Fiat Group - Consolidated Financial Statements and Notes - Fiat SpA

194
Consolidated
Financial
Statements
at 31 December
2011
Notes
Additionally, in respect of the share capital of Fiat S.p.A., in a meeting on 3 November 2006 the Company’s Board of Directors exercised its delegated
powers pursuant to article 2443 of the Italian Civil Code to carry out an increase in share capital reserved for employees of the Company and/or its
subsidiaries up to a maximum of 1% of share capital, being €50 million, by taking a decision to issue up to 10 million ordinary shares each of nominal value
€5, corresponding to 0.78% of share capital and 0.92% of ordinary share capital, at a price of €13.37 each, to service the employee stock option plan
described in the following paragraph. The execution of this increase in capital is subject to the requirement that the conditions of the plan are met. Following
the Demerger and the corresponding reduction in the nominal value of each Fiat S.p.A. share from €5 to €3.5, share capital may in future increase by up
to a maximum of €35 million.
For 2011, the Board of Directors will propose a dividend of €39.7 million on special classes of shares to Shareholders at their annual general meeting. The
dividend proposal may be summarised as follows:
€0.217 per preference share;
€0.217 per savings share.
Given that it is Fiat’s intention to maintain a high level of liquidity and that restrictions exist on Chrysler‘s ability to pay dividends to its members, the Board
of Directors has decided not to propose a dividend on Fiat’s ordinary shares.
The objectives identified by the Group for managing capital are to create value for shareholders as a whole, safeguard business continuity and support the
growth of the Group. As a result, the Group endeavours to maintain an adequate level of capital that at the same time enables it to obtain a satisfactory
economic return for its shareholders and guarantee economic access to external sources of funds, including by means of achieving an adequate rating.
The Group constantly monitors the evolution of the ratio between debt and equity and in particular the level of net debt and the generation of cash from its
industrial activities.
In order to reach these objectives the Group aims at a continuous improvement in the profitability of the business in which it operates. Further, in general,
it may sell part of its assets to reduce the level of its debt, while the Board of Directors may make proposals to Shareholders in general meeting to reduce
or increase share capital or, where permitted by law, to distribute reserves. In this context, the Group also makes purchases of treasury shares, without
exceeding the limits authorised by Shareholders in general meeting, under the same logic of creating value, compatible with the objectives of achieving
financial equilibrium and an improvement in its rating.
In this respect capital means the value brought into Fiat S.p.A. by its shareholders (share capital plus the additional paid-in capital reserve less treasury
shares, equal to €5,259 million at 31 December 2011, (€7,261 million at 31 December 2010 before the Demerger) and the value generated by the
Group in terms of the results achieved in operations (retained earnings and other reserves, equal in total, before the result for the year, to €2,927 million
at 31 December 2011 and €3,287 million at 31 December 2010 before the Demerger, excluding gains and losses recognised directly in equity and noncontrolling
interests).
Treasury Shares
Treasury shares consist of 38,568,458 Fiat S.p.A. ordinary shares for an amount of €289 million (€657 million at 31 December 2010).
The reduction in the carrying amount of Treasury shares over 31 December 2010 is a consequence of the Demerger and the Fiat S.p.A. allotment of
38,568,458 ordinary shares in Fiat Industrial S.p.A., recognised as an asset in the Statement of Financial Position at an initial amount of €368 million as
discussed in Note 17.
These Treasury shares were purchased under an original authorisation for the purchase of treasury shares (the “Programme”) renewed by Shareholders
in general meeting on 27 March 2009 and already granted by the general meeting on 31 March 2008. The authorisation provided for the purchase of a
maximum number of shares, for all three classes combined, not to exceed 10% of share capital or a purchase value of €1.8 billion, inclusive of existing
restricted reserves of €657 million.