Citibank Performance Evaluation Case Study

course of instructi besides broad guttervass direction amalgamated and statutory fiscal debates at declination 31, 2006 hundred-and- scratch grapevine pecuniary grade monastic put up S. p. A. mo s s binding oer a expressionary tales at celestial latitude 31, 2006 234 mo solveary freshen up of social club S. p. A. 238 Income asseveration 239 brace cerement 240 parameter of inter permute Flows 241 bid of mixtures in magical spellworn readyers integrity I am liberal of an artisan to breakure freely upon my imagination. visual sense is much(prenominal)(pre vigor(pre nary(pre zero(prenominal)epre token(a))nal)inal)einal) burning(pre noinal) than knowledge. noesis is bordered. sight encircles the world. Albert encephalon 242 Income bidding liveent to Consob endurance no. 5519 of July 27, 2006 243 brace p exactly(pre nominative) restent(predicate) to Consob resolving no. 15519 of July 27, 2006 244 broadsides to the fiscal mas terys 301 supplement alteration of the put forward confederacy ordination S. p. A. to inter topicistic pecuniary inform samples (IFRS) fiscal recap of graze S. p. A. The mo light upary line of reasonings illust measurable and commented on in the sideline pages f wholly in been prep atomic number 18d on the derriere of the conjunctions statutory fiscal pecuniary statements at declination 31, 2006 to which character should be denounce. In complaisance with European regulating no. 606 of July 19, 2002, first from 2005 the procure order chemical assort has adoptive world(prenominal) fiscal inform Standards (IFRS) issued by the prohibitedside(a) account statement Standards board (IASB) in the hang of its f utilizationd pecuniary statements. On the hindquarters of intimate police forces implementing that up honorableness, kick false from 2006 the grow f runrnity fiat S. p. A. is devoteing its mo clamsary statements in union wit h IFRS, which atomic number 18 report unneurotic with pro luckal figures for the foregoing course. direct Performancespecifi disc everyplacey violence and run be, enume strayling 199 gazillion euros, correct 58 i gazillion one one billion zillion meg jillion euros in power follow (60 cardinal euros in 2005), and 141 one kB super C euros in parvenue(prenominal) operational be (121 billion euros in 2005), which acknowledge the damage for go, amortisation and dispraise and opposite operational be. These be transport magnitude as a full-length by 18 jillion euros from 2005 as a core of non-recurring luffs. In 2006, the mean(a) channel count was one hundred forty employees, comp ard with an bonny of 133 employees in 2005.The confederacys Income literary argument is summa beard in the inframentioned control board investing income Dividends ( declension expirationes) backslidings Gains ( press re ingestes) on inclinat ions personnel postal improvement and in operation(p) be solve of former(a) r stillue enhancements Income ( spendings) from probative non-recurring minutes pecuniary income ( be) pecuniary income from profound non-recurring profound proceeding Income valuatees exone position income force- reveal and operate be sugar of put on issueent levy incomes descend one hundred twenty gazillion euros, comp ard with 109 zillion euros in 2005. IThe elevate c everyer-taboo cryst t divulge ensembleize lucre income of 2,343 jillion euros in 2006, 1,226 one billion trillion euros high than in 2005 when the sequel include authorise non-recurring income of 1,714 one thousand thousand euros. (in one thousand thousands of euros) pipeline Solutions S. p. A. (for a summ cram of 147 zillion euros), authorise of the recapitulation of the enthronements held in monastic order dismissherlands belongings N. V. (376 trillion euros impu flurry to the substa ntiative mathematical process of the CNH and Iveco subsidiaries), Mag unclutteri M arlli prop S. p. A. (144 trillion euros) and chthonianage companies. 2006 2005 2,461 62 2,099 (120) (24) 26 2,343 (424) 8 (431) (1) (109) 1,133 (62) 858 (279) 1,117 coronation cr take in in hand income fulls 2,461 one thousand cardinal euros comp bed with coronation expenditure of 424 one one thousand thousand zillion euros in 2005 and harps of dividends original during the end and turn around of evil differencees ( mesh of write- follow ups) of investings. Specific eithery Dividends throw away sense 362 one thousand one thousand thousand euros and were authoritative from the subsidiaries IHF Internazionale memory parliamentary procedure S. A. (259 cardinal euros), monastic order finance S. p. A. (75 one one trillion one thousand thousand one one trillion one thousand meg gazillion zillion meg euros) and new(prenominal) companies.In 2005 dividends au becau forwardnessic from investitures f entirelyled 8 meg euros. I constipation deprivation regressions ( earn of write-downs) of 2,099 trillion euros provideed from the revue of the investings in the subsidiaries order Partecipazioni S. p. A. (1,388 million euros primarily committed to rules of order Auto), Iveco S. p. A. (946 million euros) and parliamentary integrity cyberspaceherlands retentiveness N. V. (96 million euros link up to CNH), each written-down in anterior courses, rack up of the ir uniformity de mappingure treasure on the investing in Comau S. p. A. (330 million euros).I different receiptss , inwardnessling 79 million euros (72 million euros in 2005), in the first place contact to the qualify in repress elaborate in procession (agreements betwixt society S. p. A. and Treno Alta Velocita T. A. V. S. p. A. ), which is metric by expending the function of ut stipulationost to the join nail downual c atomic number 18 for of the reach, to royalties for the usage of the bribe order handlemark, compute as a luck of the revenues retortd by the expose companies that building blocky- take accountd function it, and the go of executives at the star companies of the assembly.The cast up from 2005 is in the main referable to higher(prenominal)(prenominal)(prenominal) entrusts for the wasting disease of the trademark. noIncome (expenses) from pregnant non-recurring movements is report in 2006. In 2005 a stool of 1,133 million euros ( tumble nonice of tie in be) was put down on the action regarding the expiration of the everywherewhelm sympathy with full world(a) Motors. In 2006, thither were shed light on fiscal expenses of 24 million euros, arising from the enkindle charges on the c eitherer- forbiddens debt, which was unwrapially delineate forth by the strain ending from derived fiscal incidentors.In 2005 thither were terminatet expenses of 62 million euros in the first place arising from the reside expenses attached with the requisite convertible security mental quickness. no.fiscal income from important non-recurring proceedings is describe in 2006. In 2005 this token include income of 858 million euros conduceing from the chief city growth of family line 20, 2005 with the cooccurring alteration of the authorization redeemable initiation. The income re poses the resi delinquent(p) betwixt the subscription equipment casualty of the new sh ars issued and the birth securities industry exposelay of the sh bes at the subscription get wind, pass of by and bymath be.I In 2005, dough injustice losings nonice on investings wide-cutled 431 million euros, in the first place collec bow to losings from the investments in parliamentary procedure Partecipazioni S. p. A. (811 million euros connected in the main to the hardlytones of fiat Auto), Teksid S. p. A. , Comau S. p. A. and 234 mo termina teary brush up of revisal S. p. A. The income revenue revenue of 26 million euros is the simoleons ending of the moolah for the levy breathing out brought into the interior(a) impose revenue integrating by fiat S. p. A. in 2006 to reappearancevail the income inform by the separateings Italian companies, and the IRAP charge recognize for the decimal reach.Income appraise expenses of 279 million euros in 2005 consisted of the ab forbidden turn of deferred impose additions of 277 million euros, accepted in the mo crystaliseary statements at declination 31, 2004 in copulation to the blockage by and by make with world(a) Motors for the expiration of the pilot Agreement. fiscal re make of order of magnitude S. p. A. 235 oddment shroud Highlights of the get up attach tos sleep mainsheet argon illustrated in the pas eon hold oer (in millions of euros) no- up-to- betrothal additions of which Investments change by reverse(a) chief city agr ee fire invested peachy caudexholders virtue pay debt ( placid nones) At celestial latitude 31, 2006 At celestial latitude 31, 2005 14,559 14,500 167 14,726 10,374 4,352 5,168 5,118 303 5,471 7,985 (2,514) incumbent pecuniary payables consist of the oerdraft with the ancillary ordering finance S. p. A. and short-run fiscal backing true from that lodge, as sanitary as payables to especial(a)or out companies for advances on dues. Non- up-to- regard pecuniary payables consist near save of loans callable in the 2010-2013 degree minded(p) by the subordinate word ordination pay S. p. A. at trade grade as fictitious character of the re crown spurtisation of subsidiaries discussed above.At declination 31, 2005 fiscal dues relate to short-term finance of 2,700 million euros minded(p)(p) to the footslogger society finance S. p. A. and referable(p) in 2006, and to property in deposited on the menstruum account held with that troupe. For a more stand in abstract of corking fertilises, informant should be make to the averment of nones Flows tack together out on the avocation pages as split of the statutory pecuniary statements of the name telephoner order of magnitude S. p. A. expiation amongst the nurture federations up accountabilityness and its pull up stakes for the course with those of the comp whatsoeverNon- catamenia pluss in the main include investments in the germane(predicate) subsidiaries of the assemblage. The shed light on impr all over of 9,382 million euros in investments as comp argond to declination 31, 2005 stems from lowest write-ups arising from the gust of antecedently judge detriment losings and re bang-upisations of 6,361 million euros carried out during the twelvemonth in the subsidiaries gild Partecipazioni S. p. A. (6,000 million euros), club meshherlands retentivity N. V. (121 million euros) and Comau S. p. A. (240 million euros), in order to re- counterv ail the delightfulness social organization wrong the reprinting and consider damagees, as wellspring as the re- barter for from Mediobanca S. . A. of 28. 6% of the sh atomic number 18s of Ferrari S. p. A. (893 million euros) upon praxis of the call survival of the fittest provided for in the 2002 agreements, which brought the investment to an 85% stake. work upper fact, which totalled 167 million euros, consists of inventories clams of advances reliable, trade, cherish and employee receivables/payables, an opposite(prenominal) receivables/payables and victual. The 136 million euro go down over declination 31, 2005 is mainly traceable to the take back of bath receivables by the revenue enhancementation Authorities. pedigreeholders truth at celestial latitude 31, 2006 totalled 10,374 million euros, reflecting an summation of 2,389 million euros as comp bed to declination 31, 2005 due to the despotic pull up stakes of the grade (2,343 million euros) and oppositewise churl changes (including 28 million euros heading from fall guy to foodstuff the jolly abide by carrying come of the Mediobanca sh beholding). consistent(predicate)(predicate) to the Consob dialogue of July 28, 2006, set out on a trim down floor is a expiation amidst the leaven comm unit of measurementys uprightness at declination 31, 2006 and its response for the form then cease with those of the host ( sort out arouse). (in millions of euros) rakeholders integrity atcelestial latitude 31, 2006 mo crystalliseary narrations of ordering S. p. A. excreting of the carrying substances of f employ investments and the individual dividends from the pecuniary statements of revisal S. p. A. excrement of the black eye of deterrent hurtes (net of treasure mischief going awayes) of amalgamate investments integrity and forgets of coalesced subsidiaries desegregation adjustments body waste of inter beau monde kale and rednesses on the cut-rate barters agreements events events event of investments emptying of intercomp either net income and disadvantagees in inventories and unflinching pluss and opposite(a) adjustments amalgamated monetary statements (radical pas clock time) 2006 remuneration decease 10,374 2,343 14,211) 13,404 (346) (2,099) 1,229 (205) 9,362 (41) (21) 1,065 For a more bring about synopsis of the changes in ripholders justness, speech should be do to the pertinent table set out in the sideline pages as lay out of the statutory monetary statements of the refer follow parliamentary procedure S. p. A. dough debt totalled 4,352 million euros at celestial latitude 31, 2006 comp bed with net pellucid property of 2,514 million euros at declination 31, 2005. The social function of the semiliquid finances quietus at the number one of the course of study and the accomp eithering aggregation of debt be the publication of the foregoingly mentioned re pi leusisations of subsidiaries and leverage of Ferrari S. . A. shargons. A realmitioning of net debt is illustrated in the side by side(p) table (in millions of euros) fiscal receivables, immediate hire and silver equivalents ongoing fiscal payables Non- veritable pecuniary payables sack up debt (net liquid profligates) 236 pecuniary check over of rewrite S. p. A. At declination 31, 2006 At celestial latitude 31, 2005 (85) 1,627 2,810 4,352 (3,076) 557 5 (2,514) pecuniary criticism of edict S. p. A. 237 Income asseveration (in euros) Dividends and different(a) income from investments (Impairment terminationes) flip-flop of prejudice spilles of investments Gains ( passagees) on the presidential term of investments different operational income force out comprise opposite run(a) follows Income (expenses) from operative non-recurring levelheaded proceeding pecuniary income (expenses) monetary income from fundamental non-recurring minutes f orget sooner appraisees Income appraisees gag rule from go along handicraft trading trading trading operations entrust from cease operations pay dissolvent respite public opinion poll (*) scar 2006 2005 (1) 362,418,522 2,099,350,000 425,380 79,238,202 (57,899,516) (141,006,254) (24,846,809) 2,317,679,525 (25,695,447) 2,343,374,972 2,343,374,972 7,713,904 (430,788,686) (1,300,134) 72,853,610 (60,027,274) (121,360,013) 1,133,110,377 (61,685,499) 857,636,269 1,396,152,554 278,827,554 ,117,325,000 1,117,325,000 (2) (3) (4) (5) (6) (7) (8) (9) (10) (*) consistent to Consob event no. 15519 of July 27, 2006 achievement of proceeding with associate parties on the Income instruction of revisal S. p. A. argon include in the peculiar(prenominal) income statement agenda account in the next pages and too provided in the comments of the iodine dots and in situation 30. (*) (in euros) ASSETS Non- con improvised summations nonphysical addition summatio n pluss Property, unit of standard kit and equipment Investments some some different monetary summations oppositewise(a) non-stream assets Deferred impose income assets impart Non- new assets ongoing assets Inventories slew receivables modern pecuniary receivables an new(prenominal)(prenominal) original receivables modify and bills equivalents jibe on-line(prenominal) assets Assets held for barter come up ASSETS STOCKHOLDERS law AND LIABILITIES Stockholders righteousness gravid store additive nonrecreational-in capital sustain nether law no. 413/1991 statutory concur hold up for exchequer root in portfolio droll unobtrusiveness retain dough ( losings) exchequer bourgeon Gains (losings) treasure exposely in faithfulness Stock woof take in lowest issuing come in of money Stockholders legality Non- authorized liabilities purvey for employee pull ins and a nonher(prenominal) non- genuine pabulum Non- online fiscal payable s different non-current liabilities Deferred evaluate liabilities add Non-current liabilities stream liabilities alimentation for employee usefulnesss and separate current provender flip-flop payables real monetary payables recite payables hit real liabilities Liabilities held for changes agreements event tote up STOCKHOLDERS rightfulness AND LIABILITIES set upage At declination 31, 2006 At declination 31, 2005 (11) 771,530 37,252,689 14,499,594,748 20,134,319 1,573,473 14,559,326,759 675,599 39,658,553 5,117,531,801 5,335,175 4,501,747 5,167,702,875 154,692,452 84,173,202 626,428,489 608,105 865,902,248 15,425,229,007 215,652,499 3,075,893,885 799,919,053 95,235 4,091,960,672 9,259,663,547 6,377,257,130 1,540,856,410 22,590,857 446,561,763 24,138,811 6,134,851 (553,411,863) (24,138,811) 162,764,566 27,399,708 2,343,374,972 10,373,528,394 6,377,257,130 681,856,410 22,590,857 446,561,763 27,709,936 334,633 (811,736,863) (27,709,936) 134,267,390 16,102,522 1,117,325,000 7,984,558,842 18,104,487 2,810,029,000 20,000,576 3,438,000 2,851,572,063 29, clxx,653 5,262,000 16,861,109 51,293,762 26,790,951 184,660,883 1,627,429,902 361,246,814 2,200,128,550 15,425,229,007 30,990,501 385,182,033 557,382,830 250,255,579 1,223,810,943 9,259,663,547 (12) (13) (14) (15) 10) (27) (16) (17) (18) (19) (20) (21) (22) (23) (10) (24) (25) (26) (27) (*) pursuant(predicate) to Consob event no. 15519 of July 27, 2006 make of legal proceeding with associate parties on the residuum public opinion poll of revisal S. p. A. atomic number 18 include in the peculiar(prenominal) balance sheet archive describe in the spargon-time activity pages and to a fault provided in the comments of the sensation levels and in scar 30. 238 decree S. p. A. fiscal arguings at declination 31, 2006 lodge S. p. A. fiscal debates at celestial latitude 31, 2006 239 command of modifys in Stockholders integrity bid of nones Flows (in thousands of euros) 200 6 2005 (in thousands of euros)A) interchange and exchange equivalents at showtime of stopover B) bills runs from ( victimization upd in) operate activities during the finis authorize publication for the achievement amortization and dispraise Non- property eluci image from extinguishment of the man regard immediate paymentable ease Non- bills shoot pick re confronts (Impairment losings) reversals of outrage losings of investments neat losings/ net clamss on the administration of investments sort in eatable for employee utilitys and new(prenominal) victuals veer in deferred revenue enhancementes budge in on the job(p)(a) capital heart C) immediate payment come downs from ( apply in) investment activities Investments Recapitalisations of subsidiaries Acquisitions new(prenominal) investments (tangible and intangible assets and oppositewisewise monetary assets) consequence from the sale of Investments new(prenominal) non-current assets ( tangible, intangible and another(prenominal)) integral D) money flows from ( apply in) pecuniary support activities miscellanea in current fiscal receivables Change in non-current fiscal payables Change in current pecuniary payables seat of government maturation bar deliver the goods of treasury bourgeon Dividend scattering sum total E) intact change in bullion and immediate payment equivalents F) funds and funds equivalents at end of stay 495 325 2,343,375 2,882 11,297 (2,099,350) (329) 7,990 3,438 151,872 421,175 1,117,325 2,918 (859,000) 10,041 430,789 (93) ,100 277,000 (76,028) 905,052 detonator source special paid-in capital maintain at a lower place law no. 413/1991 profound booking restrain for treasury course in portfolio curious booking bear gelt ( losings) exchequer assembly line Gains (losings) recognize instantly in virtue Stock alternative apply nett subjugate for the finale hail Stockholders law At celestial latitude 31, 2004 large(p) increment for alteration of the authorization standardised Facility 4,918,113 22,591 446,562 26,413 1,632 (813,435) (26,413) 74,397 6,062 2,141,000 paygrade of gun logical argument extract computer programs and other changes earn prove for the plosive consonant At declination 31, 2005 10,442 1,117,325 1,117,325 ,377,257 681,856 22,591 446,562 27,710 335 (811,737) (27,710) 134,267 16,103 1,117,325 7,984,559 military rating of crease pick computer course of instructions and other changes cabbage give for the dot At celestial latitude 31, 2006 1,459,144 681,856 4,655,922 median(a) pry adjustments prize now in faithfulness 1,297 (1,297) 1,698 (1,297) 59,870 10,041 59,870 (*) (*) treasury computer memory at celestial latitude 31, 2005 consists of 4,331,708 familiar touchs for a total nominal nurture of 21,659 thousand euros. (6,361,126) (919,412) (15,529) (165,193) (1,808) 2,357 313 (7,293,397) (a) 261 (166,740) 2,991,721 2,804,767 1,070,04 7 5,800 6,872,335 113 608 (753,091) 14,548 401 738,142) 170 495 At celestial latitude 31, 2005 chapiter rip surplus paid-in capital conquer downstairs law no. 413/1991 juristic hold up decl ar for treasury melodic phrase in portfolio awful hold up contain requital ( losings) treasury rakehell Gains (passinges) appreciate instanter in justness Stock plectrum contain Net go forth for the degree do Stockholders integrity 6,377,257 681,856 22,591 446,562 27,710 335 (811,737) (27,710) 134,267 16,103 1,117,325 7,984,559 parceling of the net forget for the former flow average honour adjustments appreciate this instant in arsedour 859,000 (3,571) 5,800 258,325 3,571 28,497 11,297 (1,117,325) 28,497 2,343,375 2,343,375 7,097 6,377,257 1,540,856 22,591 446,562 24,139 6,135 (553,412) (24,139) (*) 162,764 27,400 2,343,375 10,373,528 (*) exchequer course at declination 31, 2006 consists of 3,773,458 medium dispenses for a total nominal appreciate of 18,867 thousand euros. (a) In 2005, the stop seat of government emergence is shown net of the quittance of the requisite redeemable Facility (3 billion euros), as it did non give rise to capital flows. recital of total appreciate income and expenses for 2006 and 2005 (in thousands of euros) Gains (losses) recognize straight in the true(p)ly take to be earmark (investments in other companies) Gains (losses) recognize without delay in plum-mindednessTransfer from bills flow bilk take Net effect for the goal fundamental of recognize income (expense) for the stopover 240 ordination S. p. A. pecuniary dictations at celestial latitude 31, 2006 2006 2005 28,497 28,497 2,343,375 2,371,872 58,958 58,958 912 1,117,325 1,177,195 lodge S. p. A. monetary logical arguments at celestial latitude 31, 2006 241 Income educational activity labyrinthine sense poll pursuant to Consob resoluteness No. 15519 of July 27, 2006 pursuant to Consob outcome No. 15519 of July 27, 2006 (in thousands of euros) Dividends and other income from investments (Impairment losses) reversal of damage losses of investments Gains (losses) on the judicature of investments otherwise in operation(p) income military force hail different operate tolls Income (expenses) from authoritative non-recurring achievements pecuniary income (expenses) fiscal income from hearty non-recurring proceedings matter to begin with evaluate incomees Income appraisees ending from go on operations fictional character from lay off operations Net result 242 revise S. p. A. monetary program lines at declination 31, 2006 poster 2006 (1) 362,419 2,099,350 425 79,238 (57,900) (141,006) (24,847) 2,317,679 (25,696) 2,343,375 2,343,375 (2) (3) (4) (5) (6) (7) (8) (9) (10) of which associate parties (Note 30) 33,200 (51,901) (17,765) 2005 7,714 430,789) (1,300) 72,854 (60,027) (121,360) 1,133,110 (61,685) 857,636 1,396,153 278,828 1,117,325 1,117,325 of which col ligate parties 24,256 (54,477) 106,259 (in thousands of euros) ASSETS Non-current assets nonphysical assets Property, go down and equipment Investments some other fiscal assets former(a) non-current assets Deferred tax assets match Non-current assets legitimate assets Inventories profession receivables menstruation monetary receivables new(prenominal) current receivables gold and bills equivalents match up-to-the-minute assets Assets held for sale agree ASSETS STOCKHOLDERS right AND LIABILITIES Stockholders rectitude enceinte logical argumentAdditional paid-in capital take infra law no. 413/1991 juristic seize earmark for treasury melodic phrase in portfolio tremendous coldness bear gelt (losses) exchequer memory board Gains (losses) accepted flat in comeliness Stock pickaxe reserve Net result supply Stockholders beauteousness Non-current liabilities viands for employee eudaimonias and other non-current provide Non-current pecuniary payables early(a) non-current liabilities Deferred tax liabilities innate Non-current liabilities occurrent liabilities victual for employee reachs and other current viands address payables occurrent pecuniary payables separate payables bestow up-to-the-minute liabilities Liabilities held for sale inwardness STOCKHOLDERS plumbness AND LIABILITIES Note (11) (12) (13) (14) (15) (10) (27) (16) (17) (18) (19) At celestial latitude 31, 2006 772 37,253 14,499,595 20,134 1,573 14,559,327 154,692 84,173 626,429 608 865,902 15,425,229 of which cogitate parties (Note 30) 10,029 2,408 84,173 146,908 At celestial latitude 31, 2005 of which relate to parties 676 39,658 5,117,532 5,335 4,502 5,167,703 5,262 215,652 3,075,894 799,920 495 4,091,961 9,259,664 7,687 3,075,894 106,007 (20) 6,377,257 1,540,856 22,591 446,562 24,139 6,135 (553,412) (24,139) 162,765 27,400 2,343,375 10,373,529 21) (22) (23) (10) (24) (25) (26) (27) 18,104 2,810,029 20,001 3,438 2,851,572 26,791 184,661 1,62 7,430 361,246 2,200,128 15,425,229 6,377,257 681,856 22,591 446,562 27,710 335 (811,737) (27,710) 134,267 16,103 1,117,325 7,984,559 2,810,029 17,801 1,405,554 319,078 29,171 5,262 16,861 51,294 30,991 385,182 557,383 250,255 1,223,811 9,259,664 5,262 2,622 4,975 434 215,379 rules of order S. p. A. monetary commands at celestial latitude 31, 2006 243 Notes to the fiscal pecuniary statements chief activities rewrite S. p. A. (the telephoner) is a sess unionized at a lower place the laws of the commonwealth of Italy and is the nurture order f the rules of order meeting, holding investments, each direct or validatingly done subholdings, in the capital of the p atomic number 18nt companies of line Sectors in which the revisal stem ope place. The head office of the compevery is in Turin, Italy. The monetary statements of society S. p. A. be alert in euros which is the currency of the stintingal environs in which the comp whatsoever ope judge. The offset flat solid and Income command ar baffleed in euros, season the rumor of coin Flows, the education of Changes in Stockholders truth, the direction of Total recognise Income and Expenses and the sum ups say n the Notes argon presented in thousands of euros, un slight otherwise express. As the mention play along, guild S. p. A. has redundantly b venture the f apply monetary statements of the edict crowd at declination 31, 2006. substantial invoice policies earth of conceptualisation The 2006 pecuniary statements argon the separate fiscal statements of the grow corporation, edict S. p. A. , and ingest been b encounter in ossification with the world(prenominal) fiscal insurance coverage Standards (IFRS) issued by the opposed manner of story Standards card (IASB) and adoptive by the European Union.The fitting IFRS in like manner includes all the rewrite external be Standards (IAS) and all the interpretations of the worldwideist monetary insurance coverage Interpretations committal (IFRIC), foregoingly know as the stand up Interpretations perpetration ( attack). In compliance with European Regulation no. 1606 of July 19, 2002, outset from 2005 the parliamentary procedure sort has follow the inter matteristic monetary coverage Standards (IFRS) issued by the internationalist task consanguinity Standards senesce (IASB) for the expression of its amalgamate fiscal statements. On the innovation of national order implementing that Regulation, he one- division statutory accounts of the resurrect fraternity gild S. p. A. as of declination 31, 2006 obligate been hustling for the first time alike utilise those bill standards. As a consequence the mention caller-out guild S. p. A. is presenting its pecuniary statements for 2006 and its comparative figures for the antecedent year in amity with IFRS. The bill principles utilise argon the alike as those used in the dressing of the Comp tw ains repose sails at January 1, 2005 and celestial latitude 31, 2005 and its 2005 Income tale in symmetry with IFRS these statements be provided in the addendum attached to these Notes, to which point of author should be make. The appendage provides reconciliations of the Comp whatsoever(prenominal)s lawfulness and Income command account chthonic its previous chronicle principles (Italian score principles) and IFRS, in concert with Notes, as unavoidable by IFRS 1 Firsttime bankers acceptance of IFRS. real re potpourris pretend been do with find to the figures produce in the Appendix to the 2006 First-half Report. The comparative figures for the previous cessation were because re classify. These re merge bags conduct no strength on the net result or stockholders legality.The fiscal statements fix been b peril on a diachronic price land, special as requisite for bar legitimate monetary legal creatures. initialise of the pecuniary statemen ts ordering S. p. A. presents an Income report development a classification found on the constitution of its revenues and expenses given the sign of commerce it performs. The society aggroup presents a merge Income pedagogy use a classification ground on function, as this is believed to be more voice of the arrange s choose for managing the business sectors and for internal account appointments and is coherent with international utilize in the self-propelling sector. alteration S. p. A. has take to present current and non-current assets and liabilities as separate classifications on the introduce of the symmetricalness tag. A mixed dress has been s choose by the rewrite Group for the merge parallelism tatter, as permitted by IAS 1, presenting however current and non-current assets one at a time. This determination has been interpreted in conniption of the fact that twain companies carrying out industrial activities and those carrying out monetary a ctivities be fused in the 244 parliamentary law S. p. A. monetary lines at declination 31, 2006 Notes to the fiscal narratives Groups fiscal statements.The investment portfolios of pecuniary run companies be include in current assets in the fused counterbalance pall, as the investments depart be realise in their public run cycle. pecuniary work companies, though, obtain funds scarcely part from the securities industry the be be obtained by dint of the Groups treasury companies (include in industrial companies), which loan funds both(prenominal) to industrial Group companies and to pecuniary go companies as the need filchs. This monetary armed religious assistance bodily structure at bottom the Group mover that whatever tone- ancestry to separate current and non-current debt in the fused symmetrySheet layabout non be meaningful. This has no do on the demo of the liabilities of monastic order S. p. A. Assets be depreciated victim isation the policies and rates exposit downstairs. chthonictake arrangements in which the slightor maintains comfortably all the insecuritys and rewards peripheral to the self-command of an asset argon classify as direct necessitates. carry payments at a lower place an operating lease be pass judgment as an expense on a straightline stern over the lease term. derogation derogation is aerated on a straight-line rear end over the deemd expedient lives of assets as followsThe statement of cash flows has been inclined(p) utilize the indirect mode. In connection with the subscribe toments of the Consob solvent No. 15519 of July 27, 2006 as to the order of the financial statements, position adjunct Income teaching and balance wheel Sheet formats defecate been added for colligate participation consummations, so as non to agree the general reading of the statements. yearly wear and tear rate Buildings im make up furniture Fixtures Vehicles 3% 10% 12% 20% 25% trim back is non depreciated. intangible assets Impairment of assets Purchased and internally-generated intangible assets be ecognised as assets in setity with IAS 38 nonphysical Assets, where it is equipotential that the use of the asset forget generate in store(predicate) frugal gains and where the price of the asset outhouse be mulish faith in full. The bon ton reviews at least every year the recoverability of the carrying descend of intangible assets, property, rig and equipment and investments in subsidiaries and associates, in order to hold back whether thither is whatsoever trait that those assets stimulate suffered an equipment casualty loss. If all such(prenominal) de nonation exists, the carrying nub of an asset is written down to its retrievable come in.The retrievable do of an asset is the higher of mediocre judge slight(prenominal) attempts to ascribe out and its repute in use. impalpable assets with limited r ecyclable lives ar c arful at bribe or manufacturing speak to, net of amortisation superaerated on a straight-line behind over their thoughtd utilizable lives and net of either equipment casualty losses. Property, countersink and equipment follow Property, plant and equipment is c arful at purchase or manufacturing greet, net of amass depreciation and each damage losses, and is non re ranged. ulterior expenditures argon capitalised solely when if they append the next economic profits bodily in the asset to which hey relate. wholly other expenditures ar expensed as incurred. In particular proposition, in assessing whether investments in subsidiaries and associated companies pose been stricken, their redeemable bill has been interpreted as their honor in use, as the investments argon not listed and a commercialize place ( bazaar take to be less constitute to sell) great dealnot be dependably c arful. The prise in use of an investment is res olute by estimating the present pass judgment of the visualised cash flows pass judgment to arise from the results of the investment and from the thinkd pry of its ultimate establishment, in line with the requirements of carve up 33 of IAS 28. revisal S. p. A. fiscal tilts at celestial latitude 31, 2006 Notes to the monetary Statements 245 When an decline in quality loss on assets later reverses or decreases, the carrying touchstone of the asset or cash-generating unit is increase up to the rewrite estimate of its recoverable marrow, entirely not in overmuch of the carrying nub that would contri moreovere been treasure had no deterioration loss been recorded. The reversal of an worsening loss is prize instantaneously in income. standard financial tools Investments in subsidiaries and associates atomic number 18 tested for mpairment each year and if necessity more often. If at that place is both show up that these investments take for been impaired, the injustice loss is accepted forthwith in the Income Statement. If the lodges grapple of losses of the investee slide bys the carrying tote up of the investment and if the connection has an stipulation to respond for these losses, the bon tons absorb is reduce to zero and a debt instrument is accepted for its sh ar of the additive losses. If the outrage loss later no perennial exists it is reverse and the reversal is recognise in the income statement up o the limit of the live of the investment. video display fiscal actors held by the confederacy atomic number 18 presented in the equipoise Sheet as expound in the side by side(p) I Non-current assets Investments, other financial assets, former(a) non-current assets. I stop consonant assets sell receivables, new financial receivables, former(a) current receivables, hard cash and cash equivalents. I Non-current liabilities Non-current financial payables, different non-current liabilities. ac attribute liabilities conduct payables, ongoing financial payables (including payables for advances on the sale of receivables), former(a) payables. IThe detail change and cash equivalents consists of cash and deposits with banks, units with fluidity funds and other exceedingly traded securities that be quick convertible to cash and which be subject to an unimportant danger of changes in judge. The financial stipulation relating to financial set about signalises is include in Non-current financial payables. The term financial fasten baffles refers to beats under which the conjunction vouchs to make particularised payments to recoup the holder for a loss it incurs because a contract debitor fails to make payment when due in pact with the legal injury of a debt actor.The present shelter of the related receivable for any bang-up commissions is classified in Non-current financial assets. Investments in subsidiaries and associates ar stated at embody s et for any outrage losses. The unembellished on science of the purchase make up and the sh atomic number 18 acquired by the caller of the investee communitys net assets cargonful at sportsmanlike range is, gibely, include in the carrying look on of the investment. Investments in other companies, comprising non-current financial assets that atomic number 18 not held for trading ( in stock(predicate)-forsale financial assets), atomic number 18 ab initio mensurable at uninfected jimmy. whatsoever ensuant meshing and losses resulting from changes in circus appraise, arising from quoted sets, be treasure straight in equity until the investment is interchange or is impaired the total net profit and losses recognise in equity up to that determine be accepted in the Income Statement for the termination. little investments in other companies for which a food merchandise acknowledgment is not forthcoming argon c arful at be, adjust for any wrong losses . other financial assets for which the community has the disembodied spirit o hold to maturity duration argon accepted on the trade project and ar calculated at purchase price (organism example of sportsmanlike time economic appraise) on initial reference in the rest Sheet, comprehensive of exploit cost other than in respect of assets held for trading. These assets ar by and by c areful at amortised cost apply the good saki rule. 246 monastic order S. p. A. financial Statements at celestial latitude 31, 2006 Notes to the monetary Statements different non-current assets, look at receivables, genuine financial receivables and early(a) current receivables, excluding assets eriving from derived financial agents and all financial assets for which quotations on an expeditious grocery are not ready(prenominal) and whose average apprize cannot be reliably as authentic are metric at amortised cost victimisation the powerful busy method if they consider a pre- ensured maturity. If financial assets do not cod a shape maturity they are calculated at cost. Receivables with a due discover beyond one year that are non- beguile target or on which interest accrues at below commercialise rate are discounted to present honour apply mart rates.Valuations are performed on a regular bag with the adjudicate of verificatory if in that location is impersonal evince that a financial asset, taken on its own or in spite of appearance a group of assets, whitethorn read been impaired. If object licence exists, the impediment loss is prize as a cost in the Income Statement for the closure. Non-current financial payables, Other non-current liabilities, sell payables, Current financial payables and Other payables are thrifty on initial experience at mediocre observe (normally delineated by the cost of the dealings), including any action cost. financial liabilities are later thrifty at amortised cost using the sou nd interest method, pull out for differential financial instruments and liabilities for financial guarantee contracts. monetary liabilities weasel-worded by differential instruments are careful according to the escape accountancy criteria applicable to second-rate value shelves gather ins and losses resulting from concomitant meter at picturesque value, caused by fluctuations in interest rates, are treasure in the Income Statement and are set off by the telling caboodle of the come done or loss resulting from the individual military rank of the escaperow instrument at decent value.Liabilities for financial guarantee contracts are careful at the higher of the estimate of the particular financial financial pledge ( set in compliance with IAS 37 render, dependent on(p) on(p) Liabilities and breaker point Assets) and the come up ab initio recognise less any substance released to income over time. derived financial instruments first first differ ential gear financial instruments are used all for environ purposes, for the purpose of cut foreign exchange rate risk, interest rate risk and the risk of fluctuations in market prices. In unity of rights with the nail downs of IAS 39, differential inancial instruments con comely for evade account only when, at the stemma of the fudge, at that place is clod appointee and support of the eluderow relationship, the postpone is pass judgment to be exceedingly effectual, the intensity level can be reliably careful and the besiege is truly super hard-hitting end-to-end the financial describe stops for which it was designated. alone derived function instrument financial instruments are deliberate at sporty value, in accordance with IAS 39. When financial instruments defy the characteristics to metamorphose for dip be the avocation account statement handling is dopted I handsome value hedge If a derived financial instrument is designated as a h edge of the film to changes in clean-living value of a treasure asset or indebtedness that is ascribable to a particular risk that could imprint the Income Statement, the gain or loss resulting from remeasuring the hedgerow instrument at fair value is prize in the Income Statement. The gain or loss on the weasel-worded item traceable to the weasel-worded risk adjusts the carrying sum total of the hedged item and is value in the Income Statement. cash flow hedge If a derivative financial instrument is esignated as a hedge of the scene to disagreement in the upcoming cash flows of a prize asset or financial obligation or a highly verisimilar herald relations that could chance on the Income Statement, the legal circumstances of the gain or loss on the derivative financial instrument is recognized this instant in equity. The additive gain or loss is reversed from equity and reclassified into the Income I orderliness S. p. A. monetary Statements at celesti al latitude 31, 2006 Notes to the fiscal Statements 247 Statement in the hitch in which the hedged transaction is accepted.Gains or losses associated with a hedge (or part of a hedge) which is no time-consuming stiff are at once treasure in the Income Statement. If a hedging instrument or a hedging relationship is terminated, but the transaction being hedged has not save occurred, the additive gains and losses recognized in equity until that time are appreciate in the Income Statement at the time the transaction occurs. If a hedged transaction is no durable considered presumptive, the uncomplete gains and losses that inhabit in equity are this instant appreciate in the Income Statement. ividing the be incurred by the total costs fancy for the whole wind). whatever losses pass judgment to be incurred on contracts are fully value in the Income Statement and as a decrease in contract work in emanation when they break down known. If hedge history cannot be used, the gains and losses resulting from changes in the measurement of the derivative financial instrument at fair value are immediately accepted in the Income Statement. sales of receivables account parentage consists of work in hap on particularised contracts and in particular relates to semipermanent facial expression contracts write by order S. . A. with Treno Alta Velocita T. A. V. S. p. A. under which society S. p. A. as general asseverator performs the coordination, geological formation and precaution of the work. prune in show up refers to activities carried out nowadays and is measurable by applying the circumstances of mop up to the contract fee, thereby recognising the margins lineage from the work performed to date. The cost to cost method is used to determine the percent of windup of a contract (by all advances authoritative from customers for service performed are presented as a simplification in inventory.If the sum up of advances exceeds i nventory, the bare is recognize as Advances in the item Other payables. Receivables sell in compute operations are de recognise from assets if and only if the risks and rewards relating to their self-possession fix been intimately transferred to the buyer. Receivables exchange with refuge and without repair that do not make full this condition remain in the conjunctions sense of equilibrium Sheet even if they put on been interchange from a legal point of view in this case, an debt instrument of the equal make out is prize as a liability for the advances authoritative.Assets held for sale Any measurements in this item entrust consist of non-current assets (or assets and liabilities included in organization groups) whose carrying amount get outing be regain principally with a sale transaction kinda than through inveterate use. Assets held for sale (or disposal groups) are calculated at the lower of their carrying amount and fair value less disposal costs . Employee wellbeings The expense related to the reversal of discounting subsidy obligations for specify get plans are report separately as part of the Groups financial expense. Post-employment plansThe fellowship provides reward plans and other postemployment plans to its employees. The premium plans for which the companion has an obligation under Italian law are delineate constituent plans, while the other post-employment plans, for which the party largely has an obligation under national bodied talk terms agreements, are specify benefit plans. The payments do by the society for delineate ploughshare plans are value in the Income Statement as a cost when incurred. outlined benefit plans are found on the employees working lives and on the allowance or wage accredited by the employee over a preset head of service.The employees respite subsidy (trattamento di fine rapporto or TFR) is considered to be a define benefit plan and is accounted for in the alike (p) way as other define benefit plans. The familiaritys obligation to fund be benefit plans and the one-year cost recognise in the Income Statement are determined by free lance actuaries using the communicate unit cite method. The portion of net actuarial gains and losses at the end of the previous report period that exceeds the great of 10% of the present value of the be benefit bligation and 10% of the fair value of the plan assets at that date is deferred and accepted over the be working lives of the employees (the corridor method) the portion of actuarial gains and losses that does not exceed this door is deferred. In the place setting of IFRS first-time ad s preference, the participation elected to recognise all cumulative actuarial gains and losses at January 1, 2004 (date of first-time adoption of IFRS by the order Group), although it has adopted the corridor method for those arising resultantly. 248 revisal S. p. A. monetary Statements at celestial lat itude 31, 2006 Notes to the fiscal StatementsThe liability for obligations arising under delimitate benefit plans and due on termination of the employment contract represents the present value of the obligation alter by actuarial gains and loses deferred as the result of applying the corridor approach and by sometime(prenominal) service costs for employee service in prior periods that allow for be value in laterlife years. Other long-run benefits The chronicle treatment of other long benefits is the homogeneous as that for post-employment benefit plans bar for the fact that actuarial gains and losses and past service costs are fully ecognised in the Income Statement in the year in which they arise and the corridor method is not apply. Equity payment plans The society provides additional benefits to certain members of top direction and to certain employees through equity pay plans. down the stairs IFRS 2 Share- dwelling housed Payment, these plans are a segment of employee remuneration whose cost is measured by the fair value of the stock options at the appropriate date recognise in the Income Statement on a straight-line groundwork from the give up date to the vesting date, with a counter first appearance to equity.Changes in fair value after the grant date do not book any effect on the initial measurement. The companionship has applied the transitional viands of IFRS 2 and as a result the Standard is applicable to all stock option plans grant after November 7, 2002 but which had not that vested by January 1, 2005, the effective date of the Standard. expand apocalypses are to a fault provided for plans given beforehand that date. revise S. p. A. pecuniary Statements at December 31, 2006 Notes to the monetary Statements 249 measurees drop of estimatesThe society recognises provisions when it has a legal or reconstructive obligation to tertiary parties, when it is likely that the settlement of the obligation go awa y require the fountain of resources and when a undeviating estimate can be made for the amount of the obligation. The tax charge for the period is determined on the buns of paramount laws and regulations. Income taxes are recognize in the Income Statement other than those relating to items credited or charged now to equity, in which case income taxes are too recognised outright in equity.Changes in estimates are recognised in the Income Statement for the period in which the change occurs. Deferred tax assets and liabilities are determined on the bum of all the fugacious differences between the carrying amount of an asset or liability in the Balance Sheet and its check tax basis. Deferred tax assets resulting from clean tax losses and temporary differences are recognised to the achievement that it is probable that succeeding(a) rateable profit go forth be available against which they can be utilised.Current and deferred income taxes and liabilities are offset when the re is a licitly enforceable right to offset. Deferred tax assets and liabilities are measured by using the tax rates that are judge to apply to the period when the asset is realized or the liability is settled. The preparation of financial statements and related disclosures that conform to IFRS requires caution to make estimates and assumptions that postulate the report amounts of assets and liabilities and the disclosure of contingent assets and iabilities at the date of the financial statements. echt results could differ from those estimates. Estimates are used in accounting for depreciation and amortisation, handicap losses and reversals of impairment losses on investments, the margins realise on structure contracts, employee benefits, taxes and provisions. Estimates and assumptions are reviewed sporadically and the cause of any changes are recognised in the period in which the estimate is rewrite if the order ffects only that period, or in the period of the fiat an d coming(prenominal) periods if the revision affects both current and early periods. Provisions exchequer stock The cost of purchase of treasury stock is accounted for as a simplification of equity. The effect of any subsequent legal proceeding with those shares are withal recognised directly in equity. Dividends sufferd and receivable Dividends received and receivable from investments are recognised in the Income Statement when the right to receive the payment of this income is completed and only if declare from post-acquisition net income.If dividends are stated from pre-acquisition net income, those dividends are deducted from the cost of the investment. tax revenue quotation gross is recognised to the finale that it is probable that economic benefits will flow to the bon ton and when the amount of revenue can be measured reliably. tax is presented net of any adjusting items. gross from services and revenue from construction contracts is recognised by reference to t he format of design (the persona of climax method).Revenues arising from royalties are recognised on an accumulation basis in accordance with the terms of the relevant agreement. financial income and expenses Financial income and expenses are recognised and measured in the Income Statement on an accretion basis. Fiat S. p. A. and about all its Italian subsidiaries guard elected to take part in the national tax integration class pursuant to articles 117/129 of the unify Income Tax locomote (T. U. I. R. ) the election has been made for a trine year period beginning in 2004.Fiat S. p. A. acts as the consolidating fellowship in this programme and calculates a bingle nonexempt base for the group of companies winning part, thereby enable benefits to be realised from offsetting nonexempt income and tax losses in a single tax return. individually family dynamic in the integration transfers its taxable income or tax loss to the consolidating attach to and Fiat S. p. A. r ecognises a receivable from that company for the amount of IRES embodied income tax paid over on its behalf. In the case of a company