ŠKODA AUTO a. s. ANNUAL REPORT 2017 .net

SKODA AUTO a.s. ANNUAL REPORT 2017

SKODA AUTO a.s.

ANNUAL REPORT 2017

Contents

Foreword Report of the Supervisory Board

ANNUAL REPORT

Management Report

SKODA AUTO Company Profile Corporate Governance

SKODA AUTO Bodies Declaration of Compliance with the Code of Corporate Governance

Business Operations

Strategy Product Portfolio Financial Situation Other Information Technical Development

Procurement Production and Logistics

Sales and Marketing Human Resources Management

Sustainability

Report on Risks and Opportunities Outlook

Short-term and Long-term Outlook

Financial Section

Auditor's Report Separate Financial Statements for the Year Ended 31 December 2017

Notes to the Separate Financial Statements 2017 Report on Relations

Glossary of Terms and Abbreviations Persons Responsible for the Annual Report and Events after the Balance Sheet Date

Key Figures and Financial Results at a Glance

04 06

10 12

12 14

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17 20 24 26 27 32 34 40 48 52

58 62

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68 70 74 128 138 140 141

FOREWORD

Foreword

04

ANNUAL REPORT 2017

FOREWORD

Ladies and Gentlemen, Digitalisation, e-mobility, autonomous driving and artificial intelligence are fundamentally reshaping not only how we move around, but also how we do business. The automotive industry is investing billions to make motor transport even safer, more comfortable and environmentally friendly.

We at SKODA AUTO, guided by our Strategy 2025, are following a path that will mould this riveting future for our customers. This is encapsulated by the goal we have set ourselves: SKODA AUTO, is keen to be a "Simply Clever" company delivering the finest mobility solutions. And this is precisely what we have once again spent the past year working hard on in all areas of our business.

The SKODA VISION E study, a fully electric concept study offering semi-autonomous driving, offers a glimpse of tomorrow's world. In 2017, it garnered widespread international media coverage when we showcased it at the motor shows in Shanghai and Frankfurt. In 2020, the SKODA VISION E will be marketed as the first purely electric SKODA, paving the way for a portfolio of ten electric models by 2025. Our customers can look forward to stunning, yet affordable, e-mobility.

The great acclaim enjoyed by our current products shone through yet again in 2017. We reported the best ever sales and financial performance in our 122-year history. I would like to thank all employees for their fine commitment and our customers for the faith they place in us. We view this success as a great incentive to persevere with our growth strategy as we move forward. This will be reflected, in one way, by the launch of 19 new or facelifted models by the end of 2020. A vital role is played by our SUV offensive, which we continued successfully in 2017 by introducing the SKODA KAROQ, a compact SUV newly developed from top to bottom. But that's not all. We are making headway with our SKODA VISION X, an urban crossover we recently unveiled at the Geneva Motor Show as we prepare to launch it next year but one. In the coming years, we will focus even more on the growth markets of China, Russia and India.

For SKODA, 2017 was also a year of monumental strategic decisions, three of which I would like to highlight in particular. We will be making our future electric SKODA models in the beating heart of the brand in the Czech Republic. This is a major step towards securing the future of our business and of the Czech Republic as a hub of car production. The development of the MQB A0 IN platform will provide the VOLKSWAGEN Group with global architecture for small and compact cars ? we will initially be targeting India. We have taken our SKODA AUTO DigiLab branch to a new level by establishing a joint-venture in Israel.

Last year, SKODA reached significant milestones in the pursuit of its strategy. And we will spare no effort in the future. On the contrary, we will continue to pick up to pace and, through our new products and mobility services, and by capturing new markets, we will prepare all the more earnestly for the challenges before us. SKODA will keep to the roadmap it has charted in the implementation of Strategy 2025. With kind regards,

Bernhard Maier Chairman of the Board, SKODA AUTO a.s.

ANNUAL REPORT 2017

REPORT OF THE SUPERVISORY BOARD

Report of the Supervisory Board

In the past fiscal year, the Supervisory Board was regularly and extensively informed by the Board of Management of the operations of SKODA AUTO a.s., its financial performance, and its business policies.

Business processes which, due to legal regulations or the Articles of Associa-

tion, require the Supervisory Board's approval or briefing, or which were of ex-

traordinary importance, were discussed in detail at meetings of the Supervisory

Board. Based on written and oral reports from the Board of Management, the

Supervisory Board was able to continuously oversee the activities of the SKODA

AUTO a.s. management, thus duly executing its powers entrusted to it under

06

the law.

Under its resolution of 21 March 2017, VOLKSWAGEN FINANCE LUXEMBURG S.A., as the sole shareholder of SKODA AUTO a.s., approved a proposal for commissioning PricewaterhouseCoopers Audit, s.r.o. to carry out an audit of the financial statements for the 2017 accounting period.

An unqualified audit opinion was issued on separate financial statements of the SKODA AUTO a.s. pursuant to IFRS as adopted by the EU as of 31 December 2017. Other information included in the annual report for 2017 but not the financial statements or the independent auditor's report is, according to the auditor, consistent in all material respects with the financial statements of the SKODA AUTO a.s.

ANNUAL REPORT 2017

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