201Separate financial9 statements PPorscheorsche TaycanTaycan TurboTurbo S 3 Content Group management report and management report of Porsche Automobil Holding SE 6 Fundamental information about the group 10 Report on economic position 12 Significant events and developments at the Porsche SE Group 12 Significant events and developments at the Volkswagen Group 20 Business development 24 Results of operations, financial position and net assets 31 Porsche Automobil Holding SE (financial statements pursuant to the German Commercial Code) 37 Sustainable value enhancement in the Porsche SE Group 41 Overall statement on the economic situation of Porsche SE and the Porsche SE Group 43 Remuneration report 44 Opportunities and risks of future development 52 Publication of the declaration of compliance and corporate governance report 78 Subsequent events 79 Forecast report and outlook 80 Glossary 85 4 Financials 86 Balance sheet of Porsche Automobil Holding SE 90 Income statement of Porsche Automobil Holding SE 91 Notes to the consolidated fi nancial statements 92 Independent auditor’s report 212 Responsibility statement 220 5 VVolkswagenolkswagen IID.3D.3 6 1 Group management report and management report of Porsche Automobil Holding SE 7 8 Group management report and management report of Porsche Automobil Holding SE 6 Fundamental information about the group 10 Report on economic position 12 Significant events and developments at the Porsche SE Group 12 Significant events and developments at the Volkswagen Group 20 Business development 24 Results of operations, financial position and net assets 31 Porsche Automobil Holding SE (financial statements pursuant to the German Commercial Code) 37 Sustainable value enhancement in the Porsche SE Group 41 Overall statement on the economic situation of Porsche SE and the Porsche SE Group 43 Remuneration report 44 Opportunities and risks of future development 52 Publication of the declaration of compliance and corporate governance report 78 Subsequent events 79 Forecast report and outlook 80 Glossary 85 9 1 Fundamental information about the group Porsche Automobil Holding SE (“Porsche SE” Investment management of Porsche SE or the “company”), as the ultimate parent of the Porsche SE is a holding company. In particular, it Porsche SE Group, is a European Company holds the majority of the ordinary shares in (Societas Europaea) and is headquartered at Volkswagen AG, one of the leading automobile Porscheplatz 1 in 70435 Stuttgart, Germany. As of manufacturers in the world. The Volkswagen 31 December 2019, the Porsche SE Group had Group comprises twelve brands with registered 951 employees (31 December 2018: 935 employees). offices in seven European countries: Volkswagen passenger cars, Audi, SEAT, ŠKODA, Bentley, The Porsche SE Group is made up of the Bugatti, Lamborghini, Porsche, Ducati, fully consolidated subsidiaries Porsche Beteiligung Volkswagen commercial vehicles, Scania and GmbH, Stuttgart, Porsche Zweite Beteiligung MAN. The collaboration between the MAN and GmbH, Stuttgart, including PTV Planung Transport Scania commercial vehicle brands is coordinated Verkehr AG, Karlsruhe (“PTV AG”), and its in TRATON SE, which has been listed on the stock subsidiaries (the “PTV Group”), Porsche Dritte exchange since mid-2019. In addition to the Beteiligung GmbH, Stuttgart, Porsche Vierte investment in Volkswagen AG, the Porsche SE Beteiligung GmbH, Stuttgart, and the alternative Group holds 100% in PTV AG, shares in INRIX investment fund HI-Liquiditätsfonds. The as well as shares in three technology start-ups investments in Volkswagen Aktiengesellschaft, in the USA. Wolfsburg (“Volkswagen AG” or “Volkswagen”), and INRIX Inc., Kirkland, Washington, USA The principal criteria of Porsche SE for the (“INRIX”), are included in Porsche SE’s IFRS acquisition of investments are the connection to consolidated financial statements as associates. the automotive value chain, industrial production or the future of mobility. The automotive value The business activities of Porsche SE chain comprises the entire spectrum from basic essentially consist in holding and managing technologies and supporting the development investments. The management reports for and production process through to vehicle- and Porsche SE and for the Porsche SE Group are mobility-related services. The prerequisites for combined in this report. investment by Porsche SE are always the positioning in an attractive market environment and above-average growth potential. All figures and percentages are rounded according to customary business practice, so minor discrepancies may arise from the addition of these amounts. The comparative prior-year figures are presented in parentheses alongside the figures for the current reporting period. 10 Porsche Automobil Holding SE Group management report Fundamental information about the group Porsche SE is currently focusing its search In the course of the year, the development on companies in the area of autonomous driving, of the indicators is continuously tracked and made electromobility, transport infrastructure, innovative available to the executive board and supervisory production/manufacturing methods as well as board in the form of regular reports. The reporting innovative mobility offerings. includes in particular the consolidated financial statement reports for the Porsche SE Group as well as risk reports. Core management and financial indicator system Porsche SE’s main corporate goal is to invest in companies that contribute to the mid- and long- term profitability of the Porsche SE Group while securing sufficient liquidity. In line with this corporate goal, the result and liquidity are the core management indicators in the Porsche SE Group. The result after tax is used as a financial indicator for earnings for the Porsche SE Group. For liquidity, net liquidity is monitored and managed accordingly. By definition, net liquidity is calculated as cash and cash equivalents, time deposits and securities less financial liabilities. The planning and budgeting process implemented in the Porsche SE Group is designed to enable management to take its decisions on the basis of the development of these indicators. In the planning process, an integrated multi-year plan is derived from the results of operations, financial position and net assets of the Porsche SE Group. Separate fi nancial statements 2019 11 1 Report on economic position Significant events and investment. There may also still be subsequent effects developments at the on the dividend policy of Volkswagen AG and therefore Porsche SE Group on the cash inflows at the level of Porsche SE. Legal risks from claims brought against Porsche SE stemming from the diesel issue may also have an Diesel issue at the level effect on the results of operations, financial position of the Volkswagen Group and net assets of the Porsche SE Group. In addition, please refer to the explanations of the significant On 18 September 2015, the US Environmental events and developments at the Volkswagen Group, Protection Agency (EPA) publicly announced in a the explanations of the results of operations, notice of violation that irregularities in relation to financial position and net assets, the report on nitrogen oxide (NOx) emissions had been discovered opportunities and risks of the Volkswagen Group in emissions tests on certain Volkswagen Group and the “Forecast report and outlook” section. vehicles with type 2.0 l diesel engines in the USA. In this regard, numerous court and governmental proceedings were subsequently initiated in various Porsche SE acquires further ordinary countries (“diesel issue”) shares in Volkswagen AG As the majority shareholder, Porsche SE Porsche SE holds the majority of the ordinary shares continues to be affected by the negative special in Volkswagen AG as a core investment, sees itself items in connection with the diesel issue, in as a long-term anchor investor that acts strategically particular with regard to its result from investments and is also still convinced of the Volkswagen Group’s accounted for at equity. Furthermore, the potential for increasing value added. In the period proportionate market capitalization of its investment from the beginning of December 2018 and mid- in Volkswagen AG is influenced by the resulting March 2019, Porsche SE acquired a total of 0.9% of development of the prices of the Volkswagen the ordinary shares in Volkswagen AG for ordinary and preference shares. As of 31 December €397 million in capital market transactions, of which 2019, there was no need to recognize an 0.7% or €311 million relates to the period from impairment loss on the basis of the earnings 1 January to 18 March 2019. As of 31 December forecasts for the investment accounted for at equity 2019, Porsche SE held 53.1% (52.4%) of the in Volkswagen AG. However, particularly a further ordinary shares in Volkswagen AG. This increase in increase in the costs of mitigating the diesel issue the investment is another demonstration of the might still lead to an impairment in the value of the company’s clear commitment to Volkswagen. 12 Porsche Automobil Holding SE Group management report Report on economic position Significant developments and current status scheduled beginning in April 2020. Porsche SE relating to litigation risks and legal disputes is of the opinion that the claims asserted in the suspended initial proceedings are without merit and For several years, Porsche SE has been involved in that the requested establishment objectives in the various