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Annual Report
Short Fiscal Year
2010

Table of contents

  • Page 1
    Annual Report Short Fiscal Year 2010

  • Page 2
    ... sales (new cars) total 5 thereof vehicle sales (new cars) Volkswagen group5 thereof vehicle sales (new cars) Porsche Zwischenholding GmbH group Domestic Porsche 5 Export Porsche 5 9115 Boxster/Cayman 3,5 Cayenne 5 Panamera5 Carrera GT & RS Spyder 5 5 units units units units units units units units...

  • Page 3
    Porsche Automobil Holding SE Short Fiscal Year 2010

  • Page 4
    2

  • Page 5
    ... an offer of securities for sale or a solicitation of an offer to purchase securities in the United States, Germany or any other jurisdiction. The shares (the "Shares") of Porsche Automobil Holding SE (the "Company") may not be offered or sold in the United States absent registration or an exemption...

  • Page 6
    4 6 To our shareholders 8 10 12 20 26 Letter to our shareholders Company boards of Porsche Automobil Holding SE Report of the supervisory board Corporate governance report Remuneration repor t (Par t of the management repor t)

  • Page 7
    ... 50 52 57 Group management report and management report of Porsche Automobil Holding SE Significant events Business development Capital market Net assets, financial position and results of operations Porsche Automobil Holding SE (separate financial statements pursuant to German Commercial Code) 61...

  • Page 8
    6

  • Page 9
    7 To our shareholders

  • Page 10
    ... current fiscal year 2011 is the capital increase. This not only forms the basis for the intended merger of Porsche SE into Volkswagen AG. The planned issue volume of five billion euro is also the crucial factor in considerably reducing the company's liabilities. In light of this, the shareholders...

  • Page 11
    ...ch families as well as the employee representatives of both companies. But even if legal or tax issues lead us to take the alternative route of Volkswagen AG increasing its investment in Porsche Zwischenholding GmbH to 1 0 0 percent, with around 5 0 .7 percent of the ordinary shares in Volkswagen AG...

  • Page 12
    ... Investment management Werner Weresch* Member of the Berthold Huber* 1 st chairman of IG-Metall Porsche Automobil Holding SE works council Member of the Dr. Ing. h.c. F. Porsche AG Prof. Dr. Ulrich Lehner Member of the shareholders' committee of Henkel AG & Co. KGaA works council * Employee...

  • Page 13
    ... of the executive board of Porsche Automobil Holding SE Chief Executive Officer of Volkswagen AG and member of the board of management of Volkswagen AG Corporate research and development Hans Dieter Pötsch Diplom-Wir tschaftsingenieur Chief Finance Officer of Porsche Automobil Holding SE Member of...

  • Page 14
    ... gross issue proceeds of up to 5 billion euro. It is planned to use the cash from the capital increase to fur ther significantly reduce the liabilities of Porsche Automobil Holding SE. Throughout the shor t fiscal year the supervisory board also discussed the economic situation, financial position...

  • Page 15
    ... of ordinary shares who are deemed par t of the Porsche and Piëch families, as well as the voting behavior at the annual general meeting of Dr. Ing. h.c. F. Porsche Aktiengesellschaft as regards the exoneration of the management for the fiscal year 2 0 0 9 / 1 0 . The supervisory board satisfied...

  • Page 16
    ... statements and consolidated financial statements for the fiscal year 2 0 0 9 / 1 0 . One focal point of the audit was the valuation of the put and call options relating to the shares in Porsche Zwischenholding GmbH remaining at Porsche Automobil Holding SE. Moreover, the executive board informed...

  • Page 17
    ... well as the current status of litigation concerning damage claims filed by US hedge funds against Porsche Automobil Holding SE. In addition, the audit committee reviewed the separate financial statements and consolidated financial statements 2 0 0 9 / 1 0 , the combined management repor t, as well...

  • Page 18
    ... options relating to the shares in Porsche Zwischenholding GmbH remaining at Porsche Automobil Holding SE and the disposal of the cash-settled options relating to shares in Volkswagen AG. In accordance with Sec. 3 1 3 AktG, the audit of financial statements included a review of the executive board...

  • Page 19
    ... statements and separate financial statements and as a whole provides a suitable view of the position of the group and the company and suitably presents the oppor tunities and risks of future development. Based on the assessment of the independent auditor, Porsche Automobil Holding SE's early...

  • Page 20
    ...Porsche Zwischenholding GmbH remaining at Porsche Automobil Holding SE, to the disposal of the cash-settled options relating to shares in Volkswagen AG, and the risk management of Automobil Holding SE. Representatives of the auditor attended the meeting of the supervisory board on the relevant point...

  • Page 21
    ...member of Porsche Automobil Holding SE's executive board until 3 0 September 2 0 1 0 and also held the position of CEO at Dr. Ing. h.c. F. Porsche Aktiengesellschaft until that date. Since 1 October 2 0 1 0 onwards, Dr. Macht has been a member of Volkswagen AG's board of management (Group Production...

  • Page 22
    ... procedure issued by the supervisory board. The executive board informs the supervisory board regularly, without delay and comprehensively about the planning, business development and the risk management of the company and consults with the supervisory board on the strategy of the Porsche group. Cer...

  • Page 23
    ... issues relating to Volkswagen AG. In accordance with the provisions of the German Corporate Governance Code, the executive board ensures compliance with legal provisions and internal policies, and works toward ensuring they are taken into account. The Chief Compliance Officer of Porsche SE...

  • Page 24
    ... by the nominations of the employees when electing employee representatives. Financial reporting and annual audit The Por sc he g roup's financ ial repor t ing is based on t he Int er nat ional Ac c ounting Standards Rights of the shareholders Por sc he SE's share c apital is equally divided int...

  • Page 25
    ...- Directors' dealings Pursuant to Sec. 1 5 a WpHG, members of the executive board and supervisory board as well as other management personnel and persons closely related to them must disclose the purchase and sale of Porsche shares and related financial instruments. Porsche SE publishes such...

  • Page 26
    ... Code) Porsche Automobil Holding SE publishes voting rights notifications by our shareholders in accordance with the German Securities Trading Act (WpHG) as required by this law. Notifications concerning the purchase and sale of Porsche preference shares by members of the executive board and...

  • Page 27
    ... from 1 January 2 0 1 0 . No. 4 .2 .3 (3 ) and (4 ) will be taken into consideration in the future. The declaration of compliance can be found on the internet at www.audi.de/ cgk-erklaerung. Stuttgar t, 1 5 March 2 0 1 1 Porsche Automobil Holding SE Supervisory board and executive board

  • Page 28
    ... t Remuneration report (Par t of the management repor t) The remuneration repor t describes the remuneration system for members of the executive board and supervisory board of Porsche Automobil Holding SE, Stuttgar t, ("Porsche SE" or "the company") and explains the basic structure, composition...

  • Page 29
    ...years. No remuneration was granted from conversion rights under the stock option plan in effect until the end of 2 0 0 9 . Remuneration principles at Volkswagen AG The remuneration of the executive board members Prof. Dr. Martin Winterkorn and Hans Dieter Pötsch for their service to the Porsche SE...

  • Page 30
    ... of the maximum variable total remuneration, while the long-term incentive accounts for around 6 0 percent. In addition, the members of Porsche AG's executive board receive other benefits in kind, such as the use of company cars and provision of insurance cover, for which Porsche AG bears the taxes...

  • Page 31
    ... do take into account the deconsolidation of the Porsche Zwischenholding GmbH group and of the Volkswagen group as required for the purpose of group reporting in accordance with IFRSs. In addition to the remuneration for service on Porsche SE's executive board, the figures for the Porsche SE group...

  • Page 32
    ...of the comparative period, Porsche SE did not have any pension obligations due to former members of the executive board and their surviving dependants. Until the date of deconsolidation of the Porsche Zwischenholding GmbH group and the Volkswagen group, benefit payments came to 1 .0 million euro for...

  • Page 33
    ... recognized in the consolidated financial statements for the fiscal year 2 0 0 9 / 1 0 was very positive. This was due, in par ticular, to the first-time inclusion of Volkswagen AG at equity. On the other hand, the overall high negative contribution to profit from discontinued operations due to the...

  • Page 34
    ... 3 German Stock Corporation Act (AktG) of these companies until deconsolidation of Volkswagen AG on 3 December 2 0 0 9 and of Porsche Zwischenholding GmbH on 7 December 2 0 0 9 . In accordance with ar ticle 1 3 (2 ) of Porsche AG's ar ticles of association, members of Porsche AG's supervisory board...

  • Page 35
    ...IFRSs in fiscal 2 0 0 9 / 1 0 , Porsche Zwischenholding GmbH (and thus also Porsche AG) as well as of Volkswagen AG were still group entities of Porsche SE as defined by Sec. 1 8 German Stock Corporations Act (AktG) in the shor t fiscal year 2 0 1 0 . Therefore, the total remuneration required to be...

  • Page 36
    ... the table above take into account the remuneration in the Porsche Zwischenholding GmbH group and in the Volkswagen g roup that are no long er group c ompanies of Porsc he SE as defined by IFRSs. Mr. Müller was appointed as the new CEO of Porsc he AG by Porsc he AG's supervisory board effec tive as...

  • Page 37
    ... in the table above take into account the remuneration in the Porsche Zwischenholding GmbH group and in the Volkswagen g roup that are no long er group c ompanies of Porsc he SE as defined by IFRSs. These employee representatives have declared that their supervisory board remuneration is transferred...

  • Page 38
    36

  • Page 39
    37 The company

  • Page 40
    ...up to 1 .2 5 billion new ordinary shares and up to 1 .2 5 billion new preference shares) proposed by the executive board and supervisory board. This capital increase is par t of the concept agreed upon in the basic agreement to create an integrated automotive group between Porsche and Volkswagen (we...

  • Page 41
    ..., to ensure that the new ordinary shares issued as part of the capital increase adopted on 3 0 November 2 0 1 0 , are subscribed for at an estimated total subscription price of 2 .5 billion euro. In addition, the annual general meeting authorized Porsche SE's executive board, subject to the approval...

  • Page 42
    ... a new credit line totaling 8 .5 billion euro with an international banking syndicate. unsuccessful and claims filed continue to prevent In December 2 0 0 9 , Volkswagen AG acquired a 4 9 .9 percent shareholding in Porsche Zwischenholding GmbH, Stuttgar t, by means of a capital increase against cash...

  • Page 43
    ... annual general meeting of Porsche AG for the Porsche Zwischenholding GmbH group. Disposal of cash-settled stock options In t he pr ior year s, t he inc reases in the shareholding in Volkswag en were hedg ed t o a larg e ext ent by m eans of c ash-set t led opt ions for Volkswag en AG shares. The...

  • Page 44
    ... filed a total of six actions for damages against Porsche SE in the United States District Cour t for the Southern District of New York in the USA. The plaintiffs allege damages of more than 2 .5 billion US dollars. In three of the six actions, the former members of the executive board Dr. Wendelin...

  • Page 45
    ... recognized in the consolidated financial statements for the fiscal year 2 0 0 9 / 2 0 1 0 was very positive. This was due, in par ticular, to the first-time inclusion of Volkswagen AG at equity. On the other hand, the overall high negative contribution to profit from discontinued operations due to...

  • Page 46
    ... the board of management of Volkswagen AG, effective as of 1 October 2 0 1 0 . The corresponding change also took place in the management of Porsche Zwischenholding GmbH. pervisory board of Porsche AG instructed the executive board to drive forward development of a new model up to series production...

  • Page 47
    ...'s largest production facilities with an annual capacity of 5 2 5 ,0 0 0 vehicles. The group has additional plans to invest up to 1 billion US dollars in Mexico in the next three years. As par t of its growth strategy for Nor th America, the Volkswagen group is also constructing a new engine plant...

  • Page 48
    .... As expected, the number of new vehicles registered in western Europe as a whole fell by five percent to just under 1 3 million units in the wake of the expiration of economic rescue programs. When government recovery programs came to an end, the sales markets returned to their pre-crisis structure...

  • Page 49
    ... following statements on sales, production, financial services and employees only take into consideration operating developments at the Porsche Zwischenholding GmbH group, comprising Porsche AG and its subsidiaries, and at the Volkswagen group. They do not take into account the Porsche SE group. In...

  • Page 50
    ... year. At the plant Regional differences Porsche Zwischenholding GmbH group achieved significant growth in all key sales regions. Sales rose most sharply in Europe, rising 6 1 .9 percent to 1 3 ,8 9 3 vehicles. In the German market, Porsche achieved an increase of 4 9 .2 percent to 4 ,7 6 1 units...

  • Page 51
    ... . The number of accounts managed by Volkswagen Bank direct was 1 .4 million at 3 1 December, 2 0 1 0 . As of the same date, the joint venture company LeasePlan Corporation N.V. managed a total of some 1 .3 million vehicles. New jobs As of 31 December 2010, the Porsche SE group had 36 employees (31...

  • Page 52
    ... Volkswagen AG and the fact that, at present, no new elections of shareholder representatives to the supervisory board are planned prior to the merger, the specification of concrete goals would not be appropriate at the current point in time. Publication of the declaration of compliance Porsche SE...

  • Page 53
    ... million listed preference shares, with a pro rata share of capital stock of one euro per no-par value share. Until the end of the 2 0 0 8 / 0 9 fiscal year, the ordinary shares had been held indirectly exclusively by members of the Porsche and Piëch families. In August 2 0 0 9 , Qatar Holding LLC...

  • Page 54
    ...-current assets of the Porsche SE group totaling 2 8 ,7 3 3 million euro (3 1 July 2 0 1 0 : 2 7 ,0 2 6 million euro) essentially per tain to the shares in Porsche Zwischenholding GmbH and Volkswagen AG accounted for at equity. Whereas the carrying amount of the investment in Volkswagen AG accounted...

  • Page 55
    ... year was mainly due to the deconsolidation of the Porsche Zwischenholding GmbH group and the Volkswagen group in the comparative period. In the shor t fiscal year the cash flow from investing activities principally relates to changes in the cash-settled options relating to shares in Volkswagen AG...

  • Page 56
    ... came to 1 1 million euro in the Porsche SE group (2 0 0 9 / 1 0 : 1 7 million euro). amor tization of the purchase price allocations per formed at the time of inclusion of Porsche Zwischenholding GmbH as a joint venture and Volkswagen AG as an associate. The profit/ loss from investments accounted...

  • Page 57
    55 6WLYH[PUNYLZ\S[VM ZPNUPMPJHU[LX\P[`PU]LZ[TLU[Z ;OLMVSSV^PUNZ[H[LTLU[ZYLSH[L[V[OLVUNVÌ PUNVWLYH[PUNI\ZPULZZVM[OL7VYZJOLA^PZJOLUOVSKÌ PUN.TI/NYV\W7VYZJOL(.HUKP[ZZ\IZPKPHYPLZ 7VYZJOL(.NYV\WHUK[OL=VSRZ^HNLUNYV\W,MÌ MLJ[ZMYVTPUJS\ZPVUPU[OLJVUZVSPKH[LK...

  • Page 58
    ... bH and Volkswag en AG. On t he other, there are c ash out flows from int erest and pr inc ipal payments as well as t axes paid, am ong other t hing s. Por sc he SE's exec ut ive board c onsider s t he ec onom ic situation of it s sig nific ant invest ments t o be positive. The sig nific ant...

  • Page 59
    ... (the new) Porsche AG and from Porsche SE itself. In addition, the company recognized dividend income of 8 7 million euro from Porsche Zwischenholding GmbH and 2 4 0 million euro from Volkswagen AG in the prior year. The cash-settled options relating to Volkswagen AG shares that Porsche SE held as...

  • Page 60
    ... to the tax treatment of stock option transactions. After taxes and the extraordinary result, the net profit for the period was 8 7 9 million euro (prior year: 8 ,9 9 1 million euro). Income statement of Porsche Automobil Holding SE â,¬ million SFY 2 0 1 0 32 - 11 - 44 353 - 113 2009/ 10 641 - 18...

  • Page 61
    59 Net assets and financial position The financial assets of Porsche SE mainly comprise the investments held in Porsche Zwischenholding GmbH and Volkswagen AG, which are recognized at cost in the separate financial statements. Porsche SE's receivables primarily include loan receivables from Porsche...

  • Page 62
    ... management repor t Risks relating to the business development The risks relating to the development of Porsche SE's business as the parent company of the Porsche SE group are closely connected to the risks relating to the significant investments in Porsche Zwischenholding GmbH and Volkswagen AG...

  • Page 63
    ...the Porsche Zwischenholding GmbH group and the Volkswagen group. Even after deconsolidation of the two groups, these value drivers help raise the value of these significant investments held by Porsche SE in the long term. They include newly developed products, processes in the fields of research and...

  • Page 64
    ...-door vehicle. The Volkswagen group presented a large number of new models to the Russian audience at the auto salon in Moscow in August. The highlight of these was the Polo saloon, produced at Volkswagen's Kaluga plant in Russia; development of this vehicle took into account the country's special...

  • Page 65
    ... existing cooperation arrangements with Dr. Ing. h.c. F. Porsche AG, Daimler AG and the Chrysler Group on the development and production of vehicles. Volkswagen also entered into a long-term strategic par tnership with Suzuki Motor Corporation. In 2 0 1 0 , the Volkswagen group sought or intensified...

  • Page 66
    ... Group management repor t Research and development costs In the shor t fiscal year 2 0 1 0 , research costs and non-capitalized development costs in the Porsche Zwischenholding GmbH group came to 1 0 0 million euro (prior fiscal year 2 0 0 9 / 1 0 : 1 8 9 million euro). Development costs totaling...

  • Page 67
    ... 0 km) Fuel consumption combined (l/ 1 0 0 km) CO2 Emissions combined (g/ km) Audi R 8 GT Bentley Continental GT Bugatti Veyron 1 6 .4 Super Sport Porsche 9 1 1 GT2 RS Porsche 9 1 1 Carrera GTS Porsche 9 1 1 Carrera GTS PDK Porsche 9 1 1 Carrera GTS Cabriolet Porsche 9 1 1 Carrera GTS PDK Cabriolet...

  • Page 68
    ...of the global financial crisis, and the high propor tion of value added by third par ties, the efficiency of suppliers' production processes and the competitiveness of their cost structures were more impor tant than ever. Throughout the repor ting period, supplier management therefore worked hand in...

  • Page 69
    ... non-production materials. The second construction phase of the central spare par ts warehouse in Sachsenheim, with a total volume of 1 0 0 million euro, was completed and went into operation in the shor t fiscal year 2 0 1 0 . unit sales of compact cars, 2 0 1 0 saw increased demand for vehicles...

  • Page 70
    ...to helping Volkswagen meet its cost targets for Greater localization through expansion into new markets by the Volkswagen group The new production facilities in India, Russia and the United States provide numerous oppor tunities for group procurement. Firstly, localization - using local markets for...

  • Page 71
    ...partner Valmet, with the Cayman accounting for 1,982 of these vehicles. At the Leipzig plant, 22,343 vehicles of the new Cayenne series were assembled during the reporting period. And 8,189 units of the Gran Turismo Panamera rolled off the Leipzig assembly line. Customers associate the Porsche brand...

  • Page 72
    ... efficient use of resources. Work is progressing on schedule, and the new paint shop will go into operation as planned in early 2 0 1 1 . ity of a product on its reliability and appeal, but also on the basis of the after-sales service provided. The Volkswagen group's goal is to become the product...

  • Page 73
    ... ained at a c onsist ent ly low level. The Volkswagen group's production system The Volkswag en g roup's value-driven sync hronous produc t ion system has been desig ned wit h t he aim of im proving quality and adherenc e t o sc hedules while sim ult aneously reduc ing c ost s. The c ore element of...

  • Page 74
    ... to adapt their selling and service capacities in line with increased sales potential, and offer our customers a purchasing and service experience that is appropriate for the brand. At the end of the shor t fiscal year 2 0 1 0 , a total of 7 0 0 dealers served Porsche customers worldwide. To provide...

  • Page 75
    ... in 2 0 1 0 with the goal of optimizing the Volkswagen group's cross-brand sales activities. This enabled us to create ideal conditions for steadily increasing volume and market share and for lifting earnings contributions and sales efficiency while optimizing costs. To leverage synergies and to...

  • Page 76
    ... to not just meet, but to exceed their expectations of the group. For dealers, quality means creating all the requirements for maximizing customer satisfaction as regards advising, scheduling appointments, vehicle handover, order execution, billing and after-sales services. When communicating with...

  • Page 77
    ... company and its products continued to provide the basis for a good working atmosphere and successful business development. One of Porsche's success factors was the renewed increase in the number of employees at the Porsche Zwischenholding GmbH group. As of the repor ting date, the Porsche SE group...

  • Page 78
    ...phase of phased early retirement. 1 0 ,5 4 5 people were in training. The Volkswagen group's total headcount amounted to 3 9 9 ,3 8 1 employees at the end of 2 0 1 0 . This was a 5 .9 percent increase on the figure as of 3 0 June 2 0 1 0 . A total of Targeted marketing at universities In view of it...

  • Page 79
    ...So far, over 2 0 0 young employees of the Volkswagen group have taken this chance to gain initial work experience outside Germany. 1 7 companies in 1 3 different countries now par ticipate in the "Wanderjahre" program. Every year, the Group Board of Management and the World Works Council present the...

  • Page 80
    ... presentations, seminars, or visits to Volkswagen sites, building ties with talented students in the process. high level of quality and state-of-the-ar t production methods at the Pune facility. The new production plant in Chattanooga, Tennessee, USA, is working hard on preparing the star t-up...

  • Page 81
    ... Environment cycles, range and acceptance of electrical vehicles and charging stations, and traffic safety in everyday conditions - will be comprehensively tested. Customers' specific expectations of spor ts cars will also be Environmental management in the Porsche Zwischenholding GmbH group The...

  • Page 82
    ... use of eco-friendly plant technology and resources is taken at Porsche. During the planning and construction of the new paint shop at the Zuffenhausen plant, Porsc he is investing in state-of-the-ar t technology. The exceptionally eco-friendly facility is due to go into operation in early...

  • Page 83
    ... Environmentally friendly production processes at Volkswagen In view of the climate debate and the increasing scarcity of raw materials, Volkswagen uses not only environmentally compatible products but also fuel-efficient and environmentally friendly production processes. The group improved its key...

  • Page 84
    ... to pure e-mobility, a key component of the group's forward-looking fuel and power train strategy, is already clearly marked. In June 2 0 1 0 , the Volkswagen passenger cars brand presented the prototype of the Golf blue e-motion - a vehicle run solely on electricity with a rang e of around 1 5 0 km...

  • Page 85
    ... by the group's efficiency models marketed by the Volkswagen passenger cars brand under the name BlueMotion, as GreenLine models at Å koda and as ECOMOTIVE models at SEAT. Efficiency technologies are also being used in series production at Audi. The group's por tfolio currently includes 2 2 0 model...

  • Page 86
    ... the Porsche Zwischenholding GmbH group and the Volkswagen group as well as the related adjustments to the carrying amounts of these two investments accounted for at equity and the inclusion and consolidation of the remaining Porsche SE subsidiaries' repor ting packages are processed at group level...

  • Page 87
    ... and 7 December 2 0 0 9 , respectively, for group accounting purposes in accordance with IFRSs, Porsche SE now acts as a holding company for its investments in the operating companies Porsche Zwischenholding GmbH and Volkswagen AG. The income of Porsche SE consists mainly of the dividend payments of...

  • Page 88
    ... supervisory board are kept informed of the risk situation in regular repor ts. Specific risks faced by Porsche SE Due its function as a holding company managing its investments in the two operating companies, Porsche SE faces mainly financial and legal risks. Financial risks are managed using...

  • Page 89
    ...31 December 2010. In principle, Porsche SE additionally has at its disposal the aforementioned, currently unused line of credit of 1.5 billion euro. from the sale of Volkswagen AG shares or Porsche Zwischenholding GmbH shares. The remaining funds from the capital increase of up to 2 .5 billion euro...

  • Page 90
    ... loss recognized on the significant investments in Porsche Zwischenholding GmbH and Volkswagen AG recognized in Porsche SE's consolidated financial statements and could reduce the profit or loss repor ted by the Porsc he SE group. In order to ascer tain any need to record an impairment, the company...

  • Page 91
    ... of Volkswagen AG's ordinary shares, were disposed of in full. Derivative financial instruments used by Porsche SE and its remaining subsidiaries are entered into mainly to manage interest rate risks as well as in relation to the sale of the remaining shares in Porsche Zwischenholding GmbH. Any...

  • Page 92
    ... a number of agreements with Volkswagen AG and entities of the Porsche Zwischenholding GmbH group. For fur ther details, we refer to our disclosures on related par ties in note [2 9 ] of the consolidated financial statements of Porsche SE as of 3 1 December 2 0 1 0 . The company's executive board...

  • Page 93
    ... relates to the examination of the management activities of the company's executive board and supervisory board in connection with hedging transactions that Porsche SE concluded to economically secure the ability to under take potential purchases of Volkswagen shares that it might have later decided...

  • Page 94
    .... By avoiding duplicate investment, the annual depreciation charge could be reduced. Moreover, the results of operations of both groups and thereby the profit/ loss from investments accounted for at equity in the Porsche SE group can also be improved by combining purchasing functions and sharing...

  • Page 95
    ...in the organization for cooperation projects. The ultimate decisionmaking body, with representatives of both companies, has sole responsibility for key topics and issues such as project strategy, key figures, technology, quality, deadlines, finances and model updates, and meets several times a year.

  • Page 96
    94 Group management repor t Opportunities and Risks of significant investments Risk report of the Porsche Zwischenholding GmbH group audit or s and the meeting s on the financ ial st atem ent s wit h representat ives of the individual c om panies, at whic h bot h the plausibilit y of t he separ ...

  • Page 97
    ...countermeasures to be taken. The documented repor ting channels mean that management always has access to an overall picture of the current risk situation. Porsche Zwischenholding GmbH and the The leasing and hire-purchase business operated in the group's financial services division is additionally...

  • Page 98
    ... impact on the business operations of Porsche as a group with global operations, for which China represents a major sales market. The situation of the economy as a whole may make potential Porsche customers reluctant to buy a vehicle. Significant risks are also the continuing high prices for energy...

  • Page 99
    ... automotive customers has meant that a large number of automotive manufacturers have had to reduce their prices; cost-intensive marketing measures were implemented to gain an edge on the competition. Porsche also had to offer purchase incentives on several markets in order to optimize sales. The...

  • Page 100
    ... refinanced via a syndicated loan of one billion euro, which falls due at the end of 2011 or, following the exercise of a unilateral option by Porsche AG, one year later. The financial services business of the Porsche Zwischenholding GmbH group is financed primarily via securitization of loan...

  • Page 101
    ... refinancing of the financial services business of Porsche Financial Services are fully hedged through the use of suitable derivatives (e.g., interest swaps). In the case of fixed-rate bonds of the Porsche Zwischenholding GmbH group, there is no interest risk. For the syndicated lines of credit that...

  • Page 102
    ...misjudgments recur, to loss of customers and investment errors in the long term. In order to avoid developing products that do not meet the needs of consumers, Porsche conducts trend studies and market surveys before making decisions on new vehicle projects. Porsche hedges against potential breaches...

  • Page 103
    ... at an early stage. Shor t development times and pressure on costs place high demands on suppliers. Par ts deliveries are regularly subjected to quality and punctuality checks. The group sets itself high quality goals in both the production and the development of new vehicles, taking care to ensure...

  • Page 104
    ... the information currently available, no developments were identified in the Porsche Zwischenholding GmbH group that could jeopardize the ability of the group to continue as a going concern or that could significantly and negatively impact the net assets, financial position and results of operations...

  • Page 105
    ...relevant for the financial reporting process The accounting-related internal control and risk management system that is relevant for the financial statements of Volkswagen AG and the Volkswagen group comprises measures that are intended to ensure the complete, accurate and timely transmission of the...

  • Page 106
    ... planning reviews. At the same time, the results of risk mitigation measures that have already been taken are incorporated into the monthly forecasts on fur ther business development in a timely manner. This means that the board of management always has access to an overall picture of the current...

  • Page 107
    ..., changes in legislation, taxes, or customs duties in individual countries may have a severe adverse effect The Volkswagen group is prepared to enter into transparent risks that are propor tionate to the benefits expected from the business. on international trade and present significant risks to the...

  • Page 108
    10 6 Group management repor t be espec ially affec ted if c om pet ing automakers were t o fur ther st ep up t heir sales inc entives. Freig ht tr anspor t at ion fac es the r isk of t r anspor ted volum es being shift ed from c om merc ial vehic les t o ot her means of t r anspor t . The ...

  • Page 109
    ... plants to current market conditions. The ability to implement extensive flexibility measures within the existing working time models as the situation demands also mitigates the risk. Risks arising from changes in demand The Volkswagen group's wide variety of research and development activities...

  • Page 110
    ... in demand towards smaller segments and engines. The Volkswagen group is countering the risk that a shift negatively impacts its financial result by continuously developing new, fuel-efficient vehicles and alternative fuels on the basis of its fuel and drive train strategy. In the rapidly expanding...

  • Page 111
    ... lead the way for fur t her international reg ulations planned for fuel c onsum ption and g reenhouse g ases, for example in China, India, the USA and Korea. The dr aft inter nat ional reg ulations spec ify a c onc rete time horizon to t he year 2 0 2 0 , or in some c ases 2 0 2 5 . The inc reasing...

  • Page 112
    ... SE, in whic h Volkswag en holds a 2 8 .6 7 perc ent int erest . Suc h invest ig at ions nor m ally take sever al year s. It is st ill too ear ly t o judg e whet her t hese invest ig at ions pose any r isk t o Sc ania or MAN. Strategies for hedging financial risks The Volkswag en g roup's business...

  • Page 113
    ... liquidity r isks. Channeling excess liquidity into investments gives rise to counterpar ty risk. Par tial or complete failure by a counterpar ty to per form its obligation to pay interest and repay principal would have a negative impact on earnings and liquidity. The Volkswagen group counters this...

  • Page 114
    112 Group management repor t Residual value risk in the financial services business In t he financ ial ser vic es business, t he Volkswag en g roup ag rees t o buy bac k selec ted vehic les at a residual value that is fixed at inc eption of the c ontr ac t . Residual values are set realistic ally ...

  • Page 115
    ... the two former members of the executive board may have taken risks jeopardizing the company's ability to continue as a going concern by entering into share price hedging transactions in the course of acquiring the shareholding in Volkswagen AG. According to the public prosecutor, the Subsequent...

  • Page 116
    ... g lobal ec onom y as a whole. Interest rate developments At the end of the repor ting period, it remained unclear which central bank would be first to increase the key interest rates, and when. These points are not expected to be clarified for several months. At present, not even the rising global...

  • Page 117
    ... large number of fascinating new models to the market, thus fur ther expanding the group's strong position in the global markets. Volkswagen therefore expects its deliveries to customers to increase as against the previous year. The Volkswagen group expects its sales revenue and operating profit in...

  • Page 118
    ... ber 2 0 1 0 t he annual g ener al meet ing of Por sc he SE addit ionally authorized Por sc he SE's exec utive board, subjec t to t he approval of t he super visor y board, t o issue c onver tible bonds and c or responding inst r uments in a t ot al nominal amount of up t o 5 billion euro. The above...

  • Page 119
    ... the basic ag reement . However, the exec ut ive board of Por sc he SE is c ur rently of t he opinion that t he assessm ent s c an be finalized so t im ely, t hat t he m erg er c an be ac hieved even aft er 2 0 1 1 . Stuttgar t, 2 8 February 2 0 1 1 Porsche Automobil Holding SE The executive board

  • Page 120
    ...comparable prior-year period. Total vehicle deliveries came to 4 1 ,7 4 9 , exceeding the prior-year figure by 3 7 percent. Deliveries to customers were evenly distributed across the three big regions: the Americas, Europe and Asia. A key driver of this positive development was the new Cayenne. With...

  • Page 121
    ... increase on the comparable prior-year figure. The most successful model series was the Cayenne with 8 4 4 deliveries, followed by the Panamera with 1 1 3 units. While sales of the 9 1 1 increased to 1 4 2 vehicles, 1 6 7 units of the mid-engined spor ts cars were delivered to customers. order...

  • Page 122
    ...Panamera consolidated its market share of just under ten percent, with 2 4 4 units sold (prior-year period: 2 8 4 ). The new Cayenne was enthusiastically received: with 1 ,0 8 7 units sold (prioryear period: 4 0 0 ), deliveries almost trebled. The total number of vehicles delivered to customers rose...

  • Page 123
    ... network, deliveries to customers increased by 7 6 percent in comparison to the prior-year period to 5 9 6 vehicles. With 3 4 4 new vehicles delivered, the new Cayenne more than trebled its prior-year figure; and the Cayenne Diesel was the most successful model in the series with 2 1 4 vehicles...

  • Page 124
    ... crisis. Sales of Volkswagen passenger cars came to 2 ,2 3 9 ,0 9 4 units in the second half of the year. Audi deliveries totaled 5 3 7 ,4 7 2 vehicles in the reporting period. In the second half of the year, 3 8 3 ,8 5 3 units were delivered to customers of the Å koda brand. The SEAT brand notched...

  • Page 125
    ... Deliveries in Germany In the German passenger car market, 5 0 5 ,6 5 2 Volkswagen group vehicles were delivered to customers in the repor ting year. There was increased demand for the Audi Q5 and in SEAT Altea XL in 2 0 1 0 . Demand also increased for the new Touareg, Audi A4 allroad quattro, Audi...

  • Page 126
    124

  • Page 127
    125 Financials

  • Page 128
    126

  • Page 129
    ... of the Porsche SE group for the period from 1 August 2010 to 31 December 2010 â,¬ million Other operating income Personnel expenses Amortization of intangible assets and depreciation of property, plant and equipment, leased assets and investment property Other operating expenses Profit/loss from...

  • Page 130
    128 Financials Consolidated statement of comprehensive income of the Porsche SE group for the period from 1 August 2010 to 31 December 2010 â,¬ million Profit/loss for the year Securities marked to market Cash flow hedges Currency translation Other comprehensive income from investments accounted ...

  • Page 131
    129 Consolidated balance sheet of the Porsche SE group as of 31 December 2010 â,¬ million Assets Intangible assets Property, plant and equipment Investments accounted for at equity Other financial assets Leased assets Investment property Other receivables and assets Deferred tax assets Non-current...

  • Page 132
    130 Financials Consolidated statement of cash flows of the Porsche SE group for the period from 1 August 2010 to 31 December 2010 â,¬ million 1. Operating activities Profit/loss for the year Amortization and depreciation Change in provisions for pensions and similar obligations Change in other ...

  • Page 133
    ... paid for other financial liabilities Cash flow from financing activities SFY 2010 2009/10 - 17 - 11 0 0 0 0 0 0 0 - 28 -8 - 39 3 - 10,857 - 3,616 8,196 1,893 3,928 -7 - 507 4. Cash funds Change in cash funds (subtotal of 1 to 3) Exchange-rate related change in cash funds Cash funds as of 31...

  • Page 134
    ...Financials Consolidated statement of changes in equity of the Porsche SE group for the period from 1 August 2010 to 31 December 2010 Subscribed capital Capital reserves Accumulated profit Securities marked to market â,¬ million As of 31 July 2009 175 122 11,133 17 Profit/loss for the year...

  • Page 135
    133 Retained earnings Accumulated other comprehensive income Cash flow hedges Currency translation Investments accounted for at equity Revaluation reserves Equity before noncontrolling interests Noncontrolling interests - hybrid capital investors Noncontrolling interests - others Equity 243 ...

  • Page 136
    ... fiscal year have been taken into account. The requirements of the standards and interpretations applied were satisfied in full. The financial statements thus give a true and fair view of the net assets, financial position and results of operations and cash flows of the Porsche SE group (Porsche SE...

  • Page 137
    ... in Porsche Zwischenholding GmbH and Volkswagen AG. As separate assets the investments do not meet the definition of operating segments, and segment reporting in accordance with IFRS 8 is therefore not necessary. The consolidated financial statements and group management report of Porsche SE were...

  • Page 138
    136 Financials The number of companies included in the consolidated financial statements of Porsche SE as of the reporting date is shown in the following table: 31/12/2010 Fully consolidated subsidiaries Germany International Subsidiaries accounted for at cost Germany Associates and joint ...

  • Page 139
    ... holds 50.74% of the voting rights in Volkswagen AG. Since this point in time, the investment in Volkswagen AG has been accounted for at equity in the consolidated financial statements of Porsche SE. When the reporting date of a subsidiary or associate is different from that of the parent company...

  • Page 140
    ... of Porsche SE, which holds 100% of the shares in (the new company) Porsche AG. Porsche's operating business was transferred with legal effect to (this new) Porsche AG. On 7 December 2009, Volkswagen AG assumed a 49.9% shareholding in Porsche Zwischenholding GmbH in the course of a capital increase...

  • Page 141
    ...work capitalized Total operating performance Other operating income Cost of materials Personnel expenses Amortization of intangible assets and depreciation of property, plant and equipment, leased assets and investment property Other operating expenses Profit/loss before financial result Profit/loss...

  • Page 142
    ... 43,414 8,361 16,128 61,849 24,696 34,230 13,942 25,184 82,735 43,612 As a consideration for the assets and liabilities derecognized, the remaining investments in Porsche Zwischenholding GmbH and Volkswagen AG were recognized at their fair value totaling â,¬15,941 million in the comparative period.

  • Page 143
    ... (rev. 2008), in the comparative period the Volkswagen group was included in the consolidated financial statements of Porsche SE as of a reporting date that differs by one month from that of the Porsche SE group. As a result of the change in Porsche SE's fiscal year in SFY 2010, the Volkswagen group...

  • Page 144
    ...purchase price allocation performed for the purpose of accounting at equity. Interests in joint ventures Porsche Zwischenholding GmbH is a significant joint venture from the date of its deconsolidation on 7 December 2009. In the comparative period, significant joint ventures of the Porsche SE group...

  • Page 145
    ... as of the reporting date of the consolidated financial statements, which is the reporting date of Porsche SE. Where necessary, adjustments are made to the uniform group accounting policies. Business combinations are accounted for by applying the acquisition method pursuant to IFRS 3 (rev. 2008).

  • Page 146
    ...the parent company continues to hold shares in the previous subsidiary, such shares are measured at fair value on the date of loss of control. If the shares are listed on the stock exchange, the fair value of the shares on the date when control is lost is the product of the number of shares retained...

  • Page 147
    ... is changed to reflect the Porsche SE group's share of changes in net assets of the associate or joint venture. The group's share in profit/loss after tax and non-controlling interests is recognized in the income statement within the item "profit/loss from investments accounted for at equity". This...

  • Page 148
    ...in the reporting period for both the investment in Volkswagen AG and the investment in Porsche Zwischenholding GmbH. Value in use was determined for both investments using the discounted cash flow method. The most recent five-year plan approved by the management of the equity investments was used as...

  • Page 149
    ... Closing rate Porsche SE group and Porsche Zwischenholding GmbH group1 â,¬1= Argentina Australia Brazil China United Kingdom India Japan Canada Mexico Poland Republic of Korea Russia Sweden South Africa Czech Republic USA ARS AUD BRL CNY GBP INR JPY CAD MXN PLN KRW RUB SEK ZAR CZK USD 31/12/2010...

  • Page 150
    148 Financials Income statement Average rate Porsche SE group and Porsche Zwischenholding GmbH group1 â,¬1= Argentina Australia Brazil China United Kingdom India Japan Canada Mexico Poland Republic of Korea Russia Sweden South Africa Czech Republic USA ARS AUD BRL CNY GBP INR JPY CAD MXN PLN KRW ...

  • Page 151
    ... for foreign currency translation purposes in the then Porsche subgroup. For the same reason, average exchange rates for the period from 1 July 2009 to 3 December 2009 and closing rates as of 3 December 2009 were used for the then Volkswagen subgroup in the comparative period. The foreign currency...

  • Page 152
    ... information for SFY 2010 is based on the same accounting policies as for the fiscal year 2009/10. Since the contributions to profit or loss made by the investments accounted for at equity have a significant impact on the net assets and results of operations of the Porsche SE group, the accounting...

  • Page 153
    ...the point in time at which all recognition criteria are met. Capitalized development costs are amortized beginning at the start of production using the straight-line method over the expected useful life of the product, taking any impairments into account. The useful life is usually five to ten years...

  • Page 154
    ... operating leases are vehicles leased from the group's leasing companies and are presented in non-current assets. Leased vehicles are recognized at cost and depreciated on a straight-line basis over the term of the lease to the lower of estimated residual value and fair value. Where group companies...

  • Page 155
    ... test is performed at least once a year for goodwill, capitalized costs for products under development and intangible assets with an indefinite useful live. For intangible assets with finite useful lives, property, plant and equipment as well as investments accounted for at equity an impairment test...

  • Page 156
    ... the relevant brand organizations. In the case of other intangible assets and property, plant and equipment, the product or model series was used to determine the cash-generating units. Investment property Investment property held to generate rental income is accounted for at depreciated cost. The...

  • Page 157
    155 Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. If the carrying amounts are no longer realizable due to a decrease in prices, inventories are written down ...

  • Page 158
    ... the risk management and investment strategy. No financial assets or liabilities were classified as at fair value through profit or loss upon initial recognition in the short fiscal year. Any financial instruments held to maturity are accounted for at amortized cost. Gains and losses from the...

  • Page 159
    ... as non-current financial assets that are not accounted for at equity also constitute available-for-sale financial instruments and are generally measured at fair value. If no active market exists and fair value cannot be reliably estimated, they are measured at cost. The Porsche SE group did not...

  • Page 160
    ...Porsche SE's remaining 50.1% of shares in Porsche Zwischenholding GmbH. In the reporting period, the cash-settled options relating to Volkswagen AG shares that remained as of the end of the prior period were disposed of in full. Derivative financial instruments are generally recognized at fair value...

  • Page 161
    ... for use by the Porsche SE group. There was no longer any restricted cash as of the reporting date. Deferred taxes Deferred tax assets are generally recognized for deductible temporary differences between the tax base and carrying amounts in the consolidated balance sheet (taking into account...

  • Page 162
    ... gain or loss on sale are disclosed separately in the income statement as profit from discontinued operations below the profit from continuing operations. The prior-year information in the income statement is restated accordingly. Under IFRS 5, non-current assets or groups of assets and liabilities...

  • Page 163
    ... on actuarial expert opinions taking into account biometric assumptions. The interest rate used to discount provisions is determined on the basis of the return on long-term high-quality corporate bonds at the reporting date. If pension obligations are funded by plan assets the obligation and the...

  • Page 164
    ... until the point in time when the significant opportunities and risks associated with ownership of the goods and products being sold are transferred to the buyer. Revenue is reported net of discounts, customer bonuses and rebates. Income from assets for which a group entity has a buy-back obligation...

  • Page 165
    ... contingent assets and contingent liabilities. These judgments and estimates reflect the current information available. Key sources of estimations are the parameters influencing the profit or loss from investments accounted for at equity such as the fair value from purchase price allocations, useful...

  • Page 166
    ... include new information about the buying behavior on the sales markets and in response to this changes in planning, dependency on suppliers, in particular exclusive suppliers, developments in exchange rates, interest rates and the price of raw materials as well as environmental and other legal...

  • Page 167
    165 New accounting standards a) The following new or revised standards and interpretations which were adopted for first time in the short fiscal year had no material effect on the consolidated financial statements IFRIC 19 "Extinguishing Financial Liabilities with Equity Instruments" IFRIC 19 ...

  • Page 168
    ... of the Porsche SE group's net assets, financial position and results of operations or on its cash flows. In addition, a number of other changes were presented in the consolidated financial statements for the fiscal year 2009/10 which had still not been applied in SFY 2010. Voluntary early adoption...

  • Page 169
    ...increase in the investment in Volkswagen AG. This strategy is not to be pursued further and such stock options were no longer held as of the reporting date. The income reported from valuation of options on non-stock company shares contains the change in the fair value of the put option of Porsche SE...

  • Page 170
    ...valuation of options on non-stock company shares contain the change in the fair value of the call option of Volkswagen AG relating to the remaining shares in Porsche Zwischenholding GmbH. [4] Profit/loss from investments accounted for at equity The profit or loss from investments accounted for at...

  • Page 171
    ... the Porsche Zwischenholding GmbH group and the Volkswagen group that was required for the purpose of accounting for the entities at equity was completed in early December 2010. No restatements had to be made to the figures contained in the consolidated financial statements for the fiscal year 2009...

  • Page 172
    ... year: â,¬123 million) from financial instruments that are not measured at fair value through profit or loss. [7] Income tax The income tax expense (+) and income (-) disclosed breaks down into: â,¬ million Current tax income/expense, Germany Current tax income/expense, other countries Current...

  • Page 173
    ... of profit/loss from investments accounted for at equity. The effects relating to other periods are essentially due to the decision made by the tax authorities regarding the tax treatment of stock option transactions. Since no deferred tax assets or liabilities were recognized in SFY 2010, no...

  • Page 174
    ... to shareholders of Porsche SE Profit/loss attributable to ordinary shares (basic) Profit/loss attributable to preference shares (basic) Profit/loss attributable to ordinary shares (diluted) Profit/loss attributable to preference shares (diluted) Average number of ordinary shares outstanding Average...

  • Page 175
    ... other financial liabilities" mainly contains the cash contribution of â,¬3.9 billion passed on to Porsche SE as a loan from Porsche Zwischenholding GmbH which had been contributed to Porsche Zwischenholding GmbH by Volkswagen AG in the course of the capital increase. The cash flow from operating...

  • Page 176
    ... for the Porsche Zwischenholding GmbH group and the Volkswagen group), income from the initial equity accounting of the Volkswagen group and the dilutive effect arising from the capital increase performed at Volkswagen AG. The cash flow from operating activities includes: SFY 2010 2009/10 thereof...

  • Page 177
    ... the cash flows from these stock options, in the cash flow from investing activities. Since the remaining cash-settled options relating to Volkswagen AG shares were disposed of in SFY 2010, there are no restricted cash and cash equivalents as of 31 December 2010. The time deposits represent current...

  • Page 178
    ... continuing operations Net carrying amount 31 July 2010 Net carrying amount 31 December 2010 0 0 0 0 0 0 0 0 0 0 0 0 10,449 1 0 0 0 10,450 0 0 Capitalized development costs for products currently in use Capitalized costs for products under development Brands Other intangible assets Total 7,356...

  • Page 179
    ...[12] Development of property, plant and equipment â,¬ million Cost As of 1 August 2009 Additions due to initial consolidation Additions Exchange differences Reclassifications Disposals due to deconsolidation Other disposals As of 31 December 2009 Depreciation As of 1 August 2009 Additions Exchange...

  • Page 180
    ... of investments accounted for at equity and other financial assets The investments accounted for at equity comprise a carrying amount of the investment in Volkswagen AG of â,¬20,709 million (prior year: â,¬19,086 million) and a carrying amount for the investment in Porsche Zwischenholding GmbH of...

  • Page 181
    ... leased assets and investment property Leased assets Investment property â,¬ million Cost As of 1 August 2009 Additions due to initial consolidation Additions Changes from accounting at equity Exchange differences Reclassifications Disposals due to deconsolidation Other disposals As of 31 July 2010...

  • Page 182
    ... period totaling â,¬223 million related to assets of the Volkswagen group. They were incurred on account of changes in the market arising from volume and exchange rate fluctuation and, with respect to the leased assets, also from developments of the residual values. The impairment losses recognized...

  • Page 183
    ... mandatory or optional grounds for insolvency have arisen at Porsche AG. The loan receivables from the Porsche Zwischenholding GmbH group thus exceed the corresponding financial liabilities by a total of â,¬136 million (prior year: â,¬136 million). There is neither a guarantee by Volkswagen AG for...

  • Page 184
    ...-stock company shares contain the positive fair value of the put option relating to the remaining shares held by Porsche SE in Porsche Zwischenholding GmbH. The right to exercise the put option has been assigned as collateral for financial liabilities to banks. The claims from Volkswagen AG arising...

  • Page 185
    ... of the supervisory board, to set the subscription price as high as possible, but at no less than â,¬2.00 per share, taking into account the market situation prevailing prior to performance of the capital increase. The number of new ordinary and preference shares to be issued is to be determined...

  • Page 186
    ... to the approval of the supervisory board, to increase the company's share capital, on one or more occasions, by a maximum amount of â,¬87,500,000.00 by issuing new ordinary shares or non-voting preference shares in return for contributions in cash or in kind. The authorization may only be exercised...

  • Page 187
    ... to preclude the subscription rights of shareholders if new ordinary bearer shares are issued in return for a contribution in kind to effect the acquisition of other entities, operations of other entities, equity investments in other entities or other assets. The subscription price, which has yet to...

  • Page 188
    ... statements of Porsche SE as of 31 December 2010 report a net profit available for distribution of â,¬440 million. A proposal for the appropriation of profit was not available for submission to the annual general meeting by the time the financial statements were authorized by the executive board...

  • Page 189
    ... plan at the level of the Volkswagen group, which was deconsolidated in the comparative period, entitled the optionees - the board of management of Volkswagen AG, group senior executives and management, as well as employees of Volkswagen AG covered by collective pay agreements - to purchase options...

  • Page 190
    ... As of 1 July 2009 Disposed of in fiscal year due to deconsolidation As of 31 July 2010 554.75 554.75 0 Convertible bonds Number 15,432 15,432 0 1 Conversion price per ten shares Capital management Until loss of control over the Porsche Zwischenholding GmbH group and the Volkswagen group at the...

  • Page 191
    ... measurement date taking probable future increases in pensions and salaries into account. The defined benefit obligation for active employees increases annually by the interest cost plus the present value of the new benefit entitlements earned in the current period. Actuarial gains or losses result...

  • Page 192
    ... present value of pension obligations â,¬ million As of 1 August Exchange differences Current service cost Interest expenses Past service cost Actuarial gains (-) and losses (+) Benefits paid Employee contributions Changes to consolidated group Other changes As of 31 December and 31 July SFY 2010...

  • Page 193
    191 Development of plan assets â,¬ million As of 1 August Exchange differences Expected return on plan assets Actuarial gains (+) and losses (-) Benefits paid Employer contributions Employee contributions Changes to consolidated group Other changes As of 31 December and 31 July SFY 2010 0 0 0 0 0...

  • Page 194
    ... tax payments and litigation costs. 82% of the other provisions are expected to result in cash outflows in the following year and 18% in between one and five years. Other provisions developed as follows: â,¬ million Provisions for employee expenses Sundry other provisions As of 1/8/2010 11 134 145...

  • Page 195
    ... trade payables disclosed, amounting to â,¬33 million (prior year: â,¬6 million), were mainly liabilities for legal and consulting services. [22] Non-current and current financial liabilities Financial liabilities break down as follows: â,¬ million Total Current Non-current 31 December 2010...

  • Page 196
    ... in Porsche Zwischenholding GmbH held by Porsche SE. In the comparative period, this item additionally included the carrying amount of cash-settled options relating to Volkswagen AG shares. The non-current other liabilities contain derivative financial instruments totaling â,¬942 million (prior year...

  • Page 197
    ...942 942 942 31/7/2010 22 395 417 417 The options on non-stock company shares contain the fair value of Volkswagen AG's call option relating to the remaining shares held by Porsche SE in Porsche Zwischenholding GmbH. The claims arising at the level of Porsche SE if the call option is exercised were...

  • Page 198
    ... situation in the Porsche SE group, the monitoring of the enterprise value of Porsche Zwischenholding GmbH and Volkswagen AG, the development of interest levels on the capital markets and monitoring of the financial ratios. Prior to the disposal of all cash-settled options relating to Volkswagen AG...

  • Page 199
    ... no past due or impaired financial assets in the Porsche SE group. â,¬ million Valuation allowances as of 1 August Exchange differences Additions Utilization Reversal Changes to consolidated group Valuation allowances as of 31 December and 31 July SFY 2010 0 0 0 0 0 0 0 2009/10 864 0 0 0 0 - 864...

  • Page 200
    ... of the Porsche SE group is continuously monitored by means of liquidity planning. Solvency and liquidity are additionally secured by a cash liquidity reserve and guaranteed credit lines. The total credit line available to Porsche SE amounts to â,¬8,500 million as of the reporting date (prior year...

  • Page 201
    ...,164 In the prior year, the item 'derivative financial instruments' included effects from interest hedges and stock option transactions. The financial guarantees mostly relate to financial liabilities of the Porsche Zwischenholding GmbH group. Volkswagen AG has issued a hold harmless agreement for...

  • Page 202
    ..., the cash-settled options relating to Volkswagen AG shares which were still held in the reporting year but had been disposed of in full by the reporting date, changes in the enterprise value of Porsche Zwischenholding GmbH and to a small extent from cash investments. It is company policy to...

  • Page 203
    ... rates). As in the prior year, a decrease in the market interest rates by 50 base points as of 31 December 2010 would not have affected profit. 4.2.2 Stock price risk Stock option transactions were entered into in connection with the plans in the past to increase the share in Volkswagen AG...

  • Page 204
    .... This is partially offset by the accounting for the investment in Volkswagen AG at equity, as the accounting for the options at the level of Volkswagen AG has the opposite effect on the pro rata profit/loss attributable to Porsche SE in accordance with its share in capital held in Volkswagen AG.

  • Page 205
    ...remaining derivative financial instruments. The notional amounts of options on nonstock company shares contain the put option relating to the remaining shares held by Porsche SE in Porsche Zwischenholding GmbH amounting to â,¬3,893 million and the call option of the same amount. Market values of the...

  • Page 206
    ... financial instruments is determined by reference to stock market listings, reference prices or generally accepted valuation models such as the discounted cash flow method. The following term structure of interest rates is used where appropriate (amounts given in %): EUR Interest rate for 6 months...

  • Page 207
    ...assets at fair value through profit or loss Derivative financial instruments Financial assets accounted for at fair value Financial liabilities at fair value through profit or loss Derivative financial instruments Financial liabilities accounted for at fair value 31/12/2010 Level 1 Level 2 Level...

  • Page 208
    ...observable market data. These include options for equity instruments of non-listed companies. The put and call options relating to the shares in Porsche Zwischenholding GmbH remaining at Porsche SE were therefore allocated to level 3. The cash-settled options relating to shares in Volkswagen AG were...

  • Page 209
    ... risk variables for measurement of the options held by Porsche SE for the remaining shares in Porsche Zwischenholding GmbH is the enterprise value in each case and the executive board's assessment of the theoretical probability of exercise. Effects on profit or loss arising from a change in the risk...

  • Page 210
    ... the market in Volkswagen shares. According to the public prosecutor, the allegations involve public statements made by representatives of Porsche SE and the failure to make certain required statements regarding the acquisition of the shareholding in Volkswagen AG between 2007 and 2009. In...

  • Page 211
    ... that the two former members of the executive board may have taken risks jeopardizing the company's ability to continue as a going concern by entering into share price hedging transactions in the course of acquiring the shareholding in Volkswagen AG. Furthermore, the public prosecutor has launched...

  • Page 212
    210 Financials For resulting risks associated with the planned merger of Porsche SE into Volkswagen AG, please refer to the "Litigation risk" section in the risk report presented as part of Porsche SE's group management report. The company believes that adequate provisions have been recognized for...

  • Page 213
    ... the two former members of the executive board may have taken risks jeopardizing the company's ability to continue as a going concern by entering into share price hedging transactions in the course of acquiring the shareholding in Volkswagen AG. According to the public prosecutor, the investigations...

  • Page 214
    ... Porsche-Daxer-Piëch Beteiligung GmbH, which we represent in legal matters, with registered offices in Stuttgart, Kronenstrasse 30, D-70174 Stuttgart, in accordance with Sec. 21 (1) Sentence 1 WpHG ["Wertpapierhandelsgesetz": German Securities Trading Act] that the share of voting rights in Dr. Ing...

  • Page 215
    ... to the notification of 22 December 2000: The voting share held by each notifying party in Porsche Automobil Holding SE (formerly: Dr. Ing. h.c. F. Porsche Aktiengesellschaft), Porscheplatz 1, 70435 Stuttgart, Germany, exceeded the voting right thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% and...

  • Page 216
    ... No. 1 WpHG new version were held via the following controlled companies, whose share of voting rights amounted to 3% or more each: Notifying party Prof. Ferdinand Alexander Porsche GmbH, Salzburg, Austria Ing. Hans-Peter Porsche GmbH, Salzburg, Austria Gerhard Anton Porsche GmbH, Salzburg, Austria...

  • Page 217
    ...share of the voting rights held in Porsche Automobil Holding SE (formerly: Dr. Ing. h.c. F. Porsche Aktiengesellschaft), Porscheplatz 1, 70435 Stuttgart, exceeded the voting right...WpHG in the currently applicable version ("new version") and a share of 76.43% (668,749 voting rights) was allocated ...

  • Page 218
    ... to the notification of 5 February 1997: The voting share held by each notifying party in Porsche Automobil Holding SE (formerly: Dr. Ing. h.c. F. Porsche Aktiengesellschaft), Porscheplatz 1, 70435 Stuttgart, Germany, exceeded the voting right threshold of 75% on 3 February 1997 and on that...

  • Page 219
    ... voting share of Ferdinand Karl Alpha Privatstiftung, Vienna, Austria in Porsche Automobil Holding SE, registered under HRB 724512 at the Stuttgart local court, with registered office in Stuttgart and the business address Porscheplatz 1, D-70435 Stuttgart, exceeded on 30 July 2008 the voting right...

  • Page 220
    ..., Germany, as a correction to the announcement of 3 January 2003 pursuant to Sec. 21 (1) WpHG, that the share of voting rights in Porsche Automobil Holding SE (at that time operating under the name Dr. Ing. h.c. F. Porsche Aktiengesellschaft), Porscheplatz 1, 70435 Stuttgart held by Familie Porsche...

  • Page 221
    ... Daxer-Piëch GmbH, Stuttgart Prof. Ferdinand Alexander Porsche GmbH, Salzburg, Ferdinand Alexander Porsche GmbH, Stuttgart Ing. Hans-Peter Porsche GmbH, Salzburg, Hans-Peter Porsche GmbH, Stuttgart 3% or more of the voting rights arising from the shares of the following shareholders were allocated...

  • Page 222
    ...based in Grünwald, Germany, Porsche GmbH, Stuttgart, Germany. Notification on 14 May 2009: On 23 December 2008, at 7.22 p.m., Porsche Automobil Holding SE issued a 'Correction to the publication of a miscellaneous voting right announcement' entitled 'Correction of a publication pursuant to Sec. 25...

  • Page 223
    ..., Germany, as a correction to the announcement of 3 January 2003 pursuant to Sec. 21 (1) WpHG, that the share of voting rights in Porsche Automobil Holding SE (at that time operating under the name Dr. Ing. h.c. F. Porsche Aktiengesellschaft), Porscheplatz 1, 70435 Stuttgart held by Familie Porsche...

  • Page 224
    ... of Qatar Investment Authority, P.O. Box: 23224, Doha, Qatar, that its indirect voting rights in Porsche Automobil Holding SE exceeded the thresholds of 3% and 5% and reached the threshold of 10% on 28 August 2009 and amounted to 10% of the voting rights of Porsche Automobil Holding SE (8,750,000...

  • Page 225
    ...as per this date. Frankfurt am Main, 18 December 2009" Notification on 5 October 2010: On 5 October 2010, Porsche Wolfgang 1. Beteiligungs GmbH & Co. KG, Stuttgart informed us in accordance with Sec. 21 (1) WpHG that its voting rights share in Porsche Automobil Holding SE exceeded the thresholds of...

  • Page 226
    ... between the Porsche SE group and the Porsche and Piëch families and their affiliated companies. Until the date of deconsolidation of the Porsche Zwischenholding GmbH group and the Volkswagen group, the volume of trade in the vehicles and parts business came to â,¬1,568 million, and trade in the...

  • Page 227
    ... property rights required for Porsche AG's operations. Volkswagen AG will hold Porsche SE harmless from certain financial guarantees issued by Porsche SE to the creditors of entities in the Porsche Zwischenholding GmbH group for the amount of its share in Porsche Zwischenholding GmbH's capital...

  • Page 228
    ... the 2007 and/or 2009 spin-off, the purchase price payable by Volkswagen AG for transfer of the remaining 50.1% share in Porsche Zwischenholding GmbH will be increased by the present value of the tax advantages in the event that Porsche SE exercises its put options. In order to secure any remaining...

  • Page 229
    ...of members of Porsche SE's executive board and supervisory board amounted to â,¬0.4 million (prior year: â,¬3.1 million). Goods were delivered and services rendered to members of the executive board and supervisory board on a small scale, mainly for transactions in the vehicle and parts business, in...

  • Page 230
    ... Financials [30] Remuneration of the supervisory board and the executive board The total remuneration of members of Porsche SE's executive board amounted to â,¬0.9 million in SFY 2010 (prior year: â,¬4.1 million). It comprises the remuneration paid by Porsche SE. In the comparative period, total...

  • Page 231
    ...supervisory board of Porsche SE issued the declaration required by Sec. 161 AktG on 13 October 2010 and made it permanently accessible to the shareholders of Porsche SE on the webpage www.porsche-se.com. Stuttgart, 28 February 2011 Porsche Automobil Holding SE The executive board Prof. Dr. Martin...

  • Page 232
    ... financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the group management report, which has been combined with the management report of Porsche SE, includes a fair review of the development and performance of the business...

  • Page 233
    231 Auditors' report of the group auditor "We have audited the consolidated financial statements prepared by Porsche Automobil Holding SE, Stuttgart, comprising the income statement, the statement of comprehensive income, the balance sheet, the statement of cash flows, the statement of changes in ...

  • Page 234
    ... Members of the supervisory board of Porsche Automobil Holding SE Dr. Wolfgang Porsche (chairman) A) B) Dr. Ing. h.c. F. Porsche AG, Stuttgart (chairman) Volkswagen AG, Wolfsburg Porsche Holding GmbH, Salzburg (deputy chairman) Porsche Ges.m.b.H., Salzburg (deputy chairman) Porsche Retail GmbH...

  • Page 235
    ...Salzburg Porsche Retail GmbH, Salzburg Porsche Austria GmbH, Salzburg Dr. Ferdinand Oliver Porsche A) Dr. Ing. h.c. F. Porsche AG, Stuttgart Volkswagen AG, Wolfsburg AUDI AG, Ingolstadt Voith GmbH, Heidenheim Porsche Lizenz- und Handelsgesellschaft mbH & Co. KG, Bietigheim-Bissingen PGA S.A., Paris...

  • Page 236
    ... Inc., Wilmington SEAT S.A., Martorell B) (Disclosures pursuant to Sec. 285 No. 10 HGB) As of 31 December 2010 or the date on which members left the executive board of Porsche Automobil Holding SE. A) Membership in German statutory supervisory boards B) Comparable offices in Germany and abroad

  • Page 237
    235 Balance sheet of Porsche Automobil Holding SE as of 1 31 December 2010 â,¬ million Assets Non-current assets Financial assets Current assets Trade receivables Other receivables and assets Cash and cash equivalents 31/12/2010 31/7/2010 24,771 24,771 4,027 302 622 4,951 24,771 24,771 4,348 ...

  • Page 238
    236 Financials Income statement of Porsche Automobil Holding SE for the period from 1 August 2010 to 31 December 2010 â,¬ million Other operating income Personnel expenses Other operating expenses Income from investments Interest result Income from ordinary activities Extraordinary expenses Taxes...

  • Page 239
    ... Porsche Automobil Holding SE Stuttgart Photography Porsche AG, Stuttgart Volkswagen AG, Wolfsburg AUDI AG, Ingolstadt Design Concept Simone Leonhardt Frankfurt Production IThaus Münster GmbH & Co. KG Kornwestheim Produced in-house using FIRE.sys © 2011 Porsche Automobil Holding SE, Stuttgart