2014 ANNUAL REPORT

145

B.8 IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

AND FINITE-LIFE INTANGIBLE ASSETS

Property, plant and equipment and finite-life intangible assets

are analysed at each reporting date for any evidence of impai-

rment. If such evidence is identified, the recoverable amount of

these assets is estimated and any impairment loss relative to

carrying amount is recognised in profit or loss. The recoverable

amount is the higher of the fair value of an asset, less costs to

sell, and its value in use, where the latter is the present value of

the estimated future cash flows of the asset. The recoverable

amount of an asset which does not generate largely indepen-

dent cash flows is determined in relation to the cash genera-

ting unit to which the asset belongs. In calculating an asset’s

value in use, the expected future cash flows are discounted

using a discount rate reflecting current market assessments

of the time value of money, in relation to the period of the

investment and the specific risks associated with the asset. An

impairment loss is recognised in the income statement when

the asset’s carrying amount exceeds its recoverable amount. If

the reasons for impairment cease to exist, the asset’s carrying

amount is restored with the resulting increase recognised

through profit or loss; however, the carrying amount may not

exceed the net carrying amount that this asset would have had

if no impairment had been recognised and the asset had been

depreciated/amortised instead.

In the Prysmian Group, up until 31 December 2013 the smallest

CGU of the Energy operating segment was identified on the

basis of location of the registered office of the operating units

(country), while the smallest CGU for the Telecom operating

segment was the operating segment itself. Following the

change in the Group’s organisational structure, as from 1

January 2014 the Energy segment has been divided into two

operating segments: Energy Products and Energy Projects.

However, the structure of the Telecom Operating Segment has

remained unchanged.

The smallest CGUs for the Energy Projects segment can be

identified as the High Voltage, Submarine and SURF busi-

nesses; the smallest CGU for the Energy Products segment

can be identified on the basis of the country or region

[1]

of the

operating units; the smallest CGU for the Telecom segment can

be identified with the segment itself.

B.9 FINANCIAL ASSETS

Financial assets are initially recorded at fair value and clas-

sified in one of the following categories on the basis of their

nature and the purpose for which they were acquired:

(a) Financial assets at fair value through profit or loss;

(b) Loans and receivables;

Purchases and sales of financial assets are accounted for at

the settlement date.

Financial assets are derecognised when the right to receive

cash flows from the instrument expires and the Group has

substantially transferred all the risks and rewards relating

to the instrument and its control.

(a) Financial assets at fair value through profit or loss

Financial assets classified in this category are represented

by securities held for trading, having been acquired with the

purpose of selling them in the short term. Derivatives are

treated as securities held for trading, unless they are desi-

gnated as hedging instruments and are therefore classified

under “Derivatives”.

Financial assets at fair value through profit or loss are

initially recorded at fair value and the related transaction

costs are expensed immediately to the income statement.

Subsequently, financial assets at fair value through profit

or loss are measured at fair value. Assets in this category

are classified as current assets (except for Derivatives falling

due after more than 12 months). Gains and losses from

changes in the fair value of financial assets at fair value

through profit or loss are reported in the income statement

as “Finance income” and “Finance costs”, in the period in

which they arise. This does not apply to metal derivatives,

whose fair value changes are reported in “Fair value change

in metal derivatives”. Any dividends from financial assets at

fair value through profit or loss are recognised as revenue

when the Group’s right to receive payment is established

and are classified in the income statement under “Share

of net profit/(loss) of associates and dividends from other

companies”.

(1) If the operating units of one country almost exclusively serve other countries, the smallest CGU is given by the group of these countries.