Porsche 2005 Annual Report Download - page 150
Download and view the complete annual report
Please find page 150 of the 2005 Porsche annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140 -
141 -
142 -
143 -
144 -
145 -
146 -
147 -
148 -
149 -
150 -
151 -
152 -
153 -
154 -
155 -
156 -
157 -
158 -
159 -
160 -
161
-
162
-
163
-
164
-
165
-
166
 |
 |
148
Notes on the other disclosures
(27) Financial Instruments
Hedging strategy
Owing to the international activities in the vehicles and financial services segment, changes in interest
rates and exchange rates affect the net assets, financial position and results of operations of the Porsche
Group. The risks result from foreign currency transactions in the course of ordinary operations, from
financing and from investing activities. It is the objective of the Group’s central treasury department to
manage and thus minimize these financial risks for the continued existence and earnings power by con-
cluding hedges for the Group. Guidelines are issued to govern discretionary decisions and internal controls
and avoid a concentration of risk. The nature and volume of hedging transactions is generally chosen with
regard to the underlying contract. Hedging transactions may only be concluded to hedge existing under-
lyings or planned transactions. Only approved financial instruments may be entered into with approved
counterparties.
Currency risk
Currency risks from current receivables, liabilities and debts as well as from highly likely future transactions
are generally hedged with forward exchange contracts, currency options or combined options.
Hedges for value fluctuations in future cash flows from anticipated highly likely transactions mainly relate
to planned sales in foreign currency. As of July 31, 2006, currency hedges are in place in particular for
the major currencies US dollar, pound sterling and Japanese yen.
Interest rate risk
The Porsche Group has issued fixed-interest bonds. The interest rate risks arising in this regard are hedged
by interest derivatives.
Credit risk
The credit risk of financial assets is taken into account through adequate valuation allowances considering
existing collateral. Various hedging measures are taken to reduce the credit risk for primary financial
instruments, such as requesting collateral or guarantees and credit ratings based on information from
credit rating agencies and historical data.
Hedging transactions are only entered into with first-rate banks on the basis of uniform guidelines and
are monitored accordingly.
Measurement of financial instruments
The 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 USD GBP
Interest rate for 6 months 3.33% 5.51 % 4.87 %
Interest rate for 1 year 3.55 % 5.54% 5.04 %
Interest rate for 5 years 3.94 % 5.44 % 5.09%
Interest rate for 10 years 4.17% 5.56 % 4.99 %
Interest rate for 15 years 4.33% 5.63% 4.85 %