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Annual Report 2006/07
Annual Report 2006/07
Porsche Group Highlights
Porsche Automobil Holding SE
Box
D-70432 Stuttgart
Telephone +49(0)711 911-0
Porsche Group worldwide
Annual General Meeting in Stuttgart
January 25, 2008
Interim Report 1st six months
March 2008
Financial Press Conference
on 2007/08 fiscal year
November 2008
Analyst Conference
on 2007/08 fiscal year
November 2008
Contact us at
Porsche Automobil Holding SE
Box
D-70432 Stuttgart
Telephone: +49(0)711 911–0
Fax: +49(0)711 911–263 75
http://www.porsche-se.com
Financial Press and Investor Relations
Telephone: +49(0)711 911–258 69
Fax: +49(0)711 911–263 75
This annual report is available in German and English.
In case of doubt the german version is binding.

Table of contents

  • Page 1
    ... http://www.porsche-se.com Financial Press and Investor Relations Telephone: +49 (0) 711 911- 258 69 Fax: +49 (0) 711 911- 263 75 This annual report is available in German and English. In case of doubt the german version is binding. Porsche Automobil Holding SE Box D -70432 Stuttgart Telephone +49...

  • Page 2
    ... Porsche Group (Capital Investment) as of July 31, 2007 Dr. Ing. h.c. F. Porsche AG Stuttgart 1997/98 HGB Sales Domestic Export Vehicle Sales (new cars) Domestic Porsche Export Porsche Vehicle Sales Porsche 911 Boxster Carrera GT RS Spyder Cayenne Production Porsche total 911 Carrera GT Boxster RS...

  • Page 3
    Porsche Automobil Holding SE Fiscal Year 2006 ⁄ 07 of Dr. Ing. h.c. F. Porsche AG

  • Page 4

  • Page 5
    ... Group Management Report and Management Report of Dr. Ing. h.c. F. Porsche AG Corporate Governance Report Finances Capital Market Models Sales Markets Services Communication The New Museum Porsche and the Environment Production Employees Purchasing Research and Development Motor Sports Consolidated...

  • Page 6
    ... into Porsche Automobil Holding and its legal status into a European joint-stock company, a so-called Societas Europaea or SE for short. In future you will see this new name mainly in its abbreviation Porsche SE when involving our Company. As you will certainly have noticed, the cover on this Annual...

  • Page 7
    ... the very good development of VW's results called for verification and confirmation of the value of our investment. Our Company is well prepared for the years to come. Porsche is growing very dynamically in new markets such as China and Russia, as well as the Middle East and South America - and we...

  • Page 8
    ... Porsche Diplom-Kaufmann Chairman Uwe Hück* Head of the works council of the Group Head of the works council at Zuffenhausen and Ludwigsburg Deputy Chairman Hans Baur* Diplom-Ingenieur Trade union secretary Prof. Dr. Ulrich Lehner Chairman of the management board and personally liable shareholder...

  • Page 9
    7 Company Boards of Dr. Ing. h.c. F. Porsche AG Members of the Supervisory Board Members of the Executive Board Dr.-Ing. Wendelin Wiedeking Chairman of the Executive Board Klaus Berning Sales and Marketing from November 2, 2006 Wolfgang Dürheimer Diplom-Ingenieur Research and Development Thomas ...

  • Page 10
    ... to increase the investment in Volkswagen AG from 27.3 percent to up to 31 percent and to make the non-group Volkswagen shareholders a mandatory bid. At the same meeting, the Supervisory Board approved the establishment of a holding structure by spinning off the business operations of Porsche AG to...

  • Page 11
    ...its reviews, the Supervisory Board has no objections to raise. The Supervisory Board has approved the financial statements and the consolidated financial statements for the 2006/07 fiscal year. The annual financial statements are thus ratified. The Supervisory Board agrees with the management report...

  • Page 12
    ... need to be raised against the final declaration of the Executive Board in the dependent company report. After many years of outstanding service, Prof. Dr. Sihler, has laid down his office as member and chairman of the Supervisory Board at the end of the ordinary stockholders meeting on January 26...

  • Page 13
    ... name 'Porsche Automobil Holding' was also unanimously approved. The company's headquarters is in Stuttgart. The new Holding will Manage Porsche Stock The new holding will be responsible for the stock of the operating subsidiary, Dr. Ing. h.c. F. Porsche AG, and for the investments in Volkswagen AG...

  • Page 14
    ... means the change in corporate form to become an SE entailed no transfer of assets and liabilities. Nevertheless, the company received a new registration number with the Stuttgart District Court when it became a SE. All shareholders of the former Dr. Ing. h.c. F. Porsche AG became shareholders in...

  • Page 15
    13 The new Structure of Porsche 100 % approx. 31% of Ordinary Shares 25.1% 100 % 99.14 % 100 % 100 % 100 % 100 % 99.97 % 100 %

  • Page 16
    GROUP MANAGEMENT REPORT AND MANAGEMENT REPORT OF DR. ING. H.C. F. PORSCHE AG CORPORATE GOVERNANCE REPORT

  • Page 17

  • Page 18
    ...public budgets. German exports continued to grow at a faster rate than world trade as a whole. The slight dip in the US economy and the strong euro were, however, hardly perceptible because German companies have greatly improved their international competitiveness in recent years and the order books...

  • Page 19
    ...used cars and are thus not included in new car sales at the Porsche Group. Strong Demand in the Markets of the Future Demand around the globe for the sports cars and sporty all-terrain vehicles was high. In the reporting year, North America remained the largest single market; sales in future markets...

  • Page 20
    ...571, a year-on-year increase of 1.6 percent. Many of the new jobs in the Group were created in research and development and at the Leipzig plant. On a standalone basis, the headcount of Porsche AG totaled 8,229 employees as of the cut-off date (8,257 in the previous year). Porsche Drives Home Record...

  • Page 21
    ...of the engine plant in preparation for the production of the Panamera and the construction of the new museum at Porscheplatz. The Weissach plant incurred costs for a new drive center and a motor sport center. The reporting year saw the completion of the supporting steel construction and roof work in...

  • Page 22
    ... April 2008 the company is responsible for the import and sale of Porsche vehicles, spare parts and accessories from AMAG Automobil- und Mortoren AG. AMAG will remain a trading partner for Porsche. The subsidiary will initially support a network of twelve Porsche centers and 14 services operations.

  • Page 23
    ... came to around 17 million Euro. Thanks to Employees, Business Associates and Shareholders Once again, the reporting year called for exceptional commitment on the part of Porsche's employees in all divisions, in Germany and abroad. The large number of vehicles produced, the preparation of the new...

  • Page 24
    ...information used as a basis for establishing the residual value in future leasing vehicle agreements. Remaining residual risks are taken into account in the Porsche Group balance sheet. At dealers which participate in the vehicle financing program, Porsche carries out ratings of contractual partners...

  • Page 25
    ... position of the Group. Extensive Quality Assurance Measures These days, automobile manufacturers work very closely with their suppliers on product development and series production, so that synergy benefits arise. This can, however, also cause dependence on suppliers. Late deliveries, failure...

  • Page 26
    ... world economic structure. At the same time, there are good reasons to believe that the risks will remain just that and that the overall world economy will remain buoyant. For example, the weak US dollar also boosts exports from the USA to the rest of the world and supports industry in North America...

  • Page 27
    ... of the series, the Cayenne GTS, will cross the starting line. Porsche does not, however, expect the next big growth surge until the market launch of the four-door and fourseater Gran Turismo Panamera in 2009. Until then, the company development will be characterized by consolidation on a high level...

  • Page 28
    ...reproduce them here. Communication and Transparency The Porsche Group publishes a financial calendar in its annual report, its interim report and its homepage at www.Porsche.de listing all the dates of importance for the stockholders. Declaration of Conformity with the Corporate Governance Code The...

  • Page 29
    ... Supervisory Board with just twelve members. It has always been characteristic Porsche practice that the entire Supervisory Board should be given very detailed information, especially on strategy issues, accounting and risk management, and should hold in-depth discussions on the financial statements...

  • Page 30
    ... Report." (No. 6.6 German Corporate Governance Code). All ordinary shares are owned by the Porsche and Piëch families; the share ratios are published by Porsche AG as required by the German Securities Trading Act (WpHG). Notifications of purchases and sales of Porsche preference shares by members...

  • Page 31
    ... be listed separately in the corporate governance report." (No. 5.4.7 German Corporate Governance Code). 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. Taking...

  • Page 32
    FINANCES CAPITAL MARKET

  • Page 33

  • Page 34
    ... of the increased equity investment at Volkswagen AG, which was raised to 30.6 percent of ordinary shares. New Records Set In 2006/07 the Porsche Group once again closed a fiscal year with its key financial indicators evidencing record results. Unit sales, sales revenues and especially earnings...

  • Page 35
    ... amount of financial instruments used. Financial liabilities in the reporting year totaled 6.549 billion Euro (previous year: 4.810 billion Euro). This increase serves to finance the expansion of business activities. For the refinancing of the financial services business, asset-backed structures in...

  • Page 36
    34 Finances

  • Page 37
    ...risk is minimized. We also secure loans made to group entities by means of interest hedges. Cash-settled share price hedges are used on the one hand to hedge the takeover offer for shares in Volkswagen AG and also to obtain short-term liquidity. The market is monitored closely on a daily basis, with...

  • Page 38
    ... only in America. However, given that many market observers keeping track of the cooling US economy assumed there would be a soft landing rather than a crash, no further obstacles barred record stock values. At the beginning of the Porsche 2006/07 fiscal year, the German Stock Market Index (Dax...

  • Page 39
    ... the extraordinary shareholders' meeting at the end of June, which approved an amended company structure and the new name Porsche Automobil Holding SE, the price of stock once again experienced sharp growth. Only a few days later, on July 9, 2007, Porsche shares reached an interim all-time high of...

  • Page 40
    ...'s communication department is to speak with one voice both to the financial world and the general public. Current business figures and the company strategy were explained to analysts and investors at several events, including driving presentations of new Porsche models, such as the new Cayenne in...

  • Page 41
    ... for business activities to develop consistently. Porsche AG has always attached great value to this stability, with an unchanged distribution in its equity of 45.5 million Euro into 8,75 million common-stock shares and 8,75 million listed preference-stock shares. The common stock is held by members...

  • Page 42
    MODELS SALES

  • Page 43

  • Page 44
    ... standards. The manufacturer of premium-class sports vehicles continued to launch a host of new models and model variants on markets throughout the world during the 2006/07 fiscal year, all of them a great credit to the Porsche name. The review year was shaped by the successful market launch of the...

  • Page 45
    ... and the LEV II regulations in the USA. The emissions values of the new 911 Turbo Cabriolet are by far the lowest when compared with those of its direct competitors in the high-performance sports car category. Spring and damper tuning was modified to take account of the specific requirements of the...

  • Page 46
    ... Porsche Ceramic Composite Brake (PCCB) ensures exceptional deceleration performance. To utilize the abundance of propulsive power effectively, the 19-inch wheels are fitted as standard with sports tires. Another new feature on the GT models of the 911 series is the use of the PSM (Porsche Stability...

  • Page 47
    .... The special-edition model is equipped with the SportDesign package and rollover bar in GT3 RS orange. The front-end air inlets, rear side air inlets, exterior mirrors and model designation at the rear are in black. Black also carries over to the interior. The seat center panels, steering wheel...

  • Page 48
    ...-oriented engine tuning. This has helped reduce fuel consumption in everyday operation by around 15 percent. In addition to the attractive design, the new Cayenne models also offer a host of new features. These include the new Porsche Dynamic Chassis Control (PDCC), the dynamic cornering lights, new...

  • Page 49
    47

  • Page 50
    ...the customers in terms of sportiness, dynamism and driving enjoyment, coupled with excellent everyday performance and value for money. On the other, a number of awards further strengthened the excellent position Porsche enjoys as a premium sports car manufacturer. In July 2007, for the third time in...

  • Page 51
    ...brand-exclusive branches in order to provide customers with the service they expect. Online Search Facility for Used Cars To accommodate the increasing importance of the pre-owned car business, the successful 'Porsche Approved' program was stepped up and further developed over the course of the year...

  • Page 52
    ... electronic services supporting sales and service available to importers and dealers. Last, but by no means least, customers are also able to benefit from improved networking within the company. The 'Porsche Vehicle Sales Assistant (PVA)', a multimedia IT sales support system, was also developed...

  • Page 53
    ...year included the sports exhaust and 'Vehicle Tracking System' for the 911 series. The increase in power output for the 911 Carrera S also proved highly popular, while the winter tire sets recorded an increase in sales. The alloy wheels successfully combine an attractive look and an improved driving...

  • Page 54
    ... same time, the availability of spare parts in Porsche Centers, and thus for the customer, was improved. The connection of dealers to the automatic procurement system, which centrally controls the supply of in-demand replacement parts, was also improved. Tests Guarantee Service Quality The new brand...

  • Page 55
    ... brand is characterized by unique and long term relationships with customers. To secure this partnership, the most important procedures involved in comprehensive 'Customer Relationship Management' were defined and the newly-designed 'CRM@Porsche' system was introduced on the North American market...

  • Page 56
    ...customers to take a seat behind the steering wheel to experience for themselves what it is like to drive any model from the Porsche range on the race track. Porsche Travel Club in High Demand The Porsche Travel Club has been offering adventure holidays in Porsche vehicles lasting one or several days...

  • Page 57
    ...year Porsche Club activities. The annual 'Porsche Club Days' at the Belgian Spa-Francorchamps circuit welcomed more than 600 vehicles, which all took part in a parade around this famous race track to bring the event to a close. After the successful introduction of the 'Porsche Sports Cup' in Germany...

  • Page 58
    MARKETS SERVICES

  • Page 59

  • Page 60
    ... add even more to product value, which means that the vehicles can be sold as used cars later and will maintain their value. Rapid Growth on New Markets The ongoing internationalization of sales builds an important foundation for value-based growth. Porsche is now represented in over 100 markets...

  • Page 61
    ... a sales volume of 26,846 units, a new record for Porsche mid-engined sports cars. Success in the USA and Canada was driven by the traditional 911 models, which broke all previous records with total customer deliveries of 13,222 units. The road to success of the new 911 Turbo merits special mention...

  • Page 62
    ... customer deliveries - even though market conditions were difficult on the island throughout the review year. Nevertheless, Great Britain and Ireland remain the third most important market for Porsche after North America and Germany. The proportion of total sales accounted for by sports car models...

  • Page 63
    61

  • Page 64
    ...high number of incoming orders for the new model in the current fiscal year indicates that further increases in deliveries can be expected. Spain and Portugal Maintain Strong Position With 2,603 customer deliveries in total during the 2006/07 fiscal year, Porsche almost matched the high sales volume...

  • Page 65
    ... sports car was up 52 percent compared with the previous year. In total, 177 vehicles from this model series were sold (159 in the previous year). The Cayenne is holding its ground well, as reflected by the further increase in deliveries of the series to 274 units. Belgium: On the Road to Success...

  • Page 66
    ... fifth largest market after North America, New dealerships all over the world bear witness to the continuing internationalization of Porsche's business. The photo shows the "Porsche Center Sydney South" in Australia. added to the region to bring the total number of markets to 21. The new importer...

  • Page 67
    ... remarkable in a country with no history of motor sports. One reason for such positive development is the expansion of the dealer network. At the end of the review year Porsche was represented by 16 Porsche Centers in 15 Chinese cities. Partners were selected for five new dealership locations, with...

  • Page 68
    ...ranks among the 20 largest management consultancy firms in Germany. The number of employees has risen from 135 to 170. Approximately 87 percent of Porsche Consulting's turnover comes from external companies, while the remaining 13 percent comes directly from work with Porsche AG. Projects within the...

  • Page 69
    67

  • Page 70
    ... in which Porsche AG has a 74.8 percent holding, increased by 27 percent to 49.8 million Euro. The number of employees rose by just under 70 to 359. According to a study carried out by a market research company, MHP now ranks among the top 25 IT consultancy firms in Germany. MHP combines process and...

  • Page 71
    ...to achieve an optimum overall solution, starting with budget compliance and continuing into the consultancy and project management stages, right through to quality control. At the end of the 2006/07 financial year, the sale of Porsche's subsidiary Porsche Engineering Services (PES) in Troy, Michigan...

  • Page 72
    COMMUNICATION PORSCHE MUSEUM

  • Page 73

  • Page 74
    ... Institute in New York named Porsche as the premium brand with the highest reputation for the third time in a row. A company's image is not only vitally important for selling its products, but also for attracting employees. In July 2007, the consulting company Universum Communications carried out...

  • Page 75
    ...presented annually in the following four categories: Students, Start-up, Climbers and Lifework. Porsche Consulting advisors supported the pre-selection procedures Journalists Thrilled by Driving Presentations Driving presentations of new models are an essential element of Porsche's public relations...

  • Page 76
    ... investors and private shareholders. Whether in Zuffenhausen, at road shows in the world's most important financial centers or during various driving presentations, Porsche attached great value to open communication, with a focus on the outstanding success of Porsche stock. The company also believes...

  • Page 77
    ... Porsche supported the America's Cup by providing vehicles for the German team. Now Porsche Consulting, in collaboration with the team's manager Jochen Schümann, is taking responsibility for the construction of the German team's boat for 2009. second time at the 'Porsche Arena' in Stuttgart...

  • Page 78
    ...stimulated high customer interest in the new Cayenne already at a very early stage. Along with the more athletic design and increase in power output in the new model, marketing highlighted the significant reduction in fuel consumption made possible by modern direct gasoline injection technology. The...

  • Page 79
    ... sites could be accessed via the www.porsche.com portal. The increase in turnover in e-business was likewise very positive. The redesign of the 'Porsche Design Driver's Selection Online Shop' proved successful and the ongoing development of the 'Porsche Sport Driving School' and 'Porsche Travel Club...

  • Page 80
    78 The New Porsche Museum

  • Page 81
    79 Vom Rohbau zum Stahlbau: Als einzigartiges Projekt schreibt das neue Porsche Museum bereits während der Bauphase Unternehmensgeschichte. Stunning Architecture The new Porsche Museum is a unique project which is already creating quite an international stir during the construction phase.

  • Page 82
    Solid Design Steel joints hold what will become the exhibition center.

  • Page 83

  • Page 84
    82 High-rise Construction Up to 30 meters above ground-level in Zuffenhausen, workers are welding and bolting day and night to create the complex steel construction.

  • Page 85

  • Page 86
    The Museum takes Form Once the steel construction is covered, the exhibition area can be heated and the intricate work on the interior begins.

  • Page 87

  • Page 88

  • Page 89
    87 6,000 metric tons of steel - and still as light as a feather The steel girders span distances of up to 60 meters between the concrete cores, and the Museum appears to hover like a plane.

  • Page 90
    ENVIRONMENT PRODUCTION

  • Page 91

  • Page 92
    ... use popular theses to seek public support. Consequently, towards the end of the review year, Porsche, like other automobile manufacturers in Germany, received a visit from Greenpeace, the first time the organization has paid Porsche such a visit in what is now almost 60 years of the company...

  • Page 93
    ... technology. A completely new generation of engines, featuring state-of-the-art direct fuel injection that reduces fuel consumption and hence CO2 emissions by 15 percent, has been developed for the second-generation Cayenne model series. In relation to engine power output, Porsche's CO2 emissions...

  • Page 94
    ... activities ensure the continual improvement of manufacturing processes and plant technology. In the 2006/07 financial year, the best available environmental technology was used in new plants such as the vehicle assembly line fluidfill system and the waste management center. Innovative methods that...

  • Page 95
    93

  • Page 96
    ... number of new models. Apart from the Cayenne model change, the range of sports cars was extended to include attractive variants such as the 911 Turbo Cabriolet and the 911 GT2, a pure-breed production sports car. Although both vehicles only entered the market in the current 2007/08 fiscal year, the...

  • Page 97
    ... supply chain including supplier production. Maintenance areas from the shell and painting, assembly, engines and logistics sections all took part in Porsche Improvement Process events. Training was provided for the core teams, including technicians, production engineers and PVP trainers. Industrial...

  • Page 98
    ... of this new model, a concept which enables the company to produce premium vehicles in small production series at competitive prices. While the engines will be manufactured at the parent plant in Stuttgart-Zuffenhausen, the Volkswagen plant in Hanover will supply the painted chassis. Porsche thus...

  • Page 99
    ... current and new manufacturing concepts. All components are thus produced at close-to-production conditions, even during this very early stage. This approach is particularly important for the development of a brand new model series such as the Panamera or the new hybrid technology. It reduces cost...

  • Page 100
    EMPLOYEES PURCHASING

  • Page 101

  • Page 102
    ...the group has been looking to recruit engineers, industrial engineers and managers. The need for qualified academics was high, not only in Vehicle Development and Quality Management, but also in Purchasing, Production and Logistics, Sales, Marketing and After Sales. The consultancy companies Porsche...

  • Page 103
    ... succession plan for partial retirement is also being closely examined. Porsche is one of the most popular employers in Germany and Europe, particularly for the key target groups of prospective engineers and business students. Systematic Improvement in HR Development During the review year, special...

  • Page 104
    ... Cayenne S was developed with the company's Health Center. Apprentices painstakingly realized the concept and ideas with their craftsmanship skills to build a vehicle fitted with high-quality emergency Furthermore, the company's travel health advice and vaccination service is becoming increasingly...

  • Page 105
    103

  • Page 106
    ... by interdisciplinary teams and successfully implemented in collaboration with suppliers. The process also included integrating new technologies, such as Porsche Dynamic Chassis Control (PDCC) and Direct Fuel Injection (DFI), into series production. Production of the new 911 Turbo Cabriolet...

  • Page 107
    ...by 200 Porsche Partners. Support for Major Construction Projects During the 2006/07 fiscal year, Purchasing supervised a number of construction projects. The largest single project was the new Porsche Museum at the company's headquarters in Stuttgart-Zuffenhausen. In addition, the 'Powertrain Center...

  • Page 108
    RESEARCH AND DEVELOPMENT

  • Page 109

  • Page 110
    ... work to be successfully utilized in production models are the fuel-saving Direct Fuel Injection (DFI) concept and the Porsche Dynamic Chassis Control (PDCC) roll stabilization system, both features of the new Cayenne. Another key aspect of development activities is the optimization of processes...

  • Page 111
    ... clutch is disengaged. On the automatic transmission, the hill holder function performs this task. For the first time, the air suspension system with Porsche Active Suspension Management (PASM) is supplemented by a new roll stabilization system, the Porsche Dynamic Chassis Control (PDCC). The system...

  • Page 112
    ... for an imminent braking maneuver. An upgraded car/trailer stabilization system and offroad ABS are also part of the package. The result is faster brake response, prevention of hazardous vehicle/trailer sway and improved braking on loose surfaces. For the first time, the new Cayenne models are also...

  • Page 113
    ... floor assembly and the use of fine panels made from high When developing a concept for the planned Cayenne Hybrid, Porsche engineers in Weissach opted for a parallel full hybrid system. GTS sets the benchmark in the sport utility vehicle segment. By making a host of changes to the engine, chassis...

  • Page 114
    ...maximum power, fuel consumption is up to 15 percent lower than that of a turbocharged engine with a conventional intake system. The chassis of the 911 GT2 uses actively adjustable dampers for the first time. The standard-fitted Porsche Active Suspension Management (PASM) has been specially tuned for...

  • Page 115
    ... toe angles of the new 911 GT2 can be tuned to suit a particular track and optimized to the driver's own personal requirements. However, these changes can only be made for non-public road use. For the first time, the 911 GT models come as standard with Porsche Stability Management (PSM). This vated...

  • Page 116
    MOTOR SPORTS

  • Page 117

  • Page 118
    ... twelve American Le Mans Series races, once again carrying off the manufacturers', drivers' and team championships. In the world of motor sports, Porsche seeks to compete wherever race engineering is also likely to advance the design of its premium sports vehicles. The essential motivation behind...

  • Page 119
    ... series starts with the Daytona 24-hour race in January. In a dramatic finale at the circuit on Florida's west coast, a team of German, American and Canadian drivers won the GT title in a 911 GT3 Cup with a seven-second lead over a US sports car. Three other 911 GT3 Cup cars made it The new Porsche...

  • Page 120
    ...-coming racing drivers. Five of the current eight Porsche works drivers demonstrated their skills with championship titles in the Mobil1 Supercup or in the Carrera Cup before entering the world of top professional motor sports. The 911 GT3 Cup Challenges in the USA, Brazil and New Zealand and Club...

  • Page 121
    119

  • Page 122

  • Page 123
    Notes to the Consolidated Financial Statements as of July 31, 2007

  • Page 124
    122 Consolidated Income Statement of the Porsche Group for the Period from August 1, 2006 of July 31, 2007 Notes 2006/ 07 2005/ 06 Tâ,¬ Continuing operations Sales (1) 7,367,876 Tâ,¬ 7,122,667 Changes in inventories and other own work capitalized Total operating performance (2) 162,217 ...

  • Page 125
    ...Trade receivables Receivables from financial services Other receivables and assets Receivables of taxes on income Securities Cash and cash equivalents Current assets... capital Capital reserves Revenue reserves Translation differences Capital allocable to shareholders Hybrid capital Minority interests ...

  • Page 126
    ... and leased assets Cash paid for investments in financial assets Changes in receivables from financial services Cash flow from investing activities from continuing operations Cash flow from investing activities from discontinued operations Cash flow from investing activities in total 456,364...

  • Page 127
    ... shareholders Cash repayments of bonds Cash payments to hybrid capital investors Cash payments for stock options Capital contributions Cash received from the issue of loans Cash received from the issue of bonds Cash received from stock options Cash received from other financial liabilities Cash flow...

  • Page 128
    126 Statement of Changes in Equity of the Porsche Group as of July 31, 2007 Revenue reserves Subscribed capital Capital reserves Tâ,¬ Tâ,¬ Revenue reserves Tâ,¬ 1) Other comprehensive income 1) Securities marked to market Tâ,¬ Cash flow hedges Tâ,¬ As of July 31, 2005 45,500 121,969 3,054,831...

  • Page 129
    127 Translation differences Tâ,¬ Capital allocable to shareholders Tâ,¬ 1) Hybrid capital Minority interests Group equity Tâ,¬ Tâ,¬ Tâ,¬ 10,532 3,412,136 0 8,057 3,420,193 - 43,913 13,625 10,532 3,381,848 0 - 8,057 - 51,970 13,625 0 3,381,848 4,321 - 12,...

  • Page 130
    ...1 in 70435 Stuttgart, Germany. The business 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...

  • Page 131
    ... companies Porsche Consulting Italia S.r.l., Milan, and Porsche Center Moscow OOO, Moscow, and the purchased Porsche Vermögensverwaltung AG, Stuttgart, have been included in the Porsche consolidated financial statements for the first time as of July 31, 2007. These changes in the consolidated group...

  • Page 132
    ... consolidated financial statements. Based on its shareholding, the following assets, liabilities, revenues and profits of the Volkswagen group are allocated to Porsche AG as of July 31, 2007: 2006/07 2005/06 Tâ,¬ Non-current assets Current assets Non-current liabilities Current liabilities Revenues...

  • Page 133
    ... in the income statement. Goodwill and adjustments of assets and liabilities from business combinations are recorded in the functional currency of the subsidiary. The following key exchange rates for the Porsche consolidated financial statements were used for currency translation: Closing rate July...

  • Page 134
    ... 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 135
    ... sell. Value in use is determined using the discounted cash flow method or capitalized earnings method on the basis of 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...

  • Page 136
    ..."). If the total of accumulated contract costs and reported profits exceeds advance payments received, the construction contracts are recognized as an asset as future receivables from long-term construction contracts under trade receivables. Any negative balance is reported under trade payables. The...

  • Page 137
    ...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 cash flows with the market interest rate. Amortized cost corresponds to costs of purchase...

  • Page 138
    ... date. Current tax relating to items recognized directly in equity is recognized in equity and not in the income statement. Hybrid capital Based on the bond conditions of the hybrid capital issued, this is accounted for as an equity component of the Group in accordance with IAS 32. This means that...

  • Page 139
    .... Service cost is disclosed in personnel expenses while the interest portion of the addition to the provision and income from plan assets is recorded in the financial result. The interest rate used to discount provisions is determined on the basis of the return on long-term high-quality corporate...

  • Page 140
    ... of the income statement are adjusted accordingly. New Accounting Standards a) The Group has adopted the following new and amended IFRS and interpretations during the fiscal year for the first time. Adoption of these interpretations had the following effect on the consolidated financial statements...

  • Page 141
    ...of an Enterprise and related Information" with a few exceptions and has to be used adopted for the first time in fiscal years beginning on or after January 1, 2009. Amendment to IAS 1 "Presentation of Financial Statements" These amendments result in new disclosures of internal control parameters and...

  • Page 142
    ... balance between plan assets and the defined benefit obligation (asset ceiling). IFRIC 14 is mandatory for fiscal years beginning on or after January 1, 2008. These new accounting provisions are not expected to have any material effect on the result of future consolidated financial statements.

  • Page 143
    141 Notes to the Consolidated Income Statement (1) Sales 2006/07 2005/06 Tâ,¬ Divisions Vehicles Parts and accessories Other of which revenue from credit financing of which revenue from lease installments 6,214,192 486,490 667,194 117,198 226,117 7,367,876 Tâ,¬ 6,056,241 426,250 640,176 109,413...

  • Page 144
    142 When using the function of expense method, cost of sales without personnel expenses would come to Tâ,¬ 3,859,129 (previous year: Tâ,¬ 3,734,615). The cost of purchased services contains interest expenses from financial services transactions of Tâ,¬ 90,958 (previous year: Tâ,¬ 76,291). (5) ...

  • Page 145
    ... by Volkswagen and the positive outlook of the Volkswagen Group for the current fiscal year, the investment had to be revalued. The recoverable amount was set at the value in use. The shares measured at equity are adjusted in the course of the reassessment at amortized cost. (8) Financial expenses...

  • Page 146
    ... rate and the current income tax expense: 2006/07 2005/06 Tâ,¬ Profit from ordinary activities Group tax rate 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...

  • Page 147
    ... Sales Expenses Profit before financial income Financial income Profit before tax from ordinary activities from discontinued operations Income taxes - Tâ,¬ 149,992 - 148,072 1,920 - 810 1,110 - - - - - - 1,363 Current net profit from discontinued operations Profit from the sale of the CTS group...

  • Page 148
    ... year were: July 31, 2006 Tâ,¬ Intangible assets, property, plant and equipment and deferred tax assets Other assets without cash and cash ...hybrid capital Profit allocable to shareholders of Porsche AG Profit allocable to ordinary shares from continuing operations Profit allocable to ordinary shares...

  • Page 149
    ... in the cash flow statement. Cash inflows and outflows from investing and financing activities are presented 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...

  • Page 150
    ... assets include development services acquired, tool cost subsidies, capitalized development costs for vehicles, goodwill, licenses and software. Total research and development, i.e. research and non-capitalizable development costs as well as the investment in capitalized development costs developed...

  • Page 151
    ...August 1, 2006 Currency differences Changes to consolidated group Additions Extraordinary additions Disposals Write-ups As of July 31, 2007 Net carrying amount July 31, 2006 Net carrying amount July 31, 2007 Tâ,¬ Tâ,¬ costs Goodwill Advance payments made Tâ,¬ Tâ,¬ Total 352,643 144,312 45,350 22...

  • Page 152
    ...Development of property, plant and equipment Land, land rights and buildings incl. buildings on third-party land Tâ,¬ Cost As of August 1, 2005 Currency differences Changes to consolidated group... furniture and fixtures Advance payments and assets under construction Tâ,¬ Tâ,¬ Total 673,898 457,601 ...

  • Page 153
    ...Development of financial assets Investments in associates* Tâ,¬ Cost As of August 1, 2005 Currency differences Changes to consolidated group Additions Reclassifications Disposals As of July 31, 2006 Amortization and depreciation As of August 1, 2005 Currency differences Changes to consolidated group...

  • Page 154
    152 (18) Development of leased assets and of total non-current assets Leased assets Tâ,¬ Cost As of August 1, 2005 Currency differences Changes to consolidated group Additions Reclassifications Disposals As of July 31, 2006 Amortization and depreciation As of August 1, 2005 Currency differences ...

  • Page 155
    153 In its financial services division, the Porsche Group acts as lessor, primarily leasing its own products. The remaining terms of the minimum lease payments from non-cancellable operating leases of Tâ,¬ 448,993 (previous year: Tâ,¬ 406,706) are as follows: July 31, 2007 July 31, 2006 Tâ,¬ Due ...

  • Page 156
    ... 4,250 26,487 89,098 - 59,891 29,207 - 22,340 6,867 The sales revenue from long-term construction contracts totals Tâ,¬ 51,522 (previous year: Tâ,¬ 39,287). Contracts and parts of contracts billed to customers are reported under trade receivables. There were no material bad debt allowances for the...

  • Page 157
    ... generally secured by the assignment of collateral or guarantees. The non-current receivables from financial services are mainly subject to fixed interest rates of between 2.7 percent and 15.8 percent, depending on the market. The non-guaranteed residual values accruing to the Porsche Group amount...

  • Page 158
    ... taxes on income. The item derivative financial instruments mainly includes forward exchange contracts, currency options, stock options with cash compensation and compounders. A fractional amount of Tâ,¬ 268,600 is due in more than one year (previous year: Tâ,¬ 157,542). Other assets mainly contain...

  • Page 159
    ... and cash equivalents Cash and cash equivalents totaling Tâ,¬ 2,410,066 (previous year: Tâ,¬ 1,988,550) consist of checks, cash on hand and bank balances maturing within three months. (26) Equity and minority interests The development of equity and minority interests is presented in the statement...

  • Page 160
    ...-sale securities to market and reserves for cash flow hedges. The accumulated profits include the profits of Porsche AG and its consolidated subsidiaries earned in previous years and the reporting year and not yet distributed as well as transactions without effect on income. The financial statements...

  • Page 161
    ... consolidated financial statements are entitled to benefits under the company pension plan. The benefits vary according to local legal, economic and tax conditions and are usually based on the employee service period and the beneficiary's salary. The direct and indirect obligations comprise current...

  • Page 162
    ... gain/ loss recognized in the year Past service cost Net benefit expense 32,194 33,660 - 2,494 161 23 63,544 Tâ,¬ 39,143 30,172 - 2,125 3,866 29 71,085 The expected rate of return on the asset classes contained in the plan assets is determined based on the market prices prevailing on that date...

  • Page 163
    ...107 Contributions to the defined benefit plans are expected to total Tâ,¬ 4,414 for the 2007/ 08 fiscal year. The pension provision developed as follows: 2006/ 07 2005/06 Tâ,¬ Carrying amounts at August 1 Exchange differences Changes in the group reporting entity Expenses from benefit obligations...

  • Page 164
    ...2006/07, the portfolio of plan assets is as follows: July 31, 2007 July 31, 2006 % Shares Interest securities Other securities Cash reserve - 28.7 7.0 64.3 % 52.6 38.4 3.3 5.7 The experience adjustments relating to the pension obligation and the plan assets amounted to: Experience adjustments 2006...

  • Page 165
    ... the reporting year lead to payments in the following year. Provisions for obligations from ordinary operations consist above all of amounts for warranty claims, marketing services and bonuses. The warranty obligation in the Porsche Group mainly stems from product warranties granted for the vehicles...

  • Page 166
    ... result in additional current financial liabilities of Tâ,¬ 50,215 (previous year: Tâ,¬ 49,845). The following items are reported under bonds: Issue volume in TLC Carrying amount in Tâ,¬ Market value in Tâ,¬ Total term Maturity Nominal Effective interest rate interest rate % % Currency Bonds Bond...

  • Page 167
    ... and asset-backed securities programs. The present values of the future minimum lease payments from sale-and-lease-back transactions entered into to refinance the financial services business break down as follows: July 31, 2007 July 31, 2006 Tâ,¬ Minimum lease payments Due within one year Due...

  • Page 168
    ...current and current other liabilities As of the balance sheet date, other liabilities break down as follows: Due within one year Tâ,¬ July 31, 2007 Advance payments received on account of orders Sundry other liabilities Measurement of derivative financial instruments at market value Deferred income...

  • Page 169
    ... shareholding in Volkswagen AG in the reporting year and in preparation for the takeover bid for all Volkswagen AG shares. They are stock options with cash compensation. In addition, stock options with various base values are used to obtain liquidity. Bad debt exposure The credit risk of financial...

  • Page 170
    168 Measurement of financial instruments The market value of financial instruments is determined by reference to stock market listings, reference prices or generally accepted calculation models such as the discounted cash flow method. The following term structure of interest rates was used were ...

  • Page 171
    ... in the fiscal year from the reserve for cash flow hedges to the income statement (previous year: Tâ,¬ 155,266). The gain on the disposal of available-for-sale securities totaled Tâ,¬ 15,233 (previous year: Tâ,¬ 10,955), while the loss on the disposal came to Tâ,¬ 0 (previous year: Tâ,¬ 2,477). (33...

  • Page 172
    ... for assets, liabilities and contingent liabilities of the purchased dealerships had not yet been established when the consolidated financial statements were authorized for issue. Porsche China Hongkong Limited was incorporated on August 2, 2007. The purchase agreement for Jebsen and Company Limited...

  • Page 173
    ... 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. The financial services division...

  • Page 174
    ...of adjustments to previous year segment information by region Germany 2005/06 2005/06 2005/06 incl. Amounts in millions of â,¬ Third-party sales Intersegment sales Segment result from continuing operations thereof share of profits and losses of entities accounted for using the equity method Segment...

  • Page 175
    173 North America 2005/06 2005/06 2005/06 Europe without Germany 2005/06 2005/06 2005/06 incl. adjustment adjustment 2,510.6 1.4 170.9 - - 0.3 1,567.2 -...302.5 620.5 488.8 959.3 Financial services 2005/06 2005/06 2005/06 2005/06 Consolidation 2005/06 2005/06 2005/06 Group 2005/06 2005/06 incl. ...

  • Page 176
    ...2005/06 2,187.1 4,074.7 1,584.7 2.1 6,048.3 6,783.5 765.2 331.8 437.0 Segment information by business division Vehicles Amounts in millions of â,¬ Third-party sales Intersegment sales Segment assets Capital expenditures (excluding financial assets) 2006/07 6,965.3 145.2 11,047.9 576.3 2005/06 6,733...

  • Page 177
    ...1,204.7 2005/06 7,122.7 - 1,831.7 1.9 14,640.5 9,302.5 620.5 488.8 959.3 Financial services 2006/07 402.6 11.7 3,516.0 625.9 2005/06 389.5 26.8 2,954.1 555.2 Consolidation 2006/07 - - 156.9 8,768.5 2.5 2005/06 - - 167.8 5,187.7 4.4 Group 2006/07 7,367.9 - 23,332.4 1,204.7 2005/06 7,122.7 - 14,640...

  • Page 178
    ... do not control it, including close family members. In the fiscal year 2006/07 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 business with...

  • Page 179
    ... deliveries relating to the vehicle and parts business and from consulting and development services. They were charged at arm's length conditions. Related parties Supplies and services rendered 2006/07 2005/06 Supplies and services received 2006/07 2005/06 Tâ,¬ Porsche and Piëch families Members...

  • Page 180
    ...: 21.1 million Euro). Benefit payments came to 1.0 million Euro (previous year: Tâ,¬ 997). The total remuneration of the Supervisory Board for the 2006/07 fiscal year amounts to 1.6 million Euro (previous year: 1.3 million Euro). These are also all short-term. The pension provisions are disclosed...

  • Page 181
    ... German Corporate Governance Code The Executive Board and Supervisory Board of Porsche AG have issued the declaration required by §161 German Stock Corporations Act (AktG) in the annual report 2006/07. It is made permanently accessible to the shareholders at the homepage www.porsche.de. Stuttgart...

  • Page 182
    ..., France Porsche Cars Great Britain Ltd., Reading, England Porsche Financial Services Great Britain Ltd., Reading, England Porsche Retail Group Ltd., Reading, England Porsche Cars North America, Inc., Wilmington / Delaware, USA Porsche Liquidity LLC, Wilmington / Delaware, USA Porsche Cars Canada...

  • Page 183
    ... the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements...

  • Page 184
    ... foreign control bodies Members of the Supervisory Board of Dr. Ing. h.c. F. Porsche AG Dr. Wolfgang Porsche 2) Porsche Cars North America Inc., Wilmington Porsche Cars Great Britain Ltd., Reading Porsche Italia S.p.A., Padua Porsche Ibérica S.A., Madrid Porsche Bank AG, Salzburg Porsche Holding...

  • Page 185
    ... Board of Dr. Ing. h.c. F. Porsche AG Dr. Wendelin Wiedeking 1) Volkswagen AG, Wolfsburg Porsche Vermögensverwaltung AG, Stuttgart (chairman) 2) Porsche Cars North America Inc., Wilmington (chairman) Porsche Financial Services Inc., Wilmington Porsche Cars Great Britain Ltd., Reading Porsche...

  • Page 186
    ... of Dr. Ing. h.c. F. Porsche AG as of July 31, 2007 1) July 31, 2007 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 315,892...

  • Page 187
    185 Income Statement of Dr. Ing. h.c. F. Porsche AG for the Period from August 1, 2006 to July 31, 2007 2006/07 2005/06 Tâ,¬ Sales Changes in inventories and own work capitalized Total operating performance Other operating income Cost of materials Personnel expenses Amortization and depreciation...

  • Page 188

  • Page 189
    Imprint Publisher: Porsche Automobil Holding SE, Stuttgart-Zuffenhausen © 2007 Photographs: Christoph Bauer, Stuttgart Stefan Warter, Berlin Roland Halbe, Stuttgart Werkfotos Porsche AG Translations: CB Übersetzungen, Munich Design: Atelier Lagally, Stuttgart Produced by: IThaus Münster GmbH & Co...

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