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CONSOLIDATED FINANCIAL REPORT | EXPLANATORY NOTES
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losses, the book value of the investment is reduced to zero and additional losses are provided for
and a liability is recognised, only to the extent that the Group is committed to fulfilling legal or
constructive obligations of the investee company; changes in the equity of companies valued using
the equity method which are not accounted for through profit or loss, are recognised directly in
equity;
unrealised gains arising from transactions between the Parent Company/subsidiaries and equity-
accounted companies, are eliminated to the extent of the Group's interest in the investee company;
unrealised losses are also eliminated unless they represent impairment.
Special purpose entities
During 2007 the Group had defined and adopted a trade receivables securitization programme for a number
of Group companies. The securitization programme was terminated on 25 July 2013 upon reaching its end
date.
At 31 December 2015, the special purpose entity known as Prysmian Financial Services Ireland Ltd was
essentially inactive, with the procedures for its liquidation in the process of being completed.
Translation of foreign company financial statements
The financial statements of subsidiaries, associates and joint ventures are prepared in the currency of the
primary economic environment in which they operate (the "functional currency"). The consolidated financial
statements are presented in Euro, which is the Prysmian Group's functional and presentation currency for its
consolidated financial reporting.
The rules for the translation of financial statements expressed in currencies other than the Euro are as
follows:
assets and liabilities are translated using the exchange rates applicable at the end of the reporting
period;
revenues and expenses are translated at the average rate for the period/year;
the "currency translation reserve" includes both the translation differences generated by translating
income statement items at a different exchange rate from the period-end rate and the differences
generated by translating opening equity amounts at a different exchange rate from the period-end
rate;
goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the period-end exchange rate.
If a foreign entity operates in a hyperinflationary economy, revenues and expenses are translated using the
exchange rate current at the reporting date. All amounts in the income statement are restated by applying
the change in the general price index between the date when income and expenses were initially recorded in
the financial statements and the reporting date. Corresponding figures for the previous reporting period/year