Chrysler 2012 Annual Report Download - page 130

129
Consolidated
Financial
Statements
at 31 December
2012
Notes
Consolidated
Financial Statements
at 31 December 2012
Notes to the Consolidated
Financial Statements
Principal activities
Fiat S.p.A. is a corporation organised under the laws of the Republic of Italy. Fiat S.p.A. and its subsidiaries (the “Group”) operate in
approximately 40 countries. The Group is engaged in the manufacture and sale of automobiles and light commercial vehicles, engines,
transmission systems, automotive-related components, metallurgical products and production systems. In addition, the Group has
for a long while also been involved in certain other sectors, including publishing and communications, which represent a small portion
of its activities.
The Group has its head office in Turin, Italy.
The Group’s presentation currency is Euro.
Significant accounting policies
Basis of preparation
The 2012 consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards
(the “IFRS”) issued by the International Accounting Standards Board (“IASB”) and adopted by the European Union, and with the
provisions implementing article 9 of Legislative Decree 38/2005. The designation “IFRS” also includes all valid International Accounting
Standards (“IAS”), as well as all interpretations of the IFRS Interpretations Committee, formerly the Standing Interpretations Committee
(“SIC”) and then the International Financial Reporting Interpretations Committee (“IFRIC”).
The financial statements are prepared under the historical cost convention, modified as required for the measurement of certain
financial instruments, as well as on a going concern basis. In this respect, the Group’s assessment is that no material uncertainties
(as defined in paragraph 25 of IAS 1) exist about its ability to continue as a going concern, also considering the ongoing operational
integration between Fiat and Chrysler and the Group’s industrial and financial flexibility.
Format of the financial statements
For presentation of the income statement, the Group uses a classification based on the function of expenses (otherwise known as the
“cost of sales” method), rather than one based on their nature, as it is more representative of the format used for internal reporting and
management purposes and is consistent with international practice in the automotive sector.
In addition to assessing the performance of its operating segments on the basis of Trading profit, beginning 2012, and following the
progressive implementation of the new organizational structure, the Group also started assessing performance on the basis of Earnings
before Interest and Taxes (EBIT) and has decided to report it as a separate line item in the income statement in place of Operating profit.
The comparative amounts have been restated accordingly. EBIT consists of Trading profit/(loss), Result from investments, and other
income/(expense) classified as unusual and was deemed more appropriate than Operating profit as an indicator of performance for the
Group and its operating segments, since it also takes into account the Result from investments.
Trading profit, on the other hand, which remains unchanged, reflects the result from normal operating activities before taking account
of the Result from investments and unusual items such as Gains/(losses) on the disposal of investments, Restructuring costs and Other
income/(expense) classified as unusual. The definition “unusual” adopted by the Group differs from the definition provided in the Consob
Communication of 28 July 2006, under which unusual and/or abnormal transactions are those which – because of their significance or