Porsche Automobil Holding SE company accounts 2008/09 4 Group management report and management report of Porsche Automobil Holding SE 80 Balance Sheet 81 Income statement 82 Notes 102 Audit Opinion 103 Company Boards 105 Membership in other statutory supervisory boards and comparable domestic and foreign control bodies Group management report and management report of Porsche Automobil Holding SE Recent developments Michael Macht and Thomas Edig's appointment to the helm of Porsche AG marks the beginning of a new era for the Stuttgart-based automobile manufacturer. Michael Macht, who for many years served as head of pro- duction and logistics, has been made a member of the executive board of Porsche SE, and CEO of Porsche AG. Thomas Edig has been made board member at Porsche SE and Mr. Macht’s deputy at Porsche AG, where he is also responsible for HR and social issues and functions as labor director. Macht’s successor as head of production is Wolfgang Leimgruber, who was previously responsible for the body shell and paint shops. At Porsche SE, Michael Macht is responsible for technology and products, while Tho- mas Edig heads the commercial and administrative side. On 23 July 2009, the supervisory board of Porsche Automobil Holding SE (“Porsche SE”) reached an agreement on the departure of the long-term executive board members Dr. Wendelin Wiedeking and Holger P. Härter. Both men also resigned from their posts on the supervisory boards of Volkswagen AG and AUDI AG. Prof. Dr. Martin Winterkorn will be made the new CEO of Porsche SE fol- lowing the approval of the supervisory boards of Porsche SE and Volks- wagen AG. The CEO of Volkswagen AG will assume this position as soon as the specifics of the implementing agreements governing the individual steps of the combination of Porsche SE and Volkswagen AG have been clarified. On the same day, Hans Dieter Pötsch, CFO of Volkswagen AG, will be made a member of Porsche SE’s executive board. Both men will perform their new functions in addition to their current roles on the execu- tive board of Volkswagen. Prof. Dr. Winterkorn has been the CEO of Volks- wagen AG’s executive board since 2007, while Hans Dieter Pötsch has been CFO of the Wolfsburg-based automotive group since 2003. 4 By making these appointments, the supervisory In the event that the merger does not take place, board of Porsche SE has paved the way for the the basic agreement provides that Porsche SE conclusion of a basic agreement that signals the has a put option for the remaining 58 percent creation of an integrated automotive group with share in the newly formed holding company, and Volkswagen AG. The agreement, which was Volkswagen AG a call option for this share. As a negotiated between the board members of Por- modification to the basic agreement, it is sche SE and Volkswagen AG, the workforce planned in a first step for Volkswagen AG to take representatives of both companies and the ordi- a 49.9 percent share in the new holding com- nary shareholders of Porsche SE, was ratified by pany (instead of 42 percent) by means of a cash the supervisory boards at their meetings on 13 capital increase in return for a capital contribu- August 2009 and 11 September 2009, and still tion of 3.9 billion Euro (instead of 3.3 billion requires notarization among other things in Euro). This reduces the put and call options order to become effective. accordingly. The basic agreement contains the following The conclusion of the basic agreement is also concrete steps: First, Volkswagen AG acquires a necessary for the completion of the ongoing 42 percent share in Porsche AG, a wholly-owned negotiations between Porsche SE and the financ- subsidiary of Porsche SE. The investment takes ing banks on the termination of the previous the form of a cash contribution to capital via a syndicated loan. Porsche SE is seeking to im- newly created holding company with total in- prove its loan conditions. This concerns both a come of up to 3.3 billion Euro on the basis of a prolongation of the loan and a reduction of the valuation of Porsche AG that places its value at borrowing costs. 12.4 billion Euro. This holding serves on the one hand to safeguard Porsche AG as an independ- In addition to this timeline, the basic agreement ent stock corporation based in Stuttgart- also provides for a number of other points. Zuffenhausen. On the other hand, it allows Volks- These include the right of the shareholders of wagen AG to take a share in the company. Porsche Gesellschaft m.b.H., Salzburg to sell that company’s sales operations to Volkswagen In the next step, a capital increase will be ef- AG. Moreover, the following resolutions on the fected at Volkswagen AG in the first half of 2010 articles of association will be submitted to the by means of the issuance of new preference next general meeting of Volkswagen AG, which shares, with the consent of Porsche SE. This is is scheduled for 3 December 2009 (and 4 De- then to be followed by a capital increase at cember 2009 if necessary) for voting: Firstly, Porsche SE, planned for the first half of 2011. the German Federal State of Lower Saxony is to The common objective i.e. the merger between be granted the right, as a Volkswagen share- Porsche SE and Volkswagen AG will then be holder, to appoint two members of the Volks- implemented in the further course of 2011. The wagen supervisory board provided the state’s legal requirements must of course be in place by share of Volkswagen AG’s ordinary shares is at this time. least 15 percent. The planned amendment to the articles of association of Volkswagen AG 5 with regard to this right would prevent the inclu- The Prime Minister signed a purchase agree- sion by way of full consolidation of the Volks- ment giving Qatar Holding LLC ten percent of wagen subgroup (Volkswagen AG and its sub- the ordinary shares in Porsche SE. Dr. Wolfgang sidiaries) in the consolidated financial state- Porsche and Dr. Hans Michel Piëch signed the ments of Porsche SE. The resulting deconsolida- document on behalf of the shareholding families. tion would not affect liquidity, but would still The second contract, prescribing the acquisition have a lasting impact on Porsche SE's consoli- by the emirate of a significant portion of the dated financial statements. Secondly, the gen- cash-settled stock options for VW shares, was eral meeting of Volkswagen AG will vote on the signed by both Ahmad Al-Sayed, CEO of Qatar ratification of a provision requiring a majority of Holding LLC, and the executive board members more than 80 percent of the capital stock of the of Porsche SE Michael Macht and Thomas Edig. company represented at the meeting for resolu- In this context, Qatar Holding LLC further under- tions requiring a majority of 75 percent in ac- took to contribute 265 million Euro to the exist- cordance with the German Stock Corporation ing syndicated loan. The impact of the sale of Act. stock options on Porsche SE’s liquidity is de- scribed in the chapter "Opportunities and risks The basic agreement also contains the provision of future development" on page 55 of this man- that no profit and loss transfer and domination agement report. agreement may be concluded between Porsche SE and Volkswagen AG until 2020. The require- Previously, Porsche SE had already conducted ments for the enforcement of the basic agree- write-offs as a preparatory measure for the sale ment include the consent of the financing syndi- of the options. This brought about a significant cate of banks at Porsche SE, as well as deci- non-cash reduction in the result for fiscal year sions on outstanding structural issues. 2008/09 (1 August 2008 to 31 July 2009). At the same time, the sale of options improved As a further step on the path to an integrated Porsche SE's liquidity. It released cash amount- automotive group, Porsche Automobil Holding ing to more than one billion Euro, which had SE for the first time has an investor holding been deposited as collateral for the options. ordinary shares that is not associated with either the Porsche or Piëch families, namely Qatar Further events occurring after the balance sheet Holding LLC. On 14 August 2009, the chairman date are summarized on page 74 of this man- of the supervisory board of Porsche SE, Dr. agement report. Wolfgang Porsche, received a prominent delega- tion from Qatar led by the emirate’s Prime Minis- ter, Sheikh Hamad bin Jassim bin Jaber Al Thani, in Stuttgart, for the signature of two contracts. 6 Business development Due to the volume of work at the Volkswagen subgroup dedicated to preparing its own six- Initial consolidation of Volkswagen month financial report as of 30 June 2009, the Once Porsche SE had increased its share in data necessary for external reporting for the Volkswagen AG, Wolfsburg, Europe’s largest month of July could not be made available on automotive manufacturer, to 50.76 percent of time. The Volkswagen subgroup is therefore ordinary shares on 5 January 2009, the Volks- included in the consolidated financial statements wagen group became subject to inclusion in the of Porsche SE with accounting values as of 30 consolidated financial statements of Porsche SE June 2009. As a result, the Volkswagen group’s by way of full consolidation for the first time in income statement for July 2009 was not taken the past fiscal year.