Porsche 2007 Annual Report Download - page 36

rate and share price hedges totaling 18.330 billion
Euro (prior year: 5.556 billion Euro). The increase
also reflects the effects of the rise in the price of
the Volkswagen share on the stock price hedges
entered into by Porsche.
The share price hedges were designed on the one
hand to secure the future purchase of shares of
Volkswagen AG, and on the other to obtain short-
term liquidity. Cash receipts totaled 392 million
Euro. At 92 million Euro, income tax receivables
were virtually unchanged (prior year: 91 million
Euro). Deferred tax assets amounted to 95 million
Euro compared to 75 million Euro the year before.
Gross liquidity increases again
Porsche had secured a line of credit of 35 billion
Euro to finance the mandatory takeover bid to
Volkswagen shareholders. After the end of the man-
datory offer, the credit facility was reduced to ten
billion Euro. Porsche drew the whole of this credit
line at the contractually agreed interest rates. As a
result, cash and cash equivalents rose to 11.393
billion Euro (prior year: 4.844 billion Euro).
Net liquidity, that means cash and cash equiva-
lents less financial debt without financial services,
dropped from 0.283 billion Euro in the prior year
to minus 3.077 billion Euro. When considering this
figure, the substantial increase in derivative instru-
ments should, however, be considered. The cash
and cash equivalents used for these financial in-
struments were not considered when calculating
net liquidity. As a result, the extended cash and
cash equivalents rose significantly to 8.198 billion
Euro (prior year: 5.642 billion Euro). Cash paid
for investing activities amounted to 3.060 billion
Euro (prior year: 3.552 billion Euro).
Significantly higher equity
In the reporting year, the equity of the Porsche
Group rose by 7.365 billion Euro to 16.846 billion
Euro. The main reasons for this increase are the
significantly higher profit and the issue of an addi-
tional hybrid bond. Equity thus now contains two
hybrid bonds with a nominal volume of one billion
US dollars and a nominal volume of one billion euros
respectively. The equity ratio stood at 37 percent
compared to 41 percent in the prior year.
The pension provisions together with other pro-
visions amounted to 2.617 billion Euro in the
reporting year (prior year: 2.505 billion Euro).
All known risks are thus covered. The deferred tax
liabilities rose significantly from 613 million Euro to
1.015 billion Euro, mainly due to non-cash income.
Trade payables came to 587 million Euro compared
to 513 million Euro the year before. Other liabilities
came to 6.119 billion Euro (prior year: 2.775 billion
Euro). The significant increase in the financial in-
struments employed was the main reason for the
substantial increase.
In the reporting year, financial liabilities amounted
to 16.386 billion Euro compared to 6.549 billion
Euro in the prior year. This increase is due above
all to the ten billion Euro drawn on the line of credit.
Compared to the prior year, liabilities to bank
rose by 9.937 billion Euro. These funds have been
used to expand business activities and for the
planned increase in the investment in Volkswagen AG.
The financial services business was refinanced,
mainly using financing structured for the specific
country, so-called asset backed structures, with a
volume of 1.736 billion Euro. Bonds accounted for
2.295 billion Euro of the financial liabilities.
Earnings remain strong
Porsche earning’s power again remained strong in
the reporting year. Once again, Porsche succeeded
in increasing the extremely high pre-tax profit of
5.857 billion Euro returned by the Group in the
previous fiscal year even further. The unusually
large leap in earnings in the reporting year to a
total of 8.569 billion Euro was, however, due to
special factors and non-recurring effects. This also
applies to the rise in the net income for the year
to 6.392 billion Euro after 4.242 billion Euro in the
previous year. These extraordinary effects include
Porsche income from equity investments in Volks-
wagen AG of 1.007 billion Euro. In the prior year,
this figure was higher at 1.223 billion Euro because
it contained a write-up on the investment in Volks-
wagen AG of 521 million Euro.
The dividend recognized by Porsche SE in the
investment result from the equity investment of
30.3 percent of the ordinary shares held in Volks-
wagen AG amounted to 160 million Euro. The
increase in earnings was primarily attributable to
income from share price hedges relating to the
acquisition of further shares in Volkswagen AG.
This totaled 6.834 billion Euro. Taking into account
a negative interest result of Porsche Automobil
Holding SE, the operating profit of Porsche was
around one billion Euro.
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