CONSOLIDATED FINANCIAL STATEMENTS >
EXPLANATORY NOTES
172
| 2013 ANNUAL REPORT | PRYSMIAN GROUP
(*) The previously published figures have been amended. Further details can be found in Section C. Restatement of comparative figures at 31 December 2012.
The amount of goodwill thus allocated (summed with the
remaining portion of the operating segment’s net invested
capital) has been compared with the recoverable amount of
each operating segment, determined on the basis of their
value in use.
Forecast cash flows have been calculated using the post-tax
cash flows expected by management for 2014, prepared on
the basis of results achieved in previous years and the outlook
for the markets concerned. The cash flow forecasts for both
operating segments have been extended to the period 2015-
2016 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, cost of money and asset-specific
risks (Weighted Average Cost of Capital, WACC). 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 251% for
the Energy operating segment and by 55% for the Telecom
operating segment. It should be noted that the discount rate
at which recoverable amount is equal to carrying amount
is 21.1% for the Energy operating segment and 10.8% for
the Telecom operating segment (compared with a WACC of
7.7% used for both operating segments), while, in order to
determine the same match for growth rates, the growth rate
would have to be negative for both segments.
(in millions of Euro)
31 December 2012 (*)
Business
Currency
31 December 2013
combinations translation
differences
Energy goodwill
291
-
(1)
290
Telecom goodwill
103
2
(1)
104
Total goodwill
394
2
(2)
394
These are detailed as follows:
3.
INVESTMENTS IN ASSOCIATES
(in millions of Euro)
31 December 2013 31 December 2012
Opening balance
99
87
Movements:
- Business combinations
-
-
- Currency translation differences
-
-
- Investments
-
1
- Share of net profit/(loss)
15
17
- Dividends and other movements
(15)
(6)
Total movements
-
12
Closing balance
99
99
The amount of goodwill allocated to each operating segment is reported in the following table:
