Porsche 2009 Annual Report Download - page 228

228 Financials
The financial guarantees mostly relate to financial liabilities of the Porsche Zwischenholding
GmbH group. Volkswagen AG has issued a financial guarantee for 49.9% of these financial liabilities;
this is equivalent to a hold harmless agreement of €1,621 million. There was no liquidity risk from
financial guarantees in the prior year, as the Porsche Zwischenholding GmbH group was fully con-
solidated as of 31 July 2009 and the basic agreement and related agreements implementing it did
not exist at that time.
The cash outflows from irrevocable credit commitments as of the prior-year reporting date,
classified by contractual maturities, are presented in note [33].
There are no significant concentrations of risk that are not evident from the notes to the fi-
nancial statements and management report.
4 Market risk
4.1 Hedging policy and financial derivatives
During the course of its general business activities, the continuing operations are exposed
to interest rate risks, stock price risks and risks from put and call option for the remaining shares in
Porsche Zwischenholding GmbH. Before deconsolidation of the discontinued operations, there were
also currency, commodity and fund price risks. The risks of continuing operations arise from financ-
ing activities, the remaining cash-settled options relating to shares in Volkswagen AG, fluctuation in
the enterprise value of Porsche Zwischenholding GmbH and to a small extent from cash investments.
Before deconsolidation of the discontinued operations, the risks of discontinued operations addi-
tionally included risks from foreign currency transactions in the course of ordinary operations, fund
price risks and risks in connection with the purchasing of commodities. It is company policy to
exclude or limit these risks by entering into hedge transactions. All necessary hedging measures
are coordinated by the finance department of the Porsche SE group or, before deconsolidation of
the discontinued operations, were also performed and coordinated by the respective operations’
group treasury departments.
The nature and volume of hedging transactions is generally chosen with regard to the hed-
ged item. Hedging transactions may only be concluded to hedge existing underlyings or forecast
transactions. Only financial instruments approved by type and volume may be entered into with
approved counterparties.
There are no significant concentrations of risk that are not evident from the notes to the fi-
nancial statements or management report.
The Porsche SE group uses two different methods to present market risk from non-
derivative and derivative financial instruments in continuing operations in accordance with IFRS 7.
The exposure to market price risk from interest hedging and from the put and call option for the
remaining shares in Porsche Zwischenholding GmbH was calculated using a sensitivity analysis, and
a value-at-risk model was used for stock price risks. Due to deconsolidation of the discontinued
operations in the fiscal year 2009/10, the presentation of risks in the reporting period differs from
that of the prior year in that they are not presented separately for financial services and the auto-