Porsche 2011 Annual Report Download - page 99

In addition, the financial services segment in
the Volkswagen group is subject to regular special
audits by the Federal Financial Supervisory Authority
(BaFin) pursuant to Sec. 44 of the German Banking
Act (KWG) and controls by association auditors.
Specific risks faced by Porsche SE
Due its function as a holding company man-
aging its investments in the two operating companies,
Porsche SE faces mainly financial and legal risks.
Financial risks are managed using a comprehensive
liquidity and financial management system that consti-
tutes the central component of the integrated early
warning system for the detection of risk. Freely avail-
able liquidity is a significant financial and risk indicator
as it connects both the financing and the investment
strategy and is therefore included in the regular re-
porting.
Risks originating from the capital and credit
markets
Continuous monitoring ensures that the ex-
ecutive board is informed at an early stage about
changes in the conditions on the credit and capital
markets allowing it to develop and decide on suitable
methods of handling and transferring the risk. The
main focus here is primarily on the situation on the
financial markets. The relationship to creditors is
another key aspect of the strategic considerations
and risk analyses.
Following the capital increase performed in
April 2011, the partial repayment of the syndicated
loan which existed at that time, and following refi-
nancing in October 2011 within the scope of the new
syndicated loan, the total loan facility available to
Porsche SE now amounts to 3.5 billion euro, of which
2.0 billion euro has currently been drawn. The im-
plementation of the financing strategy also includes
ongoing checks to determine the extent to which
hedges of exposure to changes in interest rates are
beneficial from the company's point of view. In the
process, potential risks inherent in the interest com-
ponents of the debt capital carried by Porsche SE
are analyzed in terms of the expected development
of interest rates and transferred to third parties if
appropriate.
Liquidity risks
The issue proceeds from the capital increase
performed in April 2011 led to a cash inflow of a-
round 4.9 billion euro. Other significant cash inflows
resulted from dividends paid by Volkswagen AG and
Porsche Zwischenholding GmbH as well as from
income tax refunds. The early partial repayment of
the syndicated loan from the issue proceeds and
from available liquidity led to a cash outflow of 5.0
billion euro. Other cash outflows were attributable in
particular to the tax and interest payments that re-
mained following the decision by the tax authorities
concerning the tax treatment of stock option transac-
tions in November 2010, other interest payments
from loan liabilities, and the distribution of the divi-
dend approved by the annual general meeting for the
short fiscal year 2010 of 0.50 euro per preference
share. This resulted in a total decrease in the Por-
sche SE group's gross liquidity compared to 31
December 2010 with a simultaneous significant
improvement in net liquidity.
In October 2011, Porsche SE concluded a
new syndicated loan agreement that replaced the
previous syndicated loan. The refinancing was exe-
cuted on 31 October 2011 with a view to securing
the company’s long-term liquidity and at more favor-
able conditions from Porsche SE’s perspective.
These conditions reflect the significantly improved
net assets and financial position of the company
compared to the time when the previous syndicated
loan agreement was concluded in 2009 and, particu-
larly, the repayment of debt. The new syndicated loan
has a volume of up to 3.5 billion euro and comprises
a loan tranche amounting to 2.0 billion euro as well
as a revolving line of credit of up to 1.5 billion euro
that is currently unutilized. The loan matures on 30
November 2013, however, the company has two
options to extend it such that under certain circum-
stances the maturity date may be prolonged until
30 June 2015 in two steps (on this point, see also
the section "Repayment of debt and refinancing of
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