Porsche 2011 Annual Report Download - page 100

the previous syndicated loan" under "Significant
events" in this management report).
The cash and cash equivalents of the Por-
sche SE group totaled 0.5 billion euro as of 31 De-
cember 2011. In principle, Porsche SE additionally
has at its disposal the aforementioned, currently
undrawn, line of credit of 1.5 billion euro. This se-
cures Porsche SE’s liquidity beyond 31 December
2012.
Risks originating from financial covenants
Porsche SE and various banks agreed on fi-
nancial covenants that must be complied with in
connection with the new syndicated loan concluded in
October 2011. They relate to earnings and share
indicators of Volkswagen AG and therefore cannot be
directly influenced by Porsche SE. During the fiscal
year 2011 and as of 31 December 2011, the finan-
cial covenants were complied with. They are reviewed
on a monthly or quarterly basis. The loan agreement
is deemed to have been infringed only if all financial
covenants are breached at the same time. In that
case, the banking syndicate is entitled to terminate
the syndicated loan. This would give rise to a short-
term refinancing requirement at Porsche SE. The
executive board currently does not see any indication
that these covenants will not be met in the future.
Valuation risks
In addition, Porsche SE is exposed to poten-
tial risks from the recoverability of its investments in
Volkswagen AG and Porsche Zwischenholding GmbH.
If the financial position and results of operations of
the Porsche Zwischenholding GmbH group and the
Volkswagen group were to deteriorate materially, this
could lead to an impairment loss recognized on the
significant investments in Porsche Zwischenholding
GmbH and Volkswagen AG recognized in Porsche SE’s
consolidated financial statements and could reduce
the profit reported by the Porsche SE group. In order
to ascertain any need to record an impairment, the
company’s own evaluations are prepared regularly and
the assessments made by analysts are also moni-
tored with regard to the investment in Volkswagen AG.
Moreover, Porsche SE would carry out further im-
pairment testing if there were an indication that an
asset may be impaired. Porsche SE's measurement is
based on a discounted cash flow method and takes
into consideration the most recent five-year plan
approved by the management of the significant equity
investments. Cash flows are discounted using a
weighted cost of capital derived from a peer group
for each equity investment. There were no indications
of a need to record an impairment as of 31 Decem-
ber 2011.
GROUP MANAGEMENT REPORT100