180 348
Consolidated Financial Report |
EXPLANATORY NOTES
2014 Annual Report
Prysmian Group
180
The amount of goodwill allocated on the basis of net invested
capital at 1 January 2014 has been compared with the recove-
rable amount of each operating segment, determined on the
basis of value in use.
Forecast cash flows have been calculated using the after-tax
cash flows expected by management for 2015, prepared on
the basis of results achieved in previous years and the outlook
for the markets concerned. The operating segment cash
flow forecasts have been extended to the period 2016-2017
based on 3% projected growth. A terminal value has been
estimated to reflect CGU value after this period; this value
has been determined assuming a 2% growth rate. The rate
used to discount cash flows has been determined on the basis
of market information about the cost of money and asset-
specific risks (Weighted Average Cost of Capital, WACC). The
outcome of the test has shown that the recoverable amount
of the individual CGUs is higher than their net invested capital
(including the share of allocated goodwill). In particular, in
percentage terms, recoverable amount exceeds carrying
amount by 523% for the Energy Projects operating segment,
by 121% for the Energy Products operating segment and by
70% for the Telecom operating segment. It should be noted
that the discount rate at which recoverable amount is equal
to carrying amount is 37.5% for the Energy Projects operating
segment, 13.4% for the Energy Products operating segment
and 10.8% for the Telecom operating segment (compared
with a WACC of 7.1% used for all operating segments), while,
in order to determine the same match for growth rates, the
growth rate would have to be negative for all segments.
The Group has verified that, if impairment had been calcu-
lated on the basis of the previous structure, the recoverable
amount of the individual CGUs would nonetheless have been
higher than their net invested capital (including the portion of
allocated goodwill).
31 December 2013
Effects 31 December 2013 (*)
New Currency 31 December 2014
application
operating
translation
IFRS 10 - 11
segments differences
Energy goodwill
290
-
290
(290)
-
-
Energy Products goodwill
-
-
-
213
-
213
Energy Projects goodwill
-
-
-
77
3
80
Telecom goodwill
104
(17)
87
-
-
87
Total goodwill
394
(17)
377
-
3
380
(*) The figures at 31 December 2013 have been amended compared with those previously published following the adoption of IFRS 10 and 11. Further details can
be found in Section C. Restatement of comparative figures.
(in millions of Euro)
The amount of goodwill allocated to each operating segment is reported in the following table: