35. Related party transactions

In accordance with IAS 24 the related parties of the CNH Industrial Group are companies and persons who are capable of exercising control or joint control or who have a significant influence over the CNH Industrial Group and its subsidiaries, CNH Industrial N.V.’s parent company Exor S.p.A. and the companies belonging to the Exor Group (including the companies of the Fiat Group), unconsolidated subsidiaries in the CNH Industrial Group and the associates or joint ventures of the CNH Industrial Group. Finally, the members of the Board of Directors, the statutory auditors and managers of the CNH Industrial Group with strategic responsibility and members of their families.

The Group engages in transactions with unconsolidated subsidiaries, joint ventures, associates and other related parties on commercial terms that are normal in the respective markets, considering the characteristics of the goods or services involved.

Relations between the Group and its unconsolidated subsidiaries, its joint ventures, its associates and other related parties consist mainly of transactions of a commercial nature, which have an effect on revenues, cost of sales and trade receivables and payables.

The effects of such transactions on the consolidated income statements for 2013 and 2012 are as follows: 

  of which: with related parties
(€ million)2013Unconsolidated SubsidiariesJoint venturesAssociatesFiat GroupOther related partiesTotal related partiesEffect on Total (%)
Net revenues25,778-50041681-1,2224.7%
Cost of sales20,897-380-475238784.2%
Selling, general and administrative costs2,230---2073324010.8%
Research and development costs600---16-162.7%
Financial income/(expenses)(463)-(3)14-2(0.4%)

  of which: with related parties
(€ million)2012Unconsolidated SubsidiariesJoint venturesAssociatesFiat GroupOther related partiesTotal related partiesEffect on Total (%)
Net revenues25,785-395187637-1,2194.7%
Cost of sales20,931-334174437429874.7%
Selling, general and administrative costs2,187---2162223810.9%
Research and development costs560---22-223.9%
Financial income/(expenses)(467)-(3)14-2(0.4%)

The effects on the consolidated statement of financial position at December 31, 2013 and 2012 are as follows:

  of which: with related parties
(€ million)At December 31, 2013Unconsolidated SubsidiariesJoint venturesAssociatesFiat GroupOther related partiesTotal related partiesEffect
on Total (%)
Other investments and non-current financial assets615--43-4878.7%
Trade receivables988-491126-868.7%
Other current assets1,377--14-50.4%
Asset-backed financing10,679---5-50.0%
Other debt11,03543-1-80.1%
Trade payables5,344-1126129-2474.6%
Other current liabilities3,004-32---321.1%

  of which: with related parties
(€ million)At December 31, 2012Unconsolidated SubsidiariesJoint venturesAssociatesFiat GroupOther related partiesTotal related partiesEffect
on Total (%)
Other investments and non-current financial assets675--51-5683.6%
Trade receivables1,436-533855-14610.2%
Other current assets1,117--122-232.1%
Asset-backed financing9,708---3-30.0%
Other debt10,92542-1-70.1%
Trade payables4,843-1085136132625.4%
Other current liabilities2,666-23-41281.1%

Transactions with joint ventures

The following section provides information on transactions with companies over which the Group exercises joint control.

These transactions affected revenues, cost of sales, trade receivables and payables. The effects on the financial statements are set out as follows.

Net revenues

The transactions consist principally of sales of commercial vehicles, and agricultural and construction machinery, and the provision of technical services, to the following companies: 

(€ million)20132012
Turk Traktor Ve Ziraat Makineleri A.S., for the sale of agricultural and construction equipment13768
Iveco Oto Melara Società consortile, for the sale of vehicles and special transport9192
CNH de Mexico SA de CV, for the sale of agricultural and construction equipment7176
SAIC Iveco Commercial Vehicle Investment Company Limited for technical services5827
New Holland HFT Japan Inc., for the sale of agricultural and construction equipment5752
Other8680
Total Net revenues from joint ventures500395

Cost of sales

Transactions have taken place principally with the following companies:

(€ million)20132012
Turk Traktor Ve Ziraat Makineleri A.S., for the purchase of agricultural equipment264263
CNH de Mexico SA de CV, for the purchase of agricultural equipment11671
Total Cost of sales for purchases from joint ventures380334

Trade receivables

These relate to receivables arising from the revenues discussed. In particular:

(€ million)At December 31, 2013At December 31, 2012
Iveco – Oto Melara Società consortile2123
Other2830
Total Trade receivables due from joint ventures4953

Trade payables

These relate to payables arising from the costs discussed above. In particular:

(€ million)At December 31, 2013At December 31, 2012
Turk Traktor Ve Ziraat Makineleri A.S.6155
Other5153
Total Trade payables due to joint ventures112108

Transactions with associates

These transactions mainly affected revenues and trade receivables. The effects arising on the financial statements are set out as follows.

Net Revenues

These primarily relate to the sale of trucks, commercial vehicles and the provision of services, to the following companies: 

(€ million)20132012
Truck & Bus Company, for the sale of trucks and buses2112
IVECO-AMT Ltd. for the sale of trucks and commercial vehicles20115
Kobelco Construction Machinery Co. Ltd., for the sale of construction equipment-60
Total Net Revenues from associates41187

Cost of sales

These primarily relate to transactions with the following companies:

(€ million)20132012
Kobelco Construction Machinery Co Ltd., for the purchase of construction equipment-174
Total Cost of sales for purchases from associates-174

Trade receivables

This item, amounting to €11 million at December 31, 2013 (€38 million at December 31, 2012), relates to receivables arising from the revenues discussed above.

Transactions with the Fiat Group

These amounts arise from transactions between CNH Industrial Group companies and companies belonging to the Fiat Group, and from the asset and liability balances of the CNH Industrial Group companies which relate to companies belonging to the Fiat Group. The effects of individual transactions on financial statement items are as follows: 

Net Revenues

These primarily relate to the sale of goods to the following companies:

(€ million)20132012
Società Europea Veicoli Leggeri S.p.A. – Sevel, for the sale of engines371375
Fiat Automoveis S.A. - FIASA (subsidiary of Fiat Group Automobiles), for the sale of light commercial vehicles284238
Fiat Group Automobiles S.p.A. and subsidiaries, for the sale of engines2318
Other36
Total Revenues from Fiat Group681637

Cost of sales

These primarily relate to transactions with the following companies:

(€ million)20132012
Teksid S.p.A. and subsidiaries, for the purchase of engine blocks135119
Magneti Marelli S.p.A. and its subsidiaries, for the purchase of components10493
Other236225
Total Cost of sales from Fiat Group475437

Selling, general and administrative costs

These relate to costs for the provision of administrative, IT, corporate affairs, tax, treasury, purchasing, personnel management, communications and security services by companies belonging to the Fiat Group.

Research and development costs

These relate to the provision of research and development services in 2013 and 2012 by the Centro Ricerche Fiat on behalf of the CNH Industrial Group.

Other investments and non-current financial assets

This item includes non-current receivables arising from items due from the Fiat Group, mainly relating to factoring and dealer financing activities in South America.

Asset-backed financing and Other debt

This item mainly consists of other debt arising from the transactions of subsidiaries of the CNH Industrial Group with financial services companies of the Fiat Group in countries where the CNH Industrial Group does not have any financial services companies of its own.

Transactions with other related parties

The most significant amount in 2013 affects cost of sales and consists of the cost for purchases of components of €19 million (€36 million in 2012) from the Brembo Group which is controlled by Alberto Bombassei who has been a member of the Board of Directors of Fiat Industrial S.p.A. until the Merger occurred in September 30, 2013.

Compensation to Directors, Statutory Auditors and Key Management

The fees of the Directors and Statutory Auditors of CNH Industrial N.V. for carrying out their respective functions, including those in other consolidated companies, are as follows 

(in thousands of euros)20132012
Directors (a)13,2939,914
Statutory auditors190238
Total Compensation13,48310,152

(a) This amount includes for 2013 the notional compensation cost of €7,493 thousand (€6,196 thousand in 2012) arising from stock grants awarded to the Chairman, the Chief Executive Officer and certain Directors.

The aggregate expense incurred in 2013 for the compensation of Executives with strategic responsibilities of the Group amounts to approximately €20 million (€11 million in 2012). This amount is inclusive of the notional compensation cost for share-based payments granted to Executives with strategic responsibilities.

Commitments and guarantees with related parties

At December 31, 2013 the Group had pledged guarantees on commitments of the joint venture Iveco - Oto Melara Società consortile for an amount of €197 million (€215 million at December 31, 2012).