NET ASSETS

As of 31 December 2017, the total assets of the Porsche AG Group stood at € 35,019 million, 9 per cent higher than on the prior-year reporting date.

Non-current assets increased by € 1,655 million to € 25,247 million. The increase primarily relates to fixed assets and other financial assets, while there was a decline in deferred taxes. Non-current assets expressed as a percentage of total assets amounted to 72 per cent (prior year: 73 per cent).

At the end of the reporting period, the fixed assets of the Porsche AG Group – i.e., the intangible assets, property, plant and equipment, leased assets, equity-accounted investments and other financial assets – amounted to € 14,404 million, compared with € 12,841 million in the previous fiscal year.

Fixed assets expressed as a percentage of total assets increased to 41 per cent (prior year: 40 per cent). Intangible assets increased from € 3,965 million to € 4,646 million. The increase mainly relates to capitalised development costs. The largest additions concerned the Cayenne, 911, and Mission E model line. Property, plant and equipment increased in comparison with the prior year by € 787 million to € 5,903 million, primarily due to additions to land and buildings, furniture and fixtures, as well as advance payments made and assets under construction. These additions consist mainly of tools and construction work for the new generations of vehicles. Leased assets increased by € 82 million in comparison with the prior year, to € 3,455 million. This item contains vehicles leased to customers under operating leases.

Non-current other financial assets increased by € 425 million to € 8,903 million. The increase was due to the marking-to-market of derivative financial instruments.

Deferred income tax assets amounted to € 370 million as against € 879 million in the prior year.

As a percentage of total assets, current assets amounted to 28 per cent compared with 27 per cent in the prior year. Inventories increased from € 2,536 million in the prior year to € 3,051 million at the end of the reporting period.

Non-current and current receivables from financial services rose from € 2,010 million to € 2,095 million. This item mainly comprises receivables from finance leases and receivables from customer and dealer financing.

Current other financial assets increased by € 504 million to € 1,841 million. The increase is attributable in almost equal measure to the clearing account with Porsche Holding Stuttgart GmbH and the marking-to-market of derivative financial instruments.

Cash, cash equivalents and time deposits increased by € 178 million to € 3,067 million.

The equity of the Porsche AG Group increased by € 3,220 million to € 15,200 million compared with the prior-year reporting date. Equity was lifted by the profit after tax, profit transfer and dividends (€ 982 million), as well as revaluations from pension plans after tax (€ 50 million), the change in the cash flow hedge reserve after tax (€ 1,109 million), and a capital contribution by Porsche Holding Stuttgart GmbH (€ 1,312 million).

By contrast, currency translation effects of € 235 million were recognized as a decrease in equity.

Non-current liabilities relate to financial liabilities, pension provisions, deferred income tax liabilities, other financial liabilities, other liabilities, and other provisions. They declined by € 362 million to € 9,084 million in comparison with the prior year. Non-current liabilities expressed as a percentage of total capital decreased from 29 per cent in the prior year to 26 per cent at the end of the fiscal year.

Provisions for pensions and similar obligations increased by € 253 million, mainly due to a rise in the number of eligible employees.

Non-current other financial liabilities decreased by € 580 million. This decline relates mainly to the marking-to-market of derivative financial instruments.

Deferred income tax liabilities amounted to € 614 million compared with € 864 million in the prior year.

Current liabilities declined from € 10,809 million to € 10,735 million. Current liabilities expressed as a percentage of total capital decreased from 34 per cent in the prior year to 31 per cent as of 31 December 2017.

Trade payables increased to € 3,048 million after € 2,589 million in the prior year. This increase is attributable to higher volumes of investments and business.

Current other financial liabilities amounted to € 2,599 million (prior year: € 3,337 million). This was primarily due to the change resulting from the marking-to-market of derivative financial instruments (€ 469 million) and a reduction in the profit transfer liability to Porsche Holding Stuttgart GmbH (€ 213 million).


FINANCIAL POSITION

Cash flows from operating activities amounted to € 4,069 million in the 2017 reporting period following € 3,864 million in the prior year. The material effects resulted from increased profit and higher depreciation, amortisation and
write-downs on the one hand, and non-cash income and expenses and higher outflows for inventories on the other.

The cash flows from investing activities resulted in a cash outflow of € 3,140 million in the reporting period following € 2,724 million in the prior year. Investments in intangible assets (excluding capitalised development costs) and property, plant and equipment increased from € 1,438 million in the prior year to € 1,762 million in the period under review. Additions to capitalised development costs amounted to € 1,337 million following € 1,228 million in fiscal year 2016.

There was a change in cash flows from financing activities from € -786 million in the prior year to € -744 million in the current fiscal year.

Payments made in respect of profit transfer and dividends resulted in a cash outflow of € 2,371 million (prior year: € 1,904 million). This was partly offset by capital contributions amounting to € 1,312 million (prior year: € 1,076 million) made by Porsche Holding Stuttgart GmbH.

The net available liquidity of the automotive division – i.e., its gross liquidity less financial liabilities and excluding the financial services business in each case – improved from € 1,965 million as of 31 December 2016 to € 2,231 million as of 31 December 2017.


RESULTS OF OPERATIONS

The Porsche AG Group's profit after tax increased by € 499 million from € 2,640 million in the corresponding prior-year period to € 3,139 million in the current fiscal year. The tax rate in the reporting period was 26 per cent
(prior year: 29 per cent).

Consolidated revenue at the Porsche AG Group amounted to € 23,491 million in the reporting period (prior year: € 22,318 million). The Porsche AG Group sold 238,691 new vehicles in the past fiscal year. This corresponds to an increase in unit sales of 3 per cent compared with the prior year. The primary contribution to the growth in sales volume and revenue was made by the Panamera model line, which recorded an increase of 18,334 to 30,998 new vehicles. The Macan model line maintained its lead in terms of sales volume, with 95,540 new vehicles sold. In regional terms, China remained the largest market, with new vehicle sales totalling 70,594 units. The European market (excluding Germany) recorded particularly healthy growth, with 52,237 new vehicles sold. This corresponds to 7 per cent growth in unit sales.

The cost of sales increased in line with revenue to € 16,872 million (prior year:
€ 15,937 million), which represents 72 per cent of revenue (prior year: 71 per cent). In absolute terms, the cost of sales rose by € 935 million or 6 per cent. This slightly disproportionate increase is due to the growth in warranty expenses and higher research and development costs recognized in the income statement. The capitalisation ratio for research and development costs amounted to 58 per cent (prior year: 56 per cent). The slightly disproportionate increase in cost of sales caused the gross margin to decrease from 29 to 28 per cent.

Distribution expenses rose from € 1,703 million to € 1,883 million due to the higher volume of sales. Administrative expenses increased from € 867 million to € 1,041 million. In relation to sales revenue, distribution expenses remained level at 8 per cent (prior year: 8 per cent), as did administrative expenses at 4 per cent (prior year: 4 per cent).

The personnel expenses across all functions of the Porsche AG Group increased from € 2,875 million to € 3,200 million. The growth in personnel expenses corresponds to the rise in the average number of employees in 2017 by 2,782 to 29,033.

Depreciation, amortisation and impairment across the functions increased to € 2,276 million compared with € 2,081 million in the prior year. This primarily relates to the depreciation, amortisation and impairment of capitalised development costs and leased assets.

Other operating income rose from € 1,206 million to € 1,366 million. The increase is mainly attributable to a rise in income from the reversal of provisions and accruals as well as higher income relating to forward exchange transactions. Other operating expenses declined from € 1,140 million to € 917 million. The decrease mainly results from lower expenses in connection with forward exchange transactions.