Audi 2015 Annual Report Download - page 148

ECONOMIC REPORT
BUSINESS AND UNDERLYING SITUATION
148 >>
Jones Day, the international law firm appointed by Volkswagen AG,
overseen by the Supervisory Board of Volkswagen AG and
assisted by the auditing firm Deloitte is conducting an inde-
pendent investigation concerning the diesel issue at Volkswagen
and Audi. At the time of compilation of the Management
Report and the preparation of the Annual Financial Statements/
Consolidated Financial Statements, the Supervisory Board and
Board of Management have received a verbal initial status report
on the investigation at Audi regarding the V6 3.0 TDI engine
issue and the investigation is continuing.
The incumbent members of the Board of Management of
AUDI AG have declared that prior to their notification by the
U.S. Environmental Protection Agency EPA in November 2015,
they had no knowledge of matters concerning the V6 3.0 TDI
engines that the authorities are now treating as infringements.
With regard to the V6 3.0 TDI engine issue, at the time of
reporting the Board of Management considers that the inves-
tigations have not produced any indications to the contrary.
Investigation of the four-cylinder TDI engine issue is being
conducted at Volkswagen AG.
Based on the facts of the diesel issue available to and assessed
by the incumbent Board of Management of AUDI AG at the
time of preparation of the financial statements, relating both
to the four-cylinder TDI engine issue for which Volkswagen AG
is accountable and to the V6 3.0 TDI engines of AUDI AG, as
well as based on the status of discussions with EPA/CARB
concerning the V6 3.0 TDI engine, it is the opinion of the Board
of Management of AUDI AG that adequate risk provisioning
has been made in the form of provisions for legal risks, tech-
nical measures and sales measures. The provisions created at
AUDI AG in connection with the development responsibility for
the V6 3.0 TDI engine also cover claims by other brands of the
Volkswagen Group (see item 32 “Other provisions” in the Notes).
The risk provisioning takes account of the accountabilities as
clarified within the Volkswagen Group. In connection with the
four-cylinder TDI engine issue, Volkswagen AG has confirmed
to AUDI AG that, on the basis of existing agreements, AUDI AG
has a corresponding entitlement to compensation and that
Volkswagen AG will release AUDI AG in particular from the
direct and indirect expenses arising in this connection, includ-
ing those for legal risks. In addition, AUDI AG has concluded
an agreement with Volkswagen AG on the V6 3.0 TDI engine
issue in the event that the U.S. authorities, U.S. courts and
potential out-of-court settlements do not differentiate between
the four-cylinder TDI engine issue for which Volkswagen AG is
accountable and the V6 3.0 TDI engine issue of AUDI AG, and
that joint and several liability thus arises. In that eventuality,
costs for legal risks will be passed on to AUDI AG according to
a causation-based cost allocation. In view of this arrangement
with Volkswagen AG and the relatively low costs of the tech-
nical measures planned by AUDI AG to rectify the AECD issue
for the V6 3.0 TDI, in all probability the share of costs alloca-
ble to AUDI AG will have no material effect on the present and
future net worth, financial position and financial performance
of AUDI AG and the Audi Group.
Nor are any facts currently known to the incumbent Board of
Management which would imply that the Annual and Consoli-
dated Financial Statements for 2014 were materially incorrect
if individual Board of Management members responsible for
them possessed knowledge of the matter earlier, or that the
comparative figures for 2014 would correspondingly need to
be changed. However if, in the course of further investigations,
new findings should come to light that indicate that individual
members of the Board of Management at that time were
aware of the diesel issue earlier, this could potentially have an
effect on the Annual and Consolidated Financial Statements as
well as on the Combined Management Report for the 2015
fiscal year and the comparative figures for 2014.
/// HERE TRANSACTION
In connection with the HERE transaction, the Audi Group,
BMW Group and Daimler AG each acquired a 33.3 percent
interest in There Holding B.V., Rijswijk (Netherlands). With
effect from December 4, 2015, There Holding B.V. acquired all
shares in the HERE Group from the Nokia Corporation at a
price of EUR 2,602 million via its fully owned subsidiary, There
Acquisition B.V., Rijswijk (Netherlands). The purchase price was
financed principally via capital contributions to There Holding
B.V., which were correspondingly passed on. The share at-
tributable to the Audi Group amounts to EUR 668 million. The
remaining portion of the purchase price was financed by bank
loans taken out by There Acquisition B.V. On January 29, 2016,
There Acquisition B.V. was renamed HERE International B.V.
HERE – a leading technology provider for digitized mobility – is
planning to develop a platform that combines high-resolution
maps with location-specific real-time information in order to
provide customers with a detailed, second-by-second snapshot