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B.1 BASIS OF PREPARATION
The present financial statements have been prepared on a
going concern basis, with the directors having assessed that
there are no financial, operating or other kind of indicators
that might provide evidence of the Group’s inability to meet
its obligations in the foreseeable future and particularly in the
next 12 months.
In particular, the Group’s estimates and projections have
been prepared taking into account possible developments in
the investigations by the European Commission and other
jurisdictions into alleged anti-competitive practices in the
High Voltage underground and Submarine cables market, as
well as the risk factors described in the Directors’ Report. The
assessments carried out confirm Prysmian Group’s ability to
operate as a going concern and to comply with its financial
covenants.
Section D. Financial risk management and Section D.1 Capital
risk management of these Explanatory Notes contain a de-
scription of how the Group manages financial risks, including
liquidity and capital risks.
In application of Legislative Decree 38 of 28 February 2005
“Exercise of the options envisaged by article 5 of European
Regulation 1606/2002 on international accounting standards”,
the Company has prepared its consolidated financial state-
ments in accordance with the international accounting and
financial reporting standards (hereafter also “IFRS”) adopted
by the European Union.
The term “IFRS” refers to all the International Financial
Reporting Standards, all the International Accounting
Standards (“IAS”), and all the interpretations of the Inter-
national Financial Reporting Interpretations Committee
(“IFRIC”), previously known as the Standing Interpretations
Committee (“SIC”).
IFRS have been applied consistently to all the periods reported
in this document. The consolidated financial statements
have been prepared in accordance with IFRS and related best
practice; any future guidance and new interpretations will be
reflected in subsequent years, in the manner established from
time to time by the relevant accounting standards.
The Group has elected to present its income statement
according to the nature of expenses, whereas assets and
liabilities in the statement of financial position are classified
as current or non-current. The statement of cash flows has
been prepared using the indirect method. The Group has also
applied the provisions of CONSOB Resolution 15519 dated 27
July 2006 concerning financial statement formats and the
requirements of CONSOB Communication 6064293 dated 28
July 2006 regarding disclosures.
During 2009 and 2010, CONSOB (the Italian Securities and
Exchange Commission), together with the Bank of Italy and
ISVAP (the Italian insurance industry regulator), issued two
documents (numbers 2 and 4): “Disclosures in financial reports
about business continuity, financial risks, asset impairment
tests and uncertainties in the use of estimates” and “Disclo-
sures in financial reports about asset impairment tests, about
contractual clauses in debt financing, about debt restructuring
and about the fair value hierarchy”, which have been taken
into account when preparing the present document.
The financial statements have been prepared on the historical
cost basis, except for the valuation of certain financial assets
and liabilities, including derivatives, which must be reported
using the fair value method.
Changes to the financial statements
The consolidated financial statements for 2013, presented in
the current annual financial report for comparative purposes,
have undergone some amendments compared with the pre-
viously published figures. These amendments reflect:
• Application of IFRS 10 and IFRS 11
Investments in associates and joint ventures accounted
for using the equity method have been presented in a
separate line of the consolidated statement of financial
position.
• Reclassification of share of net profit/(loss)
of equity-accounted companies
The Group has adopted a new method of classifying
its share of the net profit/(loss) of associates and
joint ventures, whereby it recognises this amount as
a component of “Operating income” when relating
to companies that operate in the same market as the
Group. The comparative figures have been reclassified
accordingly.
Further details can be found in Section C. Restatement of
comparative figures.
B.
ACCOUNTING POLICIES AND STANDARDS
The main accounting policies and standards used to prepare the consolidated financial statements and Group financial infor-
mation are set out below.