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44 Events after the balance sheet date

Calling of hybrid note

In February 2022, Volkswagen AG called a hybrid note with a principal amount of €1.1 billion, which had been placed in 2015 via Volkswagen International Finance N.V., Amsterdam, the Netherlands (issuer). Once called, the note has to be classified as debt in accordance with IAS 32, thus reducing the equity and net liquidity of the Volkswagen Group. The note, including all unpaid interest accrued up to that point, will be repaid in March 2022.

Possible IPO of Dr. Ing. h. c. F. Porsche AG

The Board of Management of Volkswagen AG announced on February 24, 2022 that, with the consent of the Supervisory Board, it had entered into a heads of agreement with Porsche Automobil Holding SE, on the basis of which the feasibility of a possible IPO for Dr. Ing. h. c. F. Porsche AG (Porsche AG) would be investigated. The actual feasibility of an IPO will depend on a large number of different parameters and the general market conditions. No final decisions have been made at this stage.

If the IPO is to go ahead, Porsche AG’s share capital is to be divided into 50% preferred shares and 50% ordinary shares, and as part of a possible IPO up to 25% of the preferred shares are to be placed on the capital market. In connection with the possible IPO, Porsche Automobil Holding SE would acquire 25% plus one share of the ordinary shares of Porsche AG from Volkswagen AG at the placement price plus a premium of 7.5%.

Volkswagen AG would continue to hold a majority interest in Porsche AG and consolidate the company in its consolidated financial statements. The industrial cooperation between Volkswagen AG and Porsche AG would be continued after any IPO.

Volkswagen AG would use the gains from a possible IPO of Porsche AG to accelerate the industrial and technological transformation of the Volkswagen Group. This includes investments in the transformation of global production capacities for electric vehicles and the financing of additional growth. If there is a successful IPO, Volkswagen AG will also propose to shareholders that a special dividend be distributed in the amount of 49% of the total gross proceeds from the placement of the preferred shares and the sale of the ordinary shares.

Russia-Ukraine conflict

At the time of preparing this report, there is a risk that the latest developments in the Russia-Ukraine conflict will have a negative impact on the Volkswagen Group’s business. This may also result from bottlenecks in the supply chain. At the present time, it is not yet possible to conclusively assess the specific effects.

Nor is it possible at this stage to predict with sufficient certainty to what extent further escalation of the Russia-Ukraine conflict will impact on the global economy and growth in the industry in fiscal year 2022.

The Volkswagen Group does not have any material subsidiaries and equity investments in Ukraine.

In Russia, the Volkswagen Group has in particular the production company at the Kaluga site, as well as sales units and financing companies. They could above all be adversely affected by the sanctions already resolved, but also by new sanctions and general developments in Russia.

In relation to the net assets, financial position and results of operations of the Volkswagen Group, the business activities of the Volkswagen Group in these two countries are insignificant.

There is a risk that a further escalation of the conflict could have a material adverse effect on the results of operations, financial position and net assets of the Volkswagen Group.

Hybrid notes
Hybrid notes issued by Volkswagen are classified in their entirety as equity. The issuer has call options at defined dates during their perpetual maturities. They pay a fixed coupon until the first possible call date, followed by a variable rate depending on their terms and conditions.