Porsche 2012 Annual Report Download - page 214

Financials
Notes to the consolidated fi nancial statements
The financial guarantees mostly relate to financial liabilities of the Porsche Holding
Stuttgart GmbH group. As of the reporting date, there was a hold harmless agreement issued
by Volkswagen AG for 100% of these financial guarantees (prior year: 49.9%); this is equivalent
to a hold harmless agreement of €1,674 million (prior year: €1,074 million).
There are no significant concentrations of risk that are not evident from the notes to the finan-
cial statements and management report.
4 Market risk
4.1 Hedging policy and financial derivatives
In the reporting period, the Porsche SE group was exposed to interest rate risks and, until they
were transferred under the contribution of the holding business operations of Porsche SE to
Volkswagen AG, to risks from the put and call options for Porsche SE's shares in Porsche Hold-
ing Stuttgart GmbH remaining prior to the contribution of the holding business operations. The
risks arise from fluctuations in the general interest rate level, from fluctuations in the enterprise
value of Porsche Holding Stuttgart GmbH and to a small extent from cash investments. It is
company policy to exclude or limit some of these risks if necessary by entering into hedge
transactions. All necessary hedging activities are coordinated by Porsche SE’s finance depart-
ment.
The nature and volume of hedging transactions is generally chosen with regard to the
hedged item. Hedging transactions may only be concluded to hedge existing underlyings or
forecast transactions. Only financial instruments approved by type and volume may be entered
into.
There are no significant concentrations of risk that are not evident from the notes to the
financial statements and management report.
4.2 Market price risks
A sensitivity analysis is used to calculate the market price risk from the general interest rate risk
and from the put and call options relating to the shares in Porsche Holding Stuttgart GmbH
remaining at Porsche SE prior to the contribution of the holding business operations. In the
course of the sensitivity analysis, the effect on equity and profit or loss is determined by modify-
ing risk variables within the respective market risk.
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