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CONSOLIDATED FINANCIAL REPORT | EXPLANATORY NOTES
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(d) Research and development costs
Research and development costs are expensed to the income statement when they are incurred, except for
development costs which are recorded as intangible assets when all the following conditions are met:
the project is clearly identified and the related costs can be reliably identified and measured;
the technical feasibility of the project can be demonstrated;
the intention to complete the project and to sell its output can be demonstrated;
there is a potential market for the output of the intangible asset or, if the intangible asset is to be
used internally, its usefulness can be demonstrated;
there are sufficient technical and financial resources to complete the project.
Development costs capitalised as intangible assets start to be amortised once the output of the project is
marketable.
B.8 IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT AND FINITE-LIFE INTANGIBLE ASSETS
Property, plant and equipment and finite-life intangible assets are analysed at each reporting date for any
evidence of impairment. If such evidence is identified, the recoverable amount of these assets is estimated
and any impairment loss relative to carrying amount is recognised in profit or loss. The recoverable amount
is the higher of the fair value of an asset, less costs to sell, and its value in use, where the latter is the
present value of the estimated future cash flows of the asset. The recoverable amount of an asset which
does not generate largely independent cash flows is determined in relation to the cash-generating unit to
which the asset belongs. In calculating an asset's value in use, the expected future cash flows are
discounted using a discount rate reflecting current market assessments of the time value of money, in
relation to the period of the investment and the specific risks associated with the asset. An impairment loss is
recognised in the income statement when the asset's carrying amount exceeds its recoverable amount. If the
reasons for impairment cease to exist, the asset'
s
carrying amount is restored with the resulting increase
recognised through profit or loss; however, the carrying amount may not exceed the net carrying amount that
this asset would have had if no impairment had been recognised and the asset had been
depreciated/amortised instead.
In the case of the Prysmian Group, the smallest CGUs for the Energy Projects segment are identifiable as
the High Voltage, Submarine and SURF businesses; the smallest CGU for the Energy Products segment
can be identified on the basis of the country or region
[1]
of the operating units; the smallest CGU for the
Telecom segment is the operating segment itself.
[1]
If the operating units of one country almost exclusively serve other countries, the smallest CGU is given by the group of these
countries.