ANNUAL FINANCIAL STATEMENTS of TRATON SE Harnessing Talent

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ANNUAL FINANCIAL STATEMENTS of TRATON SE Harnessing Talent 2020 ANNUAL FINANCIAL STATEMENTS OF TRATON SE Harnessing talent Our cover picture shows Sofia Vahlne, who is leading the Pluralism & Inclusion program in the TRATON GROUP. Her goal is to har- The TRATON Podcast on ness the diverse perspectives, knowledge, building a sustainable future and talents of all the employees and thus increase the Company’s innovative strength. Listen now at: traton.com/podcast In the new English-language TRATON podcast, she talks to orchestra conductor And subscribe to: Jonathan Nott about how companies and organizations can achieve a goal like this. Legend for interactive navigation Cover page Search CONTENTS One page forward One page back Return to previously viewed page Annual Financial Statements of TRATON SE for the fiscal year from January 1 Combined Management Report 48 through December 31, 2020 4 The management report for TRATON SE Income Statement 5 and the management report for the Further Information 49 Balance Sheet 6 Group have been combined in accor- dance with section 315 (5) of the Handels- Notes to the Financial Statements 7 gesetzbuch (HGB — German Commercial Responsibility Statement 50 Members of the Supervisory Board Code) in conjunction with section Independent Auditor’s Report 51 and Executive Board and their 298 (2) of the HGB and published in Appointments 27 TRATON’s 2020 Annual Report. Publication Details 58 ANNUAL FINANCIAL STATEMENTS OF TRATON SE Annual Financial Statements of TRATON SE 4 Income Statement 5 Balance Sheet 6 Notes to the Financial Statements 7 Members of the Supervisory Board and Executive Board and their Appointments 27 4 Annual Financial Statements of TRATON SE 48 Combined Management Report 49 Further Information ANNUAL FINANCIAL STATEMENTS OF TRATON SE Income Statement for the period from January 1 through December 31, 2020 € thousand Note 2020 2019 Net investment income (1) 1,533 1,931,618 Write-downs of financial assets (2) – –401,482 Income from other securities and long-term loans (3) 634 – Net interest expense (4) –28,611 –973 Sales revenue (5) 26,151 13,134 Cost of sales –25,260 –15,197 Gross profit 891 –2,063 General and administrative expenses (6) –103,895 –135,046 Other operating income (7) 120,088 23,475 Other operating expenses (8) –136,828 –28,936 Income taxes (9) –43 17,339 Profit/loss after tax –146,231 1,403,932 Profit transferred on the basis of a domination and profit and loss transfer agreement (10) – –1,403,932 Net loss/income for the fiscal year –146,231 – Profit carried forward from the previous year 100,000 – Withdrawal from capital reserves 300,000 600,000 Income from capital reduction – 16,000,000 Transfer to the free capital reserves in line with the provisions governing ordinary capital reductions – –16,000,000 Net retained profit 253,769 600,000 TRATON GROUP Annual Financial Statements 2020 5 4 Annual Financial Statements of TRATON SE 48 Combined Management Report 49 Further Information Balance Sheet as of December 31, 2020 € thousand Note Dec. 31, 2020 Dec. 31, 2019 Assets Intangible assets 189 200 Property, plant, and equipment 1,226 1,277 Financial assets 20,584,708 20,583,777 Fixed assets (11) 20,586,123 20,585,254 Receivables and other assets (12) 4,190,042 3,717,629 Bank balances 30,986 270 Current assets 4,221,028 3,717,899 Deferred income and prepaid expenses 346 152 24,807,497 24,303,305 Equity and liabilities Subscribed capital 500,000 500,000 Common shares 500,000,000 500,000,000 Contingent capital in € thousand 50,000 50,000 Capital reserves 19,995,313 20,241,380 Net retained profit 253,769 600,000 Equity (13) 20,749,082 21,341,380 Provisions for pensions 4,431 2,041 Other provisions 40,500 12,850 Provisions (14) 44,931 14,891 Liabilities to banks 550,016 0 Other liabilities 3,463,468 2,947,034 Total liabilities (15) 4,013,484 2,947,034 24,807,497 24,303,305 TRATON GROUP Annual Financial Statements 2020 6 4 Annual Financial Statements of TRATON SE 48 Combined Management Report 49 Further Information NOTES Basis of Presentation TRATON SE has its registered office in Munich, Germany, and is entered in the com- The squeeze-out under merger law of the noncontrolling interest shareholders of mercial register at Munich Local Court under no. HRB 246068. On the basis of the MAN SE announced in February 2020 was not completed in the fiscal year. However, resolution of December 14, 2018, TRATON AG changed its legal form to become a the transfer of a large proportion of the employees of MAN SE to TRATON SE did European stock corporation (Societas Europaea/SE). This change took effect on take place. In the reporting period, TRATON SE successively took over the financing January 17, 2019, when it was entered in the commercial register. The annual finan- tasks of MAN SE. cial statements of TRATON SE for the fiscal year from January 1 through Decem- ber 31, 2020, have been prepared in accordance with the provisions of the Handels- There was a change in the members of the Executive Board of TRATON SE in the gesetzbuch (HGB — German Commercial Code) and the SE Regulation, in reporting period. Mr. Andreas Renschler handed over the post of Chairman to conjunction with the Aktiengesetz (AktG — German Stock Corporation Act). Mr. Matthias Gründler. Further, Dr. Ing. h.c. Andreas Tostmann took over from Joachim Drees. The Human Resources and IT function of the Executive Board, pre- To enhance clarity, individual items in the balance sheet and income statement viously the responsibility of Professor Carsten Intra, was eliminated. Instead, other have been combined. These items are disclosed separately in the notes to the finan- members of the Executive Board took partial responsibility for it in their functions. cial statements. To enhance comparability, certain amounts relating to the previous fiscal year have been adjusted to conform to the current presentation. All figures In the third quarter of 2020, TRATON SE took out its first syndicated revolving credit shown have been rounded so minor discrepancies may arise from addition of these facility in an amount of €3.75 billion as a liquidity reserve — despite the economic amounts. impact of the COVID-19 pandemic. It has a term of three years and can be extended twice for one year each. The facility amount is provided by a banking consortium The income statement has been prepared using the cost of sales method. consisting of 21 banks and serves for general corporate purposes and to safeguard the Company’s liquidity. As of the reporting date of December 31, 2020, TRATON SE was an 89.72%-owned direct subsidiary of Volkswagen Finance Luxemburg S.A., Strassen, Luxembourg, On November 7, 2020, TRATON announced that it had entered into a binding merger which is in turn a wholly owned subsidiary of Volkswagen Aktiengesellschaft, agreement under which TRATON will acquire all outstanding common shares of Wolfsburg, Germany (Volkswagen AG). TRATON SE is included in the consolidated Navistar International Corporation, Lisle, Illinois, USA (“Navistar”) not already held financial statements of Volkswagen AG, Wolfsburg, which are published in the by TRATON at a cash price of USD 44.50 per common share. This agreement in Bundesanzeiger. principle is subject to the approval of the transaction by Navistar’s shareholder meeting and to official approvals. In November 2020,TRATON SE took out a currently The domination and profit and loss transfer agreement between Volkswagen AG unutilized loan of €3.3 billion with Volkswagen International Luxemburg S.A. with and TRATON SE ended at midnight on December 31, 2019, by law in accordance with a term of 30 months to finance theUS dollar purchase price of the common shares section 307 of the AktG. TRATON GROUP Annual Financial Statements 2020 7 4 Annual Financial Statements of TRATON SE 48 Combined Management Report 49 Further Information of Navistar not already held by TRATON SE. The underlying purchase price is hedged Financial assets in full by a foreign currency derivative that is contingent on closure of the trans- Shares in affiliated companies and other equity investments are measured at the action. lower of cost or their net realizable value. The COVID-19 pandemic is having a detrimental effect on business and economic Loans are recognized at the lower of their nominal amount or present value on the conditions. TRATON SE currently presumes that the COVID-19 pandemic is a tem- reporting date. porary phenomenon that will not adversely affect the TRATON GROUP’s business performance in the long term. Write-downs are recognized if impairment is expected to be permanent. In accordance with the requirement for write-downs to be reversed, if the reasons for permanent impairment no longer apply, the write-down is reversed, but not beyond cost. Accounting Policies Current assets Sales revenue Receivables and other assets are carried at their principal amounts. Appropriate Sales revenue primarily comprises revenue from services rendered within the loss allowances are recognized for identifiable individual risks. TRATON GROUP. Bank balances are carried at their nominal amount. Intangible assets Purchased intangible assets are recognized at cost and amortized over their useful Deferred taxes life (generally three to five years) on a straight-line basis. Deferred taxes are only recognized if accounting differences result in a surplus of liabilities over assets, after taking into account applicable loss and interest carry- Property, plant, and equipment forwards, and an overall tax expense is expected in future fiscal years. In this, Property, plant, and equipment are carried at cost less depreciation and, in some accounting differences relating to companies in the tax group are included insofar cases, write-downs.
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