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Annual Report 2005 ⁄ 06
Porsche Group Highlights
Dr.Ing.h.c.F.Porsche
Aktiengesellschaft
D-70432 Stuttgart
Telephone +49(0)711 911–0
Porsche Group worldwide
Annual General Meeting in Stuttgart
January 26, 2007
Interim Report 1st six months
March 2007
Financial Press Conference
on 2006/07 fiscal year
December 2007
Analyst Conference on
2006/07 fiscal year
December 2007
Contact us at
Dr.Ing.h.c.F.Porsche Aktiengesellschaft
Porscheplatz 1
D-70435 Stuttgart
Telephone: +49(0)711 911–0
Fax: +49(0)711 911–25777
http://www.porsche.com
Financial Press and Investor Relations
Telephone: +49(0)711 911–25869
Fax: +49(0)711 911–26375
This annual report is available in German and English.
In case of doubt the german version is binding.
Annual Report 2005 ⁄ 06

Table of contents

  • Page 1
    ... fiscal year December 2007 Contact us at Dr. Ing. h.c. F. Porsche Aktiengesellschaft Porscheplatz 1 D -70435 Stuttgart Porsche Group worldwide Financial Press and Investor Relations Telephone: +49 (0) 711 911- 25869 Fax: +49 (0) 711 911- 26375 This annual report is available in German and English...

  • Page 2
    ... the Porsche Group (Capital Investment) Dr. Ing. h.c. F. Porsche AG Stuttgart 1996 /97 HGB Sales Domestic Export Vehicle Sales (new cars) Domestic Porsche Export Porsche Vehicle Sales Porsche 911 Boxster Carrera GT Cayenne Production Porsche total 911 Carrera GT Boxster Cayenne Employees Personnel...

  • Page 3
    Annual Report 2005/06

  • Page 4
    ...excellently positioned for the Future Company Boards Report of the Supervisory Board Group Management Report and Management Report of Dr. Ing. h.c. F. Porsche AG Declaration of Conformity with the Corporate Governance Code Finances Porsche Stock Models Sales Markets Services Communication Production...

  • Page 5
    Gasoline direct injection The use of state-of-the-art gasoline direct injection in the new Cayenne engines reduces fuel consumption by up to 15 percent.

  • Page 6
    ...the increased stock-exchange rate for VW's shares. Porsche has two seats on the VW Supervisory Board, and can thus contribute its knowledge and experience to the Group. We are supporting the Group's Board of Management in its restructuring efforts and are seeking an open dialog at all levels. Anyone...

  • Page 7
    ...our total sales in the review year. In the second half of the 2005/06 fiscal year, the current 911 Turbo, for example, provided the public with impressive proof of Porsche's present technical prowess in sports car construction. The enthusiasm generated by this vehicle is also reflected in the number...

  • Page 8
    ... Chairman of the supervisory board of Volkswagen AG Dr. Hans Michel Piëch Attorney Dr. Ferdinand Oliver Porsche Investment management Dr. Wolfgang Porsche Diplom-Kaufmann Hansjörg Schmierer* Trade union secretary Werner Weresch* Automotive mechanic Member of the works council Dr. Dr. h.c. Walther...

  • Page 9
    ... Diplom-Ingenieur Research and Development Holger P. Härter Diplom-Volkswirt Finance and Controlling Harro Harmel Human Resources / Labor Relations Director Michael Macht Diplom-Ingenieur Production and Logistics Hans Riedel (until July 31, 2006) Diplom-Kaufmann Sales and Marketing Klaus Berning...

  • Page 10
    ...of conformity have been included in the 2005/06 annual report. The Supervisory Board also examined fundamental issues of corporate planning, in particular financial, investment and human resources planning. Members of the Supervisory Board attended its meetings with only a few exceptions, and in the...

  • Page 11
    ... in the dependent company report. The financial statements of Porsche AG and the consolidated financial statements prepared by the Executive Board for the 2005/06 fiscal year were examined, with reference to the bookkeeping and the combined management report for the AG and the Group, were audited by...

  • Page 12
    Group Management Report and Management Report of Dr. Ing. h.c. F. Porsche AG Lightweight construction The highly torsion-resistant bodyshell of the Cayman models guarantees maximum driving enjoyment.

  • Page 13

  • Page 14
    ...Management Report Once more, Porsche has closed a fiscal year with record sales, turnover, production and profit. Special influences - such as its investment in Volkswagen - prompted a clearly disproportionate jump in profits. Economy Soaring our sports car range. There was an extraordinary level...

  • Page 15
    ... was a great deal of global demand for Porsche vehicles in the reporting year. While North America remained the largest market in terms of unit sales, sales rose at an especially fast pace in developing markets such as China and Russia. The high growth rates on these export markets are attributable...

  • Page 16
    ... 2,150 vehicles from the new 911 Turbo range, sales of which started in June 2006. On account of the high demand for the models from the 911 and Boxster series, almost all Boxster and Cayman production was carried out by our partner in Finland. Production of the Cayenne in the Leipzig plant fell by...

  • Page 17
    ...the future using the resources currently available. In the reporting period the processes for planning and controlling vehicle projects were optimized for all divisions and series - also with respect to the fourth series. Porsche Clocks Up Record Result and preference shares issued by Volkswagen AG...

  • Page 18
    ...large number of construction projects within the Group. In Zuffenhausen, these measures include the extension of the vehicle assembly line and expansion of the engine factory in preparation for the production of the Panamera. The Weissach plant incurred costs for a new drive center and a motor sport...

  • Page 19
    ... most modern in the Volkswagen group. It has one of the largest press shops in Europe and a highly flexible paint shop that offers a larger range of colors than the other Volkswagen plants. The assembly of the Panamera will create roughly 600 new jobs at Porsche Leipzig, with recruiting commencing...

  • Page 20
    ... of Porsche vehicles in the used car market is continuously monitored, and this information used as a basis for establishing the residual value in future vehicle lease agreements. Residual risks are taken into account in the Porsche Group balance sheet. Another risk which Porsche and other companies...

  • Page 21
    ... risk. In addition, Porsche has taken out extensive cover against plant failure and disruption of its business as part of its international insurance program. Finally, for events representing a potential threat to Porsche's image, the company has developed communication strategies that allow it...

  • Page 22
    .../07 fiscal year will also suffer from phase-out of the first model generation. However, in 2007 the sales figures for our sporty all-terrain vehicle will increase once again with the market launch of the new Cayenne. In view of the further increase in the size and appeal of its product range, but...

  • Page 23
    21

  • Page 24
    ... by § 15a German Securities Trading Act (WpHG). Publication in any other form of the shares or related financial instruments held by members of these bodies has not taken place so far and is not envisaged in the future. "The consolidated financial statements should be publicly accessible within 90...

  • Page 25
    ... services should be listed separately in the corporate governance report." The ability to access the expertise of the individual members of the families that are shareholders in the company on specific subjects represents a particular advantage for Porsche AG. This cooperation takes place on terms...

  • Page 26
    Finances Modular glass roof Twice as large as the Carrera's sliding roof: the new Targa's lightly tinted glass roof.

  • Page 27

  • Page 28
    ... spent on vehicles leased by our financial services entities, compared with 543.6 million Euro in the previous year. A figure of 3.123 billion Euro was invested for the 21.2 percent equity investment in Volkswagen AG. Porsche also concluded share price hedges that relate to the purchase of a further...

  • Page 29
    ... share price hedges in connection with the purchase of a further 3.9 percent in Volkswagen AG. Despite the marked increase in unit sales, the cost of materials only rose from 2.748 billion Euro in the previous year to 3.274 billion Euro, and accounted for 44.9 percent of total operating performance...

  • Page 30
    28 Finances

  • Page 31
    ...of high standing, so that the credit risk is minimized. We also secure loans made to group entities by means of interest hedges. Share price hedges are used on the one hand to hedge further purchases in Volkswagen AG and also to obtain short-term liquidity. Currency and cash management organization...

  • Page 32
    ... company continued to achieve a highly profitable growth rate by manufacturing premium sports vehicles. Holding in Volkswagen Fuels Porsche Stock Prices Porsche stock experienced sharp growth, which set in after the successful Annual General Meeting and subsequently experienced a brief final spurt...

  • Page 33
    ...The increase in value of a shareholding with Porsche stock over the same ten-year period was equally positive. If a sum of 10,000 Euro had been invested in the sports car manufacturer's shares on July 31, 1996, it would have increased to 176,484 Euro (including dividends) by July 31, 2006. The high...

  • Page 34
    ... company's Investor Relations staff. Porsche AG also introduced itself at several shareholder forums to which private investors were invited by shareholder associations and banks. In 2006, the Annual General Meeting for the fiscal year 2004/05 again took place at Porsche's headquarters in Stuttgart...

  • Page 35
    ... position but prefers the integrity of a policy based on credible substance and continuous information. The development in the price of Porsche stock demonstrates that the company's refusal to submit quarterly reports has not had an adverse effect. Moreover, Porsche is included in highly reputable...

  • Page 36
    Models Porsche Ceramic Composite Brake Modified interior cooling channels of Arcus pattern ensure improved brake cooling and improved pedal feel.

  • Page 37

  • Page 38
    ... alongside the sports cars. Since it was introduced in 2002, around 140,000 Cayenne models have been sold, exceeding all expectations. The Cayenne Turbo S, introduced in January 2006, and the Cayenne S Titanium Edition (designed exclusively for North America, Porsche's largest sales market) did much...

  • Page 39
    ... in terms of driving dynamics. The key elements of the stateof-the-art technology are the twin exhaust gas turbochargers with variable turbine geometry, which are being used for the first time, and the equally new electronically-controlled allwheel drive system, Porsche Traction Management (PTM...

  • Page 40
    ...911 GT3 model is the new 911 GT3 RS. With evolved body, transmission and chassis elements, the RS variant is a close-to-production road-legal race car. It combines the classic characteristics of a purebred vehicle developed specially for dynamic handling performance with the engineering achievements...

  • Page 41
    ... as standard in North America. Exclusive Editions of the Cayenne Since summer 2006, the new engines of the Boxster and Boxster S have been based on those of the 911 Carrera and Cayman models. As before, the Boxster is powered by a 2.7-liter, 6-cylinder boxer engine. The new valve timing system, the...

  • Page 42
    ... sports exhaust system which makes the engine sound even more powerful and sportier at the touch of the button. Available as an option with Porsche Dynamic Chassis Control (PDCC) is a new roll stabilization system. The system detects the lateral inclination of the vehicle, for example when cornering...

  • Page 43
    41

  • Page 44
    ...with Porsche's overall values and allows dealers to make long-term plans as well as secure investments in the brand. In the review year, the brand architecture design was also supplemented by a design for used car centers. The latter ensures that used cars are presented at separate locations in high...

  • Page 45
    ... supply of information. The "Porsche Vehicle Sales Assistant (PVA)", a multimedia IT sales support system, was also installed by further dealers in the international organization during the review year. PVA allows vendors to incorporate all steps - from advice on the range of financial services...

  • Page 46
    ... program offers an extensive choice to all customers wishing to retrofit individualized equipment to their vehicles. All Tequipment products comply with Porsche's high quality standards. The program's growth in the review year was in part due to products for the new Porsche 911 Carrera 4 models, the...

  • Page 47
    ... warehouse stocks. This method applies the just-in-time principle in the same way as the production process. As a result, Porsche received first class ratings for its spare parts supply in an ADAC study conducted in Germany. The introduction of new models and the growth of market shares in servicing...

  • Page 48
    ... Porsche Travel Club. Sports Driving School remains a Magnet As far back as 1954, Porsche was one of the first automobile manufacturers to offer customers the option of collecting their cars from the factory. This attractive offer remained extremely popular in the review year. Over 4,000 customers...

  • Page 49
    ..., Porsche Germany successfully inaugurated the "Porsche Sports Cup", a race series appealing both to club members and to customers with motor racing ambitions. Over 700 drivers took part in six race series on various racetracks in Germany. Cars registered for use on the roads and Porsche sports cars...

  • Page 50
    Markets All-wheel drive Engine power in the new 911 Turbo is distributed via the electronicallycontrolled multi-disk clutch depending on requirements and within fractions of a second.

  • Page 51

  • Page 52
    ...most successful high-performance sports car of all time. The international approach taken by Sales also makes it easier to achieve the objective of a balance between supply and demand. In the review year, Porsche was present in over 100 countries for the first time. Falling demand on one market can...

  • Page 53
    ... its market launch in January 2006. In its last year of production, the Carrera GT high-performance sports car was supplied to 217 customers. The sales network in North America was further expanded with the addition of five dealers, bringing the total to 214. Porsche now has 202 dealers in the USA...

  • Page 54
    ... market segment for sports utility vehicles with gasoline engines, and with 3,836 sales it made a significant contribution to Porsche Germany's operational success. In order to protect their strong position in individual segments, German dealers have invested around 100 million Euros in the brand...

  • Page 55
    ...443 vehicles delivered, the Cayenne maintained its strong position in the market segment for sports utility vehicles with a gasoline engine. Porsche Italia also improved the quality of its dealer network. In order to enhance the professionalism of its After Sales division, 22 service locations were...

  • Page 56
    ...import and sales of vehicles, replacement parts and accessories. However, AMAG will continue to be Porsche's most important trading partner. Austria: Carrera 4 Models are particularly Successful The new models in particular were presented to customers in Austria at exclusive marketing events. These...

  • Page 57
    ... in the review year. With a total of 2,413 units, 570 more vehicles were sold than in the previous year. With 1,177 units (previous year: 1,202), the Cayenne, which is the cornerstone of this business area, remained stable. A new development is the sustained success of the sports car models in...

  • Page 58
    ... high-performance sports car, the Carrera GT, was also in high demand, with 90 units delivered to customers in this region. In the course of 2006, new Porsche Centers were opened in Pakistan, Bahrain, Jordan and Oman. The policy of expanding the existing sales and service network and developing new...

  • Page 59
    ...Cayman S led to sales increases of 70 percent for the Boxster model series, with 465 units sold. And with 477 vehicles delivered, sales of the Cayenne continued to match the previous year's high level. In order to further optimize the brand's presence, new Porsche Centers were opened in Adelaide and...

  • Page 60
    .... Over one third of new-vehicle purchasers worldwide currently benefit from Porsche's financial services products. At the end of the 2005/06 fiscal year, some 12,000 customers worldwide were using Porsche credit cards, and this means that the number of new sales increased again. Clients can chose...

  • Page 61
    ... opened its own shops in, among other places, New York, London and Florence, and has franchise shops in Tokyo, Kuala Lumpur and Bangkok. "Porsche Design Driver's Selection" is a brand with a vehiclerelevant program. The collection, which comprises scale-model cars, lifestyle accessories and special...

  • Page 62
    Communication Variable turbine geometry Developed specifically for the new 911 Turbo, it combines the advantages of a small and a large turbocharger to deliver a unique performance level.

  • Page 63

  • Page 64
    ... the international media. Equally informative and impressive was Porsche's Technical Workshop in the review year. This is held each spring at the Weissach Research and Development Center. This year the event focused entirely on the 911 Turbo, and the company's engineers explained the new sports car...

  • Page 65
    ... Cayenne Turbo S. In the 2006/07 fiscal year, Porsche exhibited another design icon, the 911 Targa, at the Paris Motor Show in September and October 2006, and celebrated the world premiere of the new racing car, the RS Spyder, at the American Le Mans Series. Lively Dialog with the Financial Market...

  • Page 66
    ... the first publications of its kind in the motor vehicle industry, has proved an important instrument for promoting customer loyalty since 1952. In the review year, the magazine underwent further improvements. It now provides more detailed information on the technology of the new Porsche models and...

  • Page 67
    ...performance capabilities and the wide range of models and driving scope for the Cayenne model series. In this way, the attention garnered by the new Cayenne Turbo S could be utilized for the entire product series. Overture of a Masterpiece In the 2005/06 fiscal year, a number of Porsche's publicity...

  • Page 68
    ... in communications. The occasion was used not only to place the new 911 GT3 in its true light but also to emphasize the sporty potential of the 911 model series. Prize-winning Websites this area. The shop went online in Germany at the beginning of the 2006/07 fiscal year. Further markets followed...

  • Page 69
    67

  • Page 70
    Production VarioCam Plus In the new Boxster generation for example, variable valve timing increases engine efficiency, thus resulting in increased output with a reduction in consumption.

  • Page 71

  • Page 72
    ... all Porsche models in Zuffenhausen are built on one assembly line. This not only requires maximum flexibility and performance from employees but also involves a high level of willingness on the part of the workforce to participate in training at various levels. The production processes for the new...

  • Page 73
    ... tasks in a Group-wide logistics organization. Moreover, in the review year, individual subsidiaries set up new central warehouses in the regions for supplying the markets with spare parts. Here, too, new structures have been created to provide customers with an improved service. According to...

  • Page 74
    ...'s added value comes from Germany. Top Quality from Leipzig Porsche's clear commitment to Germany as a production location increases the prestige of its vehicles. The "Made in Germany" mark of quality is of critical importance for the Panamera. The new system will also enable improved control of...

  • Page 75
    ... current and future models. In addition, an investment will be made in a new paint shop in Zuffenhausen. Over 250 million Euro will be invested in Weissach by 2010, primarily in buildings, test rigs and systems. The new Locations Security Agreement was signed by Porsche's Executive Board and Works...

  • Page 76
    ... environmentallyfriendly disposal are made during the design phase for future vehicle models. For years Porsche has been proving that developing, producing and, of course, driving sports cars can be both economical and environmentally friendly. The company's declared objective is to minimize adverse...

  • Page 77
    ...its wide chassis, high cooling air requirements and large wheels, a drag coefficient (cD value) of 0.31 still applies. The engine's technical data represent absolute optimum values and naturally comply with all global emissions laws. In order to meet customers' rising demands, Porsche has been using...

  • Page 78
    ... the globe. Every single employee makes an important contribution to enduring customer loyalty as a strategy toward the worldwide expansion of the company. Porsche now operates in more than one hundred countries. Growth has gained particular momentum in the young future markets of the Middle and Far...

  • Page 79

  • Page 80
    ...in the review year. In Production, manufacturing processes were optimized by numerous individual measures so that work time could be used more efficiently and productivity significantly increased. Comprehensive investments guarantee the future viability of jobs and product quality. For the employees...

  • Page 81
    Linda Walterschen Service Advisor Customers at Porsche Middle East in the United Arab Emirates appreciate Linda Walterschen's friendly disposition.

  • Page 82
    Vicky Tam Sales Administrator Vicky Tam is pleased about the growing number of customers at the Porsche Center Shanghai. More and more people in China are being captivated by the Porsche brand.

  • Page 83
    Rommel Ureña Workshop Manager Rommel Urena knows about the technology in Cayenne models and Porsche sports cars like the back of his hand. He has been managing the workshop at the Porsche Center Panama for many years.

  • Page 84
    Nicky Wood Senior Sales Consultant Handing over the keys to customers collecting a Porsche for the first time in their lives is always an exciting moment for South African Nicky Wood.

  • Page 85
    Takeshi Ota Supervisor When preparing vehicles for delivery to buyers in Japan, Takeshi Ota's sharp eye plays a vital role: not even a speck of dust should dampen the customer's delight.

  • Page 86
    Mohideen Hinayathullah Mechanic Mohideen Hinayathullah knows every nut and bolt in the Cayenne and the current sports car models. Working as a mechanic at Porsche is a dream come true for Indian-born Mohideen.

  • Page 87
    ... Administration Sales Development Production Positive Experience with Part-time Work for Older Employees Following renegotiation of the conditions for part-time work for older employees in 2005, 114 employees took up the attractive package in the review year and concluded a parttime work contract...

  • Page 88
    ... 13.7 11.2 11.5 88.4 24.8 48.4 9.8 12.4 8.4 82.2 24.4 Social security contributions Workers' compensation contribution Fringe benefits 84.8 3.6 203.1 57.0 79.1 3.1 146.3 43.4 Chrismas and special bonuses Employee capital-forming savings plan Vacation bonus Other expenditures Pensions and other...

  • Page 89
    ... automobile quality. In the review year, a number of suppliers achieved better results in terms of quality, delivery service and cost management. This translates into a continued overall improvement in the partners' performance. For monitoring the suppliers' financial stability, risk management was...

  • Page 90
    Research and Development Emission control In the new 911 GT3, exhaust gases from all six cylinders are collected in a highly efficient unit that produces a unique and sonorous sound.

  • Page 91

  • Page 92
    ... agenda for engineers at the Weissach Research and Development Center in the 2005/06 fiscal year was the development of the top-of-the-range model for the 911 series, namely the 911 Turbo, and the new Cayenne. Another focal point was work on the fourth model series, the Panamera sports coupé. The...

  • Page 93
    ... The Porsche Traction Management's control system is based on a host of parameters which are evaluated in the PTM control unit. These include engine torque, steer angle, wheel rotational speed, lateral acceleration and vehicle dynamics signals such as oversteer and understeer. These data are used to...

  • Page 94
    ... data access and greater Porsche's safety philosophy demands that if engine power output increases so must braking performance. Consequently, the new 911 Turbo has been given an even more powerful braking system. On the front axle, borrowed from the Carrera GT, are six-piston fixed-caliper brakes...

  • Page 95
    ... models boast high levels of active and passive safety. A contributing factor to the car's safety performance are the engines, which deliver a lot of torque and power for swift overtaking maneuvers, the excellent brakes and the latest-evolution Porsche Stability Management (PSM). The Porsche Ceramic...

  • Page 96
    ... vehicle has been developed for customers who expect a sports car that can deliver outstanding performance on the circuit. The most powerful naturally-aspirated engine in the 911 family (305 kW/415 hp), the latest-evolution chassis and aerodynamic refinements lend the new 911 GT3 a unique level of...

  • Page 97
    ... with a dynamic cornering light function. Much is new on the chassis too. The Porsche Dynamic Chassis Control (PDCC) offers a roll stabilization function for even more Since 2002, intensive analysis of oil samples has been a focal point of laboratory work at the Porsche Development Center. The...

  • Page 98
    ... the theory that short distances promote communication. There's also a parking level for prototypes featuring the latest security technology. A new tire center has been completed. Testing on the limit requires customer-specific test conditions and sophisticated levels of safety. In the interests of...

  • Page 99
    ... at the Porsche Engineering locations at the end of the review year. In addition, resources including over 2,300 developers at the Porsche Research and Development Center in Weissach were also available. PEG supports customers throughout the entire product development process from the design stage...

  • Page 100
    Motor Sport Monocoque A super lightweight: the monocoque in the new RS Spyder racing car is made entirely of carbon fiber.

  • Page 101

  • Page 102
    ... future, Porsche opened a new motor sport center in Weissach in the summer of 2006. The RS Spyder's Triumph in North America The Porsche 911 is one of the most successful cars in motor sport in the shape of closed, two-door Gran Turismo racing cars based on a production vehicle. The impressive list...

  • Page 103
    ... the famous Nürburg Ring's North Loop ended with a double victory for Porsche sports cars in June 2006. The "Manthey Racing Team" supported by Porsche was the overall winner in a 911 GT3 and set a new distance record of 3832.08 kilometers. A total of seven Porsche 911 models finished in the top ten...

  • Page 104
    ... RS Spyder, the 911 GT3 RSR and development projects. In the manufacturing area, specialists build small series of racing cars and prototypes. Approximately 20,000 parts are stored in the logistics center. This illustrates the close intermeshing of series-production and motor sports. The new series...

  • Page 105
    103

  • Page 106
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  • Page 107
    Notes to the Consolidated Financial Statements as of July 31, 2006

  • Page 108
    ... Changes in inventories and own work capitalized Total operating performance Other operating income Cost of materials Personnel expenses Amortization and depreciation of intangible assets, property, plant and equipment and leased assets Other operating expenses Profit from ordinary activities Share...

  • Page 109
    ... assets Property, plant and equipment Investments in associates Other financial assets Leased assets Trade receivables Receivables from financial services Other receivables and assets Securities Deferred tax assets Non-current assets Inventories Trade receivables Receivables from financial services...

  • Page 110
    ... and leased assets Cash received from changes to consolidated group Cash paid for investments in intangible assets, property, plant and equipment and leased assets Cash paid for investments in financial assets Changes in receivables from financial services Cash flow from investing activities from...

  • Page 111
    ... to minority shareholders Cash repayments of bonds Cash payments to hybrid capital investors Capital payments Cash received from the issue of loans/ cash repayments of loans Cash received from the issue of bonds Cash received from stock options Cash received from other financial liabilities Cash...

  • Page 112
    ...of July 31, 2005 Currency change Translation differences Investment in associates Financial instruments pursuant to IAS 39 Income and expenses recognised directly in eqyity Profit after tax Net profit for the period Changes to consolidated group Issue of hybrid capital Share in profit hybrid capital...

  • Page 113
    111 Translation differences Tâ,¬ Capital allocable to shareholders Tâ,¬ Hybrid capital Minority interests Group equity Tâ,¬ Tâ,¬ Tâ,¬ 1,098 2,914,339 - 30,197 - 5,706 6,457 28 5,706 2,920,796 - 30,169 0 9,434 - 188,763 9,434 9,434 - 188,763 9,434 9,434 - 215,232 ...

  • Page 114
    ... objective of Porsche AG and its subsidiaries ("Porsche Group") is the production and sale of vehicles and engines of all kinds as well as of parts and components for such and other technical products. The business objective also includes the performance of development and design work, in particular...

  • Page 115
    ... financial statements as of January 28, 2006. Based on its shareholding, the following assets, liabilities, revenues and profits of the Volkswagen group are allocated to Porsche AG as of July 31, 2006: in Tâ,¬ Non-current assets Current assets Non-current liabilities Current liabilities Revenues...

  • Page 116
    ... Consolidation Principles Capital consolidation is performed in accordance with the purchase method pursuant to IFRS 3 ("Business Combinations"). Purchased assets and liabilities are measured at their fair value on the date of acquisition. The purchase costs of the shares acquired are then offset...

  • Page 117
    ... directly and indirectly to the development process that are incurred as of the time at which all recognition criteria are met. Capitalized development costs are amortized from the production start using the straightline method over the expected product life cycle of usually six years. Research...

  • Page 118
    ... the estimated future cash flows expected to arise from the continuing use and its disposal. The cash flows are derived from the long-term business planning and current developments are taken into account. They are discounted to the balance sheet date using market-oriented discount rates for similar...

  • Page 119
    ... cost. Fair value corresponds to market price provided the financial instruments measured are traded on an active market. If there is no active market for a financial instrument, fair value is calculated using appropriate actuarial methods such as recognized option price models or discounting future...

  • Page 120
    ...sale investments is then also posted to the income statement. Any increase in value at a later date is accounted for debt instruments by reversal of the impairment loss with an effect on income. Derivative financial instruments Derivative financial instruments in the Porsche Group primarily relate...

  • Page 121
    ... to the customer. Discounts, customer bonuses and rebates are deducted from sales revenue. Sales revenue for long-term construction contracts is recognized according to the stage of completion. Production-related expenses are recognized upon delivery or utilization of the service, while all...

  • Page 122
    ... items according to their residual term and whether they belong to the normal business cycle. The main changes include: Receivables from financial services, trade receivables, securities and other receivables and assets were subdivided into current and non-current positions. In this context, prepaid...

  • Page 123
    ... income statement, cash flow statement, segment reporting and notes to the consolidated financial statements. Other accounting provisions that have to be adopted for the first time The Group also had to apply IFRS 2 "Share-based Payment", IFRS 4 "Insurance Contracts", IFRIC 1 "Changes in Existing...

  • Page 124
    ... 1, 2006. IFRIC 10 "Interim Financial Report and Impairment": This interpretation is applicable for the first time for fiscal years beginning on or after November 1, 2006. These changes to the accounting principles are not expected to have a major effect on future consolidated financial statements.

  • Page 125
    ... of intangible assets Franchises, Development industrial and similar rights Tâ,¬ Cost As of August 1, 2004 Currency differences Changes to consolidated group Additions Reclassifications Disposals As of July 31, 2005 Amortization and depreciation As of August 1, 2004 Currency differences Changes to...

  • Page 126
    ...Development of property, plant and equipment Land, land rights and buildings incl. buildings on thirdparty land Tâ,¬ Cost As of August 1, 2004 Currency differences Changes to consolidated group... and fixtures Tâ,¬ Advance payments and assets under construction Tâ,¬ Total Tâ,¬ - 755 274,544

  • Page 127
    ... The increase in other operating income mainly results from income from share price hedge options. The exchange gains for the fiscal year totaled Tâ,¬ 9,373 (previous year: Tâ,¬ 7,405). (4) Cost of materials 2005/06 2004/05 Tâ,¬ Cost of materials and supplies and of purchased merchandise Cost of...

  • Page 128
    ... of profits and losses of associates thereof share of profit of associates from discontinued operations 182,852 541,263 - 520,758 203,357 122,616 Tâ,¬ - - - - - The recoverable amount was set at the value in use. The investments in associates are allocated to the segment "Germany" and "Vehicles".

  • Page 129
    ...the German entities. The income tax rates applied for foreign entities range from 0% to 41% (previous year: from 0% to 41%). There are unused tax losses and credits of Tâ,¬ 8,848 (previous year: Tâ,¬ 29,469), for which no deferred tax assets have been recorded. The unused tax losses in the reporting...

  • Page 130
    ... on the calculated tax rate and the current income tax expense: 2005/06 2004/05 Tâ,¬ Expected income tax expense Tax rate related differences Difference in tax base Recognition and measurement of deferred tax assets Taxes relating to other periods Other differences Reported income tax expense 822...

  • Page 131
    ... CTS Group was presented in accordance with the accounting rules for discontinued operations as defined by IFRS 5. Net profit from discontinued operations breaks down as follows: 2005/06 2004/05 Tâ,¬ Sales Expenses Earnings before financial income Financial income Profit before tax from ordinary...

  • Page 132
    ...387,700 4,077 8,750,000 8,750,000 73.66 4.44 73.72 4.50 44.24 0.40 44.30 0.46 Earnings per share are calculated by dividing the profit allocable to the shareholders of Porsche AG by the total number of shares outstanding in the fiscal year. There were no measures that have a dilutive effect.

  • Page 133
    ... using the direct method. The cash inflows and outflows from investing activities in the current fiscal year include additions to property, plant and equipment and financial assets as well as additions to intangible assets. Changes in leased assets and changes in receivables from financial services...

  • Page 134
    ... August 1, 2004 Changes to consolidated group Additions in fiscal year 2004/05 Disposals in fiscal year 2004/05 Carrying amount as of July 31, 2005 45,350 - 34,530 - - 10,820 45,350 - - - 45,350 To date, the goodwill has not been impaired. The development of fixed assets in the Group is presented...

  • Page 135
    ...Development of financial assets Investments in associates* Tâ,¬ Cost As of August 1, 2004 Currency differences Changes to consolidated group Additions Reclassifications Disposals As of July 31, 2005 Amortization and depreciation As of August 1, 2004 Currency differences Changes to consolidated group...

  • Page 136
    134 Development of leased assets and of total fixed assets Leased assets Tâ,¬ Cost As of August 1, 2004 Currency differences Changes to consolidated group Additions Reclassifications Disposals As of July 31, 2005 Amortization and depreciation As of August 1, 2004 Currency differences Changes to ...

  • Page 137
    ... assets in the fiscal year is shown in the statement of changes in fixed assets. The leases also contain renewal and purchase options as well as escalation clauses. (15) Inventories The inventories disclosed break down as follows: July 31, 2006 July 31, 2005 Tâ,¬ Materials and supplies Work...

  • Page 138
    ... Advance payments received Tâ,¬ 89,098 - 59,891 29,207 - 22,340 6,867 242,481 - 173,421 69,060 - 28,244 40,816 The sales revenue from long-term construction contracts totals Tâ,¬ 39,287 (previous year: Tâ,¬ 59,908). Contracts and parts of contracts billed to customers are reported under trade...

  • Page 139
    ... from financial services thereof non-current thereof current 1,683,639 1,248,750 434,889 Tâ,¬ 1,567,302 1,183,421 383,881 The receivables from financial services contain receivables from customer and dealer financing including installments due for payment of Tâ,¬ 519,803 (previous year: Tâ,¬ 472...

  • Page 140
    ...other rent and marketing expenses as well as maintenance for hardware and software. An amount of Tâ,¬ 2,264 is due in more than one year (previous year: Tâ,¬ 1,408). (19) Securities July 31, 2006 July 31, 2005 Tâ,¬ Shares Investment shares Fixed-interest securities Other securities 110,753 1,157...

  • Page 141
    ... minority interests is presented in the statement of changes in equity. Share capital Porsche AG's share capital totals EUR 45.5 million and, as in the previous year, is divided into 8,750,000 ordinary shares and 8,750,000 non-voting preference shares which have been fully paid in. A proportionate...

  • Page 142
    140 The financial statements of Porsche AG as of July 31, 2006 report retained earnings of â,¬ 627,000,000. The following appropriation of retained earnings will be proposed at the shareholders' meeting. Payment of a dividend of EUR 8.94 (EUR 5.94 + EUR 3.00 extra dividend) per ordinary share ISIN...

  • Page 143
    ... are recognized at service cost as of the measurement date. The benefit obligation for active employees increases annually by the interest cost plus the present value of the new benefit entitlements earned in the current fiscal year. The majority of the benefits pertain to Porsche AG. In addition...

  • Page 144
    ... as follows compared to the previous year: 2005/06 2004/05 Tâ,¬ Carrying amounts as of August 1, 2005 and August 1, 2004 Changes in consolidated group Retirement benefit costs Benefit payments made Contributions to funds Employee contributions to company pension plan Carrying amounts as of...

  • Page 145
    ... (-) and losses (+) Past service cost Retirement benefit costs 39,143 30,172 - 2,125 3,866 29 71,085 Tâ,¬ 22,871 28,087 - 1,655 - - 49,303 The actual return on plan assets in the fiscal year amounted to Tâ,¬ 2,811 (previous year: Tâ,¬ 3,659). (23) Non-current and current tax provisions and other...

  • Page 146
    ... Provisions for personnel Provisions for ordinary operations Other provisions 272,475 1,034,753 219,765 1,526,993 Tâ,¬ 300,194 1,069,369 271,471 1,641,034 (24) Non-current and current financial liabilities Financial liabilities break down as follows: Due within one year Tâ,¬ July 31, 2006 Due...

  • Page 147
    ... The total volume of asset-backed securities programs included therein comes to Tâ,¬ 1,798,533 as of the balance sheet date (previous year: Tâ,¬ 1,715,205). Interest is at inter-bank level. The average terms to maturity of the financing range from one to four years. Measurement is at amortized cost.

  • Page 148
    ...: July 31, 2006 July 31, 2005 Tâ,¬ Costs of conversion including outcome of the long-term construction contracts thereof services billed to customers Future receivables from long-term construction contracts before advance payments received Advance payments received Tâ,¬ 6,571 - 1,402 5,169 - 12...

  • Page 149
    ... liabilities break down as follows as of the balance sheet date: Due within one year Tâ,¬ July 31, 2006 Advance payments received on account of orders Sundry other liabilities Tax liabilities Measurement of derivative financial instruments at market value Deferred income 59,054 139,574 12,777 1,025...

  • Page 150
    ... market value of financial instruments is determined by reference to stock market listings, reference prices or recognized calculation models. The following term structure of interest rates was used were appropriate: EUR Interest rate for 6 months Interest rate for 1 year Interest rate for 5 years...

  • Page 151
    ... at market value. Of the change in measurement at market value recorded in equity of Tâ,¬ - 65,599 (previous year: Tâ,¬ - 188,763), an amount of Tâ,¬ - 21,075 (previous year: Tâ,¬ 21,319) is due to the decrease (previous year: increase) in the reserve for the available-for-sale financial assets and...

  • Page 152
    ...Group's purchase commitment from initiated investment projects for property, plant and equipment amount to â,¬ 236.0 million (previous year: â,¬ 152.0 million). There are other financial obligations of â,¬ 10.3 million (previous year: â,¬ 2.2 million). The terms to maturity of minimum lease payments...

  • Page 153
    ... Group is divided into the regions Germany, North America, Europe without Germany and Rest of the world. Segmentation by business division shows the vehicles and financial services divisions. The vehicles division includes the development, production and sale of vehicles as well as related services...

  • Page 154
    ... expenditure primarily relate to property, plant and equipment, intangible assets and leased assets. The secondary reporting format is supplemented by a condensed balance sheet for the vehicles and financial services divisions. Non-current assets in the financial services division mainly consist...

  • Page 155
    153 North America 2005/06 2004/05 Europe without Germany 2005/06 2004/05 Rest of world 2005/06 2004/05 Consolidation 2005/06 2004/05 Group 2005/06 2004....1 - 6,289.9 126.8 510.5 919.0 Financial services 2005/06 2004/05 Consolidation 2005/06 2004/05 Group 2005/06 2004/05 million â,¬ 389.5 26...

  • Page 156
    ... Company, but do not control it, including close family members. In the fiscal year 2005/06 this concerns members of the Supervisory Board and the Executive Board of Porsche AG as well as their close family members. The volume of trade in the course of ordinary operations in the vehicles and parts...

  • Page 157
    ...and companies on which Dr. Ing. h.c. F. Porsche AG can exert a significant influence. Related parties Supplies and services rendered 2005/06 2004/05 Supplies and services received 2005/06 2004/05 Tâ,¬ Porsche and Piëch families Members of the board and the supervisory board Volkswagen AG - Group...

  • Page 158
    .... The remuneration of the Executive Board for the fiscal year 2005/06 totaled EUR 45.2 million (previous year: EUR 26.0 million). This figure includes profit-based components of EUR 40.1 million (previous year: EUR 20.7 million). Dr. Ing. h.c. F. Porsche AG has recorded pension provisions of EUR...

  • Page 159
    ... Code The Executive Board and Supervisory Board of Porsche AG have issued the declaration required by § 161 German Stock Corporation Act (AktG) in the annual report 2005/06. It is made permanently accessible to the shareholders on the homepage at www.porsche.de. Stuttgart, October 13, 2006...

  • Page 160
    158 Significant Equity Investments Share in capital % Fully consolidated entities - Germany Net income 1) Tâ,¬ Sales 1) Employees Tâ,¬ 2) Porsche Financial Services GmbH & Co.KG, Bietigheim - Bissingen Porsche Consulting GmbH, Bietigheim - Bissingen Porsche Financial Services GmbH, Bietigheim ...

  • Page 161
    ... and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the Group management report are...

  • Page 162
    ...) Stuttgarter Hofbräu Verwaltungs AG Allgaier Werke GmbH Schuler AG caption AG Dr. techn. h.c. Ferdinand Piëch 1) Volkswagen AG (Chairman) 2) Porsche Holding GmbH Porsche Ges.m.b.H. Dr. Hans Michel Piëch 2) Porsche Bank AG Porsche Holding GmbH Porsche Cars North America, Inc. Porsche Cars Great...

  • Page 163
    161 Members of the Executive Board of Dr. Ing. h.c. F. Porsche AG Dr. Wendelin Wiedeking 1) Volkswagen AG 2) Porsche Cars North America, Inc. (Chairman) Porsche Financial Services, Inc. Porsche Cars Great Britain Ltd. Porsche Italia S.p.A. Porsche Ibérica S.A. Porsche Japan K.K. Porsche ...

  • Page 164
    162 Balance Sheet of Dr. Ing. h.c. F. Porsche AG as of July 31, 2006 July 31, 2006 Tâ,¬ Assets Fixed assets Intangible assets Property, plant and equipment Financial assets Current assets Inventories Trade receivables Other receivables and other assets Securities Cash and cash equivalents 306,692 ...

  • Page 165
    ... Sales Changes in inventories and own work capitalized Total operating performance Other operating income Cost of materials Personnel expenses Amortization and depreciation Other operating expenses Income from investments Interest income, net Write-downs of securities Profit from ordinary activities...

  • Page 166
    ... Stefan Warter, Berlin dpa/Picture-Alliance laif Agentur für Photos & Reportagen Ulli Upietz Photography, Duisburg Werkfotos Porsche AG Translations: CB Übersetzungen, Munich Design: Atelier Lagally, Stuttgart Blocks: L & N-Litho GmbH & Co. KG, Waiblingen Printed by: IThaus Münster GmbH & Co. KG...