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reviewed whether there was any evidence that its CGUs
might be impaired, and then tested for impairment those
CGUs potentially at “risk”. This test has led to the recognition
of impairment for the Energy segment CGU of Spain, of
which Euro 9 million against the entire value of Plant and
machinery, Euro 1 million against Equipment and Euro 2
million against Assets under construction and advances.
The net book value of the land and buildings of the Spain
CGU has been compared with the corresponding fair value
at the reporting date; this has resulted in the recognition of
Euro 2 million in impairment, net of impairment reversals.
This impairment has been necessary because of a downturn
in business in this country during 2013. In this particular case,
the post-tax cash flow forecasts for 2014-2016 have been
determined by projecting forward the cash flows expected
by management in 2014; the WACC (Weighted Average Cost
of Capital as defined in the paragraph “Goodwill impairment
test”), used to discount cash flows for determining the value
in use of the Spain CGU (Energy segment), is 8.7%.
The perpetuity growth rate (G) projected after 2016 is 2%.
Furthermore, the Group has recognised impairment losses
against other assets which, although belonging to larger
CGUs for which there was no specific evidence of impairment,
had recoverable amounts below their net book value due
to particular market circumstances. This has led to the
recognition of Euro 11 million in additional impairment losses
in 2013, due to:
• the impairment of buildings owned by Fibre Ottiche Sud –
F.O.S. S.r.l. by Euro 9 million. The impairment loss has been
recognised following the building’s partial demolition in
preparation for subsequent renovation;
• the impairment of buildings at the Livorno Ferraris site,
owned by Prysmian Cavi e Sistemi S.r.l., by Euro 2 million.
“Buildings” include assets under finance lease with a net
book value of Euro 17 million at 31 December 2013 (Euro 16
million at 31 December 2012). The change in this amount
during 2013 mainly reflects the recognition of Euro 13 million
upon entering a finance lease for the “Ansaldo 16” building,
the derecognition of Euro 5 million upon extinguishing the
finance lease relating to the Santa Perpetua site in Spain and
the redemption of buildings under finance lease by Prysmian
Cables et Systèmes France Sas in France for Euro 6 million.
The maturity dates of finance leases are reported in Note
12. Borrowings from banks and other lenders; such leases
generally include purchase options.
Gross investments in property, plant and equipment
amount to Euro 126 million in 2013.
The investments made during 2013 are analysed as follows:
• around 33%, or Euro 42 million, for structural work,
primarily linked to the acquisition of industrial buildings;
• around 23%, or Euro 29 million, for projects to increase
production capacity;
• around 11%, or Euro 14 million, for projects to develop new
products;
• around 11%, or Euro 14 million, for projects to improve
industrial efficiency;
• the remaining 22%, or Euro 27 million, for restructuring
projects, involving compliance with the latest regulations
and structural work on specific production lines.
In particular, the main investments in 2013 were for:
• the increase in production capacity at the Arco Felice
plant (Naples) needed to fulfil the Western Link HVDC
contract;
• production capacity increases at the plants in S. Andrè
(Brazil), Durango (Mexico), Drammen (Norway) and
Liverpool (Australia), to meet growth in local demand
in the Oil&Gas, Automotive and Submarine segments
respectively;
• the new finance lease to acquire the “Ansaldo 16” building
in the Bicocca district of Milan;
• the acquisition of the industrial site in Santa Perpetua
(Spain) and the extinguishment of the previous finance
lease;
• the continuation of investments in Rybinsk (Russia) for
the production of high voltage cables, in St. Petersburg
(Russia) for the production of optical ground wire and in
Slatina (Romania) for the production of loose tube optical
telecom cables;
• restructuring and rationalisation of industrial capacity
already started last year, at the plant in Wuppertal
(Germany);
• investments aimed at reducing manufacturing costs at
the plants in Schwerin (Germany), Liverpool (Australia)
and Cariacica (Brazil).
Machinery is subject to Euro 12 million in liens in connection
with long-term loans.
When closing the present financial year, the Prysmian Group
