Porsche 2012 Annual Report Download - page 169

Changes in income and expenses recognized directly in equity at the level of the associate
or joint venture are recognized in a separate item within Porsche SE’s group equity. Distributions
received lead to a reduction of the investment’s carrying amount. Other changes in equity at the
level of investments accounted for at equity include the proportionate changes in the non-
controlling interests within the respective group of investments accounted for at equity attribut-
able to Porsche SE which do not lead to a change in control and are therefore recognized in
other comprehensive income in their consolidated financial statements. Other changes in equity
at the level of the investee recognized directly in equity are also recognized in other comprehen-
sive income in Porsche SE's consolidated financial statements, provided they do not dilute the
capital share.
An impairment test is carried out whenever there is any indication in accordance with IAS 39
that the entire carrying amount of the investment is impaired. Where the carrying amount of the
investment exceeds its recoverable amount determined in accordance with IAS 36, an impair-
ment loss is recognized in profit or loss to account for the difference. Value in use is determined
on the basis of the estimated future cash flows expected to be generated by the investment
accounted for at equity in accordance with IAS 28.33a. Where an impairment loss was recog-
nized in prior periods, it is assessed at least once a year whether there is any indication that the
reason for a previously recognized impairment loss no longer exists or has decreased. If this is
the case, the recoverable amount is recalculated and an impairment previously recognized that
no longer exists is reversed.
An impairment test was carried out in the reporting period for both the investment in
Volkswagen AG and, directly prior to classification as held for sale, for the investment in Porsche
Holding Stuttgart GmbH. The recoverable amount of these investments was determined using
the discounted cash flow method. The most recent three-year plan (prior year: five-year plan) for
Volkswagen AG and the five-year plan (prior year: five-year plan) for the Porsche Holding GmbH
group approved by the management of the equity investments was used as a basis. One integral
component of the corporate planning for the Porsche Holding Stuttgart GmbH group (Porsche
Holding Stuttgart GmbH as well as Porsche AG and its subsidiaries) is the increase in the annual
sales volume to around 200,000 vehicles by 2018 and a return on sales of 15%. The corporate
planning of the Volkswagen group includes reaching and maintaining a sustainable return on
sales before taxes of 8% or more in the medium term. A growth rate of 1% was used to extrapo-
late the cash flow beyond the detailed planning phase. The sustainable EBIT margin was deter-
mined conservatively, taking into account the EBIT margins generated in the past and used for
detailed planning purposes. A weighted average cost of capital of 7.1% or 7.0% (prior year: 7.0%
165