Chrysler 2011 Annual Report Download - page 320

319
Fiat S.p.A. - Statutory
Financial Statements
at 31 December 2011
28. Information on financial risks
Fiat S.p.A. measures and manages financial risks in accordance with Group policy.
The major categories of risk to which the Company is exposed are set out below.
Credit risk
At 31 December 2011, Fiat S.p.A.’s maximum nominal credit exposure consisted of the carrying amounts of financial assets and the par value of guarantees
issues (as discussed in Note 27).
Amounts receivable at the balance sheet date are essentially due from Group companies and related parties, from the tax authorities and from Rete
Ferroviaria Italiana S.p.A. (formerly T.A.V. S.p.A.). The risk on receivables from the latter company is limited to the margin earned by Fiat S.p.A. (of
approximately 3.5%), since a condition for the settlement of payables to consortium companies is the receipt of the amounts due from Rete Ferroviaria
Italiana S.p.A.
Guarantees issued were mainly on behalf of Group companies.
At 31 December 2011, there were no material amounts past due.
Liquidity risk
Liquidity risk arises if the Company is unable to obtain, at economically viable terms, the funding needed to carry out its activities.
Fiat S.p.A. participates in the Group’s centralized treasury management and, as a result, the liquidity risk to which it is exposed is strictly correlated to that
which the Fiat Group is exposed to as a whole.
The two principal factors determining the Group’s liquidity position are, on one side, the cash generated by or used in operating and investing activities and,
on the other, the maturity and renewal profile of debt and invested liquidity and prevailing market conditions.
The Group has adopted a series of policies and procedures to optimize management of financial resources and to reduce liquidity risk by:
centralizing management of collections and payments, where it may be economically beneficial in relation the legal and tax environment and currency
conditions in countries where it is present
maintaining an adequate level of available liquidity
diversifying sources of funding and maintaining a continuous and active presence in the capital markets
obtaining adequate credit lines, and
monitoring future liquidity based on corporate planning
Management believes that the funding currently available, in addition to cash generated by operating and financing activities, will enable the Group to meet
the requirements of its investing activities and working capital needs and to meet its scheduled debt repayment obligations.
Currency risk
At 31 December 2011, Fiat S.p.A. had no significant receivable, payable or derivative positions that were exposed to currency risk.
Interest rate risk
Fiat S.p.A. satisfies its financing requirements through the Group’s centralized treasury management system.
In particular:
non-current debt partly consists of fixed rate loans from Fiat Finance S.p.A. (see Note 21). The change in fair value of these loans resulting from
a hypothetical, immediate and adverse change of 10% in market interest rates would have been approximately €6 million (€8 million at 31 December 2010)