Chrysler 2012 Annual Report Download - page 300

299
Fiat S.p.A. - Statutory
Financial Statements
at 31 December 2012
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 20). The change in fair value of these loans resulting from a
hypothetical, immediate and adverse change of 10% in market interest rates would not be material (€6 million at 31 December 2011)
current debt consists mainly of current account deposits with and loans received from Fiat Finance S.p.A. as well as liabilities related to advances on the
sale of receivables to banks (see Note 24). In addition, non-current debt to Fiat Finance S.p.A. (see Note 20) include variable rate loans. The cost of these
positions is affected by changes in short-term interest rates. For short-term or variable rate transactions, a hypothetical, immediate and adverse change
of 10% in short-term interest rates would not be material (approximately €2 million at 31 December 2011)
Other risks relating to derivative financial instruments
As discussed in Note 7, Fiat S.p.A. holds certain derivative financial instruments whose value is linked to the trends in the price of listed shares (equity swaps
on Fiat and Fiat Industrial shares). Although these transactions were entered into for hedging purposes, they do not always qualify for hedge accounting
under IFRS. As a result, fluctuations in their value could affect the Company’s results.
Assuming an immediate and adverse change in the market value of Fiat and Fiat Industrial shares of 10%, the potential loss in fair value of derivative financial
instruments held by the Company at 31 December 2012 would total approximately €20 million (approximately €17 million at 31 December 2011). The
change over the prior year is attributable to the change in the share price at the balance sheet date used as the basis for the sensitivity analysis.
28. Fair value hierarchy
IFRS 7 requires financial instruments recognized at fair value in the statement of financial position to be classified on the basis of a hierarchy that reflects the
significance of the inputs used in determining fair value. This hierarchical classification applies the following levels:
Level 1 – quoted prices in active markets for the asset or liability being measured
Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly
(i.e., derived from prices) on the market
Level 3 – inputs that are not based on observable market data
The following table provides the classification of financial instruments measured at fair value at 31 December 2012 according to this fair value hierarchy.
(€ thousand) Note Level 1 Level 2 Level 3 Total
Assets at fair value:
Investments in other companies (available for sale)
recognized at fair value directly in equity or through profit and loss (11) 285,032 10,249 - 295,281
Derivative financial assets (current) (15) - 58,281 - 58,281
Total assets 285,032 68,530 - 353,562
Liabilities at fair value:
Derivative financial liabilities (current) (24) - 8,282 - 8,282
Total liabilities - 8,282 - 8,282
In 2012, there were no transfers from Level 1 to Level 2 of the fair value hierarchy or vice versa.
29. Intercompany and related-party transactions
Intercompany and related-party transactions for Fiat S.p.A. consist for the most part of transactions carried out with the Company’s subsidiaries on
commercial terms that are normal in the respective markets, considering the characteristics of the goods or services involved.