Porsche 2012 Annual Report Download - page 141
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In the reporting period, a mandatory convertible
note was issued in the amount of 2.5 billion euro in
order to further strengthen the liquidity and capital
base of the Volkswagen group with an eye toward
future global growth and the systematic implementa-
tion of its Strategy 2018. This transaction increased
not only the Volkswagen group’s net liquidity, but
also its equity.
Residual value risk in the financial services
business
In the financial services business, the Volkswagen
group agrees to buy back selected vehicles at a
residual value that is fixed at inception of the con-
tract. Residual values are set realistically so that
the Volkswagen group is able to leverage market
opportunities. Volkswagen evaluates the underlying
lease contracts at regular intervals and recognizes
any necessary provisions if any potential risks are
identified.
Management of the residual value risk is based
on a defined feedback loop ensuring the full as-
sessment, monitoring, management and communi-
cation of risks. This process design ensures not
only professional management of residual risks but
also that the handling of residual value risks is sys-
tematically improved and enhanced.
As part of risk management, the Volkswagen
group uses residual value forecasts to regularly
assess the appropriateness of the provisions for
risks and the potential for residual value risk. In so
doing, the Volkswagen group compares the con-
tractually agreed residual values with the fair values
obtainable. These are determined utilizing data from
external service providers and the Volkswagen
group’s own marketing data. The Volkswagen group
does not take account of the upside in residual
market values when making provisions for risks.
Other factors
Going beyond the risks already outlined, there are
other factors that cannot be predicted and are
therefore difficult to control. Should these transpire,
they could have an adverse effect on the further
development of the Volkswagen group. These
factors include natural disasters, epidemics and
terror attacks.
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