Citibank Performance Evaluation Case Study

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Annual Report
Consolidated and Statutory
Financial Statements
at December 31, 2006

101st fiscal year

Fiat S.p.A.
Financial Statements
at December 31, 2006
234 Financial Review of Fiat S.p.A.
238 Income Statement
239 Balance Sheet
240 Statement of Cash Flows
241 Statement of Changes in Stockholders’ Equity

I am enough of an artist to draw freely upon
my imagination. Imagination is more important
than knowledge. Knowledge is limited. Imagination
encircles the world. Albert Einstein

242 Income Statement pursuant to Consob Resolution
No. 15519 of July 27, 2006
243 Balance Sheet pursuant to Consob Resolution
No. 15519 of July 27, 2006
244 Notes to the Financial Statements
301 Appendix – Transition of the
Parent Company Fiat S.p.A. to International
Financial Reporting Standards (IFRS)

Financial Review of Fiat S.p.A.
The financial statements illustrated and commented on in the following pages have been prepared on the basis of the company’s statutory financial statements at December 31, 2006 to which reference should be made. In compliance with European Regulation no. 1606 of July 19, 2002, starting from 2005 the Fiat Group has adopted International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) in the preparation of its consolidated financial statements. On the basis of national laws implementing that Regulation, starting from 2006 the Parent Company Fiat S.p.A. is presenting its financial statements in accordance with IFRS, which are reported together with comparative figures for the previous year.

Operating Performance

Personnel and operating costs, totalling 199 million euros, comprise 58 million euros in personnel costs (60 million euros in 2005), and 141 million euros in other operating costs (121 million euros in 2005), which include the costs for services, amortisation and depreciation and other operating costs. These costs increased as a whole by 18 million euros from 2005 as a result of non-recurring charges. In 2006, the average headcount was 140 employees, compared with an average of 133 employees in 2005.

The company’s Income Statement is summarised in the following table: Investment income
- Dividends
- (Impairment losses) reversals
- Gains (losses) on disposals
Personnel and operating costs net of other revenues
Income (expenses) from significant non-recurring transactions Financial income (expenses)
Financial income from significant non-recurring transactions Income taxes
Net income

Personnel and operating costs net of other revenues total 120 million euros, compared with 109 million euros in 2005.


The Parent Company earned net income of 2,343 million euros in 2006, 1,226 million euros higher than in 2005 when the result included net non-recurring income of 1,714 million euros.

(in millions of euros)

Business Solutions S.p.A. (for a total of 147 million euros), net of the revaluation of the investments held in Fiat Netherlands Holding N.V. (376 million euros due to the positive performance of the CNH and Iveco subsidiaries), Magneti Marelli Holding S.p.A. (144 million euros) and minor companies.








Investment income totals 2,461 million euros compared with investment expense of 424 million euros in 2005 and consists of dividends received during the period and reversal of impairment losses (net of write-downs) of investments. Specifically: Dividends total 362 million euros and were received from the subsidiaries IHF – Internazionale Holding Fiat S.A. (259 million euros), Fiat Finance S.p.A. (75 million euros) and other companies. In 2005 dividends received from investments totalled 8 million euros.


Impairment loss reversals (net of write-downs) of 2,099 million euros resulted from the revaluation of the investments in the subsidiaries Fiat...
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