2014 ANNUAL REPORT

Consolidated Financial Report |

EXPLANATORY NOTES

2014 Annual Report

Prysmian Group

142

European Union had not yet completed the endorsement

process needed for the application of these amendments.

On 18 December 2014, the IASB also published amendments

IFRS 10, IFRS 12

and

IAS 28

with the aim of clarifying the

consolidation rules applying to investment entities. As at

the present document date, the European Union had not yet

completed the endorsement process needed for the applica-

tion of these amendments.

B.5 TRANSLATION OF TRANSACTIONS IN CURRENCIES OTHER THAN

THE FUNCTIONAL CURRENCY

Transactions in currencies other than the functional currency

of the company which undertakes the transaction are transla-

ted using the exchange rate applicable at the transaction date.

Prysmian Metals Limited (Great Britain), Prysmian Cables and

Systems S.A. (Switzerland), P.T. Prysmian Cables Indonesia

(Indonesia), Draka NK Cables (Asia) Pte Ltd (Singapore) and

Draka Philippines Inc. (Philippines) present their financial

statements in a currency other than that of the country they

operate in, as their main transactions are not carried out in

their local currency but in their reporting currency.

Foreign currency exchange gains and losses arising on comple-

tion of transactions or on the year-end translation of assets

and liabilities denominated in foreign currencies are recogni-

sed in the income statement.

B.6 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at the cost of

acquisition or production, net of accumulated depreciation

and any impairment. Cost includes expenditure directly

incurred to prepare the assets for use, as well as any costs

for their dismantling and removal which will be incurred as a

consequence of contractual or legal obligations requiring the

asset to be restored to its original condition. Borrowing costs

directly attributable to the acquisition, construction or pro-

duction of qualifying assets are capitalised and depreciated

over the useful life of the asset to which they refer.

Costs incurred subsequent to acquiring an asset and the

cost of replacing certain parts of assets recognised in this

category are capitalised only if they increase the future

economic benefits of the asset to which they refer. All other

costs are recognised in profit or loss as incurred. When the

replacement cost of certain parts of an asset is capitalised,

the residual value of the parts replaced is expensed to profit

or loss.

Depreciation is charged on a straight-line, monthly basis

using rates that allow assets to be depreciated until the end

of their useful lives. When assets consist of different iden-

tifiable components, whose useful lives differ significantly

from each other, each component is depreciated separately

using the component approach.

The useful indicative lives estimated by the Group for the

various categories of property, plant and equipment are as

follows:

Land

Not depreciated

Buildings

25-50 years

Plant

10-15 years

Machinery

10-20 years

Equipment and other assets

3-10 years