Chrysler 2006 Annual Report Download - page 14

Introduction
Principal Transactions that affected the Scope
of Consolidation in 2006
■The procedure for the sale of the subsidiary Atlanet S.p.A.
to the British Telecom group was for the most part finalised
in the first quarter of 2006 on receiving the approval of the
Italian Guarantor Authority for Competition and the Market.
The transaction was completed when the businesses in Poland
and Brazil were sold during the second half of 2006.
■On August 30, 2006, Teksid S.p.A. sold 100% of the interest
it held in Société Bretonne de Fonderie et Mecanique.
■On August 31, 2006, Fiat sold its holding in Banca Unione
di Credito (B.U.C.) to BSI (a company of the Generali Group).
■On December 28, 2006 Fiat Auto and Crédit Agricole
completed the transaction for the creation of a 50/50 joint
venture, Fiat Auto Financial Services (FAFS), which will handle
Fiat Auto’s main financing activities in Europe (retail auto
financing, dealership financing, and long-term car rental and
fleet management). In particular: Fiat Auto, upon exercise of
its call option, purchased from Synesis Finanziaria 51% of Fidis
Retail Italia (a company controlling the Fiat Auto European
retail financing activities) which then changed its corporate
name into Fiat Auto Financial Services. FAFS acquired certain
Fiat Auto subsidiaries active in the European Fiat Auto dealer
financing and renting business. Fiat Auto sold to Sofinco, the
wholly owned consumer credit subsidiary of Crédit Agricole,
50% of the share capital of FAFS.
These changes in the scope of operations do not have
a significant overall impact on the comparability of the data
for the two reference periods. Nevertheless, analyses of both
the Group as a whole and the individual areas highlight
the respective effects.
Report on Operations Financial Review of the Group24
During 2006, Fiat raised its stake in Ferrari from 56% to 85%;
description of related transactions is presented in the Notes
to the Financial Statements. In addition, it should be noted that
on December 6, 2006, the Fiat Group and Norsk Hydro reached
an agreement for the sale of their interests in Meridian
Technologies Inc., 51% and 49% respectively, to a consortium
of investors headed by the Swiss holding company Estatia AG.
Closing of the transaction is subject to approval by competent
authorities.
Starting January 1, 2006 reporting of certain Business Areas
of the Group was redefined as follows.
The Fiat Powertrain Technologies Sector is no longer included
in the Automobiles Business Area since it no longer comprises
only the passenger vehicles engine and transmissions activities
–over which Fiat regained control in May 2005 following the
termination of the Master Agreement with General Motors –
but also the industrial powertrain activities that were included
in the Iveco Sector until December 31, 2005.
In accordance with IAS 14 – Segment Reporting, the figures
for 2005 have consequently been reclassified by assigning
the former Iveco powertrain activities to Fiat Powertrain
Technologies (FPT); the Iveco Sector, on the other hand,
no longer includes these activities. From the beginning
of 2006, FPT also encompasses the C.R.F.powertrain activities.
Starting from January 1, 2006 the Fiat Powertrain Technologies
Sector is included in the Components and Production Systems
Business Area and, therefore, from the same date,
the Automobiles Business Area comprises Fiat Auto (the Fiat,
Alfa Romeo, Lancia and Fiat Light Commercial Vehicles
brands), Maserati and Ferrari.
Report on Operations Financial Review of the Group 25
Financial Review of the Group
Operating Performance of the Group
(in millions of euros) 2006 2005
Net revenues 51,832 46,544
Cost of sales 43,888 39,624
Selling, general and administrative costs 4,697 4,513
Research and development costs 1,401 1,364
Other income (expenses) 105 (43)
Trading profit 1,951 1,000
Gains (losses) on the disposal of investments 607 905
Restructuring costs 450 502
Other unusual income (expenses) (47) 812
Operating result 2,061 2,215
Financial income (expenses) (576) (843)
Unusual financial income –858
Result from investments: 156 34
-Net result of investees accounted for using the equity method 125 115
-Other income and expenses from investments 31 (81)
Result before taxes 1,641 2,264
Income taxes 490 844
Result from continuing operations 1,151 1,420
Result from discontinued operations ––
Net result for the year 1,151 1,420
Attributable to:
Equity holders of the parent 1,065 1,331
Minority interests 86 89
Financial Review of the Group
In the review that follows, net revenues and trading profit are
discussed by single Business Area/Sector; the other data refer
to the Group as a whole.
Net revenues
In 2006 the Fiat Group recorded net revenues of 51,832 million
euros, up 11.4% from 2005. The increase is largely attributable
to the positive contribution of Fiat Auto and Iveco. Revenues
also increased at CNH and the Components and Production
Systems Business Area.