Chrysler 2010 Annual Report Download - page 65

REPORT ON
OPERATIONS
FINANCIAL
REVIEW –
FIAT GROUP
64
FINANCIAL REVIEW – FIAT GROUP
INTRODUCTION
Demerger of activities to Fiat Industrial
During 2010, the Group initiated and completed a strategic project to separate the Agricultural and Construction Equipment (CNH sector) and
Trucks and Commercial Vehicles (Iveco sector) activities, as well as the “Industrial & Marine” business line of FPT Powertrain Technologies
(FPT Industrial sector), from the Automobile and Automobile-related Components and Production Systems activities, which include the sectors Fiat
Group Automobiles, Maserati, Ferrari, Magneti Marelli, Teksid, Comau and the “Passenger & Commercial Vehicles” business line of FPT Powertrain
Technologies (Fiat Powertrain sector).
The separation of those businesses, in the form of their demerger from Fiat S.p.A. and transfer to Fiat Industrial S.p.A. (the “Demerger” – a
Scissione Parziale Proporzionale pursuant to Article 2506-bis of the Italian Civil Code), resulted in the creation of the Fiat Industrial Group
(consisting of CNH, Iveco and FPT Industrial) on 1 January 2011. From the same date, Fiat Group post Demerger is comprised of Fiat Group
Automobiles, Maserati, Ferrari, Fiat Powertrain, Magneti Marelli, Teksid and Comau. On 3 January 2011, Fiat Industrial S.p.A.’s shares began
trading on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A.
A description of the principal phases leading up to completion of the Demerger is provided in the Notes to the Consolidated Financial
Statements.
As the transaction took effect on 1 January 2011, the consolidated financial statements for the year ended 31 December 2010 relate to Fiat
Group pre Demerger (hereinafter the Fiat Group). Moreover, in accordance with IFRS 5 – Non-current Assets Held for Sale and Discontinued
Operations, as the Demerger became highly probable in December (when the above authorizations were obtained), all businesses to be
transferred to the new Fiat Industrial Group are classified and presented as Discontinued Operations in these consolidated financial statements.
That presentation has resulted in the following:
For both 2010 and 2009 (the latter presented for comparative purposes), all revenues and costs relating to Discontinued Operations are reported in the
Income Statement as Profit/(Loss) from Discontinued Operations.
All current and non-current assets relating to Discontinued Operations at December 2010 have been reclassified in the Statement of Financial Position as
Assets Held for Sale and Discontinued Operations.
All liabilities (excluding equity) relating to Discontinued Operations at December 2010 have been reclassified in the Statement of Financial Position as
Liabilities Held for Sale and Discontinued Operations.
For both 2010 and 2009 (the latter presented for comparative purposes), all cash flows arising from Discontinued Operations have been presented in the
Statement of Cash Flows as separate line items under cash flows from operating, investing and financing activities.
In other words, the Fiat Group consolidated financial statements are based on the full consolidation of subsidiaries that are to remain within the scope of
operations of Fiat Group post Demerger (i.e., Continuing Operations) and those that will be transferred to Fiat Industrial Group (i.e., Discontinued Operations),
with separate presentation for each group of activities.
For additional detail of items presented under Discontinued Operations in the Consolidated Statements of Income, Financial Position and Cash Flows, please
refer to the section Asset and liabilities held for sale and Discontinued Operations.
Additionally, as the Demerger is considered a “business combination involving entities or businesses under common control”, it is outside the scope of
application of IFRS 3 and IFRIC 17. Accordingly, in the 2011 consolidated financial statements for Fiat S.p.A. post Demerger and Fiat Industrial S.p.A., the
opening position for items in the statement of financial position will be equivalent to the carrying amounts reported in the consolidated financial statements
of Fiat Group prior to the Demerger.