims
against the Company by filing a lawsuit in the future, nor what the chances of success of such claims will be. Likewise, it is not
possible to reliably estimate how many customers bring their alleged claims against dealers, service partners and importers of
ŠKODA brand, what actions they will seek and what will be the extent of their success. However, it can be expected that the
chances of success will continue to decline as more time passes since the EA 189 theme became known in September 2015.
It can be also expected that dealers, service partners and importers of ŠKODA brand who would not be successful in disputes
started by customers, could then exercise alleged recourse claims against the Company.
All potential costs arising from claims and proceedings described above would be fully compensated to the Company by the
VOLKSWAGEN AG.
28 SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE
As at the preparation date of the Financial Statements, there is a risk that developments of the Russian-Ukrainian conflict could
have a negative impact on the Company’s business activities, including the risk of supply chain constraints.
The Company has no subsidiaries or equity investments in Ukraine. In Russia, the Company owns a 16.8% investment share
in a company OOO Volkswagen Group Rus that may be impacted in particular by the sanctions currently adopted and further
political and economic developments in Russia.
The Company’s business activities in these two countries do not have a material impact on the Company’s earnings and financial
position and there is no risk of material impairment of the assets recognised in the financial statements as at 31 December 2021.
As at the preparation date of the Financial Statements, it is not possible to predict with sufficient degree of certainty the extent to
which further escalation of the Russian-Ukrainian conflict will affect the global economy in 2022 and at the same time an adverse
effect on the Company’s results of operations, financial position and net assets cannot be ruled out.
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29 INFORMATION ABOUTVOLKSWAGEN GROUP
ŠKODA AUTO a.s. is a subsidiary included in the consolidation group of its ultimate parent company, VOLKSWAGEN AG, with
a registered office in Wolfsburg, the Federal Republic of Germany.
The VOLKSWAGEN Group consists of two divisions – Automotive and Financial Services. The activities related to the Automotive
Division include the development of cars and aggregates, production and sale of passenger and commercial cars, trucks, buses and
motorcycles as well as the business with spare parts, large-bore diesel engines and turbomachinery. The following brands belong
to VOLKSWAGEN Group: Audi, Bentley, CARIARD, CUPRA, Ducati, Lamborghini, MAN, MOIA, Navistar, Porsche, Scania, SEAT,
ŠKODA, TRATON, Volkswagen Passenger Cars and Volkswagen Commercial Vehicles.
The Financial Services Division includes activities related to the dealer and customer financing, leasing, banking and insurance
services and the fleet management.
ŠKODA AUTO and its subsidiaries (see Note 6) and its investments in associates (see Note 7) are included in the consolidation
of VOLKSWAGEN Group’s financial statements. These consolidated financial statements, and other information relating to the
VOLKSWAGEN Group, are available in the annual report of VOLKSWAGEN AG and on its internet site (www.volkswagenag.com).
The Board of Management:
Mladá Boleslav, 4 March 2022
Thomas Schäfer
Maren Gräf Johannes NeftMartin Jahn
Michael Oeljeklaus Karsten SchnakeChristian Schenk
Persons responsible for accounting:
Dana Němečková Martina Janebová-Ciencialová
The original of the Separate Financial Statements was signed with a qualified electronic signature.
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REPORT ON RELATIONS
OF THE COMPANYŠKODA AUTO A.S. PURSUANT TO THE PROVISIONS OF SECTION 82 OF ACT
NO. 90/2012 COLL., ON COMMERCIAL COMPANIES AND COOPERATIVES (HEREINAFTER REFERRED TO AS
THE “BUSINESS CORPORATIONS ACT”) FOR THE ACCOUNTING PERIOD 1 JANUARY– 31 DECEMBER 2021
The Board of Management of ŠKODA AUTO a.s., having its
registered office tř. Václava Klementa 869, Mladá Boleslav II,
293 01 Mladá Boleslav, identification number 00177041,
registered in the Commercial Register kept by Municipal
Court in Prague, Section B, Insert 332, with File No. Rg. B
332 (hereinafter referred to as “the Company“ or “ŠKODA
AUTO“), prepared the following Report on Relations pursuant
to the provision of § 82 of Business Corporations Act, in
the accounting period 1 January – 31 December 2021
(hereinafter referred to as “the Period“).
1 STRUCTURE OF RELATIONS
The Company has been a part of VOLKSWAGEN Group
(hereinafter referred to as “the Group“) for the whole
Period, where the controlling entity is VOLKSWAGEN AG
(hereinafter referred to as „VOLKSWAGEN“ or “the
Controlling Entity“).
ŠKODA AUTO company was in the Period indirectly
controlled by VOLKSWAGEN AG based at Berliner Ring 2,
384 40 Wolfsburg, Federal Republic of Germany through
VOLKSWAGEN FINANCE LUXEMBURG S.A. seated in
Luxembourg, 19/21 route d’Arlon, L-8009, Grand Duchy of
Luxembourg, which is the sole shareholder of the Company.
The Controlling Entity is the ultimate parent company
of the Group, the activities of which comprise especially
the development of vehicles and aggregates, automotive
software, the production and sale of passenger and
commercial cars, trucks, buses, and motorcycles, as well
as business with spare parts, large-bore diesel engines and
turbo machinery (via brands Audi, Bentley, CARIAD, CUPRA,
Ducati, Lamborghini, MAN, MOIA, Navistar, Porsche,
SEAT, ŠKODA, TRATON, Volkswagen Passenger Cars and
Volkswagen Commercial Vehicles). In addition, the Group
engages in financial services segment in activities related
to the dealer and customer financing, leasing, banking and
insurance services, and the fleet management.
Information about the structure of relations is stated as at
31 December 2021, based on the information available
to the statutory body of the Company acting with due
managerial care. The ownership structure of ŠKODA AUTO
is graphically illustrated in the Appendix. The ownership
structure of the Controlling Entity of VOLKSWAGEN AG is
available on the website www.volkswagenag.com/ir.
2 FUNCTION OF THE COMPANY
WITHIN THE GROUP
The Company operates in the Automotive Division of
the Group and focuses particularly on the development,
production and sale of vehicles of the ŠKODA brand, its spare
parts and accessories, and the development and production
of components for other Group companies. The Company
holds interests in subsidiaries within ŠKODA AUTO Group
and in other companies. The overview of the interests is
illustrated in the Appendix.
3 MEANS OF CONTROL
During the Period, the Company was indirectly controlled
by the Controlling Entity through the sole shareholder
VOLKSWAGEN FINANCE LUXEMBURG S.A. The Company
is controlled mainly through decision of the sole shareholder
during the general meetings. Important decisions influencing
the Company’s operations are approved within the Group’s
respective boards.
4 OVERVIEW OF TRANSACTIONS
REALISED AT THE INSTIGATION OR IN
THE INTEREST OF THE CONTROLLING
ENTITY OR ENTITIES CONTROLLED BY
THE CONTROLLING ENTITY
The Company deposits surplus liquidity with Volkswagen
Group Services S.A. in the form of deposits and cash
pooling at the instigation of the Controlling Entity
in the usual way applied within the Group. As at
31 December 2021, the value of cash equivalents amounted
to CZK 19,700 million and the value of cash pooling
amounted to CZK 2,717 million. CZK. The value of interest
income on loans and deposits for 2021 was CZK 74 million.
Based on the Decision of the sole shareholder
VOLKSWAGEN FINANCE LUXEMBURG S.A. from
18 March 2021, ŠKODA AUTO paid a dividend of
CZK 15,170 million on 12 April 2021 to the sole shareholder
VOLKSWAGEN FINANCE LUXEMBURG S.A.
The Company has not carried out any other transactions
during the Period concerning assets exceeding 10% of the
Company’s equity per the last individual financial statements
as at 31 December 2020.
In 2021, dividends and share in profit of CZK 61 million
were paid out to the Company by the subsidiaries. In 2021,
dividends and share in profit of CZK 33 million were paid out
to the Company by the associates.
5 OVERVIEW OF THE CONTRACTS WITHIN
THE GROUP
During the Period, agreements existed or were newly
concluded between ŠKODA AUTO and VOLKSWAGEN
and between ŠKODA AUTO and companies controlled by
VOLKSWAGEN in the following areas:
5.1 SALE OF OWN PRODUCTS, GOODS AND
SERVICES
a) vehicles
In the context of car sales, ŠKODA AUTO had contractual
relationships in force in the Period (concluded in the Period or
in previous years) with the following companies:
	■ Audi Volkswagen Taiwan Co., Ltd.
	■ MAN Truck & Bus Slovenija d.o.o.
	■ OOO Volkswagen Group Rus
	■ Porsche Albania Sh.p.k.
	■ Porsche Austria GmbH & Co. OG
	■ Porsche BH d.o.o.
	■ Porsche Croatia d.o.o.
	■ Porsche Hungaria Kereskedelmi Kft.
	■ Porsche Chile S.p.A.
	■ Porsche Inter Auto CZ spol. s r.o.
	■ Porsche Macedonia d.o.o.e.l.
	■ Porsche Romania S.R.L.
	■ SEAT, S.A.
	■ SIVA – Sociedade de Importação de Veículos
Automóveis, S.A.
	■ SKODA AUTO Deutschland GmbH
	■ ŠKODA AUTO Slovensko, s.r.o.
	■ ŠkoFIN s.r.o.
	■ Volkswagen Group Australia Pty. Ltd.
	■ Volkswagen Group España Distribución, S.A.
	■ Volkswagen Group France S.A.
	■ Volkswagen Group Ireland Ltd.
	■ Volkswagen Group Italia S.p.A.
	■ Volkswagen Group Polska Sp. z o.o.
	■ Volkswagen Group Singapore Pte. Ltd.
	■ Volkswagen Group Sverige AB
	■ Volkswagen Group United Kingdom Ltd.
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b) genuine parts
In the context of genuine parts sales, ŠKODA AUTO
had contractual relationships in force in the Period
(concluded in the Period or in previous years) with the
following companies:
	■ Audi Volkswagen Taiwan C+A2:B21o., Ltd.
	■ Porsche Austria GmbH & Co. OG
	■ Porsche BH d.o.o.
	■ Porsche Colombia S.A.S.
	■ Porsche Croatia d.o.o.
	■ Porsche Česká republika s.r.o.
	■ Porsche Hungaria Kereskedelmi Kft.
	■ Porsche Chile S.p.A.
	■ Porsche Inter Auto CZ spol. s r.o.
	■ Porsche Konstruktionen GmbH & Co. KG
	■ Porsche Macedonia d.o.o.e.l. Skopje
	■ Porsche Romania S.R.L.
	■ Porsche Slovakia, spol. s r.o.
	■ Porsche Slovenija d.o.o.
	■ SEAT, S.A.
	■ SIVA – Sociedade de Importação
de Veículos Automóveis, S.A.
	■ SKODA AUTO Deutschland GmbH
	■ ŠKODA AUTO Volkswagen India Pvt. Ltd.
	■ ŠKODA AUTO Slovensko, s.r.o.
	■ VOLKSWAGEN AG
	■ Volkswagen de México, S.A. de C.V.
	■ Volkswagen Group Australia Pty. Ltd.
	■ Volkswagen Group España Distribución, S.A.
	■ Volkswagen Group France S.A.
	■ Volkswagen Group Ireland Ltd.
	■ Volkswagen Group Italia S.p.A.
	■ Volkswagen Group of America, Inc.
	■ Volkswagen Group Polska Sp. z o.o.
	■ OOO Volkswagen Group Rus
	■ Volkswagen Group Singapore Pte. Ltd.
	■ Volkswagen Group Sverige AB
	■ Volkswagen Group United Kingdom Ltd.
	■ Volkswagen of South Africa (Pty) Ltd., Uitenhage
c) others
In the context of sale of services, licenses, aggregates,
bodyworks and other products, ŠKODA AUTO
had contractual relationships in force in the Period
(concluded in the Period or in previous years) with the
following companies:
	■ AUDI AG
	■ Audi Brussels S.A./N.V.
	■ Audi Hungaria Zrt.
	■ Bentley Motors Ltd.
	■ Connectivity Lab s.r.o.
	■ Digiteq Automotive s.r.o.
	■ HoppyGo Czechia s.r.o.
	■ HoppyGo Poland Sp. z o.o.
	■ HoppyGo s.r.o.
	■ INIS International Insurance Service s.r.o.
	■ Mobility Lab s.r.o.
	■ OOO Volkswagen Group Rus
	■ OOO Volkswagen Komponenten und Services
	■ Porsche Česká republika s.r.o.
	■ Porsche Konstruktionen GmbH & Co. KG
	■ Porsche Slovenija d.o.o.
	■ Porsche Werkzeugbau s.r.o.
	■ SEAT CUPRA S.A.
	■ SEAT, S.A.
	■ Shanghai Volkswagen Powertrain Co., Ltd.
	■ SIVA – Sociedade de Importação
de Veículos Automóveis, S.A.
	■ SKODA AUTO Deutschland GmbH
	■ ŠKODA AUTO DigiLab s.r.o.
	■ ŠKODA AUTO DigiServices s.r.o.
	■ ŠKODA AUTO Slovensko, s.r.o.
	■ ŠKODA AUTO Volkswagen India Pvt. Ltd.
	■ ŠKO-ENERGO FIN s.r.o.
	■ ŠKO-ENERGO s.r.o.
	■ Volkswagen (China) Investment Co., Ltd.
	■ VOLKSWAGEN AG
	■ Volkswagen Argentina S.A.
	■ Volkswagen de México, S.A. de C.V.
	■ Volkswagen do Brasil Indústria
de Veículos Automotores Ltda.
	■ Volkswagen Financial Services Digital Solutions GmbH
	■ Volkswagen Group Australia Pty. Ltd.
	■ Volkswagen Group France S.A.
	■ Volkswagen Group Import Co., Ltd.
	■ Volkswagen Group Malaysia Sdn. Bhd.
	■ Volkswagen Group of America
Chattanooga Operations, LLC
	■ Volkswagen Group Polska Sp. z o.o.
	■ Volkswagen Group Real Estate Czech Republic s.r.o.
	■ Volkswagen Group United Kingdom Ltd.
	■ Volkswagen Immobilien GmbH
	■ Volkswagen IT Services India Pvt. Ltd.
	■ Volkswagen Osnabrück GmbH
	■ Volkswagen Poznan Sp. z o.o.
	■ VOLKSWAGEN SACHSEN GmbH
	■ Weser-Ems Vertriebsgesellschaft mbH
5.2 PURCHASE OF GOODS, SERVICES
AND NON-CURRENT ASSETS
a) production material
In the context of purchases of production material, ŠKODA
AUTO had contractual relationships in force in the Period
(concluded in the Period or in previous years) with the
following companies:
	■ AUDI AG
	■ Audi Brussels S.A./N.V.
	■ Audi Hungaria Zrt.
	■ Digiteq Automotive s.r.o.
	■ OOO Volkswagen Group Rus
	■ OOO Volkswagen Komponenten und Services
	■ Porsche Werkzeugbau GmbH
	■ SEAT, S.A.
	■ Shanghai Volkswagen Powertrain Co., Ltd.
	■ SITECH Sitztechnik GmbH
	■ SITECH Sp. z o.o.
	■ SKODA AUTO Deutschland GmbH
	■ ŠKODA AUTO Volkswagen India Pvt. Ltd.
	■ ŠKO-ENERGO s.r.o.
	■ ŠkoFIN s.r.o.
	■ VOLKSWAGEN AG
	■ Volkswagen Argentina S.A.
	■ Volkswagen Autoeuropa, Lda.
	■ Volkswagen Automatic Transmission (Dalian) Co., Ltd.
	■ Volkswagen de México, S.A. de C.V.
	■ Volkswagen do Brasil Indústria
de Veículos Automotores Ltda.
	■ Volkswagen Group Logistics GmbH
	■ Volkswagen Group of America, Inc.
	■ Volkswagen Group Services GmbH
	■ Volkswagen IT Services India Pvt. Ltd.
	■ Volkswagen Konzernlogistik GmbH & Co. OHG
	■ Volkswagen Motor Polska Sp. z o.o.
	■ Volkswagen Navarra, S.A.
	■ Volkswagen of South Africa (Pty) Ltd.
	■ Volkswagen Osnabrück GmbH
	■ Volkswagen Poznan Sp. z o.o.
	■ Volkswagen Sachsen GmbH
	■ Volkswagen Sarajevo d.o.o.
	■ Volkswagen Slovakia, a.s.
	■ Volkswagen Transmission (Shanghai) Co., Ltd.
	■ Volkswagen Navarra, S.A.
	■ Volkswagen de México, S.A. de C.V.
	■ Volkswagen Original Teile Logistik GmbH & Co. KG
b) overheads
In the context of purchases of indirect material and services
(including research and development cooperation, IT
services, software and hardware supplies, customer services
consultancy), ŠKODA AUTO had contractual relationships
in force in the Period (concluded in the Period or in previous
years) with the following companies:
	■ AUDI AG
	■ Audi Brussels S.A./N.V.
	■ Audi Business Innovation GmbH
	■ Audi Hungaria Zrt.
	■ Audi Planung GmbH
	■ Audi Volkswagen Taiwan Co., Ltd.
	■ Automotive Safety Technologies GmbH
	■ Autostadt GmbH
	■ CARIAD SE
	■ Digiteq Automotive s.r.o.
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	■ Dr. Ing. h.c. F. Porsche AG
	■ dx.one GmbH
	■ EURO-Leasing GmbH
	■ HoppyGo Czechia s.r.o.
	■ Italdesign Giugiaro S.p.A.
	■ MHP Management- und IT-Beratung GmbH
	■ Mobility Asia Smart Technology Co., Ltd.
	■ Nardò Technical Center S.r.l.
	■ OOO Volkswagen Group Rus
	■ OOO Volkswagen Komponenten und Services
	■ Porsche Austria GmbH & Co. OG
	■ Porsche BH d.o.o.
	■ Porsche Croatia d.o.o.
	■ Porsche Česká republika s.r.o.
	■ Porsche Engineering Services s.r.o.
	■ Porsche Hungaria Kereskedelmi Kft.
	■ Porsche Chile S.p.A.
	■ Porsche Inter Auto CZ spol. s r.o.
	■ Porsche Macedonia d.o.o.e.l. Skopje
	■ Porsche Romania S.R.L.
	■ Porsche Slovenija d.o.o.
	■ Porsche Werkzeugbau GmbH
	■ Scania Czech Republic s.r.o.
	■ SEAT, S.A.
	■ Shanghai Volkswagen Powertrain Co., Ltd.
	■ SITECH Sitztechnik GmbH
	■ SITECH Sp. z o.o.
	■ SIVA – Sociedade de Importação
de Veículos Automóveis, S.A.
	■ SKODA AUTO Deutschland GmbH
	■ ŠKODA AUTO DigiLab s.r.o.
	■ ŠKODA AUTO DigiServices s.r.o.
	■ ŠKODA AUTO Slovensko, s.r.o.
	■ ŠKODA AUTO Volkswagen India Pvt. Ltd.
	■ ŠKO-ENERGO s.r.o.
	■ ŠkoFIN s.r.o.
	■ Volkswagen (China) Investment Co., Ltd.
	■ VOLKSWAGEN AG
	■ Volkswagen AirService GmbH
	■ Volkswagen Argentina S.A.
	■ Volkswagen Autoeuropa, Lda.
	■ Volkswagen de México, S.A. de C.V.
	■ Volkswagen do Brasil Indústria
de Veículos Automotores Ltda.
	■ Volkswagen Gebrauchtfahrzeughandels
und Service GmbH
	■ Volkswagen Group Australia Pty. Ltd.
	■ Volkswagen Group España Distribución, S.A.
	■ Volkswagen Group France S.A.
	■ Volkswagen Group Charging GmbH
	■ Volkswagen Group Ireland Ltd.
	■ Volkswagen Group Italia S.p.A.
	■ Volkswagen Group of America, Inc.
	■ Volkswagen Group Polska Sp. z o.o.
	■ Volkswagen Group Services GmbH
	■ Volkswagen Group Services Kft.
	■ Volkswagen Group Services, s.r.o.
	■ Volkswagen Group Singapore Pte. Ltd.
	■ Volkswagen Group Sverige AB
	■ Volkswagen Group United Kingdom Ltd.
	■ Volkswagen Infotainment GmbH
	■ Volkswagen IT Services India Pvt. Ltd.
	■ Volkswagen Konzernlogistik GmbH & Co. OHG
	■ Volkswagen Motor Polska Sp. z o.o.
	■ Volkswagen Navarra, S.A.
	■ Volkswagen Navarra, S.A.
	■ Volkswagen of South Africa (Pty) Ltd.
	■ Volkswagen Osnabrück GmbH
	■ Volkswagen Payments S.A.
	■ Volkswagen Sachsen GmbH
	■ Volkswagen Software Asset Management GmbH
	■ Volkswagen Software Asset Management GmbH
	■ Volkswagen Zubehör GmbH
	■ VW Kraftwerk GmbH
c) genuine parts
In the context of purchases of genuine parts, ŠKODA AUTO
had contractual relationships in force in the Period (concluded
in the Period or in previous years) with the following
companies:
	■ OOO Volkswagen Group Rus
	■ SITECH Sp. z o.o.
	■ VOLKSWAGEN AG
	■ Volkswagen Motor Polska Sp. z o.o.
	■ Volkswagen Slovakia, a.s.
	■ Volkswagen Original Teile Logistik GmbH & Co. KG
d) non-current assets
In the context of purchases of non-current assets,
ŠKODA AUTO had contractual relationships in force in the
Period (concluded in the Period or in previous years) with the
following companies:
	■ Audi Brussels S.A./N.V.
	■ Digiteq Automotive s.r.o.
	■ Dr. Ing. h.c. F. Porsche AG
	■ MHP Management- und IT-Beratung GmbH
	■ SKODA AUTO Deutschland GmbH
	■ ŠKO-ENERGO s.r.o.
	■ VOLKSWAGEN AG
	■ Volkswagen Group Services GmbH
5.3 OTHER CONTRACTUAL RELATIONSHIPS
In the context of other contractual relationships (particularly
marketing services, training, sales support, financial services,
consultancy, production of cars, purchase of capital interests,
system and other support), ŠKODA AUTO had contractual
relationships in force in the Period (concluded in the Period or
in previous years) with the following companies:
	■ Audi (China) Enterprise Management Co., Ltd.
	■ Audi Business Innovation GmbH
	■ Audi Hungaria Zrt.
	■ Audi México S.A. de C.V.
	■ Audi Volkswagen Middle East FZE
	■ Audi Volkswagen Taiwan Co., Ltd.
	■ Auto Union GmbH
	■ Bentley Motors Ltd.
	■ CARIAD SE
	■ Digiteq Automotive s.r.o.
	■ HoppyGo Czechia s.r.o.
	■ INIS International Insurance Service s.r.o.
	■ Konnect with the Volkswagen Group Ltd.
	■ MAN Truck & Bus SE
	■ OOO Volkswagen Group Rus
	■ Porsche Albania Sh.p.k.
	■ Porsche Austria GmbH & Co. OG
	■ Porsche BH d.o.o.
	■ Porsche Colombia S.A.S.
	■ Porsche Croatia d.o.o.
	■ Porsche Česká republika s.r.o.
	■ Porsche Engineering Services s.r.o.
	■ Porsche Hungaria Kereskedelmi Kft.
	■ Porsche Chile S.p.A.
	■ Porsche Inter Auto CZ spol. s r.o.
	■ Porsche Macedonia d.o.o.e.l. Skopje
	■ Porsche Romania S.R.L.
	■ Porsche Slovakia, spol. s r.o.
	■ Porsche Slovenija d.o.o.
	■ Scania CV AB
	■ SEAT CUPRA S.A.
	■ SEAT, S.A.
	■ SIVA – Sociedade de Importação
de Veículos Automóveis, S.A.
	■ SKODA AUTO Deutschland GmbH
	■ ŠKODA AUTO DigiLab s.r.o.
	■ ŠKODA AUTO DigiServices s.r.o.
	■ ŠKODA AUTO Slovensko, s.r.o.
	■ ŠKODA AUTO Volkswagen India Pvt. Ltd.
	■ ŠKO-ENERGO s.r.o.
	■ ŠkoFIN s.r.o.
	■ TRATON SE
	■ UMI Urban Mobility International Česká republika s.r.o.
	■ VDF Servis ve Ticaret A.S.
	■ Volkswagen (China) Investment Co., Ltd.
	■ VOLKSWAGEN AG
	■ Volkswagen Argentina S.A.
	■ Volkswagen Automatic Transmission (Tianjin) Co., Ltd.
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The Board of Management:
Thomas Schäfer
Maren Gräf Johannes NeftMartin Jahn
Michael Oeljeklaus Karsten SchnakeChristian Schenk
The original of the Report on Relations was signed with a qualified electronic signature.
	■ Volkswagen de México, S.A. de C.V.
	■ Volkswagen FAW Engine (Dalian) Co., Ltd.
	■ VOLKSWAGEN FINANCIAL SERVICES AG
	■ Volkswagen Group Australia Pty. Ltd.
	■ Volkswagen Group Canada, Inc.
	■ Volkswagen Group España Distribución, S.A.
	■ Volkswagen Group France S.A.
	■ Volkswagen Group Charging CZ s.r.o.
	■ Volkswagen Group Import Co., Ltd.
	■ Volkswagen Group Ireland Ltd.
	■ Volkswagen Group Italia S.p.A.
	■ Volkswagen Group Polska Sp. z o.o.
	■ Volkswagen Group Singapore Pte. Ltd.
	■ Volkswagen Group Sverige AB
	■ Volkswagen Group United Kingdom Ltd.
	■ Volkswagen Insurance Brokers GmbH
	■ Volkswagen International Belgium S.A.
	■ Volkswagen IT Services India Pvt. Ltd.
	■ Volkswagen Konzernlogistik GmbH & Co. OHG
	■ VOLKSWAGEN NAVARRA S.A.
	■ Volkswagen of South Africa (Pty) Ltd.
	■ Volkswagen Original Teile Logistik GmbH & Co. KG
	■ Volkswagen Payments S.A.
	■ Volkswagen Poznan Sp. z o.o.
	■ Volkswagen Slovakia, a.s.
	■ Volkswagen Vertriebsbetreuungsgesellschaft GmbH
	■ VW Kraftwerk GmbH
6. ASSESSMENT OF A DETRIMENT
AND ITS SETTLEMENT
Contracts concluded in the Period and in previous years
were concluded under conditions in the ordinary course of
business.
The Company did not suffer from any damage or detriment
as a result of the contracts concluded in the Period and in
previous periods between the Company and other Group
companies, or as a result of other transactions or measures
realised during the Period by the Company at the instigation
or in the interest of these entities.
7. EVALUATION OF THE RELATIONS
AND RISKS WITHIN THE GROUP
7.1 EVALUATION OF ADVANTAGES AND
DISADVANTAGES OF THE RELATIONS WITHIN
THE GROUP
Involvement in the Group leads mainly to advantages for
the Company. The Group is a world-leading automotive
manufacturer. Involvement in the Group brings economies of
scale to the Company, realised through shared platforms and
modern technologies. At the same time, it provides shared
know-how and distribution channels.
Currently, there is no apparent disadvantage for the Company
emerging from involvement in the Group.
7.2 THERE ARE NO RISKS FOR THE COMPANY
ARISING FROM THE RELATIONS WITHIN THE
GROUP.
Mladá Boleslav, 4 March 2022
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STRUCTURE OF COMPANIES WITH ŠKODA AUTO PARTICIPATION
VOLKSWAGEN FINANCE
LUXEMBURG S.A.
STRASSEN
VOLKSWAGEN AG
WOLFSBURG
ŠKODA AUTO SLOVENSKO s.r.o.
BRATISLAVA
100 %
ŠKODA AUTO DIGILAB s.r.o.
PRAHA
100 %
DIGITEQ AUTOMOTIVE s.r.o.
PRAHA
49 %
ŠKO−ENERGO s.r.o.
MLADÁ BOLESLAV
44,50 %
SAIC VOLKSWAGEN
AUTOMOTIVE CO. Ltd.
SHANGHAI
1 %
OOO VOLKSWAGEN GROUP RUS
KALUGA
16,80 %
SKODA AUTO VOLKSWAGEN INDIA Pvt. Ltd.
PUNE
3,47 %
ŠKODA AUTO DIGISERVICES s.r.o.
PRAHA
100 %
CONNECTIVITY LAB s.r.o.
PRAHA
ŠKODA AUTO DIGILAB ISRAEL Ltd.
BNEI BRAK
ANAGOG Ltd.
TEL AVIV
BERIDER
SERVICES s.r.o.
PRAHA
MOBILITY LAB s.r.o.
PRAHA
HOPPYGO POLAND Sp. z o.o.
VARŠAVA
100 %
100 % 50 %
100 %
HOPPYGO CZECHIA s.r.o.
PRAHA
HOPPYGO SLOVAKIA s.r.o.
BRATISLAVA
15 %
100 %
85 %
2,19 %
100 %
HOPPYGO s.r.o.
PRAHA
100 %
ŠKODA AUTO a.s.
MLADÁ BOLESLAV
UMI URBAN MOBILITY INTERNATIONAL
ČESKÁ REPUBLIKA s.r.o.
PRAHA
100 %
ŠKO−ENERGO FIN s.r.o.
MLADÁ BOLESLAV
31,25 %
100 %
100 %
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GLOSSARY OF TERMS
AND ABBREVIATIONS
ASEAN
The Association of Southeast Asian
Nations is a political and economic union
comprising Brunei, Cambodia, Indonesia,
Laos, Malaysia, Myanmar, Philippines,
Singapore, Thailand and Vietnam
BEV
Battery electric vehicle
CAS
Czech accounting standards for businesses
and other accounting regulations valid
in the Czech Republic, particularly
Act No. 563/1991 Coll. on Accounting and
Decree No. 500/2002 Coll., implementing
selected provisions of the Accounting Act,
as subsequently amended
CGU
Cash-generating unit; the smallest group of
assets that independently generates cash
flow defined by IFRS
CNG
Compressed natural gas; methane fuel
COMPANY
in the Annual Report, the term
“the Company” is used as a synonym for
the company ŠKODA AUTO a.s.
CONSOLIDATED GROUP
in addition to ŠKODA AUTO a.s. with
registered office in Mladá Boleslav, also
includes all significant subsidiaries and
associates
CUV
Crossover utility vehicle; vehicle combining
features of a sport utility vehicle (SUV)
with features from a passenger vehicle
DELIVERIES TO CUSTOMERS
number of ŠKODA brand vehicles delivered
to end customers that were produced
in ŠKODA AUTO Group and/or partner
plants
EGAP
Exportní garanční a pojišťovací
společnost, a.s.; Export Guarantee
and Insurance Corporation
EURO NCAP
European New Car Assessment
Programme; European consumer
organisation that conducts safety tests
GDPR
General Data Protection Regulation;
general regulation on the protection of
personal data
GRC
Governance, Risk management and
Compliance
GROUP
in the Annual Report, the term
“the Group” is used as synonym for
the VOLKSWAGEN Group
HR
Human Resource
IAS/IFRS
International Accounting Standards /
International Financial Reporting Standards
as adopted by the European Union
IASB
International Accounting Standards
Board; independent international group of
accounting experts
INFOTAINMENT
multimedia information system consisting
of radio, navigation system and other
multimedia devices in a vehicle
INVESTMENT RATIO
ratio of capital expenditures (less
capitalised development expenses) to total
sales revenues
KONTRAG
Gesetz zur Kontrolle und Transparenz
im Unternehmensbereich; German
Information Disclosure and Transparency
Act
MEB
Modular Electric Drive Matrix;
modular platform for electric vehicles
MQB
Modular Transverse Matrix; modular
platform
NET LIQUIDITY
gross liquidity (cash and cash equivalents)
less liabilities to a factoring company within
the VOLKSWAGEN Group
OECD
Organization for Economic Cooperation
and Development
PHEV
Plug-in hybrid electric vehicle; hybrid
electric vehicle that uses batteries that can
be recharged by plugging it in to an external
source of electric power
PRODUCTION
number of vehicles produced; the total
production figure also includes production
of vehicles for the VOLKSWAGEN Group
brand SEAT manufactured by the company
ŠKODA AUTO; for accuracy, vehicle
assembly kits are reported in the vehicles
segment
RMS/ICS
Risk Management System / Internal
Control System
SALES
number of vehicles sold to importers and
dealers; the unit sales figure also includes
sales of vehicles of the VOLKSWAGEN
Group brand SEAT manufactured by the
company ŠKODA AUTO; for accuracy,
vehicle assembly kits are reported in the
vehicles segment
SUV
Sport utility vehicle in the mid-range
category of cars
TEMPORARY EMPLOYEES
employees of a labour agency who
are temporarily seconded to work for
a different employer
UNECE
United Nations Economic Commission for
Europe
WLTP
Worldwide Harmonised Light Vehicle Test
Procedure; new test cycle measuring CO2
and other pollutant emissions as well as
fuel consumption values
PERSONS RESPONSIBLE FOR THE ANNUAL REPORT,
EVENTS AFTER THE BALANCE SHEET DATE
AND OTHER INFORMATION
EVENTS AFTER THE BALANCE SHEET DATE
As at the preparation date of this Annual Report, there is a risk that developments of the Russian-Ukrainian conflict could
have a negative impact on the Company’s business activities, including the risk of supply chain constraints. The Company
has no subsidiaries or equity investments in Ukraine. In Russia, the Company owns a 16.8% investment share in a company
OOO Volkswagen Group Rus that may be impacted in particular by the sanctions currently adopted and further political
and economic developments in Russia. The Company’s business activities in these two countries do not have a material
impact on the Company’s earnings and financial position and there is no risk of material impairment of the assets
recognised in the financial statements as at 31 December 2021.
As at the preparation date of the Annual Report, it is not possible to predict with sufficient degree of certainty the extent to
which further escalation of the Russian-Ukrainian conflict will affect the global economy in 2022 and at the same time an
adverse effect on the Company’s results of operations, financial position and net assets cannot be ruled out.
OTHER INFORMATION
The Company did not acquire any treasury shares during the relevant period. The Company as an accounting entity does
not have a branch or part of a business plant abroad. The Company is subject to no further disclosure obligations pursuant
to the provision of Section 21(2)(g) of Act No. 563/1991 Coll., on Accounting, as amended, with the exception of the
obligations arising from Act No. 542/2020 Coll. on End-of-Life Products described in the Sustainability section.
AFFIRMATION
The persons stated below, responsible for the preparation of this Annual Report, hereby declare that the information
contained in this Annual Report is factual and that no substantive matters that could influence an accurate and correct
evaluation of the company ŠKODA AUTO a.s. have been knowingly omitted or distorted.
The Board of Management:
Thomas Schäfer
Maren Gräf Johannes NeftMartin Jahn
Michael Oeljeklaus Karsten SchnakeChristian Schenk
Mladá Boleslav, 4 March 2022
The original of the Annual Report was signed with a qualified electronic signature.
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KEY FIGURES AND FINANCIAL RESULTS
OF ŠKODA AUTO ACCORDING TO IFRS IN BRIEF
SALES, PRODUCTION AND WORKFORCE 2017 2018 2019 2020 2021
Deliveries to customers vehicles 1,200,535 1,253,741 1,242,767 1,004,816 878,202
Sales* vehicles 909,567 932,035 947,531 784,871 691,889
Sales of ŠKODA cars* vehicles 818,976 831,067 847,655 708,161 633,389
Production* vehicles 858,103 886,103 907,942 749,610 680,397
Production of ŠKODA cars* vehicles 767,474 785,128 808,066 672,900 621,897
Employees persons 31,626 33,696 34,829 35,437 36,032
* Sales and production volumes are reported excluding kits shipped to foreign production plants not operated by ŠKODA AUTO company. These kits are
reported as other intragroup deliveries.
INCOME STATEMENT 2017 2018 2019 2020 2021
Sales revenue CZK million 407,400 416,695 459,122 424,292 422,607
Cost of sales CZK million 347,519 359,421 397,086 381,221 380,689
% of revenues 85.3 86.3 86.5 89.8 90.1
Gross profit CZK million 59,881 57,274 62,036 43,071 41,918
% of revenues 14.7 13.7 13.5 10.2 9.9
Distribution expenses CZK million 15,040 14,046 14,735 12,349 10,287
Administrative expenses CZK million 9,710 12,366 13,234 13,565 12,271
Net other operating result CZK million 5,400 2,978 3,153 159 6,856
Operating profit CZK million 40,531 33,840 37,220 17,316 26,216
% of revenues 9.9 8.1 8.1 4.1 6.2
Net financial result CZK million (1,406) 1,291 1,278 547 1,104
Profit before tax CZK million 39,125 35,131 38,498 17,863 27,320
Return on sales before tax % 9.6 8.4 8.4 4.2 6.5
Income tax expense CZK million 7,284 6,239 6,809 2,688 4,910
Profit for the year CZK million 31,841 28,892 31,689 15,175 22,410
Return on sales after tax % 7.8 6.9 6.9 3.6 5.3
BALANCE SHEET / FINANCING 2017 2018 2019 2020 2021
Non-current assets CZK million 106,675 118,871 141,524 144,651 144,902
Current assets CZK million 144,184 100,447 100,111 83,332 86,561
Equity CZK million 117,484 111,674 109,626 94,920 101,528
Non-current and current liabilities CZK million 133,375 107,644 132,009 133,063 129,935
Balance sheet total CZK million 250,859 219,318 241,635 227,983 231,463
Net liquidity CZK million 95,078 43,333 42,321 16,478 20,418
Cash flows from operating activities CZK million 60,811 44,763 66,151 36,833 51,964
Cash flows from investing activities CZK million (17,996) (25,758) (36,912) (31,709) (32,485)
Net cash flows CZK million 42,815 19,005 29,239 5,124 19,479
Investments CZK million 18,885 22,574 32,105 17,849 15,300
Investment ratio % 4.6 5.4 7.0 4.2 3.6
Equity ratio % 46.8 50.9 45.4 41.6 43.8
Non-current asset to equity ratio % 110.1 93.9 77.5 65.6 70.1
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PUBLISHED BY:
© ŠKODA AUTO a.s., 2022
Tř. Václava Klementa 869, 293 01 Mladá Boleslav, Czech Republic
Identification No: 00177041
Incorporated by entry in the Commercial Register maintained by the Municipal Court in Prague, Section B, File 332
Tel.: +420 326 811 111, Infoline +420 800 600 000
The Annual Report 2021 is published in Czech and English. In all matters of interpretation of information,
views or opinions, the Czech version takes precedence over the English version.
Both versions are available on the Company’s website:
www.skoda-auto.cz
www.skoda-auto.com
Annual Report prepared in-house using firesys.
PRODUCTION:
© Boomerang Communication, s.r.o.