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33 IFRS 16 (Leases)

1. LESSEE ACCOUNTING

The Volkswagen Group is a lessee, mainly as a result of leasing office equipment, real estate and other means of production. The leases are negotiated individually and include a large number of contract terms and conditions. The following amounts for right-of-use assets resulting from leases are included in the balance sheet items:

PRESENTATION OF AND CHANGES IN RIGHT-OF-USE ASSETS FROM LEASES FOR THE PERIOD FROM JANUARY 1 TO DECEMBER 31, 2021

€ million

 

Right of use on land, land rights and buildings incl. buildings on third party land

 

Right of use on technical equipment and machinery

 

Right of use on other equipment, operational and office equipment

 

Total

 

 

 

 

 

 

 

 

 

Cost
Balance at Jan. 1, 2021

 

7,009

 

56

 

744

 

7,809

Foreign exchange differences

 

196

 

2

 

6

 

203

Changes in consolidated group

 

129

 

0

 

10

 

139

Additions

 

1,224

 

10

 

155

 

1,390

Transfers

 

–16

 

–2

 

–8

 

–26

Classified as held for sale

 

31

 

 

1

 

32

Disposals

 

549

 

3

 

89

 

641

Balance at Dec. 31, 2021

 

7,962

 

63

 

816

 

8,841

Depreciation and impairment
Balance at
Jan. 1, 2021

 

1,608

 

28

 

204

 

1,840

Foreign exchange differences

 

49

 

2

 

3

 

54

Changes in consolidated group

 

7

 

0

 

–3

 

4

Additions to cumulative depreciation

 

945

 

7

 

156

 

1,108

Additions to cumulative impairment losses

 

9

 

 

1

 

10

Transfers

 

–6

 

0

 

–1

 

–7

Classified as held for sale

 

12

 

 

1

 

13

Disposals

 

255

 

3

 

70

 

328

Reversal of impairment losses

 

13

 

 

 

13

Balance at Dec. 31, 2021

 

2,358

 

34

 

289

 

2,681

Carrying amount at Dec. 31, 2021

 

5,604

 

29

 

527

 

6,159

PRESENTATION OF AND CHANGES IN RIGHT-OF-USE ASSETS FROM LEASES FOR THE PERIOD FROM JANUARY 1 TO DECEMBER 31, 2020

€ million

 

Right of use on land, land rights and buildings incl. buildings on third party land

 

Right of use on technical equipment and machinery

 

Right of use on other equipment, operational and office equipment

 

Total

 

 

 

 

 

 

 

 

 

Cost
Balance at Jan. 1, 2020

 

6,253

 

44

 

738

 

7,034

Foreign exchange differences

 

–210

 

–3

 

–8

 

–221

Changes in consolidated group

 

47

 

 

7

 

54

Additions

 

1,240

 

16

 

102

 

1,358

Transfers

 

–24

 

–1

 

2

 

–23

Disposals

 

297

 

1

 

97

 

394

Balance at Dec. 31, 2020

 

7,009

 

56

 

744

 

7,809

Depreciation and impairment
Balance at
Jan. 1, 2020

 

848

 

23

 

126

 

998

Foreign exchange differences

 

–37

 

–2

 

–3

 

–43

Changes in consolidated group

 

5

 

 

1

 

6

Additions to cumulative depreciation

 

896

 

8

 

158

 

1,062

Additions to cumulative impairment losses

 

27

 

 

1

 

27

Transfers

 

0

 

0

 

–1

 

–1

Disposals

 

130

 

0

 

78

 

209

Reversal of impairment losses

 

0

 

0

 

0

 

0

Balance at Dec. 31, 2020

 

1,608

 

28

 

204

 

1,840

Carrying amount at Dec. 31, 2020

 

5,401

 

27

 

540

 

5,969

Subleases of right-of-use assets generated income of €19 million (previous year: €16 million) in the fiscal year.

The measurement of right-of-use assets from leases and the associated lease liabilities is based on a best estimate regarding the exercise of extension and termination options. If there are material changes in circumstances or in the contract, this estimate is updated.

The tables below show how the lease liabilities are assigned in the balance sheet and give an overview of their contractual maturities:

ASSIGNMENT OF LEASE LIABILITIES TO THE RESPECTIVE BALANCE SHEET ITEMS

€ million

 

Dec. 31, 2021

 

Dec. 31, 2020

 

 

 

 

 

Financial liabilities – Noncurrent

 

5,137

 

5,119

Financial liabilities – Current

 

1,108

 

1,005

Lease liabilities – Total

 

6,245

 

6,124

MATURITY ANALYSIS OF UNDISCOUNTED LEASE LIABILITIES

 

 

REMAINING CONTRACTUAL MATURITIES

 

 

€ million

 

under one year

 

within one to five years

 

over five years

 

Total

 

 

 

 

 

 

 

 

 

Lease liabilities at Dec. 31, 2021

 

1,266

 

3,312

 

2,803

 

7,381

Lease liabilities at Dec. 31, 2020

 

1,187

 

3,112

 

3,138

 

7,437

Interest expenses of €177 million (previous year: €216 million) were incurred for lease liabilities in the fiscal year.

No right-of-use assets are recognized for low-value or short-term leases. Expenses for leasing low-value assets totaled €233 million (previous year: €285 million) in the fiscal year. This figure does not include any expenses for short-term leases, which totaled €276 million (previous year: €268 million) in the fiscal year. Variable lease expenses not included in the measurement of lease liabilities accounted for €6 million (previous year: €1 million) in the fiscal year.

Leases gave rise to cash outflows totaling €1,952 million (previous year: €1,865 million) in the fiscal year.

The table below shows a summary of potential future cash outflows, that have not been included in the measurement of the lease liabilities:

€ million

 

2021

 

2020

 

 

 

 

 

Future cash outflows to which the lessee is potentially exposed

 

 

 

 

Extension options

 

3,594

 

3,350

Termination options

 

2

 

8

Obligations under leases not yet commenced

 

270

 

270

 

 

3,867

 

3,628

No material cash outflows attributable to variable lease payments and residual value guarantees are expected.

2. LESSOR ACCOUNTING

The Volkswagen Group is a lessor in both the finance lease business and the operating lease business. The subject of these transactions is primarily motor vehicles and, to a small extent, land and buildings and items of equipment for dealerships.

The Volkswagen Group fully accounts for the default risk on lease receivables by recognizing loss allowances, which are recognized in accordance with the requirements of IFRS 9. As lessor, the Volkswagen Group covers risks arising from the assets underlying the leases by, among other measures, taking account of residual value guarantees received for parts of the lease portfolio and by taking account of forward-looking residual values forecast on the basis of internal and external information as part of residual value management. The forecast residual values are regularly reviewed.

2.1 OPERATING LEASES

Assets leased under long-term operating leases amounted to €60,313 million at the end of the fiscal year (previous year: €51,244 million). While €615 million (previous year: €558 million) is attributable to investment property, assets separately reported as lease assets in the balance sheet amount to €59,699 million (previous year: €50,686 million). They relate primarily to vehicles in an amount of €59,622 million (previous year: €50,605 million) as well as land, land rights and buildings, including buildings on third-party land, in an amount of €68 million (previous year: €79 million). The remaining assets relate to technical equipment and machinery as well as other equipment, operating and office equipment. More information on changes in value of investment property and lease assets can be found in the section entitled “Lease assets and investment property”.

The following cash inflows from expected outstanding, non-discounted operating lease payments are expected over the coming years:

DISCLOSURE AS OF DECEMBER 31, 2021

€ million

 

2022

 

2023

 

2024

 

2025

 

2026

 

from 2027

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease payments

 

8,840

 

6,198

 

3,761

 

1,243

 

398

 

329

 

20,769

DISCLOSURE AS OF DECEMBER 31, 2020

€ million

 

2021

 

2022

 

2023

 

2024

 

2025

 

from 2026

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease payments

 

7,893

 

5,636

 

3,178

 

1,220

 

452

 

362

 

18,741

BREAKDOWN OF INCOME FROM OPERATING LEASES

€ million

 

2021

 

2020

 

 

 

 

 

Lease income

 

13,560

 

12,429

Income from variable lease payments

 

5

 

7

Total

 

13,566

 

12,436

2.2 FINANCE LEASES

Interest income from the net investment in the leases amounted to €2.3 billion (previous year: €2.4 billion) in the fiscal year. Furthermore, a selling profit from the finance leases in the amount of €1.1 billion (previous year: €0.8 billion) was recognized.

The following table shows the reconciliation of outstanding lease payments under finance leases to the net investment:

€ million

 

Dec. 31, 2021

 

Dec. 31, 2020

 

 

 

 

 

Non-discounted lease payments

 

54,985

 

53,162

Non-guaranteed residual value

 

3,393

 

4,255

Unearned interest income

 

–3,710

 

–3,468

Loss allowance on lease receivables

 

–1,207

 

–1,414

Net investment

 

53,462

 

52,534

The following cash inflows from expected outstanding, non-discounted finance lease payments are expected over the coming years:

DISCLOSURE AS OF DECEMBER 31, 2021

€ million

 

2022

 

2023

 

2024

 

2025

 

2026

 

from 2027

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease payments

 

20,220

 

15,512

 

11,802

 

6,273

 

725

 

454

 

54,985

DISCLOSURE AS OF DECEMBER 31, 2020

€ million

 

2021

 

2022

 

2023

 

2024

 

2025

 

from 2026

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease payments

 

19,059

 

15,299

 

12,051

 

5,684

 

612

 

456

 

53,162