Chrysler 2009 Annual Report Download - page 329

FIAT S.P.A.
STATUTORY
FINANCIAL
STATEMENTS AT
31 DECEMBER
2009
NOTES
328
28. Information on financial risks
The manner in which Fiat S.p.A. measures and manages financial risks are consistent with Group policy.
In particular, the categories of the major risks to which the company is exposed are set out below.
Credit risk
The maximum credit risk to which Fiat S.p.A. is theoretically exposed at 31 December 2009 is represented by the carrying amounts at which financial assets
are recognised in the statement of financial position and the nominal value of the guarantees provided as discussed in Note 26.
Amounts receivable at the balance sheet date are essentially due from Group companies, from the tax authorities and from 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 3.6%), since a condition for the settlement of payables
to consortium companies is the receipt of the amounts due from T.A.V. S.p.A.
Guarantees given are for the most part on behalf of Group companies.
There are no significant overdue balances.
Liquidity risk
Liquidity risk arises if the company is unable to obtain, at economical terms, the funding needed to carry out its operating activities.
Fiat S.p.A. participates in the Group’s centralised treasury management and, as a result, the liquidity risks to which it is exposed are strictly correlated to
those which the Fiat Group is exposed to as a whole.
The two main determinants of 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 of debt or invested liquidity and market conditions.
The Group has adopted a series of policies and procedures whose purpose is to optimise the management of financial resources and to reduce liquidity risk by:
centralising the management of collections and payments, where it may be economical in the context of the local civil, currency and tax regulations of the
countries in which the Group is present;
maintaining an adequate level of available liquidity;
diversifying the sources of funding and maintaining a continuous and active presence in the capital markets;
obtaining adequate credit lines; and
monitoring future liquidity based on business planning.
Management believes that the funding currently available, in addition to those funds that will be generated from operating and funding activities, will
enable the Group to satisfy the requirements of its investing activities and its working capital needs and to fulfil its obligations to repay its debts at their
maturity date.
Currency risk
At 31 December 2009, Fiat S.p.A. had no significant amounts receivable or payable or derivative financial instruments exposed to currency risk.
Interest rate risk
Fiat S.p.A. satisfies its financial requirements through the Group’s centralised treasury management system.
In particular:
non-current financial payables consist of fixed rate loans granted by Fiat Finance S.p.A. (as discussed in Note 21). The change in the fair value of these
loans resulting from a hypothetical, immediate and adverse change of 10% in market interest rates would have been approximately €8 million (€18 million
at 31 December 2008);