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CONSOLIDATED FINANCIAL REPORT | EXPLANATORY NOTES
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factors described in the Directors’ Report. The assessments carried out confirm Prysmian Group's ability to
operate as a going concern and to comply with its financial covenants.
Section C. Financial risk management and Section C.1 Capital risk management of these Explanatory Notes
contain a description of how the Group manages financial risks, including liquidity and capital risks.
In application of Legislative Decree 38 of 28 February 2005 "Exercise of the options envisaged by article 5 of
European Regulation 1606/2002 on international accounting standards", the Company has prepared its
consolidated financial statements in accordance with the international accounting and financial reporting
standards (hereafter also "IFRS") adopted by the European Union.
The term "IFRS" refers to all the International Financial Reporting Standards, all the International Accounting
Standards ("IAS"), and all the interpretations of the International Financial Reporting Interpretations
Committee ("IFRIC").
IFRS have been applied consistently to all the periods reported in this document. The consolidated financial
statements have been prepared in accordance with IFRS and related best practice; any future guidance and
new interpretations will be reflected in subsequent years, in the manner established from time to time by the
relevant accounting standards.
The Group has elected to present its income statement according to the nature of expenses, whereas assets
and liabilities in the statement of financial position are classified as current or non-current. The statement of
cash flows has been prepared using the indirect method. The Group has also applied the provisions of
Consob Resolution 15519 dated 27 July 2006 concerning financial statement formats and the requirements
of Consob Communication 6064293 dated 28 July 2006 regarding disclosures.
The financial statements have been prepared on the historical cost basis, except for the valuation of certain
financial assets and liabilities, including derivatives, which must be reported using the fair value method.
B.2 BASIS OF CONSOLIDATION
The financial statements of Group operating companies used for consolidation purposes have been
prepared for the year ended 31 December 2015 and the year ended 31 December 2014. They have been
adjusted, where necessary, to bring them into line with Group accounting policies and standards. All the
companies included in the consolidation end their financial year at 31 December. It should be noted that
Yangtze Optical Fibre and Cable Joint Stock Company Limited, consolidated using the equity method, has
reported financial results for the first nine months of 2015; for consolidation purposes these figures have
been combined with the company's estimated results for the last quarter of the year.
Subsidiaries
The Group consolidated financial statements include the financial statements of Prysmian S.p.A. (the Parent
Company) and the subsidiaries over which the Parent Company exercises direct or indirect control.
Subsidiaries are consolidated from the date control is acquired until the date such control ceases. Control is
connected with the ongoing existence of all the following conditions: